What's US economy's future? Ask illegal immigrants.
The rise and fall of border crossings foretells economic change, researchers say.
Fewer people are trying to sneak across the US-Mexico border. As a result, US border officials are nabbing fewer illegal immigrants – 30 percent fewer for the first quarter of this year compared with the same period a year ago. That's a triumph, says US Customs and Border Protection, of new sophisticated detection equipment as well as 6,000 National Guard troops situated along the 2,000-mile border with Mexico.
But enhanced security may explain only part of the decline. A slowing US economy, resulting in fewer jobs, is discouraging immigrants from slipping into the United States, according to economists at Arizona State University in Tempe. In fact, falling border apprehensions may be an early predictor of where the economy is headed.
If that's true, then Americans should prepare for rough economic times ahead, says Dawn McLaren, a research economist at Arizona State's business school.
For the past decade, Ms. McLaren has been tracking the relationship between border apprehensions and economic growth. Every time apprehensions declined, the economy slowed about 12 months later, she found. "About a year before a recession, or a down cycle, there was a slowdown in the number of arrests" on the border.
The connection is straightforward: New illegal immigrants hold some of the economy's most marginal jobs, which are some of the first to be left unfilled when a slowdown looks imminent. When jobs are scarce, word quickly gets out to would-be immigrants.
"Because it is difficult and dangerous to cross the border, they're not going to come unless they have a job lined up," McLaren says. "If they get a call from someone saying it's a good time to come, they do. If the caller says wait for the times to get better, they do that."
During the good economic times of the 1990s, the number of apprehensions (and thus illegal border crossings) generally rose. But they fell dramatically after December 1995 as the economy slowed (see chart below), rebounded a bit, and then fell several months before Asian currencies plunged in July 1997, setting off economic jitters in the US. Apprehensions rose again, peaking in January 2000, two months before the dotcom stocks hit their high and 14 months before the US entered a recession. Apprehensions bottomed out in October 2001 along with the recession, rose as growth improved, then dived again when the economy began to slow in late 2002, and then rose again.
Since the end of 2005, however, apprehensions have fallen again. By April of last year, the trend was firmly established and indicated to her that the economy would slow down this year. Indeed, the Department of Commerce reported on Friday that the economy grew only 1.3 percent for the first quarter of this year, the worst performance in four years. One key reason: a slump in the housing market, which is the biggest employer for foreign-born Hispanic workers, according to the Pew Hispanic Center in Washington.
Through 2006, the numbers of Hispanic foreign-born workers employed in the construction industry continued to grow, with the number of recently arrived immigrants employed in the industry nearly doubling last year, according to a Pew Center report.
McLaren and her colleagues now use the numbers of apprehensions as one tool in their matrix of indicators to predict where the economy is headed.
"Generally, there does seem to be some relationship between economic conditions in the US and the number of foreign-born workers here," says Rakesh Kochhar, associate director for research at the Pew Hispanic Center.
Of course, border security still affects the numbers of illegal immigrants entering the country. McLaren argues that the two are inextricably linked. Because they won't chance coming to the US unless they have solid employment prospects, a change in their numbers is the first ripple of any change that ripples through the economy, she says.