As Immigrants Move In, Americans Move Up

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Congress and President Obama may tackle the controversial issueof immigration reform as soon as the fall of 2009. If pastcongressional debates are any guide, one point of contention willbe the impact of reform on the American underclass.

In 2006, and again in 2007, the U.S. Senate debated"comprehensive immigration reform" designed to curb illegalimmigration by ramping up enforcement while providing expandedopportunities for legal immigration. Both bills would havelegalized several million immigrants currently in the United Statesillegally and created a temporary visa program to allow morelow-skilled workers to enter the country legally in futureyears.

One argument raised against expanded legal immigration has beenthat allowing more low-skilled foreign-born workers to enter theUnited States will swell the ranks of the underclass. The criticswarn that by "importing poverty," immigration reform would bring inits wake rising rates of poverty, higher government welfareexpenditures, and a rise in crime. The argument resonates with manyAmericans concerned about the expanding size of government and aperceived breakdown in social order.1

As plausible as the argument sounds, it is not supported by thesocial and economic trends of the past 15 years. Even though thenumber of legal and illegal immigrants in the United States hasrisen strongly since the early 1990s, the size of the economicunderclass has not. In fact, by several measures the number ofAmericans living on the bottom rungs of the economic ladder hasbeen in a long-term decline, even as the number of immigrantscontinues to climb. Other indicators associated with theunderclass, such as the crime rate, have also shown improvement.The inflow of low-skilled immigrants may even be playing a positiverole in pushing nativeborn Americans up the skills and incomeladder.

Measuring the Size and Composition of theUnderclass

"Underclass" is not a precise term, but it is generallyunderstood to mean those who live below or near the poverty lineand who lack the education or jobs skills to join the middle class.If we define the underclass to be the number of people in theUnited States living below the poverty line, in households earningless than $25,000 a year or without a high school diploma, and thenexamine the changing size and composition of each of thosecategories by either race or citizenship status, a consistentpattern emerges.

By all three measures, the size of the underclass has beenshrinking since the early 1990s-during a period of large-scalelegal and illegal immigration. The composition of the underclasshas also been changing, with the number of immigrants and Hispanicsgrowing, while the number of native-born and non-Hispanics hasdeclined at an even more rapid rate.

Families and individuals below the poverty level. If wedefine the underclass as families living below the official povertylevel, the recent trend has been downward. Between 1995 and 2004,the number of family households living below the poverty level fellby half a million, from 8.1 million to 7.6 million. The number ofimmigrant households in poverty did indeed rise-by 194,000-but thatincrease was more than offset by a drop of 675,000 in native-bornhouseholds living in poverty. In other words, for every poorimmigrant family we "imported" during that time, more than threenative-born families were "exported" from poverty.2

Poverty figures by race span a longer period, 1993 though 2007,but they tell the same story. The total number of family householdsliving in poverty fell by 770,000 during that period, from 8.4million to 7.6 million. The number of Hispanic families living inpoverty increased by 420,000-providing evidence of a growingHispanic/immigrant underclass-but over those same years, the numberof non-Hispanic families in poverty dropped by 1.1 million,including a decline of 408,000 in the number of poor blackfamilies.3

The trend is no different when we look at individuals inpoverty. From 1993 through 2007, the number of individuals in oursociety subsisting below the poverty line declined by 2 million,from 39.3 million to 37.3 million. A 1.8 million increase in thenumber of Hispanics living in poverty was swamped by a 3.8 milliondecline in non-Hispanics, including a 1.6 million decline in blackpoverty. Similarly, a 1 million increase in immigrants living inpoverty was more than matched by a 3 million drop in native-bornAmericans under the poverty line.4 Measured by the official poverty numbers, theAmerican underclass has been shrinking as it has become composed ofmore immigrants and more Hispanics.

Households with income less than $25,000. Measuring theunderclass by household income reveals the same underlying trend.The number of households earning less than $25,000 in a given yeardropped by 5.6 million from 1995 to 2004, according to the mostrecent numbers that disaggregate the underclass by citizenshipstatus. Almost all the drop was accounted for by a decline innon-immigrant households earning less than $25,000, which droppedfrom 20.6 million in 1995 to 15.0 million in 2004. (All incomeswere measured in inflation-adjusted dollars.) The number ofimmigrant families under that income threshold also dropped, butonly by 80,000. As a result, the immigrant share of the underclassgrew from 15 percent to 20 percent, even as the size of theunderclass was shrinking.5

The same picture emerges when we examine the number oflow-income households by race and ethnicity. From 1994 through2007, the number of households in America getting by on less than$25,000 fell by almost 10 million (with incomes measured across theyears in real dollars). The share of total households living underthat threshold dropped from 40 percent to 25 percent. Again, theentire decline was accounted for by non-Hispanic households,including a drop of 900,000 in black households, while the numberof Hispanic households surviving on less than $25,000 was virtuallyunchanged.

Although the underclass became increasingly more Hispanic duringthe period, the share of all households living on less than $25,000fell for every ethnic group. In fact, the steepest decline inpercentage terms was among Hispanic households, with the share ofhouseholds living below $25,000 dropping from 53 percent to 31percent.6

Householders and Individuals without a High-SchoolDiploma. A third way of measuring the underclass is byhouseholders or individuals without a high-school diploma. InAmerica today, a worker or head of household without a high-schooleducation is almost invariably confined to lowerproductivity, andthus, lower-wage occupations, with limited prospects foradvancement.

As with the poverty and income measures, here, too, the story isbasically positive. Between 1993 and 2006, the number of householdsheaded by someone 18 and older without a high-school diplomadropped by 3.7 million, from 19.9 million to 16.2 million. Thenumber of such "low-skilled households" headed by a Hispanic didindeed increase by 1.8 million during that period, undoubtedlydriven in significant part by large inflows of low-skilledimmigrants from Mexico and Central America. The rest of the story,however, is that during those same years, the number ofnon-Hispanic households headed by a high-school dropout fell by ahefty 5.5 million. That means that for every net addition of oneHispanic-headed, low-skilled household to the ranks of theunderclass, the number of such non-Hispanic households dropped bythree. Meanwhile, the share of total U.S. households headed by ahigh-school dropout declined steadily, from one in five to one inseven.7

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The number of individuals 25 years and older without ahigh-school diploma has also been in steady decline. From 1993through 2006, the number of adults who were highschool dropoutsdeclined from 32.1 million to 27.9 million, a fall of 4.2 million(see Figure 1). The number of adult Hispanics in the United Stateswithout a high-school education swelled by 3.9 million, much ofthat growth driven by the influx of low-skilled illegal immigrants.But during that same period, the number of non-Hispanic adultstoiling in life without a high-school diploma plunged by 8.1million, including a drop of 1 million in the number of adult blackdropouts. For every additional Hispanic dropout added to the pool,the number of non-Hispanic dropouts fell by two. The share ofadults without a diploma dropped in every racial and ethnic group,although the decline was less rapid among Hispanics.8

Educational attainment by citizenship status covers a slightlydifferent period but also confirms the trend. From 1995 to 2004,the number of adults without a high school diploma declined by 2.9million. An increase of 2.4 million in the number of immigrantdropouts was overwhelmed by a decline of 5.3 million in native-borndropouts. As that measure of the underclass shrank, the sharerepresented by immigrants grew from 22 percent to 32 percent. Bythis and the other measures above, "the underclass" in our societyhas been shrinking as its face has become more Hispanic andforeign-born.9

Immigrants Move In, Americans Move Up

Multiple causes lie behind the shrinking of the underclass inthe past 15 years. The single biggest factor is probably economicgrowth. Despite the current recession, the U.S. economy enjoyedhealthy growth during most of the period, lifting median householdincomes and real compensation earned by U.S. workers, which usheredmillions of families into the middle class and beyond. Welfarereform in the 1990s, and rising levels of education, may also becontributing factors.

Another factor may be immigration itself. The arrival oflow-skilled, foreign-born workers in the labor force increases theincentives for younger native-born Americans to stay in school andfor older workers to upgrade their skills. Because they competedirectly with the lowest-skilled Americans, low-skilled immigrantsdo exert mild downward pressure on the wages of the lowest-paidAmerican workers. But the addition of low-skilled immigrants alsoexpands the size of the overall economy, creating openings inhigher-paid occupations such as managers, skilled craftsmen, andaccountants. The result is a greater financial reward for finishinghigh school and for acquiring additional job skills. Immigration oflow-skilled workers motivates Americans, who might otherwiselanguish in the underclass, to acquire the education and skillsnecessary so they are not competing directly with foreign-bornworkers.

The shrinking of the native-born underclass contradicts theargument that low-skilled immigration is particularly harmful toAfrican-Americans, who are disproportionately represented in theunderclass. By each of the three measures above-poverty, income,and educational attainment-the number of black American householdsand individuals in the underclass has been declining. Native-bornblacks have been moving up along with other native-born Americansas immigrants have been moving in.

That same win-win dynamic may have been at work a century agoduring the "great migration" of immigrants from eastern andsouthern Europe. Most of those immigrants were lower-skilledcompared with Americans, and their influx also exerted downwardpressure on the wages of lower-skilled Americans. It was probablynot a coincidence that during that same period the number ofAmericans staying in school to earn a high-school diploma increaseddramatically in what is called "the high-school movement." From1910 to 1940, the share of American 18-year-olds graduating fromhigh school rose from less than 10 percent to 50 percent in ageneration.10Today's immigrants are arguably contributing to the same positivedynamic.

America's experience with immigration contradicts the simplisticargument that the arrival of a certain number of low-skilledimmigrants increases the underclass by that very same amount. Thatapproach ignores the dynamic and positive effects of immigration onnative-born American workers. The common calculation that everylow-skilled immigrant simply adds to the underclass betrays astatic and inaccurate view of American society.

A Less Dysfunctional Underclass

Another contribution of immigration has been that it has changedthe character of the American underclass for the better. Years oflow-skilled immigration have created an underclass that is not onlysmaller than it was 15 years ago, but also more functional. Membersof today's more immigrant and Hispanic underclass are more likelyto work and less likely to live in poverty or commit crimes thanmembers of the more native-born underclass of past decades.

One striking fact about low-skilled immigrants in America, bothlegal and illegal, is their propensity to work. In 2008, thelabor-force participation rate of foreign-born Hispanics was 70.7percent-compared to an overall rate of 65.6 percent for native-bornAmericans. Immigrants 25 years of age or older, without ahigh-school diploma, were half again more likely to beparticipating in the labor force than native-born dropouts (61.1percent vs. 38.4 percent).11 According to estimates by the Pew HispanicCenter, male illegal immigrants, ages 18-64, had a labor forceparticipation rate in 2004 of an incredible 92 percent.12 Illegal immigrantsare typically poor, but they are almost all working poor.

Nowhere is the contrast between the immigrant and native-bornunderclass more striking than in their propensity to commit crimes.Across all ethnicities and educational levels, immigrants are lessprone to commit crimes and land in prison than their native-borncounterparts.

The reasons behind this phenomenon are several. Legal immigrantscan be screened for criminal records, reducing the odds that theywill engage in criminal behavior once in the United States. Illegalimmigrants have the incentive to avoid committing crimes tominimize their chances of being caught and deported. Legal orillegal, immigrants come to America to realize the opportunities ofworking in a more free-market, open, and prosperous economy;committing a crime puts that opportunity in jeopardy.

Strong empirical evidence points to the fact that immigrants areless likely to commit crimes than native-born Americans. Intestimony before Congress in 2007, Anne Morrison Piehl, a professorof criminal justice at Rutgers University, addressed the questionof "The Connection between Immigration and Crime." Using censusdata from 1980, 1990, and 2000, she told the House JudiciaryCommittee that "immigrants have much lower institutionalizationrates than the native born-on the order of one-fifth the rate ofnatives. More-recently arrived immigrants had the lowest relativeinstitutionalization rates, and the gap with natives increased from1980 to 2000." Piehl found no evidence that the immigrant crimerate was lower because of the deportation of illegal immigrants whomight otherwise be held behind bars in the United States.13

Crime rates are even lower than average among the poorlyeducated and Hispanic immigrants that arouse the most concern fromskeptics of immigration reform. Rubén Rumbaut of theUniversity of California at Irvine, after examining the 2000 censusdata, found that incarceration rates among both legal and illegalimmigrants from Mexico, El Salvador, and Guatemala were all lessthan half the rate of U.S.-born whites.14 Immigrants without a high-schooldiploma had an incarceration rate that was one-fourth that ofnative-born high-school graduates, and one-seventh that ofnative-born dropouts.15

The reluctance of low-skilled immigrants to commit crimes helpsto explain the lack of any noticeable connection between risinglevels of illegal immigration and the overall national crime rate.As Professor Rumbaut explained in a recent essay:

Since the early 1990s, over the same time period as legal andespecially illegal immigration was reaching and surpassing historichighs, crime rates have declined, both nationally and mostnotably in cities and regions of high immigrant concentrations(including cities with large numbers of undocumented immigrants,such as Los Angeles, and border cities like San Diego and El Paso,as well as New York, Chicago, and Miami).16

Ironically, illegal immigrants who break U.S. immigration lawsto enter the United States appear much more likely than native-bornAmericans to respect our domestic criminal code once they areinside the country. Once here, low-skilled immigrants, as a rule,get down to the business of earning money, sending homeremittances, and staying out of trouble. The wider benefit to oursociety is that, in comparison to 15 years ago, a member of today'sunderclass, standing on a street corner, is more likely to bewaiting for a job than a drug deal.

Contrary to popular notions, low-skilled immigration has notcontributed to a swelling of the underclass, or any increase atall, nor has it contributed to a rise in crime or other antisocialbehaviors. In fact, it would be more plausible to argue thatlow-skilled immigration has actually accelerated the upwardmobility of Americans on the lower end of the socioeconomic ladder.At the same time, the influx of lowskilled immigrants has helped totransform the American underclass into a demographic group that isstill poor-but more inclined to work and less prone to crime.

Conclusion

Members of Congress should not reject market-orientedimmigration reform because of misguided fears about "importingpoverty." Based on recent experience, a policy that allows morelow-skilled workers to enter the United States legally would notnecessarily expand the number of people living in poverty or thenumber of low-skilled households demanding government services. Itwould not impose significant costs on American society in the formof welfare spending or crime abatement.

As Cato research has shown elsewhere, strong, positive argumentsremain for pursuing a policy of expanding legal immigration forlow-skilled workers. Comprehensive immigration reform that includeda robust temporary worker program would boost economic output andcreate new middleclass job opportunities for native-born Americans.It would reduce the inflow of illegal workers across the border,allowing enforcement resources to be redeployed more effectively tointerdict terrorists and real criminals. It would restore the ruleof law to U.S. immigration policy, while reducing calls forenforcement measures such as a national ID card or a centralizedemployment verification system, which compromise the freedom andcivil liberties of American citizens.17

Along with those major benefits, immigration reform wouldenhance the incentives for native-born Americans up and down theincome ladder to acquire the education and skills they need toprosper in a dynamic economy.

Notes

1 See, forexample, Robert Rector, "Importing Poverty: Immigration and Povertyin the United States: A Book of Charts," Heritage Foundation,Special Report #9, October 25, 2006; Heather Mac Donald, "Surge inBirth Rate Among Unwed Hispanics Creating New U.S. Underclass,"Dallas Morning News, Jan. 21, 2007; and Robert J.Samuelson, "Importing Poverty," The Washington Post,September 5, 2007.

2 U.S. Bureau ofthe Census, Current Population Survey, Foreign Born Population,1995-2004, Survey Table 1.12, http://www. census.gov/cps/.

3 U.S. Bureau ofthe Census, Current Population Survey, Poverty Status of Families,Table 4, http://www.census.gov/cps/.

4 For povertynumbers by citizenships status, see U.S. Bureau of the Census,Current Population Survey, Historical Poverty Tables, People, Table23; by race, see ibid., Table 2, http://www.census. gov/cps/.

5 U.S. Bureau ofthe Census, Current Population Survey, Foreign Born Population,1995-2004, Survey Table 1.9, http://www.census. gov/cps/.

6 U.S. Bureau ofthe Census, Current Population Survey, Detailed Household Income,Table H-1, http://www.census.gov/cps/.

7 U.S. Bureau ofthe Census, Current Population Survey, Educational Attainment,Table 4, http://www.census.gov/cps/. Data is not available forhouseholder's education level by citizenship status.

8 Ibid.

9 U.S. Bureau ofthe Census, Current Population Survey, Foreign Born Population,1995-1999, Survey Table 1.4, and 2000-2004, Survey Table 1.5,http://www.census.gov/cps/.

10 See, forexample, Claudia Goldin and Lawrence F. Katz, "Human Capital andSocial Capital: The Rise of Secondary Schooling in America,"National Bureau of Economic Research, Working Paper no. 6439, March1998.

11 U.S.Bureau of Labor Statistics, "Foreign-born Workers: Labor ForceCharacteristics in 2008," Bureau of Labor Statitstics (newsrelease, March 26, 2009), Table 1.

12 Jeffrey S.Passel, "Unauthorized Migrants: Numbers and Characteristics," PewHispanic Center, June 14, 2005, p. 25.

13 AnneMorrison Piehl, "The Connection between Immigration and Crime"(testimony before the House Judiciary Subcommittee on Immigration,Citizenship, Refugees, Border Security, and International Law,hearing on "Comprehensive Immigration Reform: Impact of Immigrationon States and Localities," May 17, 2007).

14Rubén Rumbaut, "Undocumented Immigration and Rates of Crimeand Imprisonment: Popular Myths and Empirical Realities," AppendixD, in The Role of Local Police: Striking a Balance BetweenImmigration Enforcement and Civil Liberties, ed. Anita Khashu(Washington: The Police Foundation, April 2009), p. 127.

15 Ibid., p.129.

16 Ibid., p.124.

17 See JimHarper, "Electronic Employment Eligibility Verification: FranzKafka's Solution to Illegal Immigration," Cato Policy Analysis no.612, March 6, 2008; Daniel Griswold, "The Fiscal Impact ofImmigration Reform: The Real Story," Cato Free Trade Bulletin no.30, May 21, 2007; Daniel Griswold, "Comprehensive ImmigrationReform: Finally Getting It Right," Cato Free Trade Bulletin no. 29,May 16, 2007; and Daniel Griswold, "Willing Workers: Fixing theProblem of Illegal Mexican Migration to the United States," CatoTrade Policy Analysis no. 19, October 15, 2002.