American dream falters

Second generation immigrants' financial progress slows.

Lionel Santibañez is better off because his parents came to America. His father was illiterate and his mother spoke little English when they arrived in Texas from Mexico in 1980. But they sacrificed, saved, and pushed their kids into good schools – and today Mr. Santibañez is a college graduate who works at the M.D. Anderson Cancer Center in Houston as a scientific editor.

"Absolutely I've had more opportunity than my parents," he says.

Raja Patel, on the other hand, is a second-generation immigrant who worries whether he's lived up to his parents' example. True, he's got a good job as a network engineer for an investment bank in New York City. But his father – who emigrated from India in the late 1960s – was a civil engineer who owned small stores on the side.

"I'm definitely not doing better financially than my dad," says Mr. Patel.

For hundreds of thousands of immigrants to the US, the American dream lives. Their families prosper, with their children becoming more affluent than they were, according to a new report.

"The American engine of economic assimilation continues to be a powerful force," concludes the Pew Charitable Trust study of immigrant economic mobility.

But it's a force that may be faltering. The gains of second-generation immigrants have shrunk in recent years – in part because first-generation immigrants now are poorer than at any time since World War II.

"I've been studying this stuff for a long time, and I was surprised by the amount of the first generation that is in bad shape," says Ron Haskins, the study's author.

The United States is now experiencing a wave of immigration comparable to the largest in its history. More than 1 million immigrants enter the United States legally every year, up from about 300,000 in the 1960s. An estimated 500,000 illegal immigrants also enter the US annually, according to Pew.

The effect this influx has on the pay and prospects of nonimmigrant workers is a contentious issue. Some economists forcefully argue that immigration hurts the poor already present in the country – particularly poor African-Americans. Others insist that the US economy is large enough to accommodate the newcomers easily.

The experience of the immigrants themselves, and the progress of their children, may receive less political attention. Yet immigrant economic mobility – or lack of it – could affect the US economy as a whole profoundly in coming years.

The American economy remains an escalator, carrying many children of immigrants to a better life, Pew found. Second-generation immigrants do much better than their parents, on average. They do so well, in fact, that they surpass the earnings of those whose families have lived in the US much longer. Second-generation immigrants make 6.3 percent more than nonimmigrant workers, according to data compiled by Pew.

Often this jump for the children is due to parental initiative and hard labor. David Hul's mother and father, for instance, fled Cambodia's cruel Khmer Rouge regime during the era of the Vietnam War. They came to the US in 1981, eventually settling in Lowell, Mass.

Lack of English meant that Mr. Hul's father – an engineer – had to work long hours to eventually reach an employment level commensurate with his skills. Meanwhile, the senior Huls ran a convenience store on the side.

Hul, a Boston-based marketing manager for a technology firm, says he has not had to worry about making a living as much as his parents did. He says he's confident he will eventually be more financially successful than they were.

But he knows his parents' drive helped him to his current economic position.

The nationality diversity of immigrants – both illegal and legal – today is far different from in decades past. In the 1960s, Europe and Canada accounted for half the newcomers to the US. Now, they make up less than 20 percent.

Meanwhile, the percentage of immigrants from Latin America, the Caribbean, and Asia has jumped from about 50 percent in the 1960s to nearly 75 percent.

The educational mix of immigrants has remained relatively constant. The proportion of those with advanced degrees, at 12 percent, and those with a high school degree or less, at 52 percent, is about the same today as it was before 1970, according to Pew. .

However, the educational differences between immigrants from different regions of the world is "stark," in Pew's terminology. Half of Asian immigrants have at least a bachelor's degree. Half of Latin American immigrants haven't finished high school.

Not surprisingly, education plays a large role in the lives of many immigrants who have done well.

Kent Lee is a senior research scientist at a medical device technology firm in Minneapolis. His father, who immigrated to the US from Taiwan in 1954, was the first person in his family to attend college. His mother came to the US in 1972 as a graduate student.

Mr. Lee remembers a constant focus on education from his parents. In the end, he and his two sisters all had the chance to attend college and graduate schools.

"It all depends on what base you come from," Lee says. "If you come from a family with an emphasis on good education, you can do well."

Overall, however, second-generation immigrants are not doing quite as well as they used to. Their income lead over nonimmigrant workers has shrunk, from 14.6 percent in 1970 to 6.3 percent today.

In part this is because their parents aren't doing as well, either. In 1970, the relative wages of first-generation immigrants were slightly higher than those of nonimmigrants. By 2000, their wages had fallen to 19.7 percent below those of nonimmigrants, according to Pew.

If this decline continues apace, wages of second-generation immigrants will fall below nonimmigrant pay by 2030.

"If low wages persist into the second and subsequent generations for substantial numbers of immigrants, economic hardship may persist beyond the first generation and assimilation into American society may become more difficult," says the Pew report on immigrants and economic mobility.

Not that assimilation is a snap now. After all, it's a process that involves more than money.

Take Wade Tsai, who, as a small boy, immigrated to the US from Taiwan with his parents in the late 1970s. His parents sweated when he was young, working at a series of restaurants, among other jobs, to ensure that Mr. Tsai and his sister could go to college.

But for all the years they have spent in the US, the parents remain tied to old tradition and culture. Tsai's mother still cannot speak English well, despite the fact that she was a cashier for many years. Neither she nor her husband was much help for their children when it came to adapting to American ways.

Today, Tsai is an engineering manager who lives in Seattle. He says that he has had to learn things that people who grew up in the US seem to know from birth, such as how to interact and the toughness of competition in business.

"You just kind of learn it as you go," he says. "So that's the most challenging part about being the second generation, because you have this disconnect between the old-school culture you've emigrated from, and the one you've come to."

• Elizabeth Armstrong Moore contributed from Portland, Ore.