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One of the most important questions surrounding the debate over Mexican immigration to the United States is its impact on the U.S. economy. By holding jobs, Mexican immigrants have a direct and immediate effect on the supply of labor as well as on the goods and services available for consumption within the United States or for export to other countries. One of the most important factors determining the impact of Mexican immigrants on the U.S. economy is their labor market characteristics.
Educational Attainment of Mexican Immigrants. Looking at educational attainment is a useful starting point because to a large extent income, what kind of job one holds, and socio-economic status in general are closely tied to educational attainment. This is especially true in recent years. As the U.S. economy has moved to one based on technology and information and away from so called "smoke stack" industries, wages and benefits for unskilled workers have lagged far behind those of more educated workers. Figure 5 reports the education level of adult working-age natives, all immigrants, and Mexican immigrants. The most striking finding in Figure 5 is that a very large share of Mexican immigrants have not completed high school. Working-age Mexican immigrants are more than six times as likely as natives to lack a high school education. Moreover, only a small share of Mexican immigrants have a college or graduate education. Whereas 28 percent of natives have at least a four-year college degree, only 4.4 percent of Mexican immigrants have a college or graduate degree. (Throughout this report persons who lack a high school education are also referred to as dropouts or unskilled workers.) Overall, Figure 5 shows that there is a dramatic difference between the educational attainment of Mexican immigrants and that of the native-born population. As will become increasingly clear in this report, the findings in Figure 5 have profound implications not only for the distribution of Mexican immigrants across occupations and their impact on the U.S. economy, but also for their social mobility, use of means-tested programs, and their effect on public coffers.
Mexican Immigration Has Dramatically Increased the Number of Dropouts. In terms of its impact on the U.S. labor market, the large number of Mexican immigrants with low education levels means that Mexican immigration has dramatically increased the supply of workers without a high school degree, while increasing other educational categories very little. Figure 6 shows the percentage of each educational category comprised of Mexican immigrants. The Figure shows that immigrants from Mexico account for more than one-fifth of all workers who lack a high school education in the United States. In contrast, they account for only 2.7 percent of workers with only a high school education and less than two percent of workers with some college. For workers with a bachelor’s degree or higher, Mexican immigrants represent less than one percent of all those in these higher-skilled categories.
Based on the March 2000 CPS, which asks about employment in the previous calender year, there were almost three million Mexicans working full time for at least part of 1999 who had not completed high school. Basic economic theory predicts that an increase in the supply of something, in this case unskilled labor, reduces the price that the commodity commands in the market. The increase in the number of high school dropouts caused by Mexican immigration indicates that the primary impact of current and almost certainly future Mexican immigration will be on the price of unskilled labor. That is, by increasing the supply of dropouts, Mexican immigration lowers the wages, benefits, and job opportunities for natives and other immigrants with little education. Its effect on more educated workers will be minimal. Therefore, Mexican immigration makes sense to the extent that policy makers determine that the U.S. economy needs more high school dropouts and to the extent that lowering the compensation packages these workers receive is desirable.
Distribution of Mexican Immigrants Across Occupations. Table 2 shows the distribution of Mexican immigrants across occupations.5 Turning to the figures for all Mexicans first, Table 2 shows that Mexican immigrants tend to be employed in non-private household service occupations such as janitor, security guard, and child care worker. A large share of Mexicans are also employed as farm laborers and as operators, fabricators, and non-agriculture laborers. Only 5.5 percent of all Mexican immigrants are employed in managerial and professional jobs. Given the lower educational attainment of many Mexican immigrants, the results in Table 2 are not surprising. Commensurate with their education levels, immigrants from Mexico tend to be concentrated in lower-skilled, lower-paying occupations. For example, the average annual wages for managerial and professional jobs is almost $50,000 a year, whereas the average wages are less than half that amount for those who are operators, fabricators, and laborers or workers in non-private household service occupations.
Illegal Aliens from Mexico. A significant percentage of Mexican immigrants live in the United States without authorization. While a large portion of illegals are likely missed by the CPS, perhaps 80 percent are included in this data. It is possible, based Immigration and Nationalization Service (INS) arrival data for legal immigrants and demographic characteristics, to identify persons included in the CPS who have a high probably of being in the country illegally. It is likely that of the 7.9 million foreign-born persons from Mexico in the March 2000 CPS, between 2.5 million and 3.5 million are in the country illegally. Based on year of entry, citizenship status, age, educational attainment, welfare use, and citizenship of spouse, I estimate that the size of the Mexican illegal population in the March 2000 CPS is 2.96 million.6 These results are consistent with estimates made by the INS7 and indicate that nearly 38 percent of the Mexican-born population in the CPS are in the country illegally.
Of course, it should be noted that different assumptions about the attributes of illegals will yield different results. By its very nature, estimating the size and characteristics of the illegal Mexican population in the CPS involves a good deal of uncertainty. The above estimates and those that follow from it should not be seen as quantifiable absolutes but rather should be used to provide insight into the relative differences between legal and illegal Mexican immigrants. It is also important to realize that the above figures are only for illegal Mexicans included in the CPS. The total illegal population from Mexico is almost certainly larger. Assuming that the CPS includes 80 percent of the illegal Mexicans, then the total size of the illegal Mexican population residing in the United States in 2000 was perhaps 3.7 million.
Distribution of Legal and Illegal Immigrants Across Occupations. The figures in Table 2 for legal and illegal Mexican immigrants are based on the above method of distinguishing between the two groups. The table shows that there are some differences in the kinds of occupations legal and illegal Mexican immigrants hold in the United States. Almost 18 percent of illegal Mexican immigrants are employed as agricultural laborers, in contrast to only about 10 percent of legal Mexican immigrants. The table also shows that contrary to the popular impression, more than 80 percent of illegal Mexican immigrants work outside of the agriculture sector. Most illegal immigrants work in non-private household service occupations, precision production craft occupations or as operators, fabricators, and laborers. The same is true for legal Mexican immigrants.
Both groups are overwhelmingly concentrated in lower-paying, less-skilled occupations. However, in contrast to illegals, a significant percentage of legal Mexican immigrants work in managerial and professional or technical sales and administrative support occupations. One out of four legal Mexican immigrants was employed in these higher skilled occupations, compared to only 6 percent of illegal aliens. Of course, compared to the 60 percent of natives who work in higher-skilled occupations, relatively few Mexican immigrants, legal or illegal, are employed in higher-paying professions.
Distribution of Mexican Immigrants Across Industries. In addition to the kind of jobs they hold, the impact of Mexican immigration on the United States is also dependent on their employment by industry. Table 3 shows the distribution of Mexican immigrants across industries. The table shows that Mexicans are concentrated in the retail, agriculture, and manufacturing sectors of the economy, with 56 percent employed in these industries. In comparison, only one-third of natives work in these industries. Also in contrast to natives, relatively few Mexican immigrants work in the public sector or are employed in professional services industries (such as doctors’ offices, law offices, accounting, and engineering), whereas 29 percent of natives work in these areas.
Distribution of Legal and Illegal Immigrants Across Industries. Table 3 also shows the distribution of legal and illegal Mexican immigrants across occupations. The table reveals some important differences between the two groups, but also a good deal of similarity. The primary difference is that illegal Mexican immigrants are more concentrated in agriculture and construction. Also, relatively few illegal aliens work in professional services. Overall, however, the two groups are much more similar to each other than they are to natives, with almost two-thirds of both working in manufacturing, construction, agriculture, and retail. In contrast, only about 40 percent of native-born workers are employed in these industries.
5 The occupations in which Mexican immigrants are most concentrated in Table 2 are: service occupations (not private household), which includes such jobs as security guard, cooks, waiters, and child care workers; farming (except managerial), primary agricultural and horticultural laborers; precision, production craft and repair, which includes mechanics, repairmen, metal workers, meat processing, and construction trades (e.g. masons); and operators, fabricators, and laborers, comprised mostly of factory workers, warehouse workers, and drivers.
6 I assume that the Mexican illegal population is composed of Mexican-born persons who arrived between 1980 and 2000, do not have citizenship, and do not themselves receive cash assistance means-tested programs, food stamps or Medicaid. For Mexican illegals 18 years of age and older, I further assume that they do not have a high school degree, are less than 60 years of age, and are not married to a U.S. citizen. For persons under age 18, I assume that their parents met the above criteria and that they, too, do not use cash assistance and are themselves non-citizens. One disadvantage of this approach is that it does not include Mexicans who are in the country illegally but arrived prior to 1980. However, past research indicates that this number is likely to be very small and does not have a significant effect on the data. It should also be noted that because education is one of the factors used to determine legal status, it is not possible to estimate the educational attainment of illegal Mexican immigrants.
7 Robert Warren. Annual Estimates of the Unauthorized Immigrant Population Residing in the United States and Components of Change: 1987 to 1997, Draft: 8/21/00. Office of Policy and Planning U.S. Immigration and Naturalization Service.