Metropolitan Population, Immigration and Unemployment

September 2013

Executive Summary

The United States has become a metropolitan nation in the sense that most of the nation’s population today is living in a metropolitan statistical area (MSA). Those areas are concentrated populations surrounding and integrated with one or more major cities. The attraction of these MSAs appears to be even greater for immigrants than for the native-born population, because there is a greater concentration of foreign-born residents in these metro areas than in the rest of the country.

With today’s unacceptably high rate of national unemployment — 7.6 percent in July 2013 — there is an understandably acute focus on policies that may help or hinder the prospect for restoring job opportunities for the unemployed.

An examination of the demographic and unemployment data among MSAs reveals that there is a significant difference in the incidence of unemployment and concentration of immigrants among MSAs with higher unemployment in the MSAs with larger foreign-born populations. This does not mean that the higher foreign-born population in these areas caused the higher rate of unemployment, although it likely has contributed to it — but it does suggest that current proposals to increase the admission of immigrants and to create more job competition by legalizing the illegal alien population may aggravate unemployment rather than ameliorate it.

The Metropolitan Area Concentration

Census Bureau data indicate that as of 2010 more than four-fifths of U.S. residents (83.3) lived in a metropolitan area.¹ An even larger share — more than nine of every ten (94.4%) of the nation’s foreign-born also lived in one of the 389 MSAs. This is vastly different from immigration during the settlement of the country when immigrants still headed into the hinterland to stake out a new homestead or even the “great wave” era of mass immigration at the turn of the last century. In 1870, 26.4 percent of the immigrant population resided in cities of over 100,000 residents. By 1900, that share was 38.8 percent. By 1990 the share of the foreign-born population living in “urbanized areas” was 88.3 percent.²

The average foreign-born population share for the 389 MSAs in 2010 was 14.7 percent, which was higher than the national average of 12.9 percent — the difference showing the foreign-born concentration in metropolitan areas. Another indication of the big city concentration of the immigrant population may be seen in the difference between the average (mean) population and the median (half higher and half lower) foreign-born population. The MSAs average population was about 661,000 residents, and the average foreign-born population was about 97,000 residents. That compares with a median population of 252,705 residents and a median foreign-born population of 15,915 residents, a foreign-born share of 6.3 percent using the median foreign-born and general population. The average MSA population was 2.6 times the size of the median population, and the average MSA foreign-born population was 6.1 times as large as the median.

Figure 1 – Average native-born and foreign-born populations in high and low foreign-born share MSAs.

Of the 389 MSAs, 67 had a foreign-born population larger than the MSA average, i.e., more than 96,940 residents. Those 67 MSAs had an average population of more than 2.3 million residents — all but 17 of them had a population of over one million. They had an average foreign-born population of more than 467,000 — an average foreign-born share of 19.9 percent. The remaining 322 MSAs with smaller immigrant populations had an average population of 310,150 residents and an average foreign-born population of 19,826, or an average foreign-born share of 6.4 percent.

The Unemployment Connection

The advocates for increased immigration argue that a growing population will grow the economy and result in job growth. The White House released a report in August 2013 on “The Economic Benefits of Providing a Path to Earned Citizenship.” It cites a study by Manuel Pastor and Justin Scoggins in which the authors claim that, “They [immigrants] will spend their increased earnings on the purchase of food, clothing, housing, cars, and computers. That spending, in turn, will stimulate demand in the economy for more products and services, which creates jobs and expands the economy.”³ The claimed job benefit for the White House-backed S.744 amnesty legislation appears to be designed to overcome the difficulty in generating support for legislation to increase the number of legal workers pursuing U.S. jobs — especially at a time when there is a high rate of unemployment. The Senate legislation (S.744) adopted in July not only would  increase the number of illegal aliens competing for jobs by making them legal workers, it would also increase the intake of both legal immigrants and guest workers coming to the country with visas to take jobs.

If the number of immigrants in an area were a benefit to the economy and an advantage in generating jobs, the MSAs with larger than average foreign-born populations could be expected to be more successful in creating jobs and thereby have lower rates of unemployment. The data on the rate of current unemployment among MSAs disproves that assumption. According to unemployment data for MSAs reported by the U.S. Bureau of Labor Statistics for July 2013, the MSAs with higher than average foreign-born populations had an average unemployment rate of 8.1 percent — higher than the national average of 7.8 percent for all MSAs. By contrast, the MSAs with smaller than average foreign-born populations had an average unemployment rate of 7.5 percent.⁴

The Congressional Budget Office analysis of the Senate-passed S.744 immigration legislation concluded that, “…temporary imbalances in the skills and occupations demanded and supplied in the labor market, as well as other factors, would cause the unemployment rate to be slightly higher for several years than projected under current law.”⁵ The assessment that the legislation’s creation of higher unemployment would be only slight and only for several years is optimistic given the pattern of higher foreign-born settlement in the nation’s larger MSAs and the already higher level of unemployment in those same MSAs.

Rather than there being an employment benefit from an increased immigrant population, as claimed by the proponents of S.744, the reverse — and adverse impact — would appear to more likely.