Effects of Immigration on African-American Employment and Incarceration "The 1980-2000 immigrant influx, therefore, generally 'explains' about 20 to 60 percent of the decline in wages, 25 percent of the decline in employment, and about 10 percent of the rise in incarceration rates among blacks with a high school education or less." Almost everybody knows that in the past 40 years, the real wages and job prospects for low-skilled men, especially low-skilled minority workers, have fallen. And there is evidence -- although no consensus -- that a rising tide of immigration is partly to blame. Now, a new NBER study suggests that immigration has more far-reaching consequences than merely depressing wages and lowering employment rates of low-skilled African-American males: its effects also appear to push some would-be workers into crime and, later, into prison. "Remarkably, as far as we know, no study has examined if there is a link between the resurgence of large-scale immigration and the employment and incarceration trends in the black population," co-authors George Borjas, Jeffrey Grogger, and Gordon Hanson write in Immigration and African-American Employment Opportunities: The Response of Wages, Employment, and Incarceration to Labor Supply Shocks (NBER Working Paper No.12518). The authors are careful to point out that even without increased immigration, most of the fall in employment and increase in jailed black men would have happened anyway. Nevertheless, the racially disproportionate effects of immigration on employment are striking. Changing technology, government programs, and a stagnant real minimum wage have all been blamed for the poor labor market performance of low skilled and minority workers. Another key reason, the authors show, is immigration. Using census data from 1960-2000, the authors trace the evolution of wages, employment, and incarceration rates for particular skill groups in the black and white populations. They then relate the trends observed in these variables to the increases in immigration experienced by each skill group. The observed correlations suggest that immigration is an important underlying factor influencing the observed trends. In particular, their analysis finds that a 10 percent rise in immigrants in a particular skill group significantly trimmed the wages of black and white men alike. For African-Americans, the decline was 3.6 percent. For whites, it was actually slightly higher: 3.8 percent. Beyond that, however, the black-white experience differed markedly, especially for low-skilled workers. Take employment rates: from 1960 to 2000, black high school dropouts saw their employment rates drop 33 percentage points -- from 88.6 percent to 55.7 percent -- the authors found in their analysis of census data from 1960 to 2000. The decrease for white high school dropouts was only roughly half that -- from 94.1 percent to 76.0 percent. One reason, the authors argue, is that black employment is more sensitive to an immigration influx than white employment. For white men, an immigration boost of 10 percent caused their employment rate to fall just 0.7 percentage points; for black men, it fell 2.4 percentage points. That same immigration rise was also correlated with a rise in incarceration rates. For white men, a 10 percent rise in immigration appeared to cause a 0.1 percentage point increase in the incarceration rate for white men. But for black men, it meant a nearly 1 percentage-point rise. Why would a boost in immigration effectively put more men, especially black men, behind bars? The authors put forward a straightforward theory: immigration causes wages and employment to fall for black workers. When this happens, some of those workers -- especially those with the lowest skills -- turn to crime to increase their income. Certainly, the census data reveal a statistical link: as immigration began to increase, beginning in the 1980s, so did the institutionalization of low-skilled black men. While the Census Bureau defines institutions to include mental hospitals, the 1980 census -- and Justice Department data -- suggests that the majority of young men who were institutionalized were, in fact, in prison or in jail. The rise in incarceration is most dramatic for the lowest-skilled black men. In 1980, it was just 1.3 percent; by 2000, it had skyrocketed to 25.1 percent. Even blacks with a high school diploma saw incarceration rates increase from 0.5 percent to 9.8 percent in the same time period. Why the increase? One reason, the authors suggest, is crack cocaine. Cheap to produce, it first appeared in the 1980s and had spread widely by the early 1990s.African-Americans became heavily involved in trafficking it because existing black gangs already controlled many of the urban spaces where it could be easily distributed and sold, the authors say, citing recent research. The surge in drugs caused police to step up enforcement and states to enact tougher sentencing laws. The result: a quarter of low-skilled black men were incarcerated by 2000. But crack alone can't explain that spike, the authors say. Using an already developed "crack index," which combines the effects of crack busts, arrests, emergency hospitalizations, and deaths, and skewing it so that the crack epidemic affected only younger, low-skilled workers, the authors still find that immigration boosted incarceration rates of black, low-skilled workers. In fact, factoring in crack barely changed the results. While that outcome backs up the authors' theory, it doesn't prove it. The crack index isn't a perfect measure for the crack epidemic because it deals with indirect effects rather than causes. So, testing their thesis further, the authors compare their national results of immigration's impact with state-level results. Such comparisons have been problematic in the past because local-level studies have found far less of a wage impact from immigration than national-level studies. That's because the local data doesn't capture the response of native workers, who often leave the area for higher-wage opportunities elsewhere. But by adding that data to national-level immigration trends, the effects of immigration appear consistent with what the authors had found by looking at national-level statistics alone. The authors stress that immigration is only one factor in the worsening labor situation of low-skilled African-American men. "The 1980-2000 immigrant influx, therefore, generally 'explains' about 20 to 60 percent of the decline in wages, 25 percent of the decline in employment, and about 10 percent of the rise in incarceration rates among blacks with a high school education or less," they write. That's significant enough to demonstrate immigration's impact. It's small enough to suggest there's far more their data can't explain. -- Laurent Belsie The Digest is not copyrighted and may be reproduced freely with appropriate attribution of source.