The Hispanic unemployment rate reached a historic low of 5.2% in the second quarter of 2006. The gap between the seasonally-adjusted unemployment rates for Latinos and non-Latinos was just 0.6 percentage points—the smallest since 1973, when employment data on Latinos first became available. Wages for Latino workers also rose between the second quarters of 2005 and 2006, and at a faster rate than for other workers. Those developments reflect significant improvement in the labor market for Latinos in 2005-06 and indicate that the jobs recovery from the recession in 2001 is nearing completion for Hispanic workers.
The healthy job market for Latinos has been driven by the construction industry. Construction added nearly a half a million jobs alone between the second quarters of 2005 and 2006, the majority of them filled by foreign-born Latinos. Since the jobs recovery began in 2003, nearly 1 million Latinos have found jobs in construction, accounting for about 40% of all new jobs gained by Hispanics. The construction sector, however, is showing signs of a slowdown, and that could have an impact on Latino employment.
The Hispanic labor force continues to grow, primarily as a result of immigration. The rate of growth in the Latino labor force exceeds that of any other group, and the new entrants have been successful in finding employment, especially in the construction industry. Wages, however, have not kept pace with the growth in employment for all Hispanic workers. For foreign-born Latino workers, median wages decreased from the second quarter of 2005 to the second quarter of 2006.
Other groups of workers also fared well in the improving labor market. Among Asian workers, the growth in the labor force and in employment in 2005-06 rivaled that of Hispanics. Non-Hispanic whites and blacks, whose population growth is slower, also experienced an increase in the number of employed workers, though at a slower pace than Latinos and Asians. For white workers, the unemployment rate dropped below 4%, second only to Asians. Among black workers, the unemployment rate fell by nearly one percentage point, but that was due in part to reduced participation in the labor market.
Wage growth, while inconsistent across groups, tended to favor minority workers. Median wages for Latino and black workers, which started at lower levels and remained lower, increased in 2005-06, while wages of Asian and white workers declined slightly. But among foreign-born Hispanics, who represent the biggest share in the Latino labor pool, the median wage actually declined. Latinos also still have the lowest median wage of all racial and ethnic groups.
This analysis is based on data from the Bureau of Labor Statistics and the Census Bureau. Most of the data is from the Current Population Survey, a monthly Census Bureau survey of approximately 60,000 households. Data from three to six monthly surveys were combined to create larger sample sizes and to conduct the analysis on a quarterly basis or semi-annual basis.
The study reports on trends in several key labor market indicators in the past year and also since 2000, the last year for the economic expansion in the 1990s. Some of these indicators, such as the working-age population (16 and older) and the size of the labor force, respond principally to demographic forces. Tracking those indicators establishes the size of a racial or ethnic group in the labor market and whether its relative size is shrinking or expanding.
Other important labor market indicators respond more to economic developments for a racial or ethnic group. Those include employment levels, the employment rate, the unemployment rate and the labor force participation rate. Tracking those indicators, along with estimating wages, is the key to understanding the economic outcomes for Hispanic and non-Hispanic workers.
Among the major findings of this report:
- The Hispanic unemployment rate in the second quarter of 2006 was 5.2% on a seasonally adjusted basis, a historic low. The non-seasonally adjusted unemployment rate was 4.9% in the second quarter of 2006, a decrease from 5.8% a year earlier.
- In the second quarter of 2006, the gap between the seasonally adjusted unemployment rate for Hispanics and non-Hispanics was 0.6 percentage points, the lowest since 1973, when data on Latinos first became available.
- The Latino labor force added 867,000 workers between the second quarters of 2005 and 2006, more than any other group. That accounted for about 40% of all workers added to the U.S. labor force.
- Overall employment for Latinos increased by 993,000, rising 5.3% over the previous 12-month period. Hispanics, who were only 13% of the U.S. labor force, represented 37% of the total increase in employment.
- Foreign-born Latinos continued to dominate the Hispanic labor force. About eight out of every 10 new jobs landed by Latinos in 2005-06 went to foreign-born Latinos. The foreign-born Hispanic labor force also accounted for nine of every 10 new Latino workers in the labor force.
- The unemployment rate for foreign-born Latinos was 3.9% in the second quarter of 2006, a decrease from 4.6% a year earlier. Among native-born Hispanics, the unemployment rate in the second quarter of 2006 was 6.2%, down from 7.2% in the second quarter of 2005.
- The construction industry added jobs for 471,000 Hispanic workers in 2005-06. That was 47% of the total increase in Latino employment. Latinos also had significant employment gains in two other industries, business and other professional services, and wholesale and retail trade.
- About 1 million Latino workers have been hired by the construction industry since the jobs recovery began in 2003. More than 90% of those jobs have been filled by foreign-born Latinos. In that time, the proportion of Hispanics working in construction has risen from 11% to 15%. For foreign-born Hispanics, the proportion in construction has risen from 14% to 20%.
- The growth in construction jobs for Latinos is almost entirely in the South and the West. Together, those two regions account for more than 90 percent of all construction jobs filled by Hispanics since 2003.
- After two years of declines, the median weekly earnings for Latino workers rose from $423 in the second quarter of 2005 to $431 in the second quarter of 2006. Hispanics still have the lowest median wage of any ethnic or racial group.
- The Asian labor force added 283,000 workers, an increase of 4.3%, between the second quarters of 2005 and 2006. Economic outcomes for Asian workers also improved and, in the second quarter of 2006, unemployment rate for Asians was 3.5%, the lowest among all racial and ethnic groups.
- The unemployment rate for black workers dropped from 9.9% in the second quarter of 2005 to 9% in the second quarter of 2006. In part, the decline may have been due to a decrease in their labor force participation rate—from 65% to 64.5%—over the same time period.
- The white labor force increased by 781,000, or only 0.8%, between the second quarters of 2005 and 2006. However, employment for white workers increased by 1 million and their unemployment rate decreased from 4.1% to 3.9%.
A Note on Terminology
The terms Hispanic and Latino are used interchangeably in this report. The terms “whites”, “blacks” and “Asians” are used to refer to the non-Hispanic components of their population.
Foreign-born refers to an individual who is born outside of the United States, Puerto Rico or other U.S. territories and whose parents are not U.S. citizens.
The terms “jobs” and “employment” are used interchangeably in the report although they are not necessarily the same—a single worker can hold more than one job, and a job can be filled by more than one worker
Unless otherwise indicated, estimates are not seasonally adjusted.