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July 1999, Volume 6, Number 7

California: Economy, Driver's Licenses

California's unemployment rate fell to 5.2 percent in May 1999, the lowest rate since 1990, as the state added 56,000 jobs, almost 2,000 a day. Unemployment rates for Blacks and Hispanics, nine and eight percent, were at their lowest levels in the 1990s. Analysts predicted that rapid job growth might lead to more immigration from abroad and elsewhere in the US.

The US unemployment rate was 4.2 percent in May 1999 and 4.3 percent in June 1999; half of the five million unemployed at any time are jobless for less than five weeks. Labor force participation rates, the percentage of the population 16 and older that is employed or looking for work, have been rising, especially for Black men and for single mothers.

US unemployment rates have been below five percent for 24 months. One study concluded that three factors have reduced the unemployment rate by about one percent, for example, it would be five rather than four percent if not for the growing prison population, the aging labor force and the expanding temporary-help industry which keeps people off unemployment rolls between permanent jobs.

In 1998, California added 450,000 jobs, a 3.4 percent growth rate that took payroll employment to almost 14 million. The structure of employment is changing. In 1983, there were almost three times more jobs in the manufacture of durable goods than in business services; in 1999, business services employment of 1.2 million is expected to surpass durables manufacturing employment. Other sectors that added large numbers of jobs in the 1990s include construction and eating and drinking places.

Sectors that have lost jobs in the 1980s and 1990s include aerospace, which had 380,000 jobs in 1986. About one-third of aerospace workers had a college education; the collapse of aerospace in the late 1980s and early 1990s helps to explain the 25 percent fall in house prices in southern California in the early 1990s.

The median weekly wage of men in the California labor force fell in inflation-adjusted terms from $600 in 1989 to $550 in 1997, with the sharpest drop, 11 percent, for those at the bottom of the wage ladder. Most analyses trace growing wage inequality to the increased wage premium for schooling and to immigration--the immigrant share of the male labor force in California rose from 29 percent in 1989 to 36 percent in 1997. Over 40 percent of the immigrant men in 1997--compared to seven percent of the US-born men--did not complete high school.

Across the US, the number of working-age immigrants without a high school degree increased from 2.8 million in 1989 to 5.1 million in 1997-- as the number of US-born high school dropouts fell from 20 million to 13 million. Thus, by the mid-1990s, low-skilled immigrants --legal and illegal -- were 30 percent of the 18 million US workers without a high school diploma (there are about 16 million immigrants in the US labor force). Immigrants are already the majority of low-skilled workers in California and other immigrant destinations, such as Texas and Florida, and could soon be more than half such workers nationwide. Two-thirds of immigrant workers in the US did not attend high school and 20 percent speak no English.

Between 1979 and 1997, the average hourly wages of high school dropouts, adjusted for inflation, fell by 26 percent. As a result, poverty among working-age immigrants rose from 15 percent in 1980 to 21 percent in 1994, and was 36 percent among the less-educated immigrants. The poorest-paid 20 percent of workers had an average hourly wage of $7.05 in 1998, well below the $7.44 inflation-adjusted hourly wage that this group earned in 1979. Harvard economist George Borjas estimates that "44 percent of the drop in the real wages of high school dropouts can be traced back to immigration."

The predominance of immigrant businesses and workers in Los Angeles is one reason why the county has one of the highest percentage of private sector employees who do not obtain health insurance through their employers--fewer than 60 percent of Los Angeles county employees obtain health insurance through their employers. Less than half of workers earning less than $380 a week obtain health insurance through their employers. Only El Paso, Texas has a lower rate of health insurance through employers. Across the US, about 74 percent of workers obtain health insurance through their employers.

One reason why so many private sector workers in Los Angeles do not have health insurance is that many are immigrants employed by immigrants. Many of the immigrant entrepreneurs are small, come from cultures that do not provide benefits and often do not belong to organizations where they can learn about the benefits and costs of employee benefits.

Efforts to develop low-cost plans are floundering, despite plans that offer an individual health insurance for $90 a month and family coverage for $250. Joe Rodriguez, director of the Southern California's Garment Contractors Association, believes there must be a restructuring of the garment industry before sewing shops offer health insurance to employees. Only one or two of the 200-member firms offer health insurance to employees; many of the others are barely remaining afloat, or come from countries in which residents pay cash when they need care.

UCLA's Center for the Study of Urban Poverty examined day labor markets and found that 25 percent of the estimated 20,000 day workers in Los Angeles and Orange counties were long-time US residents who have been working as day-laborers for over six years. Many of the day-laborers interviewed had less than six years of education. Most preferred day labor to regular low-wage jobs, since they believed that they could get more than the state's minimum wage of $5.75 an hour; workers reported earning $1,000 or more a month in the busy summer months, on which they generally pay no taxes (a full-time minimum wage worker earns $920 a month, and pays about $140 in taxes). About 40 percent had been doing day labor for less than one year, and 40 percent were under 28.

Only six percent of the 481 workers surveyed at 81 sites were legally authorized to work in the US when they first began to seek jobs in day labor markets, and most were not authorized to work when interviewed. Many cities and counties have enacted ordinances to ban curbside solicitation of jobs and workers, and created publicly-funded centers where employers and workers can meet; however, such centers are generally opposed by construction unions. About 40 percent of the employers who hire day laborers are subcontractors, and 40 percent are homeowners.

The Suffolk County Legislature rejected a bill in June 1999 that would have banned day laborers from the roadside job markets where they find work. Immigrant workers carrying signs saying "Don't Outlaw Work" and "Traffic Is No Excuse for Unjust Laws" and picketed outside the county center before the vote.

Driver's Licenses. Since March 1994, California has required applicants for original driver's licenses to prove that they are lawful US residents. California, which issues more than 1 million driver's licenses and state identification cards each year, is the only state that uses the INS's Systematic Alien Verification for Entitlements (SAVE) program to verify INS documents, and is one of 30 states that require applicants to provide Social Security Numbers. Persons caught driving without a license and insurance are fined at least 1,351 for a first offense and can have their vehicles seized.

A bill, AB1463, was approved by the Assembly on a 41-36 vote to end DMV checks on applicants for driver's licenses. Proponents argued that repealing the legal residency checks would allow the estimated two to three million unauthorized residents of California to drive legally and obtain insurance; opponents contend that its repeal would invite more illegal immigration.

Six states require first-time applicants for drivers licenses to prove that they are legal US residents. The Texas Department of Public Safety on April 1, 1999 began requiring first-time foreign-born applicants to prove legal US residency before obtaining a Texas driver's license, and Florida implemented a similar requirement on July 1, 1999--those without a US or Canadian driver's license must show one of five official documents to get a first license: a US birth certificate, a valid US passport, an Immigration and Naturalization Service green card, an employment authorization card or a Justice Department proof of non-immigrant classification. There were long queues as foreigners rushed to beat the deadline. On the other hand, the Utah state legislature in 1999 approved a law making it possible for undocumented workers to get licenses.

California's Supreme Court unanimously denied review of a suit by the Howard Jarvis Taxpayers Association, a conservative tax-reduction organization, that sought to force Governor Gray Davis to end mediation of Proposition 187 and instead defend Prop 187 in court.

Texas Governor George W. Bush, opening his quest for the Republican presidential nomination in California in June 1999, reiterated his opposition to Prop 187, which, if it had not been blocked by court actions, would have barred illegal alien children from K-12 public schools. Bush said: "Everyone must have a first-rate education, because there are no second-rate children, no second-rate dreams." Both Bush and Al Gore regularly address campaign crowds in Spanish.

J-1/F-1. Foreign students and exchange visitors will be more than 10 percent of the seasonal workers in many US resort areas in summer 1999. Foreign students with F-1 visas are pursuing a full time course of study in the US; they may work part-time after one year of US study, and full-time during summer vacations. Foreign visitors with J-1 visitor exchange visas are in the US under programs approved by the United States Information Agency, including programs in which, for example, foreign visitors provide child care or work in summer resorts. In many resort areas, wages are above the federal minimum wage of $5.15 an hour, but the students often have to pay for relatively expensive housing if they want to live near their seasonal jobs.

Some US agencies have begun to specialize in admissions under the J-1 exchange visitor program. Ohio's Cedar Point Amusement Park said that about 1,000 of the park's 3,700 seasonal workers would be foreign youth recruited under international exchange programs to work and travel in the US for six months.

Under a bill introduced in the state Legislature, certain students who are illegally present in the United States could again pay the in-state tuition rate in California community colleges and state universities. Those who have attended a California high school for three years or more, graduate and gain admission would quality. In 1985, a California state court ruled that illegal immigrants must be permitted to pay in-state tuition; this decision was reversed in 1990.

Patrick McDonnell, "Bill Would Open Driving to Illegal Immigrants," Los Angeles Times, July 5, 1999. Don Lee, "L.A.'s proportion of workers with job-based insurance is lowest of major metro areas," Los Angeles Times, July 4, 1999. Manolo Barco and Charles Rabin, "Immigrants rush to beat Thursday's deadline on stricter ID rules," Miami Herald, June 29, 1999. Bill Ainsworth, "Resident tuition for noncitizen gets an OK," San Diego Union-Tribune, June 16, 1999. Ken McLaughlin, "Bill could aid illegal immigrants," San Jose Mercury News, June 28, 1999. Siskind, Greg, Bill Stock and Steve Yale-Loehr. 1999. The J-Visa Guidebook.