A Strong Economy Can Be Tough on Immigrants

(Bloomberg) —

A strong economy and labor market can be great for U.S. workers as a whole. In some working-class immigrant communities, however, its effects could prove devastating.

At the moment, the labor market is tightest for low-paid service workers. That’s why large corporations are raising their minimum wages so quickly: Starting this year, Walmart employees will make at least $11 an hour. Such jobs now often include paternity benefits and money for continuing education. This is one of the most positive trends in the labor market.

But consider the effects on small-scale immigrant-run businesses. How many of them can afford to pay entry-level workers more than $10 an hour and offer a suite of benefits, too? Those that can’t will find it hard to compete and may have to close. Restaurants face a unique challenge: Training someone to flip burgers is one thing, but finding Indian or Vietnamese cooks is another matter, especially if they need to be bilingual. In my own dining forays, I’ve seen help-wanted signs at more and more restaurants going unfilled for weeks or months.

The next question: What happens to vacant storefronts as restaurants and other labor-intensive businesses close? Any similar new businesses will face the same obstacles. What’s more, a growing economy will push up land values, notably in “class A” urban areas. As a result, developers will set their sights on immigrant neighborhoods, where land is cheaper. The real-estate investment will change the character of such communities, eliminating the relatively old and inexpensive buildings that have given lower-cost businesses a chance to thrive.

At the same time, millennials are getting older and looking to settle down and start families. With housing inventories low nationwide, where will they buy homes? Once again, immigrant neighborhoods will be in play. Just as with commercial buildings, the housing stock tends to be older and cheaper. Redevelopment into luxury townhomes will become a more attractive option than paying for repairs on lower-rent units. Fighting such gentrification will be difficult, because immigrant neighborhoods tend to have low voting rates.

The changing demographics of immigration will play a role as well. Since the 2008 financial crisis, new arrivals have tended to come from Asian countries such as China and India, with higher levels of education and different housing preferences. And the birthrates of immigrants are falling faster than those of native-born Americans, perhaps affording the working-class the ability to live in wealthier communities with better schools. All this will inevitably lead to some hollowing out of older immigrant neighborhoods, even in the absence of economic pressures.

The face of U.S. immigration is constantly changing. The wave of Spanish-speaking immigrants may be coming to an end, much as the Irish and Italian wave did more than a century ago. But this doesn’t mean the end of immigrant communities.

If you’re wondering where the next thriving immigrant scene will develop, look for neighborhoods with aging residents and buildings that are at least 20 or 30 years old. Ideally, they should also have plenty of under-utilized commercial and retail space, located where it can serve as an anchor for the community. In other words, decaying suburbs with dying malls.

Sen is a Bloomberg View columnist.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

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