Due mainly to a slump in the construction industry, the unemployment rate for Hispanics in the U.S. rose to 6.5% in the first quarter of 2008, well above the 4.7% rate for all non-Hispanics. As recently as the end of 2006, the gap between those two rates had shrunk to an historic low of 0.5 percentage points—4.9% for Latinos compared with 4.4% for non-Latinos, on a seasonally adjusted basis.1
The spike in Hispanic unemployment has hit immigrants especially hard. Their unemployment rate was 7.5% in the first quarter of this year,2 marking the first time since 2003 that a higher percentage of foreign-born Latinos was unemployed than native-born Latinos. Some 52.5% of working-age Latinos (ages 16 and older) are immigrants. Latinos make up 14.2% of the U.S. labor force.
Despite the disproportionate impact that the economic slowdown has had on immigrant Latino workers, there are no signs that they are leaving the U.S. labor market. Their labor force participation rate—that is, the percentage of the immigrant working-age Latino population either employed or actively seeking employment—has remained steady. However, they now play a smaller role in the growth of the Hispanic workforce than in recent years.
These findings emerge from the Pew Hispanic Center’s analysis of the latest data from the Bureau of Labor Statistics and Census Bureau. Most of the data are from the Current Population Survey, a monthly Census Bureau survey of about 60,000 households. Data from three monthly surveys were combined to create larger sample sizes and to conduct the analysis on a quarterly basis.
This report is not able to identify immigrant workers by whether they are documented or undocumented because the immigration status of workers is not recorded in the source data. However, estimates by the Pew Hispanic Center show that unauthorized migrants account for about 5% of the U.S. labor force and about one-third of the foreign-born labor force. They are overrepresented in certain industries such as construction, where they account for 12% of employment (Passel, 2006). Most unauthorized migrants are from Latin American countries, with those from Mexico accounting for about 55% of the total.
The study focuses on developments over the past year in several key labor market indicators, from the first quarter of 2007 to the first quarter of 2008. Long-term trends, from 2000 onward, are also presented for major indicators. Some of those indicators, such as the working-age population 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 and the employment, unemployment and labor force participation rates. Tracking those indicators, along with estimating wages, is the key to understanding economic outcomes for Hispanic and non-Hispanic workers.
The latest trends in the labor market represent a dramatic reversal for Latino workers. Hispanics lost nearly 250,000 jobs over the past year because of the recent slump in the construction sector. For several years, construction was the mainstay of job growth for Hispanic workers, especially those who are immigrants (Kochhar, 2006 and Kochhar, 2007). Even as home building stumbled in 2006, Hispanics found nearly 300,000 new jobs in the construction industry from the first quarter of 2006 to the first quarter of 2007. The ongoing slump in construction over the past year has wiped out those gains, virtually in their entirety.
Mexican immigrants have suffered the effects of the construction downturn most keenly. Latino workers who exited construction in 2007 included about 221,000 immigrants. Some 152,000 of those workers had migrated from Mexico. Latino immigrants who entered the U.S. in 2000 or later (from any country) lost 69,000 jobs in construction. For each of these groups of immigrants the jobs lost in construction accounted for the majority of losses from the first quarters of 2007 to the first quarter of 2008.
Labor market outcomes for Hispanic women appear to be worse than for men during 2007. They left the labor force in greater proportion and experienced greater increases in unemployment than did Hispanic men. Some 130,000 more Latino women became unemployed in 2007, and their unemployment rate increased from 5.6% to 7.0%.
Weekly earnings for most groups of Hispanic workers also slipped backward in the past year. Again, Latino construction workers suffered most from the decline in wages. Their earnings tumbled in 2007 and they now earn less than they did two years ago in the first quarter of 2006.
Demographically, immigrant workers now contribute less to the growth in the Hispanic workforce than in recent years. Labor market data do not reveal proximate cause—it could be the economic slowdown, increased immigration enforcement or a combination of those and related factors—but some trends are consistent with reduced levels of immigration. The Latino immigrant working-age population (ages 16 and older) increased 462,000 from the first quarter of 2007 to the first quarter of 2008. That increase was similar to the year before. However, two years earlier, between the first quarters of 2005 and 2006, this population had increased by 784,000 workers. Similarly, foreign-born Latinos have accounted for less of the total growth in the Latino labor force (those employed or actively seeking employment) in recent years.
Among the major findings of this report:
- The Hispanic unemployment rate (seasonally adjusted) increased to 6.5% in the first quarter of 2008 from its historic low of 4.9% in the fourth quarter of 2006.
- The unemployment rate for Hispanics is now about two percentage points higher than for non-Hispanics. In contrast, in the fourth quarter of 2006 the Hispanic unemployment rate (seasonally adjusted) was just 0.5 percentage points higher than the rate for non-Hispanics (4.4%).
- The last time the unemployment rate (seasonally adjusted) for Hispanics was as high as 6.5% was in the fourth quarter of 2004, during the first full year of recovery from the 2001 recession and subsequent slowdown. The last time the gap in the unemployment rate between Hispanics and non-Hispanics was as high as 1.8 percentage points was in the first quarter of 2004.
- The Latino employment rate (seasonally adjusted) most recently peaked at 65.5% in the fourth quarter of 2006. By the first quarter of 2008, it dropped to 64.1%.
- In the first quarter of 2008, the Hispanic labor force participation rate (seasonally adjusted) was 68.5%—a level comparable to its recent history.
- Stability in the Hispanic labor force participation rate compared with the increase in Latino unemployment suggests that Hispanics are not leaving the labor market.
Unemployment and job losses in 2007
- The Hispanic unemployment rate, not seasonally adjusted, increased from 6.1% in the first quarter of 2007 to 7.3% in the first quarter of 2008. Over the same period, the non-Hispanic unemployment rate increased from 4.6% to 5.0%.
- The unemployment rate for Latino immigrants leapfrogged the rate for native-born Latinos. From the first quarter of 2007 to the first quarter of 2008, the rate for foreign-born Latinos increased from 5.5% to 7.5%. That compared with an increase from 6.7% to 6.9% in the unemployment rate of native-born Latinos.
- Mexican immigrants suffered some of the largest increases in the unemployment rate. The unemployment rate for Mexican immigrants rose to 8.4% from 5.5% over the past year. Immigrants who arrived in 2000 or later (from any country) were among those hit hard by job losses. Their unemployment rate increased to 9.3% from 7.1% over the same period.
- The number of unemployed Latino workers increased 302,000 from the first quarter of 2007 to the first quarter of 2008. Nearly 85% of the newly unemployed—255,000—were Latino immigrants, including 233,000 Mexican-born workers.
- Almost 90% of Hispanic job losses over the past year in the construction industry were jobs held by Hispanic immigrants. Hispanics lost 247,000 jobs in the construction industry from the first quarter of 2007 to the first quarter of 2008. That included 221,000 immigrants, 152,000 Mexican-born workers and 69,000 immigrants who arrived in 2000 or later.
Employment trends in 2007
- Employment growth for Latinos was cut in half in 2007. Latinos gained 329,000 jobs between the first quarters of 2007 and 2008, an increase of 1.7%. That compared with 734,000 new jobs in the preceding one-year period, an increase of 3.9%.
- The Hispanic employment rate fell from 64.5% in the first quarter of 2007 to 63.3% in the first quarter of 2008.
- Hispanic immigrants, while accounting for almost all of the increase in Hispanic unemployment, secured few (21%) of the new jobs going to Hispanics (70,000 out of 329,000).
- The leading sources of jobs growth for Hispanics were business services (203,000 new jobs) and hospital and other health services (170,000 new jobs).
Population and labor force
- The Hispanic working-age population (ages 16 and older) increased 1.1 million between the first quarters of 2007 and 2008. That accounted for 41% of the total increase in the U.S. working-age population, similar to the preceding two one-year periods.
- Foreign-born workers are contributing less to the growth in the Hispanic working-age population. Correspondingly, native-born Latinos make up an increasing share of the growth in the Latino working-age population. The Latino immigrant workforce increased 462,000 in 2007 and 430,000 in 2006. That accounted for 43% and 41%, respectively, of the total increase in the Latino workforce. However, in 2005, the foreign-born workforce had increased 784,000, representing 74% of the total growth for Hispanics.
- Growth in the Hispanic labor force—those employed or actively seeking work—has slowed recently. The labor force increased 630,000, or 3.0%, in 2007, compared with 780,000 (3.9%) in 2006 and 898,000 (4.6%) in 2005.
- Foreign-born workers accounted for 52% of the increase in the Latino labor force in 2007. That is higher than 2006 (41%) but well below 2005, when immigrants accounted for 82% of the increase in the Latino labor force.
Employment trends for Hispanic men and women in 2007
- The labor force participation rate for Latino women dropped from 56.3% in the first quarter of 2007 to 55.9% in the first quarter of 2008. The participation rate for Latino men is much higher—about 80%—and changed little in 2007.
- Employment growth for Latino women dropped sharply in 2007. They gained only 94,000 jobs in 2007, compared with 396,000 in 2006. Hispanic men added 235,000 jobs in 2007, compared with 338,000 in 2006.
- The unemployment rate for Hispanic women increased from 5.6% in the first quarter of 2007 to 7.0% in the first quarter of 2008. This increase was slightly greater than for men, whose unemployment rate increased from 6.3% to 7.4% over the same period.
- Median weekly wages were unchanged for all Hispanics—$480 in the first quarter of 2008 and $479 in the first quarter of 2007 (wages expressed in 2008 dollars). Among native-born Hispanics, median wages increased 1.5%; for foreign-born Hispanics median wages were up 1.6%.
- Median weekly earnings of workers born in Mexico fell 3.1% in 2007, and median earnings of those who arrived in 2000 or later fell 4.3%. Median wages for both groups of workers are currently less than their level two years ago, in the first quarter of 2006.
- Wages of Hispanic workers in the construction industry fell sharply in 2007—a loss of 6.9% for all Hispanics and 4.0% for foreign-born Hispanics.
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.
Most of the analysis discusses changes in labor market indicators from the first quarter of 2007 to the first quarter of 2008 and from the first quarter of 2006 to the first quarter of 2007. The shorthand “in 2007” or “in 2006” is used to refer to changes in those time periods.