KEY FINDINGS

Our major conclusions can be summarized as follows. Although the characteristics of immigrants have changed over the past three decades, the state's economy continues to benefit from immigration. However, the magnitude of current flows--and the flows' disproportionate share of poorly educated immigrants--combined with ongoing changes in the state's economy has increased the costs of immigration to the state's public sector and to some native-born workers. The state faces a growing challenge as it attempts to integrate these new immigrants while also trying to promote the welfare of the state and all its residents.

The number of immigrants entering the state has been increasing at unprecedented rates: More immigrants--1.8 million--entered the state during the 1970s than in all prior decades together. And that number nearly doubled again, to 3.5 million, during the 1980s. Immigrants have continued to come at these high rates during the 1990s despite a recession that was the state's most severe since the Great Depression. As a result, immigrants now constitute in excess of one-quarter of California's residents and workers and are now responsible for more than half of the state's population and labor force growth.

The profile of these recent immigrants is more diverse ethnically, socio-demographically, and economically than in the past. California has more of more different types of immigrants than ever before. Also its immigrants differ significantly from those in the rest of the country. Today, about 50 percent of California's foreign-born residents are from Mexico or Central America and another 33 percent are from Asia, compared with 23 and 21 percent, respectively, in the rest of the country. California's immigrants are also much more likely to be illegal, newly legalized, or refugees than are immigrants elsewhere in the country. And although immigrants at all levels of education have entered the state, there has been a steady decline in the average educational level of immigrants relative to native-born workers--a pattern that is not found in the rest of the country.

To a much greater extent than in the past, the rate at which immigrants and their children succeed economically and socially depends directly on their education. Highly educated immigrants--about half of the state's total--reach economic parity with native-born residents within their lifetimes. The other half--those with extremely low levels of education who are primarily from Mexico and Central America--command low earnings and make little economic progress in their lifetimes. This raises serious concerns about whether and, if so, when their children will reach parity with other groups.

California's employers, and its economy more generally, have been the primary beneficiaries of this recent immigration. To employers, immigrants are cheaper but equally as productive as native-born workers across all levels of education from high school dropouts to college graduates. This comparative labor cost advantage helped the state's economy grow more rapidly than that of the rest of the nation from 1960 to 1990. Although the state suffered a long and deep recession from 1990 to 1994, immigration has continued unabated. Currently, California's employment growth is once again exceeding that of the rest of the nation.


Looking to the future, long-term economic and immigration trends appear to be headed in opposite directions. The state's economy, for example, has been changing in several ways--albeit mostly independently of immigration. First, the rate of employment growth began declining from its 1970 peak even before the employment losses of the early 1990s and, while now recovering, is not projected to regain the rapid pace of the 1970-1990 period. Second, consistent with the shift in the state's economy away from manufacturing and toward higher-skill service and technology industries, employers have been placing a higher premium on a highly educated workforce. Eighty-five percent of the new jobs added to the state's economy between 1970 and 1990 were filled by workers with at least some postsecondary training. Third, there has been an increasing divergence between the economic fortunes of California's well-educated workers and the less educated, who now have to compete for fewer low-paying jobs and face the prospects of little career earnings growth.