November 17, 2010
The Role of Immigrants in the U.S. Labor Market: An Update
July 23, 2010
People born in other countries are a growing presence in the U.S. labor force. In 1994, 1 in 10 people in the U.S. labor force was born elsewhere, but in 2009, 1 in 7 was foreign born. About 40 percent of the foreign-born labor force in 2009 was from Mexico and Central America, and more than 25 percent was from Asia.
This document updates the Congressional Budget Offices (CBOs) November 2005 paper The Role of Immigrants in the U.S. Labor Market. That earlier report included data through 2004; this update, the first of several on various aspects of immigration, incorporates data through 2009. It focuses on the growing number of foreign-born workers, the countries from which they have come, their educational attainment, the types of jobs they hold, and their earnings. In keeping with CBOs mandate to provide objective, nonpartisan analysis, this report makes no recommendations.
People born in other countries represent a substantial and growing segment of the U.S. labor forcethat is, people with a job or looking for one. In 2009, 24 million members of the labor forcemore than one in sevenwere foreign born, up from 21 million in 2004. However, the growth of the foreign-born labor force was much slower between 2004 and 2009 than between 1994 and 2004. In that earlier period, the size of the foreign-born labor force grew at an average annual rate of more than 5 percent, whereas from 2004 to 2009, the rate was about 2 percent. As a share of the total, the foreign-born labor force grew from 10.0 percent in 1994 to 14.5 percent in 2004 and to 15.5 percent in 2009.
Among members of the foreign-born labor force in the United States in 2009, about half came to this country before 1994. In 2009, 40 percent of the foreign-born labor force was from Mexico and Central America, and more than 25 percent was from Asia.
In 2009, over half of the foreign-born workers from Mexico and Central America did not have a high school diploma or GED credential, as compared with just 6 percent of native-born workers. In contrast, nearly half of the foreign-born workers from places other than Mexico and Central America had at least a bachelors degree, as compared with 35 percent of native-born workers.
Over time, participants in the U.S. labor force from Mexico and Central America have become more educated. In 2009, they had completed an average of 9.8 years of schooling up from 9.5 years in 2004; 55 percent lacked a high school diploma or GED credential down from 59 percent in 2004; and among 16- to 24-year-olds, 50 percent were not in school and were not high school graduates down from 60 percent in 2004. Nevertheless, those born in Mexico and Central America are constituting an increasingly large share of the least educated portions of the labor force. For example, in 2009 they made up 64 percent of labor force participants with at most an 8th grade education a figure that was 58 percent in 2004.
To a considerable extent, educational attainment determines the role of foreign-born workers in the labor market. In 2009, 70 percent of workers born in Mexico and Central America were employed in occupations that have minimal educational requirements, such as construction laborer and dishwasher; only 23 percent of native-born workers held such jobs. On average, the weekly earnings of men from Mexico and Central America who worked full time were just over half those of native-born men; women from Mexico and Central America earned about three-fifths of the average weekly earnings of native-born women.
Foreign-born workers who came to the United States from places other than Mexico and Central America were employed in a much broader range of occupations. They were more than twice as likely as native-born workers to be in fields such as computer and mathematical sciences, which generally require at least a college education. Their average weekly earnings were similar to those of native-born men and women.
The information on immigration in this report comes from the Current Population Survey, a survey of U.S. households conducted monthly by the Census Bureau. The survey asks respondents where they and their parents were born. Those who were born in another country are asked when they came to the United States to stay and if they have become a U.S. citizen by naturalization. They are not asked about their legal immigration status.
Social Security Disability Insurance: Participation Trends and Their Fiscal Implications
July 22, 2010
The Social Security Disability Insurance (DI) program pays cash benefits to nonelderly adults (those younger than age 66) who are judged to be unable to perform substantial work because of a disability but who have worked in the past; the program also pays benefits to some of those adults dependents. In 2009, the Disability Insurance program paid benefits to almost 8 million disabled beneficiaries and about 2 million of those beneficiaries spouses and children.
Between 1970 and 2009, the number of people receiving DI benefits more than tripled, from 2.7 million to 9.7 million (unless otherwise specified, all years are calendar years). That jump, which significantly outpaced the increase in the working-age population during that period, is attributable to several changesin characteristics of that population, in federal policy, and in opportunities for employment. In addition, during those years, the average inflation-adjusted cost per person receiving DI benefits rose from about $6,900 to about $12,800 (in 2010 dollars). As a result, inflation-adjusted expenditures for the DI program, including administrative costs, increased nearly sevenfold between 1970 and 2009, climbing from $18 billion to $124 billion (in 2010 dollars). Most DI beneficiaries, after a two-year waiting period, are also eligible for Medicare; the cost of those benefits in fiscal year 2009 totaled about $70 billion.
Under current law, the DI program is not financially sustainable. Its expenditures are drawn from the Disability Insurance Trust Fund, which is financed primarily through a payroll tax of 1.8 percent; the fund had a balance of $204 billion at the end of 2009. The Congressional Budget Office (CBO) projects that by 2015, the number of people receiving DI benefits will increase to 11.4 million and total expenditures will climb to $147 billion (in 2010 dollars; see Figure 1). However, tax receipts credited to the DI trust fund will be about 20 percent less than those expenditures, and three years later, in 2018, the trust fund will be exhausted, according to CBOs estimates. Without legislative action to reduce the DI programs outlays, increase its dedicated federal revenues, or transfer other federal funds to it, the Social Security Administration will not have the legal authority to pay full DI benefits beyond that point.
A number of changes could be implemented to address the trust funds projected exhaustion. Some would increase revenues dedicated to the program; others would reduce outlays. One approach to reducing expenditures on DI benefits would be to establish policies that would make work a more viable option for people with disabilities. However, little evidence is available on the effectiveness of such policies, and their costs might more than offset any savings from reductions in DI benefits.