From Tech to Traditions: The Influence of Foreign-born workers on U.S. Jobs

By Mariano Mamertino and Gad Levanon

Introduction

The diversity that foreign-born workers bring to the U.S. labor market is a tremendous asset, enriching the economy with a vast array of skills, perspectives, and expertise. Workers from different parts of the world often come with unique talents honed in their home countries, where traditions in specific industries, professions, or trades are deeply rooted. Whether it's software developers from India, acupuncturists from China, roofers from Mexico, cooks from Italy, floral designers from Japan, or film directors from Australia, these individuals contribute to the U.S. labor market by infusing it with specialized skills, knowledge, services, and products.

The wealth of experiences and knowledge they bring comes into full focus when we look at the types of occupations immigrants from different countries tend to cluster in when they make the U.S. their home. This cultural and professional diversity not only fills critical gaps but also supports a range of industries and sectors that make American cities stand out for the blend of diverse services, experiences, and goods they offer—not to mention the delicious melting pot of cuisines. Using a data-driven approach, we want to highlight the roles that make all this possible.

Sources and methodology

To identify the jobs foreign-born workers are more likely to do, we used the Census’s American Community Survey (ACS), which asks respondents about their employment status, occupation, and birthplace, among many other topics.

We analyzed data on all workers in the U.S., focusing on their countries of birth. This enabled us to calculate the foreign-born occupation quotient, the key metric in this article, which represents the ratio of workers born in each country who work in a specific occupation compared with the share of U.S.-born workers in the same occupation. A higher quotient indicates that foreign-born workers are more likely to be employed in that occupation relative to their U.S.-born counterparts.

Foreign-born workers find themselves in a range of occupations that are often, albeit not always, overlooked by American-born people. Let’s take a closer look.

Delicious food and a buzzing restaurant scene

Asian-born chefs and cooks are the undisputed champions of the U.S.'s vibrant food scene. Let’s start with Chinese cuisine, a staple of global culinary culture. Its presence in the U.S. is bolstered by Chinese immigrants working as chefs, head cooks, and food service workers. Compared with the average U.S.-born worker, Chinese-born ones are nine times more likely to work as chefs and head cooks.

Similarly, immigrants hailing from Thailand and Indonesia are between ten and eleven times more likely than U.S.-born folks to be employed as chefs, highlighting the influence of Southeast Asian cuisine on the U.S. culinary arts. Japan and Korea come next. Workers from those countries are about four and five times more likely than the average American to make the preparation of delicious food their main activity.

A relatively small country that has an outsized influence on the U.S. food scene is Greece. The famous Greek food and hospitality can be experienced in countless Greek diners and restaurants across the country, also thanks to the fact that Greek-born workers are almost seven times more likely than U.S.-born ones to work as food service managers. Talking of small countries with an outsized influence on hospitality, the Irish pub is probably as much of a U.S. institution as the local pizza parlor or bowling alley, and so are their friendly bartenders. It should not come as a surprise then that bartender is the job Irish-born workers are four times more likely to hold compared with U.S.-born people.

But the list would not be complete without two other mainstays of the American food scene: Italian and Mexican food. The quotients for chefs and cooks born in either Mexico or Italy are in fact between 3.5 and 4.5, meaning they are roughly four times more likely than American-born workers to work as chefs.

Figure 1. Who is most likely to work as a cook or head chef? Occupation quotient of foreign-born Cooks and Head Chefs, by country of birth. (Source: ACS.)

Figure 2. In which other food-related occupations are foreign-born workers more likely to be employed? Occupation quotient of foreign-born workers in selected food-related occupations, by country of birth. (Source: ACS.)

The creative scene: Design, arts, fashion, and music

Few things bring more joy, amusement, and fascination than the products of artistic and creative endeavors. Again, this is an area where foreign-born workers are particularly active. Korean immigrants have made a mark on the U.S. fashion industry. For example, they are eight and a half times more likely than U.S.-born workers to work as fashion designers. This notable figure underscores the global impact of Korea’s dynamic fashion culture, supported by the export of K-pop music and its global style icons.

Turning to Japan, we see a strong contribution in a unique profession: the realm of floral design. Japanese-born workers, deeply rooted in the aesthetic traditions of practices like Ikebana, are more than three times more likely to be employed in this field than their U.S.-born counterparts. Their ability to blend natural beauty with artistic finesse has made them highly sought-after in the American floral industry. Furthermore, Japanese immigrants also excel in the broader arts sector, displaying a similarly high quotient in roles such as artists, musicians, and singers.

Meanwhile, Australians and New Zealanders bring their creative prowess to the U.S., particularly in photography, film direction, and graphic design. Workers born in the two countries are six times more likely to work as producers and directors than the average U.S.-born worker. They are also between two-and-a-half to three times more likely to work as graphic designers and photographers.

Italian immigrants are another group deeply involved in the cultural arts. Notably, they are four times more likely than their U.S.-born counterparts to work as music directors. They may have an advantage since several world-famous operas are sung in Italian.

Figure 3. In which creative occupations are foreign-born workers more likely to be employed? Occupation quotient of foreign-born workers in selected creative occupations, by country of birth. (Source: ACS.)

Taking care of others

Perhaps the industry where the presence of foreign-born workers is most consequential is healthcare and caregiving. Filipino immigrants are indispensable in the U.S. healthcare system in a way that few other groups are, filling a wide range of crucial roles across various medical professions. Their presence is particularly significant in nursing, with Filipino-born workers being five times more likely than U.S.-born ones to work as registered nurses. Workers born in Iran, India, and other parts of the Middle East also hold key roles in the U.S. healthcare sector, particularly in high-skill positions such as physicians and surgeons. Iranian-born doctors stand out, being six times more likely to work as physicians and four times more likely to work as surgeons than U.S.-born people. Those hailing from Syria are fourteen times more likely to work as physicians than the average U.S. worker. The quotient for Indian-born professionals is 6.5.

Beyond healthcare, workers born in foreign countries still contribute to the mental, spiritual, and physical well-being of Americans. Chinese immigrants, for instance, are pivotal in bringing traditional holistic health practices to the U.S., particularly acupuncture and massage therapy. A Chinese-born person is eighteen times more likely than a U.S.-born one to work as an acupuncturist, one of the highest quotients in our analysis. Chinese practitioners are leading the charge in meeting the growing American demand for alternative health treatments.

Additionally, Vietnamese-born workers have established a dominant presence in nail care within the personal care industry. Workers born in Vietnam are 355 times more likely to work as manicurists and pedicurists than U.S.-born people. This is the highest quotient in the entire dataset. Their expertise extends to roles as hairstylists and cosmetologists, albeit with a much smaller quotient of 3.3, demonstrating their contribution to beauty and personal care.

Thai-born workers also make a significant contribution to the physical well-being of others. They are nine times more likely than U.S. workers to work as massage therapists. Similarly, people born in the West Indies are the foreign-born group most likely to work as home health aides, with a remarkable quotient of 14.7, underscoring their importance in providing essential in-home care services.

Figure 4. In which health-related and personal services occupations are foreign-born workers more likely to be employed? Occupation quotient of foreign-born workers in selected health-related and personal services occupations, by country of birth. (Source: ACS.)

Driving innovation in tech and engineering

Another group of professions where foreign-born workers have had a transformative impact is in tech and engineering roles. Let’s begin with the country most prominently represented in this field: India. Indian immigrants have become closely associated with leadership in tech, holding pivotal roles in U.S. technology and engineering. Their presence is particularly pronounced in software development, where Indian-born workers are an astounding 17.5 times more likely than U.S.-born workers to hold such roles. In computer hardware engineering, the quotient is similarly impressive at 14, underscoring the critical contribution of Indian talent to maintaining the U.S. technological edge. The influence of Indian professionals extends to electrical and electronics engineering, where they are five times more likely to be employed, reflecting the rigorous training provided by Indian educational systems, which prepares engineers to tackle complex challenges in innovation and infrastructure development.

Chinese-born workers also have a profound impact on the U.S. tech and engineering landscape. They are notably present in fields like computer hardware engineering, where their quotient stands at 7.6, and in chemical engineering at 3.6. Moreover, Chinese talent is well-represented in computer and information research, with a quotient of 4.0, illustrating their pivotal role in advancing cutting-edge technologies and contributing to the U.S.'s leadership in tech innovation.

Nepalese, Russian, Malaysian, and Turkish immigrants, though fewer in number, also make significant contributions: they are between five and six times more likely than U.S.-born workers to be employed as software developers. Iranian-born professionals, alongside Malaysian-born workers, play a crucial role in the engineering sector. In particular, they are employed in electrical and electronics engineering roles at six times the rate of U.S.-born workers.

Figure 5. Who is most likely to work as a Software Developer? Occupation quotient of foreign-born Software Developers, by country of birth. (Source: ACS.)

Figure 6. What other tech occupations are foreign-born workers more likely to work in Foreign-born occupation quotient for selected tech occupations by country of birth. (Source: ACS.)

Growing, building, and fixing things

The agriculture, construction, and skilled trades sectors in the U.S. are also heavily supported by the contributions of foreign-born workers, whose expertise is vital to these industries. These are the people who grow our crops, build, and fix our houses. Mexican immigrants are particularly prevalent in agricultural roles, where they excel as graders and sorters of agricultural products. They are nineteen times more likely than U.S.-born people to work in such roles. Their significant presence in this area ensures that the U.S. food industry maintains high standards in production and distribution, making them indispensable in the agricultural supply chain.

The Mexican-born often occupy specialized positions in construction, such as plasterers, drywall installers, and roofers. They are between ten and seventeen times more likely to work in these jobs than the average U.S.-born worker. Beyond agriculture and construction, Mexican immigrants are also vital in other skilled trades, such as pressers and upholsterers, with quotients ranging from 5 to 8. Mexican-born, alongside Central American-born people are also between three and four times more likely than natives to work as pipelayers. While Mexicans are also more likely to work as plumbers, Cuban and Albanian-born workers are the group most likely to work as electricians, with quotients ranging between two and three.

Figure 7. Occupations in which Mexican-born workers are most likely to be employed. Top occupation quotients for Mexican-born workers. (Source: ACS.)

Conclusions

In conclusion, the diverse contributions of immigrants across key professions and roles in the United States—from technology and engineering to healthcare, hospitality, and skilled trades—are undeniable. These foreign-born workers not only fill essential roles but also bring a wealth of expertise and cultural richness that enhances the fabric of the American workforce.

Is Productivity Accelerating? Some Initial Thoughts

By Gad Levanon

Introduction

The decade preceding the pandemic was marked by the lowest productivity growth ever recorded in the U.S., raising serious concerns about the nation's long-term economic prospects. However, the recent surge in productivity over the past 5 years, particularly in the last 4-5 quarters, potentially signifies a reversal and suggests a positive shift that appears to be unique to the U.S. among major advanced economies. Is the acceleration in labor productivity growth sustainable? Very few economic related questions are more important. While it is too early to reach definite conclusions, below are some early thoughts.

This resurgence is primarily driven by a significant increase in capital investments, especially in software and research and development. Additional key factors contributing to this acceleration include the transformative impact of digitalization and creative destruction, which has reallocated resources to more efficient businesses. Furthermore, the expansion of West Coast technology companies into various sectors has disrupted traditional business practices and driven productivity improvements across the board. Labor shortages have also played a role, as companies have increasingly turned to automation and optimized workforce strategies to maintain output. The introduction and integration of Generative AI into various industries may have further boosted productivity.

These dynamics, largely catalyzed by the pandemic, are expected to support strong productivity growth in the near term. While this growth may not reach the heights seen in the late 1990s and early 2000s, it is poised to significantly outpace the sluggish growth observed in the 2010s. Beyond the near term, the rate of productivity growth will largely depend on the transformative potential of generative AI. Although there is limited data to rely on, I am cautiously optimistic about its potential to sustain longer-term gains.

This resurgence in productivity has the potential to substantially improve living standards and reduce inflation. However, it could also widen economic disparities across the country.

Recent Productivity Trends

In the past 4-5 quarters, labor productivity has been rapidly improving. From a business cycle perspective, this is happening at a time when one wouldn’t expect unusually strong growth in labor productivity.

Historically, labor productivity growth is strong in the 1-2 years following a recession. However, in the past 4-5 quarters, we've observed strong productivity growth occurring 3-4 years after the pandemic recession. This atypical timing suggests that there may be factors at play beyond the usual cyclical fluctuations in productivity. The data in the chart are likely to be revised up for 2023-2024 due to the expected revisions to the jobs data.

As shown in the chart above, productivity tends to be highly volatile when viewed on a 4-quarter basis. To gain a clearer understanding of productivity trends, it's more effective to analyze data over longer periods.

Notably, the five-year percent change in productivity is now much higher than in the previous five years. While this is a positive sign, it's important to consider that the comparison spans a period disrupted by the pandemic, making it less straightforward to draw direct parallels.

It is interesting though that when using OECD data, we see that the boost in productivity growth in 2018-2023 versus 2013-2018 was unique to the US. In most other advanced economies, the productivity growth in 2018-2023 was abysmal. The U.S. comparative advantage in technology, has likely played an important role in the unique boost in productivity seen from 2018 to 2023.

Source: OECD

Productivity growth in the U.S. shows significant variation across sectors. As illustrated in the chart below, the manufacturing sector has experienced a plateau in productivity over the past decade, with a slight decline in some instances. It appears that the most straightforward gains from substituting technology for labor in manufacturing were largely realized by 2010.

To better understand the recent growth in labor productivity we need a few definitions:

1. Labor Productivity: Labor productivity measures the amount of goods and services produced per hour of labor. Labor productivity growth is a sum of three factors below:

2. Contribution of Capital Intensity: Capital intensity refers to the amount of capital (e.g., machinery, equipment, software, knowledge from R&D) used per unit of labor. The contribution of capital intensity to labor productivity measures how much of the productivity growth is due to increases in the amount or quality of capital per worker.

3. Contribution of Labor Composition: Labor composition refers to the quality or skill level of the workforce, which can include factors such as education.

4. Total Factor Productivity (TFP): Total Factor Productivity (TFP) represents the portion of output not explained by the amount of inputs used in production (i.e., labor and capital). It captures the efficiency with which labor and capital are used together in the production process. TFP is often seen as a measure of innovation, technological improvements, organizational changes, and other factors that lead to more efficient production processes.

Breaking down the acceleration in labor productivity growth between 2013-2018 and 2018-2023 (look at the green bar), we find that it came mostly from the larger contribution from capital intensity.

Source: Bureau of Labor Statistics

The growing contribution of capital intensity to GDP is increasingly driven not by traditional investments in equipment and structures but by significant investments in software and research and development (R&D). Since the late 2010s, and particularly following the onset of the pandemic, the impact of these investments has surged. This shift was fueled by the widespread move to remote work, education, and services, necessitating extensive digital transformation across organizations. Additionally, the rapid advancement and implementation of artificial intelligence (AI) have further accelerated this trend.

However, despite these substantial investments, total factor productivity (TFP), the efficiency with which labor and capital are used, has not yet shown a corresponding acceleration, remaining modest by historical standards. There is hope that like the productivity surge observed during the 1995-2005 period following large-scale capital investments, these recent investments will eventually lead to stronger gains in TFP.

What other factors may have contributed to the acceleration in productivity growth?

More creative destruction: The simultaneous surge in Private Sector Gross Job Gains at Opening Establishments and Gross Job Losses at Closing Establishments since the onset of the pandemic likely played a significant role in boosting U.S. labor productivity. This period saw a marked increase in creative destruction, as resources were reallocated from less efficient businesses to more productive ones, fueled by heightened entrepreneurial activity. However, it's worth noting that Job Gains at Opening Establishments have trended downward slightly over the past year, which may suggest a lower contribution to productivity growth moving forward.

Expansion of west coast tech companies: West Coast tech companies are more efficient and productive than many U.S. firms. In recent years, they've expanded into sectors like finance, healthcare, retail, automotive, education, entertainment, agriculture, and logistics. This expansion has disrupted traditional practices, raising productivity across these industries. Their soaring market capitalization reflects strong investor confidence in their continued influence and growth. As these companies keep innovating and investing in emerging technologies they are poised to drive further productivity gains.

Labor Shortages: During the labor shortages of 2018-2019 and 2021-2023, companies accelerated productivity growth by investing in automation and advanced technologies, reducing their reliance on scarce labor. These shortages also led firms to optimize workforce utilization and innovate business processes, shifting towards more capital-intensive operations. This transition resulted in higher output with fewer workers, driving significant productivity gains.

Generative AI: Since late 2022, the evolution of generative AI appears to have had some positive impact on labor productivity in various sectors. By automating tasks such as content generation, coding, data analysis, and customer support, AI has likely enabled workers to shift focus to higher-value activities. In industries like marketing, software development, and finance, AI tools seem to have accelerated certain workflows, potentially leading to quicker decision-making and improved output. These are still early days though, and we can’t quantify the magnitude of the impact of generative AI

In sum, here are the key factors that may have impacted faster productivity growth in recent years:

·       Increased Capital Intensity - Increased investment in software and R&D.

·       Digital Transformation – including shift to remote work and services.

·       Creative Destruction - Reallocation of resources to more efficient businesses.

·       West Coast Tech Expansion - Disruption and efficiency across various sectors.

·       Labor Shortages - Automation and workforce optimization

·       Generative AI - Automation of tasks and improved decision-making.

Most of these factors were triggered by the pandemic economy and are likely to have a stronger impact in the near term than in the longer term. Therefore, I anticipate relatively strong productivity growth over the next 2-3 years. Beyond the near term, generative AI is expected to become the primary driver of productivity. While there is limited precedent to rely on, I am cautiously optimistic about its potential to sustain longer-term gains. While I don't expect productivity growth to return to the golden days of 1995-2005, I do believe it will significantly outpace the slower growth seen in the 2010s.

Implications:

If labor productivity were to grow rapidly in the coming years, it could have several significant implications for the U.S. economy and labor market:

Increased productivity could reduce the need for additional workers if productivity outpaces demand growth, potentially loosening the labor market. In the current demographic environment, rapid productivity growth can counterbalance the effects of a slow-growing or even shrinking labor force.

Productivity growth can lower unit labor costs, as businesses produce more with the same or fewer labor inputs, helping increase profitability. Stronger productivity growth could also lower inflation control inflation by reducing the need for businesses to raise prices to cover labor costs.

Periods of strong productivity growth could lead to growing income and wealth inequality, as business owners and senior executives benefit more than workers. In addition, economic benefits could be uneven across regions, with areas with higher tech concentration experiencing more growth.

But most of all, labor productivity is the main determinant of living standards. By increasing the efficiency with which goods and services are produced, it allows economies to generate more wealth from the same amount of resources, directly boosting the quality of life.

The Midwest is in a Vicious Cycle

By Gad Levanon

As the 2024 elections approach, this edition of Labor Matters will examine the political implications of labor market and higher education trends, and how these trends, in turn, influence politics. Nowhere are these issues more prominently highlighted than in the Midwest.

The Midwest finds itself amid a vicious cycle of economic, demographic and educational decline that is reshaping its societal and political landscape. Historically a manufacturing stronghold, the region has suffered significant job and population losses, and economic stagnation. At the same time, the Midwest is barely benefiting from the rise of tech and consulting, that are boosting growth in other parts of the country.

Amidst these challenges, there has been a notable political shift, with the Midwest increasingly gravitating towards the Republican Party. This political realignment corresponds with a growing skepticism among Republicans about the value of higher education. This skepticism is manifesting tangibly as a stagnation in 4-year college enrollment rates across the Midwest.

The cycle of economic decline and educational disengagement is likely to perpetuate itself, potentially leading to even more significant declines in the coming years.

Economic and population decline

The economic trajectory of the Midwest over the past few decades has been significantly shaped by two major factors: the decline of the manufacturing sector and the minimal impact from the booming tech and consulting industries.

Historically, the Midwest relied heavily on manufacturing. However, this sector has experienced a significant decline in employment due to a combination of offshoring, migration to the Sun Belt, and automation. These changes have led to widespread job losses and reduced economic activity, contributing to a broader economic downturn in the region.

In contrast, the expansion of the U.S. economy over the past decade has been significantly driven by two key sectors: Professional & Technical Services and Information, representing the technology and consulting industries. The accompanying chart illustrates the importance of these sectors to state GDPs, showing that they play a substantial role in the economies of the Pacific region and states near New York City, Boston, and Washington D.C.

However, many states in the South and Midwest see minimal impact from these industries. Consequently, the populations in these regions largely miss out on the rapid growth observed in the tech and consulting sectors.

Recent economic data starkly reflects these trends. Among U.S. regions, the Midwest, particularly the Great Lakes states, has experienced the most significant drop in per capita income relative to the national average over recent decades. As a result, nearly every state in the Midwest now falls below the average state income.

This trend is evident in the distribution of fast-growing metropolitan areas in the U.S., where the Midwest is notably underrepresented. For instance, between 2012 and 2022, only three out of 72 metropolitan areas identified as top performers in personal income and per capita income growth were in the Midwest.

In recent years, this slower growth in Midwestern states has persisted:

In addition to declining per capita income, Midwestern states have also been among the slowest growing in terms of population. Even if an individual's financial situation remains stable, living in an area with a shrinking population can negatively impact their sense of well-being. Reduced social interactions, fewer local services, and economic stagnation contribute to feelings of isolation and insecurity. Moreover, the visible deterioration of the community and a decline in cultural activities can adversely affect mental health and overall quality of life.

Impact on voting

This economic and population decline has also had significant political ramifications. Our analysis indicates a substantial political shift in the Midwest between the 2012 and 2020 presidential elections, with no other region in the country moving more decisively towards the Republican Party. Over the past decade, the Republican Party's message has increasingly resonated with those who feel economically left behind—a sentiment that has grown strong and relatively new in the Midwest.

The Midwest's shift towards the Republican Party is part of a broader trend where regions with lower levels of education and income increasingly align with Republican candidates. The chart below presents findings from a recent analysis that examines the relationship between the Republican-Democrat vote share gap and key demographic indicators: personal income per capita and the population share with a bachelor’s degree. This analysis utilized data from the 2000 largest counties in the United States, covering presidential election results from 2000 to 2020.

In 2000, the analysis revealed a barely negative correlation between the vote share gap and both personal income per capita and the share of the population with a bachelor’s degree, indicating that voting preferences were not significantly polarized by these demographic factors at the turn of the millennium.

However, over the next 20 years, these correlations turned markedly negative, particularly in relation to the population share holding a bachelor’s degree or higher. This shift suggests a substantial change in how educational attainment influences voting behavior, with lower education levels increasingly aligning with the Republicans.

The evolution of these correlations, especially the pronounced negative shift with education levels by 2020, indicates a growing political divide based on socioeconomic status, particularly education. If this trend continues through 2024, areas with lower education attainment and personal income, like the Midwest, are likely to shift further towards Republicans.

And there are also higher education implications. A recent Gallup study https://news.gallup.com/poll/646880/confidence-higher-education-closely-divided.aspx) reveals a significant decline in public confidence in higher education, particularly among Republicans. According to the study, 50% of Republicans now express very little or no confidence in higher education institutions, marking a substantial increase from six to nine years ago.

The declining confidence among Republicans is likely leading to reduction in their enrollment in colleges and universities. Our earlier analyses indicate that, all else being equal, colleges in counties that shifted towards the GOP between 2012 and 2020 saw significant declines in student numbers.

And when looking at actual enrollment data, while in other regions, the share of 18-24 y.o enrolling in 4-year colleges has been growing in the past decade, in the Midwest it has been stagnating.

The Midwest contends with simultaneous declines in educational attainment, population and economic development. This region is caught in a self-perpetuating cycle of economic downturn and educational disengagement, which may lead to more pronounced declines in the future. The widening economic divide threatens the Midwest's competitiveness and viability in a rapidly changing national landscape. This trend, if unaddressed, suggests that today's challenges could merely be the beginning of a more severe deterioration.

Without significant intervention, such as a comprehensive development plan akin to the Marshall Plan, the Midwest risks further economic degradation and a deepening distrust in fundamental American institutions and democratic values