Labor Outsourcing in the United States

In a recently published article, Capps, Fix, and Fortuny (2007) said that “immigrants are playing an increasingly important role in the U. S. labor force – at both the lower-skilled and higher-skilled ends. ”  The authors further stated that with the improvements in the educational attainment of natives, especially women, there has been a decline in the numbers of native workers in the low-wage work force. Thus, the immigrants were filling the demand for lower-skilled labor.

This view was supported by Kremer and Watt, stating that “as more immigrant women serve in household positions, more high-skilled native women are available to join the labor market…” (2006). In a tabulation presented by Borjas in 2002, he showed that immigration has become a major component in the demographic changes in the United States (Table 5). Table 5. Flows of Immigrants Relative to Population and Labor Force * Average for 1901-10 and 1911-20. Sources:  John M. Abowd and Richard B.

Freeman, Immigration, Trade, and the Labor Market, 1991:  4; U. S. Bureau of the Census, Historical Statistics of the United States, Colonial Times to 1970, 1975:  105, 131. With these figures, Borjas discussed that since 1940, the number of legal immigrants has “increased at a rate of 1 million per decade. By the eighties, about 600,000 legal immigrants were being admitted each year, making a rate of about 6 million per decade. ” Indeed, U. S. immigrants have become a large and growing share of U. S. workers.

However, they are disproportionately represented at the low-wage and lower-skilled end of the labor force. In 2005, about 21 percent, or a fifth, of the total of low-wage workers in the U. S. were immigrants, 45 percent, or almost a half, of which have not graduated from high school. Focusing on the development of women’s status in their participation in the U. S. work force, the demand for immigrant low-wage workers has increased, thus the influx of foreign private household workers in the United States.

However, American economists are debating on the effects of migration to the economy of this country. Then again, Kremer and Watt defend that “since high-skilled natives with a higher opportunity cost of time are more likely to purchase domestic services from immigrants, native high-skilled workers will spend more time working in the labor market. ”  They further argued that the increase in the labor supply to the market of high-skilled women natives leads to the reduction of wage inequalities among natives.

In addition, the said increase in labor supply also provides fiscal benefit to the population since the transfer of labor of high-skilled women from home production to market work produces taxable income. This is even without considering the taxes paid by the migrants themselves. Kremer and Watt further claimed that “assuming immigration levels of 7 percent of the total labor force, relative wages of native low-skilled workers are increased by 3. 9 percent, and native welfare overall is increased by 1. 2 percent. ”


Through the years, American women have struggled to have equal opportunities with men. Before and during World War II, women were traditionally viewed as merely home workers or homemakers. But in the succeeding years, women fought for their rights to have equal opportunities with men. In the recent decades and until now, women perform more significant jobs that contribute more to the American society. Tinges of the traditional view still remain, as women still carry a great responsibility in home care and child rearing.

However, with their opportunity to gain higher educational attainment, American women have also gained opportunities to high-wage occupations. With the increase in their wages also came the demand for more time from these highly-talented women, thus leaving the domestic chores to helpers. The increase in the numbers of women going to high-wage occupations, the number of native women in the low-wage work force has correspondingly decreased. This led to the need to outsource low-wage workers such as nannies, caretakers, and housecleaners, to fill in for the necessary domestic work.

The influx of immigrant low-wage workers has caused demographic changes in the population of the United States. In the same manner, however, the entry of immigrant workers has also benefited the U. S. economy. Women’s and immigrants’ entry to the U. S. work force has contributed more tax dollars to the general coffers.


  • Borjas, George J. Immigration. EconLog, The Library of Economics and Liberty, 2002. Available http://www. econlib. org/LIBRARY/Enc/Immigration. html.
  • Capps, Randy, Michael Fix and Karina Fortuny. Trends in the Low-Wage Immigrant Labor Force, 2000-2005. The Urban Institute,  March 2007.