The following excerpt is from the report, Diverging Fortunes: Trends in Poverty and Inequality, published by the Russell Sage Foundation and the Population Reference Bureau. This report is one of several in the new series, “The American People,” which sets the results of Census 2000 in context and collectively provides a portrait of the American people in a new century. Each report is written by an author or team of authors selected for their expertise with the data and their broad understanding of the implications of demographic trends. For information on the series, go to www.prb.org/AmericanPeople. The full report is available through the PRB online store.

(December 2004) The United States has from its beginning been a nation of immigrants. However, immigration slowed after Congress imposed immigration controls in the 1920s. Some researchers have labeled the period between 1915 and 1965 as the “Immigration Pause.”1 Thus, there was relatively little immigration during the quarter-century following World War II, when poverty fell rapidly and real family income doubled. Between 1960 and 1980, between 5 percent and 6 percent of all persons were foreign-born.

But in response to legislative changes, particularly the Immigration Reform and Control Act of 1986, immigration to the United States surged. The number of immigrants increased by 40 percent between 1980 and 1990 and by almost 60 percent between 1990 and 2000.2 Because immigration has increased rapidly over the last two decades while economic progress has slowed, some observers have suggested that immigration accounts for a large share of the recent slowdown in economic progress and increased inequality.3

Immigrants are heterogeneous—not only by country of origin, but also by their citizenship status and by how recently they immigrated. In 2002, 12 percent of all people in the United States were foreign-born, and about 40 percent of the foreign-born had become naturalized citizens. The official poverty rate for naturalized citizens regardless of country of origin—10.0 percent—was lower than the 11.5 percent poverty rate for U.S.-born citizens. Immigrants who were not naturalized had a poverty rate (20.7 percent) about twice as high as both of these rates. However, immigrant noncitizens represented a small fraction both of the total population and of the poor—7.2 percent and 12.4 percent, respectively.4

In Figures 1 and 2, we divide the population into two mutually exclusive groups—those who were born in the United States, and those who were born abroad. Figure 1 shows that between 1959 and 1999, the poverty rate for the U.S.-born fell by 13.9 percentage points, from 23.5 percent to 9.6 percent—a decline not much different from the 13.1 percentage-point fall (from 23.2 percent to 10.1 percent) for all people. If we assume that the poverty rate among the U.S.-born in any year is not much affected by immigration, then increased immigration over the period from 1959 to 1999 had little effect on the overall poverty rate.


Figure 1
Poverty Rate, by Nativity, 1959–1999

Source: Authors‘ calculations using the Integrated Public Use Microdata Series (IPUMS), 2003.


Figure 2
Median Family Income-to-Needs Ratio, by Nativity, 1959–1999

Note: The family “income-to-needs” ratio is defined as the ration of a family’s income to the poverty line for a family of that size. An income-to-needs ratio of 1.0 indicates that family income is equal to the poverty line.?Source: Authors’ calculations using the Integrated Public Use Microdata Series (IPUMS), 2003.


However, if immigrant workers do compete for jobs with U.S.-born workers and do exert downward pressure on the latter’s wage rates, comparing poverty trends for the foreign-born and the U.S.-born provides a lower-bound estimate of the effects of immigration on poverty. Indeed, the existing literature does indicate that immigration affects the labor market status of some U.S.-born workers. Researchers estimate that, while the effect is relatively small for the nation as a whole, it is substantial for specific industries or local labor markets where the immigrant share of workers is relatively high.5

Trends in poverty from 1969 to 1999 differ from those between 1959 and 1969. In 1959, when most foreign-born Americans were not recent immigrants, the poverty rate for the foreign-born was lower than that for the U.S.-born. By 1969, the situation had changed: The poverty rate was virtually the same for these two groups. But while poverty among the foreign-born was fairly constant between 1969 and 1999—14.6 percent in 1969, and 14.2 percent in 1999—it declined among the U.S-born from 14.3 percent to 9.6 percent. Thus, the increase in the immigrant share of the population since 1969 has contributed somewhat to an increase in the overall poverty rate. Note, however, that the size of this effect is very small: The poverty rate in 1999 for the U.S.-born was only 0.5 percentage points lower than the rate for all persons in 1999.

The lack of economic progress in recent decades for the foreign-born relative to the U.S.-born is mirrored in the trends for family income divided by the poverty line. Figure 2 shows that, in 1959, the median income adjusted for family size was somewhat higher for foreign-born persons (2.1 times the poverty line) than that for U.S.-born (1.8 times the poverty line).

Yet, as the number of immigrants increased between 1969 and 1999, median income grew at a much faster rate for U.S.-born persons than for the foreign-born (52 percent versus 12 percent). In 1999, the median income-to-needs ratio of the foreign-born (2.9 times the poverty line) was about one-quarter less than that for people born in the United States (3.8 times the poverty line). Again, the overall difference directly attributable to immigration is small: In 1999, the median was about 3 percent higher for the U.S.-born than for all persons.


Sheldon Danziger is Henry J. Meyer Collegiate Professor of Public Policy and co-director of the National Poverty Center at the Gerald R. Ford School of Public Policy, University of Michigan. Petter Gottschalk is professor of economics at Boston College.


References

  1. James Smith and Barry Edmonston, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration (Washington, DC: National Academies Press, 1997).
  2. Philip Martin and Elizabeth Midgley, “Immigration: Shaping and Reshaping America,” Population Bulletin 58, no. 2 (2003).
  3. Martin and Midgley, “Immigration: Shaping and Reshaping America.”
  4. George J. Borjas, Heaven’s Door: Immigration Policy and the American Economy (Princeton, NJ: Princeton University Press, 1999); and Steven A. Camarota, “Importing Poverty: Immigration’s Impact on the Size and Growth of the Poor Population in the United States,” Center Paper 15 (Washington, DC: Center for Immigration Studies, 1999).
  5. The Census Bureau does not obtain a full count of all immigrant noncitizens, since illegal immigrants are likely to avoid contact with government authorities.
  6. Martin and Midgley, “Immigration: Shaping and Reshaping America.”