http://www.investors.com/stories/IF/1998/Sep/3/94.html

NATIONAL ISSUE

IS THE U.S. IMPORTING POVERTY?

New Immigrants Are Now Often Poor, Uneducated

Date: 9/3/98

Author: Jim Christie

Investors Business Daily

Mexico's economy has greatly improved since the '94 peso devaluation. So why hasn't that reduced illegal immigration into the U.S.? The reasons are complex. But the flood of illegal newcomers probably won't slow any time soon, immigration experts believe.

In fact, the current high rate of illegal border crossings will likely continue for at least the next five to 10 years, according to Edward Taylor, a professor of agricultural and resource economics at the University of California, Davis. ''Everything points to a continuation, if not a gradual increase, in migration pressure,'' Taylor said. Of course, economists are nearly unanimous that immigrants, in general, are a boon to the economy. And immigration is nothing new in the U.S. But immigrants' origins have changed dramatically.

From '51 to '60, some 66% of legal immigrants to the U.S. came from Canada and Europe. They had little trouble assimilating because of their already-high income and educational levels.

From '81 to '90, however, some 83% of all legal immigrants came from Asia, Mexico and other Latin American countries. This more recent wave of immigrants is having trouble keeping up economically. ''U.S. immigrants, on average, earn less than native workers, and the deficit has been growing - mainly because the gap in education and skills has been widening,'' wrote economists Beverly Fox Kellam and Lucinda Vargas in a recent report for the Federal Reserve Bank of Dallas. Taylor of UC Davis warns of growing rural poverty in the U.S., as a steady stream of Mexican farm workers and their families settle in areas where labor- intensive farming is expanding.

David Heer, a University of Southern California sociologist, expects the steady stream of new workers will cement a buyer's market for farm labor. ''The more Mexican immigration that comes into California agriculture, the more wages are reduced,'' said Heer, who heads USC's Population Research Laboratory. He adds that more farm workers will come as agricultural imports into Mexico undercut Mexican farm cooperatives and displaced farm workers head north to work in U.S. fields rather than in cities back home.

California, where voters in '94 tried unsuccessfully to cut off public benefits to illegal aliens, is expected to have the biggest influx of Mexican farm laborers.

In many rural areas in the state, effects of past inflows are already clear, although most in the heavily urbanized state may not have noticed. In a '97 study, Taylor and UC Davis labor economist Phil Martin found double-digit welfare-dependency rates throughout California's agricultural heartland, the San Joaquin Valley. There, nine out of 10 farm workers are Mexican-born. In their online Migration News newsletter,

Taylor and Martin note California's farm labor market -which annually hires some 800,000 workers, 90% of whom are immigrants - is the major ''port of entry'' for rural Mexicans into the U.S. Martin says another 1.5 million immigrants, mostly Mexican-born, are employed on farms and ranches around the U.S.

Unlike such workers in California, however, they aren't locked into farm labor. In North Carolina, for instance, migrant workers who once picked tobacco now are moving into poultry processing and construction. Their mobility is being noticed by the Mexican government. ''Mexico has more consulates in the U.S. than any other country has in any other country,'' Martin said. ''They just opened one in Alaska because of Mexican workers in fisheries.''

In California, Mexican-born farm workers stay on the farm. Even with more workers coming in from Mexico, there are jobs picking crops like strawberries, which are ''about as labor-intensive as you can get,'' Taylor said. Crops of strawberries and grapes are surging right now, helped by the availability of plentiful immigrant labor.

Last year, the value of the California strawberry crop jumped 15.5% to $686 million, while the grape crop surged 33% to $3.8 billion. Impressive as these gains may be, they impose a cost: After looking at 65 rural communities, Taylor and Martin found that adding 100 farm jobs would add 139 people living in poverty. Ninety people are added directly by immigration and 49 because of below poverty-level earnings. It's a situation that's led Taylor to warn the U.S. ''risks recreating rural poverty via immigration.'' As an example, he points to Parlier, a California farming town of 10,000 near Fresno.

According to the '90 census, Parlier's population is 37% foreign born, and about half the residents have less than eight years of formal schooling. The average farm worker, U.S. education data show, has only about five years of schooling. Per-capita income in Parlier, whose population swells by 4,000 during harvest time, is about $3,700 annually, or ''about the same as the per-capita GDP of Mexico,'' Taylor said.

Still, the prospect of poverty here is not as daunting as in Mexico, as the recent deaths of seven illegal immigrants who tried to cross the blazing hot desert in California's Imperial County suggest. The peso's devaluation in '94 provided a big reason to head north. Per-capita income for the average Mexican in the year following the devaluation fell by more than $1,000 from $3,384, according to Ciemex-Wefa Mexican Economic Outlook Services.

Not surprisingly, large numbers of Mexicans continue to make their way illegally into the U.S. More than 150,000 go undetected each year, the Immigration and Naturalization Service estimates. That's on top of a large number who migrate legally, including more than 160,000 in '96.

But the outflows aren't all due to the Mexican economy. In fact, the Mexican economy has many things going for it -despite the peso's recent loss of value against the dollar and other emerging markets' effects on it.

First, job creation is up in Mexico because that nation is ''attached to the healthiest economy in the world today,'' that of the U.S., through the North American Free Trade Agreement, points out Francis Freisinger, Merrill Lynch's chief Latin America economist. Mexico also is in far better financial shape than most emerging markets. ''There's not a banking crisis or short-term credit crisis,'' Freisinger noted. Mexico's economic growth rate is expected to remain above 4% this year.

According to Mexico's National Statistics, Geography and Informatics Institute, per-capita income is starting to climb again. The agency expects it to more than double by '04. Yet another positive sign is more political openness - something investors welcome. Mexico now ''feels a lot more like a democracy than it did five years ago,'' said Chip Wendler, a vice president with Rowe Price-Fleming International, T. Rowe Price's overseas funds management company. Still, illegal immigration into the U.S. will persist -regardless of Mexico's economy.

Taylor says U.S. policy is helping to drive the high rate of illegal Mexican immigration. Specifically, he said, the '86 Immigration Control and Reform Act's amnesty ''legalized migration networks and created migration multipliers.'' Taylor is not alone in that belief. Manuel Garcia y Griego, a historian at the University of California, Irvine, says illegal immigrants' way into the U.S. is smoothed by information from others on the best way to get here and contacts once they arrive.

Migrant networks have become so extensive that illegal immigration has become a ''social behavior as much as an economic behavior,'' said Garcia y Griego, who has studied the matter since the early '70s.

The INS estimates 2.7 million Mexicans may be in the U.S. illegally, 2 million of them in California. It's a pool of knowledge and resources that all but ensures that if a family member or friend wants to get across the border illegally, he or she will. Their chances of finding work also are good. ''Employers are tapping into the networks,'' Taylor said. ''Almost anywhere you go in rural America, agricultural work forces are becoming increasingly Mexicanized and are predominantly Mexican in many parts of the country.''

(C) Copyright 1998 Investors Business Daily, Inc.