Third International Metropolis Conference, Israel, November 1998
COMPARATIVE EXPERIENCES WITH TEMPORARY WORKERS:
THE UNITED STATES*

TEMPORARY WORKERS AND THE U.S. LABOR MARKET

Temporary workers generally play a positive role in the U.S. economy, but there is some debate over whether or not they interfere with labor market incentives and conditions. Research suggests that all foreign R&D workers are exceptionally productive, contributing disproportionately to cited research literature and patent awards (Stephan and Levin, n.d.). At the same time, there is slim evidence for accusations that they undercut the earnings of U.S. workers. But a small body of research raises reasonable concerns about adverse effects on the incentives for graduate-level, especially doctoral (Ph.D.) education, and on working conditions post-graduation.

Foreign Students and Higher Education

Foreign-born scientists and engineers in research and development, those occupations likely to be temporary or adjusting workers, are a significant part of the U.S. labor force. They make up a greater share of doctorates than masters, although the numbers have increased at all levels of education and about one-third of the resident foreign-born received their education abroad.¹ Consider Table 5 and the most recently available data for the post secondary labor force in research and development by degree received in 1993. At that time, 28.3 percent of the foreign born were employed in academics where they made up 20.7 percent of all employed in that sector. While 62.7 percent of all foreign born were employed in industry, they made up a lesser 15.5 percent of workers in that sector.

Table 5. U.S. and Foreign-Born Scientists and Engineers in Research and Development by Sector, 1993

Source: NSF, 1998.

The foreign-born concentration is much greater among those with Ph.D. degrees than it is for those with a Master degree or less. Research on just those temporary foreign students who receive a bachelor is scant. What we do know suggests that there may be different outcomes following completion of the Ph.D. in the teaching and in the postdoctoral ("apprentice") labor markets. There seems to be some consensus that most scientific fields are overproducing Ph.D.s, at least in so far as the number of academic teaching positions is not growing fast enough to absorb new graduates.

We are witnessing a restructuring of academics with an increasing share of non-tenured and part-time faculty, and a large pool of postdoctoral workers who spend more years in that status (Leslie, 1998; CPST 1997). Consider that the number of postdoctoral appointments increased 210 percent from 16,829 in 1975 to 35,379 in 1995; and that the foreign-born have received half of all postdoctoral appointments since 1990 (CPST 1997). Of course, with solid access to postgraduate employment, many foreign students go on to temporary work authorization and, ultimately, permanent employment.² Nearly half of the temporary foreign students who received their Ph.D.s in 1990-91 were still working in the United States five years later in 1995 (NSF 1998).

This tendency is greater in some disciplines, especially in engineering and health and life sciences, but it occurs across the board. Starting in 1988, the National Research Council reported a substantial increase in the share of foreign engineers over the previous decade (NRC 1988). It found that a disproportionate part of the increase occurred in the academic sector. For example, over half of the assistant professors younger than 35 years were foreign born in 1983-85, and about two-thirds of postdoctoral appointees were not U.S. citizens. Other than academia, the NRC surveyed 20 major R&D firms which reported they were "dependent upon foreign talent and that such dependency is growing" (NRC, 1988: 3). Nevertheless, the NRC concluded that the foreign engineer played a positive role in academia and in the private-sector labor market. Indeed, without foreign engineers universities and industry would "experience difficulty in staffing."³

A decade later and in a different field the story is similar, but the conclusions evidence a hint of concern for the continued growth of foreign student enrollments. The National Research Council reported in 1998 in Trends in the Early Careers of Life Scientists exclusively on developments in academia, including that of foreign students and faculty (NRC 1998). They found that the number of foreign students earning life-science degrees at U.S. universities doubled from 1987 to 1996 and that temporary residents earned one-quarter of all Ph.D.s At the same time, about one half of postdoctoral appointees are temporary foreign residents. To be sure, the bulk of the report deals with the increased age at graduation and the explosion of postdoctoral appointments in the life sciences.⁴ Many graduates do not end up in independent research positions and years in postdoctoral study have increased. Overall, the report concludes that it would be "unwise" to limit visas for U.S. education, but that "institutions should [not] continue to enroll unlimited numbers of foreign nationals."

In short, most research from the premier institutions that investigate academics — The National Research Council and the National Science Foundation — do not find obvious adverse effects of from foreign temporary or permanent residents. In fact, foreign students have faster and higher Ph.D. completion rates, indicating that they certainly do not lower standards in U.S. graduate institutions (Espenshade and Rodriguez, 1997). Other observers are concerned by the remarkable growth in the post-Ph.D.-completion market and the high concentration of the foreign born among Ph.D. workers (North, 1995). They assert that an expanding postdoctoral market, with large shares of foreign students and workers willing to take these typically underpaid postdoctoral positions, may create conditions that discourage natives. Competition may be especially steep with minorities. More than 75 percent of foreign doctoral recipients in 1996 reported that their U.S. university was their primary source of funding (Morris, 1996; NSF, 1998). But while there are many suggestive findings that point in the direction of such competition, there is to-date no conclusive research to support broad assertions.

Non-Academic Labor Markets

The non academic labor market has many foreign workers in high-skilled occupations, although research most often cannot differentiate temporary from permanent workers. While the available research does not indicate that foreign workers have clear-cut effects on the earnings and employment of natives, it suggests that there are subtle labor market mechanisms that may result in adverse outcomes for native workers.

For example, the expansion of foreign-born scientists, engineers, and mathematicians has been substantial and some observers argue that minorities might have been able to fill the jobs that the foreigners took (Bouvier and Martin, 1995). They calculate that, if minorities were educated and took these types of jobs at the same rate as white males, their numbers would nearly supply the actual labor force numbers counted in the 1990 U.S. Census. Only a very few foreign-born would be needed to meet demand, if minorities and women were attracted to science and engineering employment. In fact, across all professions there is a much greater concentration of Asian and White professionals than Black or Hispanic (Bouvier and Simcox, 1994). It is asserted that the "striking" under representation of Blacks and Hispanics discourages their entry into the professions, and that the foreign-born, who are often temporary workers at the highest skill levels, disrupt incentives to stimulate the latent supply of minority professionals. But what is the causal chain?

Other than through their sheer numbers, how would the foreign-born displace minorities? The most straightforward arguments are that the foreign-born professionals, much like their blue collar counterparts, are willing to work longer hours at lesser pay.⁵ However, there is no strong evidence for this typically-cited displacement mechanism. Asian and White professionals, especially the foreign born, tend to earn more on average than Black or Hispanic professionals (Bouvier and Simcox, 1994; Gurcak and Espenshade, 1996). Rising unemployment, especially among U.S. workers, might be another manifestation of adverse competition. But skilled U.S. workers in 1994 had a 2.2 percent unemployment rate as compared to 3.9 percent for the skilled foreign-born (Gurcak and Espenshade, 1996). Even in highly competitive high-technology fields with increasing numbers of foreign workers, rates of employment and year-to-year earnings increases are outpacing the market at large (Anderson, 1996).

Even if immigrants do not work for lower wages, a "glut of any group in the marketplace" may lower wages because even equally qualified unemployed would be willing to work for less (Gurcak and Espenshade, 1996:32). Note that recently arrived Asian immigrants make 18 percent less than Whites, after controlling for human capital characteristics, training, specialty, and government employment. This wage difference takes six to eleven years for the skilled foreign-born worker to overcome (Tang, 1993). A study of M.S. graduates of the UCLA engineering school found that the initial earnings disadvantage of immigrants relative to natives in their first job, disappeared with subsequent employment. Nor do immigrant engineers experience a glass ceiling on their upward mobility (Waldinger et al., 1995). If there is an adverse effect of a "glut" it appears to be short-lived, although the long-term effect may be to lower wage growth in given occupations over time. Given that these high-skilled occupations have unemployment rates below 3 percent and earnings are well above average, most observers express little concern.

If there is an effect of immigrants on natives, especially minorities, the effect must be a subtle one for it does not appear immediately in the data. Perhaps if employers simply prefer the foreign-born to minorities, then discrimination may be a mechanism whereby U.S. natives and minorities loose out to immigrants. Yet, tests for the effects of discrimination demand a ceteris paribus explanation and there are no earnings differences between immigrants and natives after controls are introduced (NRC, 1997). Discrimination that favors immigrants over minorities in the open labor market must play itself out in some way other than wages.

One possible adverse effect of immigrants may be that they are, indeed, preferred and that they are sorted at the top a labor queue. Smith (1997) analyzed the 1993 National Survey of College Graduates. He found that there no earnings differences between race/ethnic groups or for the foreign-born, after introducing controls for human capital and the likelihood of being employed as a scientist or engineer. In fact, the differences that occurred happened much earlier. Blacks, Hispanics, and Native Americans with S&E educations were less likely than immigrants and native-born Whites to find S&E employment.⁶ One implication is that a ready supply of immigrants and native White men are at the top of the hiring-queue (if not the pay scale), at least when supply is able to meet demand. As tempting as it might be to draw parallels with the indirect effects of immigrants on the academic job market, this is only one study and it relies on a methodology that produces many internally inconsistent results.

Footnotes

¹  Those educated abroad were 29.3 percent of all foreign-born R&D workers in 1993.

²  Typically they change temporary status to speciality worker (H-1B), and the adjust as permanent third-preference (EB-3) employment based immigrants.

³  The 1988 study did note that the large number of foreign students could create problems over time in the educational sector. Minorities and women might be adversely affected because of competition with a growing number of foreign students. Especially in education, large numbers of foreign students may compete for scarce funding resources. Further, they found that the linguistic and cultural backgrounds of the predominantly Asian foreign students is likely to be significantly different from natives. Foreign teaching assistants and instructors might make it difficult for students to learn. Yet, no clear adverse effects were noted and the report recommended little other than tests for language proficiency for foreign-student instructors.

⁴  Most all life-science fields have experienced increased numbers of enrollments and graduations, coupled with declining slots in academic employment with more employment in industry.

⁵  Similar arguments apply to the post-doctoral market in and outside of academics. Here, the wage structure is determined mostly by government funding of research projects and the effect of immigrant competition has to be analyzed within that structure. Temporary immigrants are willing to take half of these low-skilled jobs and, perhaps, put off a day of reckoning for the U.S. government’s research funders. But the evidence still suggests that natives and minorities in particular are favored over immigrants in competition for university funds (Gureak and Espenshade, 1996).

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