The Pew Charitable trusts issued an interesting report that shows recent immigrants continue to earn more in the second than first generation, but that their wages do not compare as favorably relative to non-immigrants in the US as they have in the past.

Most Americans assume that immigrants realize economic gains between the first and second generation. Is American not the Land of Opportunity? The Pew report confirms this fact.

More surprising, perhaps, is the finding that wages of immigrants are declining relative to non-immigrant Americans. The Pew report finds that first generation immigrants earned 20% less than typical non-immigrants in 2000, compared to 1970 when they earned 1.4% more (second generation immigrants made 6.3% more than non-immigrants in 2000). The report points to the influence of the immigrant's education on economic mobility, with better educated immigrants doing better, and this passes on to the second generation as well.

Why are the wages of immigrants declining relative to non-immigrants? The Pew report points to the large net increase in the immigration levels that result in many more immigrants with low education entering the US. I think that the report could have also pointed to changes in US immigration law in the late '90's that imposed prevailing wage requirements on many categories of visas used by non-immigrants. In such cases, the non-immigrant is required to be paid a wage equal to or greater than the weighted average paid to all similarly employed US workers in the same geographic area.

See Economic Mobility of Immigrants in the United States for more information.