9.27.2006

Latino Labor Report 2006

Strong Gains in Employment

Rakesh Kochhar, Associate Director for Research, Pew Hispanic Center

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The Hispanic unemployment rate reached a historic low of 5.2% in the second quarter of 2006. The gap between the seasonally-adjusted unemployment rates for Latinos and non-Latinos was just 0.6 percentage points--the smallest since 1973, when employment data on Latinos first became available. Wages for Latino workers also rose between the second quarters of 2005 and 2006, and at a faster rate than for other workers. Those developments reflect significant improvement in the labor market for Latinos in 2005-06 and indicate that the jobs recovery from the recession in 2001 is nearing completion for Hispanic workers.

The healthy job market for Latinos has been driven by the construction industry. Construction added nearly a half a million jobs alone between the second quarters of 2005 and 2006, the majority of them filled by foreign-born Latinos. Since the jobs recovery began in 2003, nearly 1 million Latinos have found jobs in construction, accounting for about 40% of all new jobs gained by Hispanics. The construction sector, however, is showing signs of a slowdown, and that could have an impact on Latino employment.

The Hispanic labor force continues to grow, primarily as a result of immigration. The rate of growth in the Latino labor force exceeds that of any other group, and the new entrants have been successful in finding employment, especially in the construction industry. Wages, however, have not kept pace with the growth in employment for all Hispanic workers. For foreign-born Latino workers, median wages decreased from the second quarter of 2005 to the second quarter of 2006.

Other groups of workers also fared well in the improving labor market. Among Asian workers, the growth in the labor force and in employment in 2005-06 rivaled that of Hispanics. Non-Hispanic whites and blacks, whose population growth is slower, also experienced an increase in the number of employed workers, though at a slower pace than Latinos and Asians. For white workers, the unemployment rate dropped below 4%, second only to Asians. Among black workers, the unemployment rate fell by nearly one percentage point, but that was due in part to reduced participation in the labor market.

Wage growth, while inconsistent across groups, tended to favor minority workers. Median wages for Latino and black workers, which started at lower levels and remained lower, increased in 2005-06, while wages of Asian and white workers declined slightly. But among foreign-born Hispanics, who represent the biggest share in the Latino labor pool, the median wage actually declined. Latinos also still have the lowest median wage of all racial and ethnic groups.