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A Comparative Analysis of the Economic Status of Native-Born and Foreign-Born Residents of Minnesota

by Sanjukta Chaudhuri
January 2019

According to the 2017 one-year American Community Survey (ACS) estimates, 13.7 percent of the U.S. population is comprised of foreign-born people, defined as those who reside in the domestic United States but were born outside of the United States, and could be either naturalized citizens or non-citizens. In contrast to the national share, only 9 percent of Minnesota's residents are foreign-born. However, between 2005 and 2017, 41.4 percent of Minnesota's population increase has been from an increase in the foreign-born population residing in the state. During this same time span, our foreign-born population increased by 36 percent, almost 10 times more than the native-born population growth of 3.7 percent. As a result, the contribution of our foreign-born population is of increasing importance to the economic vibrancy of Minnesota.

This article presents a comparative analysis of the economic status of native-born and foreign-born residents of Minnesota. This is important to Minnesota's labor market because of the increase in the share of foreign-born population in the state and the growing need to attract foreign-born workers into Minnesota's labor market to offset the impact of an aging and largely native-born generation of baby boomers. The indicators of economic well-being and labor market outcomes considered include educational attainment, labor force participation rate, unemployment rate, median earnings, and occupational and industry status.

Table 1. Population of Minnesota, 2005-2009 and 2013-2017
Population Numbers of Minnesota 2009 2017
Total Population of Minnesota 5,266,215 5,576,606
Native-born 4,908,654 5,090,363
Foreign-born 357,561 486,243
Foreign-born; naturalized Citizen 158,320 254,798
Foreign-born; not a U.S. citizen 199,241 231,445
% of native-born and foreign-born residents of Minnesota
Native 93 91
Foreign-born 7 9
% breakdown of foreign-born residents between citizens and non-citizens
Foreign-born; naturalized Citizen 44 52
Foreign-born; not a U.S. citizen 56 48
Source: 1-year ACS estimates (2009 & 2017)

Characteristics of foreign-born population residing in Minnesota

Country of origin and citizenship status: With the most recent information available from the 2017 one-year ACS data, the largest share of foreign-born Minnesota residents hailed from Mexico (12.6 percent), followed by Somalia (8 percent), India (6.4 percent), Ethiopia (5.5 percent), and Laos (4.7 percent). Together these five countries comprise 37 percent of the foreign-born population of Minnesota. These are followed by Korea (3.6 percent), Liberia (3.5 percent), Vietnam (3.5 percent), China (3.5 percent), and Thailand (3.1 percent). 52.4 percent of foreign-born residents were naturalized citizens, which has increased since 2009 when it stood at 44.3 percent.

Figure 1. Country of Origin of Foreign-born Population Residing in Minnesota, 2017

Race/ethnicity and Hispanic/Latino origin: According to 2017 one-year ACS data, race and ethnicity of the foreign-born population follows their country of origin closely. Since the largest percentage of foreign-born people originate in Asia, most identify as Asians or Pacific Islanders (32.8 percent). Asians are followed by white (26.7 percent), Black (27.9 percent), some other race (11.0 percent), and two or more races (1.6 percent). Roughly 20 percent of foreign-born people are of Hispanic or Latino heritage.

Table 2.
Race breakdown of foreign-born residents of Minnesota, 2017 % Frequency Distribution
White 26.7
Black 27.9
Asian or Pacific Islander 32.8
Other race 11.0
Two major races 1.6
Source: 1-year ACS estimates (2017)

Age composition: The age composition of a population is an important indicator of its likely contribution to the workforce. A younger population is deemed more vibrant than an aging population. In Minnesota, compared to the native-born, the foreign-born population is more likely to belong to the vibrant working age (i.e., ages 16 through 65). In 2017, 83.2 percent of the foreign-born population belonged to the working age population, and only about 9 percent were seniors (i.e., 65 years or older). In contrast, only 63.3 percent of the native-born population belonged to the working age cohort, while more than 15 percent were seniors older than 65. Given the stalled birth rate of the native-born population and the younger age composition of the foreign-born population, maintaining the vibrancy of Minnesota's future labor force will depend significantly on the continued and growing presence of foreign-born people in its overall population.

Table 3. Age breakdown for foreign-born and native-born populations, 2017
Age Foreign-born Native-born
15 or less 7.9 21.6
16 through 65 83.2 63.3
Over 65 8.9 15.1
Source: 1-year ACS estimates (2017)

Economic Characteristics: Comparison of native-born and foreign-born populations in Minnesota

Education: Compared to the native-born population, the average foreign-born person is less educated, but the educational attainment of the foreign-born population tends to be extreme. On one hand, more than a quarter of foreign-born people have less than a high school degree, compared to only 5 percent for the native-born population. Only 20 percent of the foreign-born population completes a high school degree or equivalent, compared to 26 percent of the native-born population. At the college level 21 percent of foreign-born people have some college or an Associate's degree compared to 34 percent of native-born people. 18 percent of foreign-born people complete a Bachelor's degree compared to 23.5 percent of native-born people. However, at the advanced graduate or professional degree level, foreign-born people tend to outdo the native-born people with 15 percent achieving an advanced degree compared to 11.5 percent of the native-born population.

Labor force and poverty indicators: The data also show that compared to native-born people, foreign-born people tend to participate in the labor force more frequently, but face a higher unemployment rate and higher poverty rate. In 2017 the labor force participation rate was 72.2 percent for foreign-born people aged 16 years and over and slightly lower for native-born people at 69.6 percent. The unemployment rate for foreign-born residents was much higher at 4.3 percent compared to 2.9 percent for native-born individuals. Likewise, the individual poverty rate tends to be higher among foreign-born individuals (19.3 percent were below the poverty level in 2017 compared to 9.7 percent of native-born individuals).

Annual earnings of full-time, year-round workers: the median household income for the foreign-born population is $53,063, compared to $66,807 for native-born workers. Thus at the median, households comprised of foreign-born people earn 20.6 percent less than households comprised of native-born people. As for income of individuals, foreign-born women are the worst off, earning only $36,632 annually at the median. Foreign-born males earn $41,935 at the median. In contrast, native-born males earn $55,363 while native-born females earn $44,797 at the median.

21.2 percent of foreign-born individuals earn less than $25,000 annually compared to 12.1 percent of native-born individuals. At a higher income range, only 38.1 percent of foreign-born individuals earn $50,000 or more annually, compared to 52 percent of native-born individuals.

Table 4. Share of native-born and foreign-born populations in Minnesota (2013 -2017 estimates) by education, labor force, poverty, and earnings
Educational Attainment (25 years and older; 2013-2017 ACS) Native-born Foreign-born
Less than high school graduate 5.2 26
High school graduate (includes equivalency) 26 20
Some college or associate's degree 33.9 21.1
Bachelor's degree 23.5 17.9
Graduate or professional degree 11.5 15
Labor force and poverty indicators
Labor force participation rate 69.6 72.2
Unemployment rate 2.9 4.3
Below poverty level 9.7 19.3
$1 to $9,999 or less 1.4 1.6
$10,000 to $14,999 2.2 4
$15,000 to $24,999 8.5 15.6
$25,000 to $34,999 14 20.1
$35,000 to $49,999 22.3 20.6
$50,000 to $74,999 25.7 17.8
$75,000 or more 26 20.3
Median earnings for full-time, year-round workers
Male 55,363 41,935
Female 44,797 36,632
Median household income 66,807 53,063
Source: 5-year ACS estimates (2013-2017)

Occupation and Industry: Foreign-born individuals fill a wide range of occupations, including unskilled, semi-skilled, and highly-skilled ones. Among full-time employed workers, foreign-born employees work as assemblers and fabricators (4.8 percent), software developers, applications, and systems software (4.2 percent), chefs and cooks (3.4 percent), personal care aides (2.5 percent), and first-line supervisors of sales workers (2.4 percent). They also work as computer scientists and systems analysts, packers, physician and surgeons, registered nurses, and managers. Foreign-born individuals track into a wide variety of industries as well, including hospitals (7.5 percent of full-time foreign-born workers are located in this industry), eating and drinking places (5.6 percent), construction (5.1 percent), computer and data processing services (4.4 percent), and medical, dental, and optical instrumental supplies (4.3 percent). Foreign-born individuals also work in colleges and universities, health services, meat products, insurance, and department stores.

So far, this article has shown that foreign-born individuals have mixed success in the Minnesota labor market. Many earn less than the native-born, face higher unemployment rates, higher poverty rates, and usually have less education than native-born people. The labor market success of foreign-born individuals is potentially associated with their country of origin, length of residency in the United States, educational attainment, citizenship status, and perhaps even proficiency in speaking the English language.

Citizenship status: In Minnesota amongst foreign-born individuals, naturalized citizens have more education than non-citizens. For example, 40 percent of naturalized citizens have high school or less, whereas 54 percent of non-citizens have high school or less. 60 percent of naturalized citizens have at least an Associate's degree, whereas only 47 percent of non-citizens have at least an Associate's degree. Naturalized citizens earn more at the median than non-citizens. For example, 15.5 percent of citizens have an annual income of less than $25,000 compared to 28.2 percent of non-citizens. Males who are citizens earn $47,423 at the median compared to $36,883 earned by non-citizen males. Similarly, women who are citizens earn $40,165 compared to $30,820 earned by non-citizen females. Citizens also tend to have a lower rate of individual poverty (14.5 percent) than non-citizens (24.2 percent).

English proficiency: In Minnesota 44.2 percent of foreign-born individuals speak English less than "very well". This increases to 52.8 percent for those who are non-citizens and is 35.9 percent for those who are naturalized citizens. Given that previous research has demonstrated that a positive association between higher spoken English proficiency and labor market success, the association between English proficiency amongst foreign-born individuals and labor market indicators is worth exploring further.

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