Inequality of labor market earnings has increased over recent decades, with the US economy experiencing a period of polarizing wage growth due to changing technology and the importance of highly educated workers (Autor, 2009; Jones, 2009; Steelman and Weinberg, 2005). This growth has not been uniform across occupations. Those requiring high skill and more education, such as managerial and professional occupations, have benefited with rapid growth, as have service-oriented occupations needing the least education. Autor (2009) suggests these low-paying jobs are difficult to automate, cannot be outsourced, and require in-person performance.

At the same time that inequality has been rising, the composition of the American workforce has shifted to a higher proportion of foreign-born workers, from 5.2 percent in 1970 to 15.6 percent in 2007 (Newburger and Gryn, 2009). Some researchers consider foreign-born workers an important component of the economy as they offer a large supply of labor for jobs that are plentiful and difficult to fill (Enchautegui, 1998; Orrenius, 2003; Ottaviano and Peri, 2006; Hanson, 2007). Others argue that the abundance of foreign-born workers depresses natives’ wages and may provide a less expensive substitute for native workers (Borjas, 2003; Orrenius and Zavodny, 2006; Hanson, 2007).

This research attempts to examine how the growth of foreign-born labor may have contributed to rising earnings inequality. An influx of foreign-born labor with different human capital endowments may have macro level effects on inequality. In this research, we use the changing prevalence of occupations as an indicator of the changing industrial and technological bases of the US economy. Our examination of educational attainment and earnings within occupations serves as an indicator of changing human capital endowments in the US labor force and the changing returns on human capital.