Low-Wage U.S. JobsGet 'Mexicanized,'But There's a Price - May 02 2002

By JOEL MILLMAN Staff Reporter of THE WALL STREET JOURNAL
SAN YSIDRO, Calif. -- Here at the world's busiest international crossing point, 50,000 Mexicans enter the U.S. economy every day. They are permanent workers with green cards who commute from Tijuana, and stay close to Mexico by toiling, legally, in San Diego County as janitors, landscapers and hospital aides.
The border also attracts thousands of illegal job seekers every day, few of whom work locally. Rather, they merge into the U.S.'s growing underground economy, whose pool of workers includes an estimated five million undocumented Latinos. With each passing year, many other parts of the U.S. far from the border come to mirror the San Diego labor market.
According to a study being released today by the Pew Hispanic Center, a think tank in Washington, Latino workers accounted for 40% of the 2.5 million jobs created last year, despite comprising barely 15% of the U.S. work force. Even more striking, 88% of the one million new jobs filled by Latinos went to recent immigrants, mainly from Mexico. Dozens of U.S. job categories have become "Mexicanized." Today, nearly half of all plasterers and stucco masons are foreign-born Latinos, while immigrants hold at least 40% of all jobs in such occupations as garment pressers, drywall installers and ceiling-tile installers.
The surge in hiring comes at a price, the Pew report reveals -- falling wages. In 2004, Latino workers' median weekly earnings were $400, down from $411 in 2003 and $420 in 2002. "No other major group of workers has suffered a two-year decline in wages," says Rakesh Kochhar, author of the report.
Why are jobs increasing, but wages falling? Mexican immigrants are changing destinations, bypassing high-cost cities on the coasts and flocking to small towns in rural America. There, they manage to find work in low-wage industries, but their greater numbers make it easier for employers to keep salaries low.
"Fifteen years ago nearly 60% of Mexican immigrants worked in California," says Gordon Hanson, economics professor at the University of California at San Diego. "Today it's barely 40%."
The "Mexicanization" of the U.S. job ladder's lower rungs raises important political and economic questions. Will support diminish for minimum-wage increases when most low-wage earners are immigrants who can't vote? As industries like construction, food service, lodging and landscaping grow dependent on imported labor, will they face labor shortages if border security is tightened.
The Pew study supports the theory that immigrants are supplementing the U.S. work force, not pushing native-born Americans out of jobs. Native-born U.S. workers have become better-educated and more ambitious in the past four decades. The percentage without a high-school diploma has dropped to about 9% from 52% in 1960. And these U.S. workers are looking for higher-skilled, higher-paying jobs.
So opportunities abound for low-skilled Latino immigrants. Even where illegal immigrants do compete with native-born workers, the larger labor pool may produce more jobs overall. That is because "employers are forgoing labor-saving machinery to rely on more laborers," says Ethan Lewis of the Federal Reserve Bank of Philadelphia. "That has the effect of saving jobs."
The flip side of lower wages for workers, of course, is a boon for employers, who can use the savings to keep prices lower. Consider the interstate motel business.
When Hasmukh P. Rama opened his first motel in 1973, he had no Latino workers. Today, his JHM Hotels Inc. employs nearly 1,000 people across six Southeast states, 300 of them Spanish speakers. "In an industry where labor shortages are endemic, we have stability" because of additional immigrant labor, says Mr. Rama, who pays entry-level hires $6 an hour. "We're not all fighting for the same employees and bidding up prices."
Harvard economist George Borjas, who is a Cuban immigrant, warns that the U.S. economy's dependence on imported labor obscures many costs. Besides the expense of assimilating immigrants, businesses may be slower to innovate if they can make do with cheap labor.
Mr. Borjas cites Japan as an example of a developed economy that was forced to become more productive because of its anti-immigrant policies. Americans may delight at the Japanese mania for vending machine and other quotidian gadgets, but the economist says that shows a Japanese willingness to mechanize, in contrast to the U.S. choice to Mexicanize.
"Japan chose to robotize," Mr. Borjas says. "Mexican immigration has given us a very labor-intensive economy."
Write to Joel Millman at joel.millman@wsj.com