Data Analysis Chapter: Impacts on Labor Market From Trade and Immigration in the United States

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¶ … Labor Market from Trade and Immigration in the United States

Over the last several decades, globalization has been having a tremendous impact on the United States economy. Part of this is in response to the increasing pressures to remain competitive, as the overall trend since the end of World War II has been to increase the number of competitors on the world market. While at the same time reducing: trade barriers, tariffs, quotas and loosening immigration restrictions. As a result, the overall amounts of immigration into the United States have continued to increase. A good example of this can be seen with the total number of American workers who were born outside of the United States, which accounted for one of out every seven people working in 2004. This number is up significantly from a decade earlier, where it was every one in ten people working. ("The Role of Immigrants in the U.S. Labor Market," 2004) Part of the reason for such a large increase, is the higher wages that are paid in comparison with third world countries and a large portion of the population becoming older. As a result, this has caused a shift in the U.S. labor market, as more foreign born workers are required to fill the emerging labor shortages. This has helped to keep the cost of labor fairly low, at a time when a declining pool of labor means rising wages. Then, there are those immigrants who came to the United States and made significant contributions to the economy. Where, some of the largest technology companies such as: Yahoo, Google and EBay were started by immigrants. ("We Need an Immigration Stimulus," 2009) Commenting about their contribution former Federal Reserve Chairman Allen Greenspan said, "We have a very large number of immigrants who are high school or less educated, a significant part of whom are illegal. And then we have a remarkably large number of Ph.D.'s and better who have come to this country and contributed immensely to our economic success. I argue that both groups are affecting the economy in a positive way. If we try to send all our illegals home, speaking as an economist, I will tell you, we would have a very serious problem. There are 12 million of them." (Nil, 2009) What this shows is: the overall contributions that are made to the economy because of immigrants. Yet, to fully understand this contribution requires that you carefully examine various pieces of data showing the overall trends in immigration and analyze the results using the regression model. This will provide the greatest insights as to the impact that immigration is having on the U.S. economy.

Data

Throughout its history the United States has always been a country of immigrants. Think about, the first Native Americans that arrived America thousands of years ago were immigrants. As time went by, the overall quality and scope of immigration would vary depending upon: political and economic events that were occurring around the globe. Over the last 20 years, the scope of immigration has been changing as a wide variety of immigrants are coming to America from various backgrounds. In some cases, these people have less than a high school education and are seeking employment in unskilled labor. While at the same time, there are those immigrants who have advanced university degrees and skill sets that can be used to find employment in technical / higher paying jobs. According to the Congressional Budget Office, the majority of the unskilled immigrants come from Mexico and the Central / South American countries. Where, they account for nearly three quarters of the unskilled immigrant laborers in the United States. Compared to immigrants from the rest of the world, they have an average of 14 years of education and are more skilled than the Mexican / Latin American immigrants. The overall growth in both groups continued to see increases between 1994 and 2004, with Mexican / Latin American immigrants increasing from 4.6 million to 8.3 million. The rest of the world saw an increase of 8.3 million to 13.1 million. ("The Role of Immigrants in the U.S. Labor Market," 2004)

Immigration Numbers from Mexico / Latin America vs. The Rest of the World

Immigrant Group

Time Frame

Total Immigrants

Mexico / Latin America

1994

4.6 million

Mexico / Latin America

2004

8.3 million

Rest of the World

1994

8.3 million

Rest of the World

2004

13.1 million

However, when you look at the overall trends of immigration, it is clear that the large number of immigrants have consistently remained a part of the economic model that helped contribute dramatically to the economic growth of the United States. Over the course of time, the amounts immigrants have been consistently increasing. A good example of this can be seen within the individual U.S. immigration statistics since 1820. Where, in the period between 1820 and 1900, 19.11 million people immigrated to the United States. This trend has continued to increase into the 20th century as there were a total of 26.03 million people immigrated into the country between 1900 and 1970. However, in the decades after 1970 was when you saw a consistent increase in the total number of immigrants. This can be seen in the immigration data compiled during that time, where from 1970 to 1980 there were 4.93 million people immigrating to the U.S. During the time frame from 1980 to 1990, the total was 7.33 million immigrants. Between 1990 and 2000, this number increased to 9.09 million people. In the time frame between 2000 and 2004, there were a total of 3.78 million people immigrating to the United States. ("2004 Yearbook of Immigration Statistics," 2010)

Historical U.S. Immigration Patterns

Time Frame

Total Immigration

1820 -- 1900

19.11 million

1900 -- 1970

26.03 million

1970-1980

4.93 million

1980-1990

7.33 million

1990 -- 2000

9.09 million

2000 -- 2004

3.78 million

Yet, when you look at the difference between the groups of skilled and unskilled immigrant workers, it is clear that there is a vast disparity in education levels. With those immigrants who are from Mexico / Latin America less likely to have an education in comparison to the rest of the world. An example of this can be seen with data compiled from the Congressional Budget Office, which found that 60% of the immigrants from Mexico / Latin America do not have a high school education. Within the 40% that do have an education, only 25% are college graduates. In comparison to the rest of the world, 62% of the immigrants in the United States have a college education. Out of the 38% who are less educated, only 21% have less than a high school education. ("2004 Yearbook of Immigration Statistics," 2010) When you compare this number with the earnings potential from the U.S. Census Bureau, it is clear that there is link between education and earnings. Those people who have at least a four-year degree will earn $23,000.00 more per year, in comparison to someone who has no education. ("University Education Results in Significantly Higher Wages," 2006)

When you analyze the above data looking for any kind of manipulations, it is obvious that the number of immigrants entering the country could be incorrect. The reason why, is because this data was compiled based on U.S. Government immigration numbers. In the time frame from 1970 and beyond these number could be low, because of the number of illegal immigrants would be difficult to determine. This means that the government actuaries must estimate what are: the total number of illegal immigrants (which could cause the immigration numbers to be low). That being said, you would more than likely see the data for unskilled immigrants to be higher than skilled immigrants. This is because unskilled immigrants have fewer hurdles in finding employment. ("2004 Yearbook of Immigration Statistics," 2010)

What all of the above data shows, is how both in the unskilled and skilled labor markets, immigration has consistently played a role in helping to provide the country with economic growth. This is because the wages for native born workers is higher than that of immigrants. Where the native born workers; will demand that they are paid within the various federal and state guidelines. This is problematic for some employers who are facing a skilled or unskilled labor shortage, as the costs for hiring native workers has become cumbersome. As a result, many will often turn to immigrants to perform various tasks, where native born workers will demand more money and benefits. This is having an impact on various cities and states, where the majority of immigrants are located. According to the Congressional Budget Office, immigrants have a tendency to consolidate to six states (California, New York, New Jersey, Texas, Arizona and Illinois). In those cities where there are high amounts of unskilled immigrant workers, the unemployment rate increases. This is because many unskilled younger native workers have to compete against immigrants. Since many native born workers will demand higher wages / compensation,… [END OF PREVIEW]

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https://www.essaytown.com/subjects/paper/impacts-labor-market-trade-immigration/13.