The impact of immigration

by Russ Roberts on April 3, 2006

in Immigration, Less Than Meets the Eye

The New York Times had a full-page story on immigration in the Week in Review section yesterday. It was a negative piece. A lot of data were presented (see the "Multimedia" link in the Times article) were presented, all negative. A caption under the photograph read:

JOBS LOST AND FOUND At California construction sites
like this one, well-paid work that used to go to native-born Americans
is going to lower-paid immigrants.

That description implies that immigrants take jobs away from native-born Americans. I don’t know of any serious study that shows that. The usual claim is that competition from immigrants lowers the wages of Americans. And sure enough, the Times article has a chart that shows that. Here it is:

Borjas_1
There’s nothing in the graphic that questions whether these numbers are accurate. They’re presented as facts ("Reduced Wages") with no disclaimers about the statistical techniques or assumptions that went into them. Borjas is quoted in the article but no skeptic is quoted about whether these estimates are reliable.  The numbers are about the impact of legal and illegal immigrants even though the article is about illegals, a smaller group. And there’s nothing about the impact on the immigrants themselves from coming to America relative to the country they’ve left behind.

But what’s really misleading and bizarre about the chart is that there’s no visual benchmark for these decreases. Your eye can see that 5.0 is almost twice 3.1. But is 5% a big decrease or a small one?  The way you’d show the size would be to have a bar chart of what average wages are for Asians, Whites, Blacks and Hispanics and then show the average wages that would allegedly exist if there were no immigration. If the data were presented in this way, you’d see how small or large the impact is.

Ironically, just below this chart in the Times article is another chart that does exactly what could have been done with the wages chart. This second chart shows how little the impact on food prices would be if didn’t allow immigration and we had to pick farm products with native-born labor. Farm wages would go up and so would prices. But the impact on food prices would be small, the Times graphic points out, only about two or three cents on the dollar:

Farmprices

So the impact on wages of all immigration, legal and illegal, is about four cents on the dollar. The overall impact on food prices is about two to three cents on the dollar. There’s no differential impact illustrated for blacks or hispanics who are relatively poor. Just a summary "two or three cents" with a nice picture to let your eye see how little two or three percent is. But no corresponding measure for wages.

What a dishonest article. The Times should be ashamed.

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{ 49 comments }

Mickey Klein April 3, 2006 at 1:57 pm

I've seen this kind of trick before with ultra pessimist economic analysis. Its a simple formula: compare a percentage number (without the absolute) to another changing absolute number (without the percentage). Its basically taking the numerator of one and the denominator of another and making a claim on it. In short:

%wage drop/ungiven wage absolute compared to ungiven food expenditure %/absolute food cost.

spencer April 3, 2006 at 2:44 pm

Maybe you should read the referenced paper by Borjas.
http://www.cis.org/articles/2004/back504.pdf

His actual paper estimated that the impact of immigrants was about equally divided between weeky earnings and hours worked.

I am not making any claims about how valid his estimates are.

Half Sigma April 3, 2006 at 3:21 pm

"That description implies that immigrants take jobs away from native-born Americans. I don't know of any serious study that shows that."

No, the description says that salaries are lower, and I don't know how any "serious" economist can deny that when you increase the supply of something, such as labor, the price will go down. What's implied is that immigrants have a comparative advantage in certain industries.

"There's nothing in the graphic that questions whether these numbers are accurate."

One can be certain that the direction is accurate, basic supply and demand once again. The NY Times doesn't normally provide links to backup the data it displays, and this is unfortunate, and you are correct that calculating these numbers is way too complicated to simply display with no information.

"What a dishonest article."

I think the libertarian professor from GMU is being at least as equally dishonest on this issue, because you will grasp at any straw you find to support your view that the U.S. should have open borders and allow anyone in who wants to come, in unlimited quantity.

OneEyedMan April 3, 2006 at 4:09 pm

It does say that the "average annual wage loss for all American male workers from 1980 to 2000 was $1,200"

Which, when I read it, made it seem like a modest effect. It does give you much of the information you need to make estimates of the true size of these effects.

Mickey Klein April 3, 2006 at 4:10 pm

Salaries may drop in certain sectors but that is met with a decrease in the price of goods and shift of the native workforce to higher end industries. In the meantime you may have a temporary decrease in wages for native workers.

We've been doing this for hundreds of years, bringing in multitudes of laborers to push down costs of production in the lower end of the economy and it has made us the wealthiest country in the world even if it has meant increased competition for some workers born here.

There was a time when people born here worked in the sweat shops and strawberry fields, but unfortunately they all lost their jobs or had their wages slashed and now find themselves toiling as desk bound wage slaves.

Robert Cote April 3, 2006 at 4:27 pm

The US has prevailed since the Civil War by virtue of productivity gains. Illegal immigrations reduces productivity. Where's the confusion? Removing the social services burden is an immediate benefit. Then, as the wage/lobor balance is restored the higher costs of labor wil justify investments in productivity. Before long strawberries and lettuce will be harvested by machine, costs will decline and good jobs will be created. Just like every other industry that didn't have their labor/productivity trends disrupted by immoral worker exploitation policies.

John Dewey April 3, 2006 at 4:43 pm

Robert,

I don't understand how it's immoral worker exploitation when my brother hires a Mexican construction worker for $8 an hour or when I pay a pair of Mexican workers $25 to mow and trim my lawn. Who's being exploited?

John Pertz April 3, 2006 at 4:51 pm

I think the historical record clearly confirms that there is absolutely nothing wrong with legal open immigration. Immigration restrictions will utlimately produce black market activity(illegals doing work for less than the prevailing wage). I do not see any wisdom in advocating for increases in immigration law. BTW, to the person who argues that restricting immigration is of net benifit they should probably take a review of what an input cost is. If you are so bold to point out that decreasing the supply of labor will ultimately make us all better off by raising wages then are not wages an input cost factor which are a strong determinate of overall price level? What I am saying is where is the net benifit in raising wages through supply restrictions? You raise one input cost and businesses will ultimately pass the cost along to consumers. It is the same faulty logic that is behind minimum wage advocacy. I think the only thing which will ultimately benifit the whole of humanity is capital formation and increases in productivity . Increases in either of those two factors are not biased to limiting the supply of cheap labor.

John Pertz April 3, 2006 at 4:53 pm

John Dewey:

I think Robert is arguing about illegal immigration which is the ultimate by product of immigration restrictions.

Scott April 3, 2006 at 4:58 pm

Half Sigma, I don't think anyone is denying that an increase in the labour force (illegal immigrants) results in lower wages for the jobs they perform, but why is that bad? Isn't getting the same output for a lower cost increasing productivity? As John Dewey points out, who is being exploited when a farmer hires an illegal immigrant voluntarily?

Scott April 3, 2006 at 5:15 pm

There's a good article on immigration over at Capitalism Magazine. http://www.capmag.com/article.asp?ID=4620

And for those who worry about the entire world coming to the U.S.:

"Suppose that half of the people on the planet moved here. That would mean an unthinkable eleven-fold increase in our population–from 300 million to 3.3 billion people. That would make America almost as "densely" populated as today's England (360 people/sq. km. vs. 384 people/sq. km.). In fact, it would make us less densely populated than the state of New Jersey (453 per sq. km.)."

Half Sigma April 3, 2006 at 5:50 pm

"I don't think anyone is denying that an increase in the labour force (illegal immigrants) results in lower wages for the jobs they perform, but why is that bad? Isn't getting the same output for a lower cost increasing productivity?"

First of all, it's bad for the taxpayer whose taxes are being used to pay for social services to support the immigrants, education for the immigrants' children, law enforcement to put the immigrants in jail when they commit crimes. So the employer's use of illegal immigrant labor creates a significant externality.

And it's bad for American citizens who have to compete for those unskilled jobs. They may wind up unemployed instead and collect welfare and other social benefits, increasing the externality by an even greater extent. College professors don't have to compete for those jobs, so its easy for them to sit in their ivory tower and ponder the "benefit" those unskilled Americans are getting from illegal immigration.

And as far as "productivity" goes, it brings to my mind the image of the same number of laborers producing more, not producing more by increasing the number of laborers.

colson April 3, 2006 at 5:58 pm

I just had a thought occur to me as I was talking to a co-worker about outsourcing. While it isn't quite on-topic, it isn't too far off topic. Has there been any studies that have looked into the benefits or costs related to outsourcing and immigration? What I am getting at in a way is that for the most part, it seems that outsourcing to countries often provides jobs paying at or higher than market rates for the most part. India is beginning to see a re-emergence of a middle class and a more mobile workforce from my reading. When I spent time in the Philippines, you could see the vitality of the Filipino people beginning to be renewed by the amount of outsourcing happening there.

I think companies will begin looking harder at Central and South America as sources for untapped labor and it would be interesting to see some data or a study of the effects of outsourcing to these markets and how they affect immigrant and labor migration to the North. Most of the focus lately has been on manual labor moving north but if the need and opportunity begin to arise to stay and provide labor and services to their home market, it would be one way to ease the worries of those who oppose such "illegal" immigration.

andy April 3, 2006 at 6:27 pm

When free workers are competing with slaves, They both lose. What's worse is for the free worksers to hate slaves, which is more pathetic. The REAL ppl should be hated are the masters of the slaves or the slavary system. However, they are in control of the legislation now.

Steven M. Warshawsky April 3, 2006 at 6:37 pm

This strikes me as an utterly ridiculous point:

"Suppose that half of the people on the planet moved here. That would mean an unthinkable eleven-fold increase in our population–from 300 million to 3.3 billion people. That would make America almost as "densely" populated as today's England (360 people/sq. km. vs. 384 people/sq. km.). In fact, it would make us less densely populated than the state of New Jersey (453 per sq. km.)."

Presumably this factoid is based on dividing 3.3 billion people by the total square kilometers of the United States — hardly a realistic assumption. No population would be distributed in this manner. Did this "argument" come from the Cap Mag article? If the rest of the article is this lame, Cap Mag needs to hire a better editor.

But the real question is: Does "Scott" really believe that America could absorb 3.3 billion people???

John Dewey April 3, 2006 at 6:59 pm

Andy,

Who are the slaves you refer to? Mexicans are risking their lives to get into the U.S. and work. They don't have to risk anything to go back. So surely they aren't the slaves. Who are you talking about?

Robert Cote April 3, 2006 at 7:03 pm

JD: "I don't understand how it's immoral worker exploitation when my brother hires a Mexican construction worker for $8 an hour or when I pay a pair of Mexican workers $25 to mow and trim my lawn. Who's being exploited?"

My children are being exploited. Everything else fades in that light. Haven't you been following my comments? Their part-time and summer job prospects are nil when it is necessary to pay them minimum wage and contribute to SocSec and such as opposed to cash under the table. They suffer from lower quality schools as resources are diverted from education to immigrant support services. Their college prospects are inhibited as in state tuition is granted illegal aliens and the practice of quotas stubbornly remains despite laws and lawsuits. Their lives are endangered by unregistered vehicles driven by uninsured unlicensed drivers who if stopped are not cited because of the futility or if cited are unpunishable. The money that should go to their college funds or summer camp are instead spent on uninsured motorist coverage, higher healthcare premiums, more expensive food, California debt payments, unreimbursed county jail costs, increased pollution from substandard vehiles, increased pollution from congestion, increased pollution from overloaded waste treatment, …

How long is this list John? Anyway, those are just the UNINTENDED CONSEQUENSES of the deliberate policy of the immoral exploitation polices we currently subsidize.

I cannot abide the idea of our luring the best and brightest and most ambitious Mexican/South American/misc citizens from their homelands depriving those poor places of their efforts to improve their own peoples' condition. Call 'em big healthy bucks in the 1820s and ship them forcefully or lure them into a trap with false promises in the 2000s makes no difference. Every poor disenfranchised Mixtecan in Oxnard is one less pair of hands raising Mexico out of its' problems.

Scott April 3, 2006 at 7:09 pm

Steven M. Warshawsky, yes, that quoted paragraph is from the Cap Mag article. Could you please explain how that is "hardly a realistic assumption"? If England is able to achieve such a population density why is it so unrealistic that it could not be similar to the U.S.?

As for your "real question", I guess it would depend on what your definition of absorb is. If you mean, do I think 3.3 billion people could move to the U.S. and that no current "native" Americans would see any negative effect on their income, then the answer would depend on the time frame. In the short run, undoubtedly some "native" Americans would see their incomes fall as there is much greater competition. But I don't see how this is any different than if those same workers were displaced due to technological changes. In the long run, as history has shown, mass immigration will benefit everyone.

Now for my real question for you. Do you think America is better off today because of immigration in the past, or do you think it would be better none of the mass immigration in the mid-19th century and early 20th century occured?

Scott April 3, 2006 at 7:18 pm

Robert Cote, how many of the examples in your list would be gone if there were no illegal immigrants, by which I mean that anyone and everyone who wanted to work in the U.S. was able to? How many of the examples in your list would be gone if government intervention were reduced?

Illegal immigrants aren't responsible for minimum wage laws. Illegal immigrants aren't responsible for race based quotas. Illegal immigrants aren't responsible for Social Security and welfare. Perhaps it's time to address the real root of the problems you mentioned.

John Pertz April 3, 2006 at 7:44 pm

Scott is on track in his analysis. Robert, calm down and think this thing through a little more deeply and you will figure it out. If we restrict immigration to the U.S that means that we will have illegal immigration. If immigration is open or severly deregulated then illegal immigration will not be a problem. Just becuse you legislate that people should not come to the U.S does not mean that they will stop. The fact that poor Mexicans risk their lives for "crap" wages has more to do with the fact that Mexico is not offering a good deal to it's people. If you want to improve the lot of Mexicans and the immigration system in general then we are going to have to discuss how we balance open immigration with welfare programs. If immigration does become open then welfare payments should become minimized. It does the U.S no good to offer universal anything to any citizen if immigration is open. This is a huge problem with the welfare state because it turns countries into "country clubs." Its tough to get in but once you are in the benifits are great.

The best solution IMHO is to alow for relatively open immigration. Obviously some system should exist for checking the backgrounds of new immigrants to make sure that they are coming here with "good" intentions but other than that immigration should be open. Other than that I think a balanced budget amendment would help to smooth the transition and it force us to reevaluate the way that we want to spend what the government brings in. The welfare or warfare state are going to have to give in order to make open immigration work.

scottynx April 3, 2006 at 8:01 pm

Here is Razib from gnxp on the relative intractability of solving massive unskilled immigration vs solving the welfare state:

[...one half of the equation is actually tractible in terms of public policy. america has reduced immigration levels in the past. i do not know of any time when the welfare state has retreated to any extent (someone can correct me). just as michael pointed out that the majority of americans are against high levels of immigration, they are also against "big government." big deal, they still love their mortgage guarantees and federally funded pork programs, just like they hire jose to do landscaping because he'll take $5/hour while john demands $10/hour. i think getting rid of jose is a lot more feasible in the medium term than getting rid of pork projects. that's just my realistic assessment....]
a comment on the post: "Is Jane Galt the New Paul Erlich?" on gnxp.com

Vic April 3, 2006 at 11:04 pm

If America has to completely block immigration, it better stop tourism. By stopping tourism, nobody else from other countries could come and over stay and become illegals!

Little's Blog Things

JohnJ April 4, 2006 at 1:25 am

So you would say that it should not be illegal to run from the cops or even resist arrest? Wow, that's just inarguable, I guess. I honestly don't think I can come up with a way to approach a counterargument rationally.
You are suggesting that people should be able to go wherever they want, whenever they want, without having to let anyone know. Look, I can really understand the desire that people should be able to do this, but it's a lot like the desire that people should have the right to say whatever they want, whenever they want, and reality just doesn't work that way. We can't yell "Fire!" in a theater, we can't picket on the floor of Congress, we can't slander others… Ideals are nice, but reality has to be dealt with.
The reality is that not every country is like America. I know you're just getting ready to try to argue, but I urge you to really think about it. Arguing that we should allow greater immigration is an entirely different argument than saying that there should be no immigration process. Immigration is good and we could possibly stand to have more of it. There's absolutely nothing wrong with people wanting to come to the greatest country in the world. There's nothing wrong with wage competition. We'd certainly have to get rid of our socialist policies were we to consider allowing significantly more immigration. But saying that people should not have to check in with the government that is responsible for protecting their human rights when they enter a country is unreasonable, and unrealistic. At least try to see the other side.

Glen Raphael April 4, 2006 at 2:07 am

Half Sigma: Immigrants increase the demand for labor as well as the supply of it. They buy food and clothes and housing which bids up the price of labor.

Thus, you can only claim the net effect is to reduce wages generally if they produce more than they consume, which would mean they are increasing general productivity which lowers prices – yet another benefit that offsets the alleged "cost" of their lower wages. Add all that up and whatever the effect is, it's probably a lot smaller than your intuitive "add more labor, drive down the price" argument suggests.

[Also note: if their net productivity is positive then society at large benefits from their presence, alleged welfare benefits notwithstanding.]

JohnDewey April 4, 2006 at 7:38 am

"Call 'em big healthy bucks in the 1820s and ship them forcefully or lure them into a trap with false promises in the 2000s makes no difference."

Robert, you know that I highly respect your opinions, but also that we occasionally disagree.

If it were slavery or exploitation, the Mexican workers wouldn't keep coming. Sorry, but I can't equate 19th century slavery with 21st century employment of illegals.

JohnDewey April 4, 2006 at 7:50 am

"We'd certainly have to get rid of our socialist policies were we to consider allowing significantly more immigration."

JohnJ,
I'm all for getting rid of the welfare state. But I don't see why that should be a prerequisite to allowing more immigration. Several economists have determined that immigrants directly pay more in taxes than they receive in government benefits. They also enlarge the economy and give rise to even more tax revenues.

Those studies do not include education costs for a very good reason. Education is considered a public investment in the future. Very few if any parents pay the full cost of their child's public education. Education costs are shared by all the population. In many cases, older empty nest households living in rich neighborhoods pay several times the average in school taxes.

Eliminating public funding of education has almost no political support.

Aaron Krowne April 4, 2006 at 9:24 am

Here is a paper which examines the effect of illegal immigrant labor on the "native" labor market. They make a difficult-to-dispose of case that there is indeed "unfair" crowding of domestic labor, particularly at the low end.

http://www.cis.org/articles/2006/back206.html

I quote:

"There is some direct evidence that immigration has harmed less-educated natives; states with the largest increase in immigrants also saw larger declines in natives working; and in occupational categories that received the most new immigrants, native unemployment averages 10 percent."

Anyway, I am with Half Sigma: I don't see how you can deny the supply-and-demand effects on the labor market. And anyone who makes the case that tax-evasive, substandard-living-conditions labor is *necessary* or *desireable* for our economy (which is supposedly first-world) is undermining the quality and ethical superiority of our system.

Aaron Krowne April 4, 2006 at 9:25 am

P.S. – This blog post is itself extremely biased by being entitled "the impact of immigration". What is being discussed is *illegal immigration*, which in its current levels, is a basically new phenomenon.

Half Sigma April 4, 2006 at 9:57 am

"Immigrants increase the demand for labor as well as the supply of it. They buy food and clothes and housing which bids up the price of labor."

The unskilled immigrants, including all ILLEGAL immigrants which is what I thought we were talking about, earn disproportionately small salaries so therefore increase demand by an amount disproportionately small in relation to their numbers. And a lot of the stuff they buy is imported from other countries

The U.S. is rich because of capital, not labor. If economic production were all about labor, then we'd be tiny economic power comapred to China and India. If we want to continue to be rich, we don't want to make ourselves more like China and India, we want to make ourselves more like the country of decades past.

John Dewey April 4, 2006 at 11:00 am

"If we want to continue to be rich, we don't want to make ourselves more like China and India, we want to make ourselves more like the country of decades past."

Half Sigma,

What exactly does this statement mean? What decades past are you referring to?

Were you referring to the 1960's and 1970's when the Cuban-American population swelled from 100,000 to a million? The U.S. government at that time granted "amnesty" by allowing Cubans to stay and work after their visas expired.

Did you mean the 20 years after 1975 when 1.5 million Vietnamese immigrants arrived here?

Or perhaps you meant earlier? such as the 1900's when 125,000 Filipinos were brought to Hawaii to work on sugar plantations?

Do you want to return to those glorious days of the 1870's? That was when European-American workers, reacting to tough economic times, demonstrated against Chinese immigrants in hopes the jobs of the latter would be taken away. That led to one of our nation's crowning legislative achievements: the Chinese Exclusion Act.

What decade do you want revert back to?

John Pertz April 4, 2006 at 11:43 am

The fact that exploitative illegal immigrant jobs are in the U.S is a function of the fact that immigration to the U.S is restricted. As long as it is regulated then you will have to deal with the fact that certain people are going to work for below market wages just because those "crappy" wages are superior to what is being offered from the country of their origin.

I am not going to sit here and pout about it. Remove the restrictions and the illegal immigration stops. BTW, nobody is denying the S and D effects its just I dont think that it is of net benifit or detriment if the supply of labor is reduced or expanded. Wages are an input price of final prices so as they move up and down final prices adjust. The only way that wages can go up and be of net benifit is if it is due to gains in productivity.

Half Sigma April 4, 2006 at 12:28 pm

"The fact that exploitative illegal immigrant jobs are in the U.S is a function of the fact that immigration to the U.S is restricted. As long as it is regulated then you will have to deal with the fact that certain people are going to work for below market wages just because those "crappy" wages are superior to what is being offered from the country of their origin. "

An interesting paragraph that deserves further consideration.

FACT 1: People in other countries, especially poor countries, see living in the U.S. as more desirable than living where they currently are.

FACT 2: We have decided that we don't want as many people moving here as want to move here, so we restrict the numbers who can legally come here. Somewhat arbitrarily.

FACT 3: People who don't luck out and get a green card still want to come here because they see living illegal in the U.S. as more desirable than living where they currently are.

Well, the problem isn't unfixable as suggested. All we need to do is make living here as an illegal LESS DESIRABLE than not coming here, which we do by actively deporting illegals that are found, denying illegals services like healthcare and education, denying citizenship to babies of illegals born here, etc. We also make it harder to get here illegally by building a fence, increasing the expense of getting here illegally making it even a worse deal.

Mickey Klein April 4, 2006 at 12:28 pm

The drain on social services could be cured instantly if the illegal workers were legalized and their incomes taxes just as our's are. The problem is that the government chooses the "stick-the-head-in-the-sand" approach, by letting in laborers the market demands, giving them social services, not taxing them, and then complaining about giving social services to illegal workers who don't pay for them in taxes.

The loss of government money to illegal immigration could be very simply solved by letting in the laborers we need (need being determined by market forces) and then taxing them appropriately.

Mickey Klein April 4, 2006 at 12:32 pm

Also, Half Sigma, denying citizenship to babies born here is extremely unconstitutional.

John Dewey April 4, 2006 at 12:37 pm

"denying citizenship to babies of illegals born here"

That requires a constitutional amendment, one that has about zero chance of getting passed or ratified. As long as Democrats believe that Mexican-American citizens will continue to vote Democratic, they're not going to support such an amendment.

John Dewey April 4, 2006 at 12:54 pm

"The drain on social services could be cured instantly if the illegal workers were legalized and their incomes taxes just as our's are."

Mickey, I agree somewhat, though I question the magnitude of the alleged drain on social services.

One problem I see is that taxed immigants will likely qualify for Earned Income Tax Credits. Once they are legal, many low-income immigrants should start receiving tax "refunds". Also, if legal immigrants are required to pay FICA taxes, they will then qualify for all forms of Social Security, including disability payments not now available to them.

Economists have estimated that the marginal tax contribution of illegal immigrants currently exceeds the marginal cost of benefits received, excluding education. Thanks to our perverse tax laws and system of entitlements, the post-legalization tax revenues may drop while the benefits will certainly increase. Education taxes and costs will not change.

Mickey Klein April 4, 2006 at 1:18 pm

If they were to pay taxes, why not recieve the same refunds that others who pay taxes too? And if their paying FICA taxes, why not give them social security and disability payments like everyone else who pays FICA taxes gets?

In fact, a flood of young workers into the social security system may be what it needs to remain sustainable in light of the ageing native population.

Half Sigma April 4, 2006 at 2:18 pm

"denying citizenship to babies born here is extremely unconstitutional"

I'm aware of the Constitution, I mentioned it because it's a bad policy. The Framers didn't envision our current problem with illegal immigrants. Yes, it has to be changed, either by a vote of 2/3 of both Houses of Congress or a Constitutional Convention, and then ratification by 3/4 of the states.

"a flood of young workers into the social security system may be what it needs"

Not a flood of workers making below minimum wage who will eventually collect more than they pay in making a bad situation even worse.

johnny bonk April 4, 2006 at 2:25 pm

Dudes,
Just a perspective from here in England – it seems so very un-american to be mean spirited towards immigrants.
JB

BridgetB April 4, 2006 at 2:43 pm

Call me crazy but that article wasnt about immigration or its impact on the economy at all. It was a thinly veiled attempt to yet again promote minimum wage laws and increases in minimum wage.

John Dewey April 4, 2006 at 3:19 pm

Johnny bonk,

I agree it sounds that way, but I'm not so sure the anti-immigrant folks are mean-spirited. Some have legitimate complaints, though they haven't offerred solutions that are acceptable to a majority of the population. Mass deportation is not going to happen, and everyone knows it.

I think many have trouble accepting the argument that immigrant labor increases our standard of living. I also suspect that California may face far different immigration challenges than the rest of the U.S.

John Dewey April 4, 2006 at 3:31 pm

Mickey,

Most recipients of Earned Income Tax Credits end up with negative taxes: their refund far exceeds what they've paid in income taxes. So it's not really a refund but instead a form of welfare. The problem is not with the immigrants, but with the negative tax itself.

Immigration foes claim that illegal immigrants are not paying their fair share. But the fair share for low-income legal immigrants and citizens is generally less than $0. The U.S. is actually getting a break by not having to pay E.I.T.C. to the illegals.

Mickey Klein April 4, 2006 at 3:38 pm

That’s ridiculous. Its almost as if the earned income credit is a subsidy for native born poverty.

John Dewey April 4, 2006 at 4:09 pm

Milton Friedman proposed the negative income tax nearly 40 years ago in his book "Capitalism and Freedom".

E.I.T.C. wasn't implemented until 1975. Like most government transfers, it started out small but kept on growing. Maximum benefit was $400 in 1975, and grew to $1200 by 1992. Clinton and the Republican congress tripled the benefit in 8 years. The maximum benefit now exceeds $4,000.

In theory E.I.T.C. was supposed to replace other welfare payments and provide an incentive for work. I'm not sure that's what actually happened.

Tom Kelly April 4, 2006 at 5:24 pm

Gentlemen, join the 21st century! There is no immigration or emigration, it is a closed system called Earth.

The global standard of living is determined by global productivity. Restricting movement of any productive asset on the planet lowers total productivity and lowers the global standard of living.

The only asset that appreciates in absolute value over time is the human mind- therefore it is the most important asset that must be free to move to it's highest and best use.

Sections of the planet (current nomenclature, "countries"), that restrict the movement of valuable assets in or out are doing so at their peril. Freedom is prosperity!

Andrew Kronenberg April 4, 2006 at 8:10 pm

This is my final post on this subject, as neither Professors Roberts – under whom I studied and tremendously respect – nor Boudreaux understand this issue. Never mind the New Joke Times.

Forgive the weakness of this argument, but I’m forced to use it, and it clearly applies: unless you live around or within general proximity of the border, you have no idea what you are talking about on this issue. This is the most likely reason for the huge disconnect between politicians, academics, and people who live near the Mexican border, and people who don’t.

I have not read the NYT article (I don’t read the NYT, nor believe what they say, different story), but from Professor Roberts’ comments above and the story itself, there is a glaring problem with the entire scenario: there is absolutely no way to measure the true impact of underbidding and worker displacement/substitution in the southwest labor market, as almost none of the illegal labor involved reports it because it is in their interest not to – and hence pay no taxes – and the employers have a vested interest not to report it as well, as it is ILLEGAL – and most of them aren’t paying payroll taxes on it.

This is absolutely true in construction. Any day of the week, I can walk 10 minutes from my affluent gated Mesa neighborhood to Home Depot (Puedes hacerlo. Podemos ayudarte), and there will be a gathering of what are called “day laborers,” i.e. low-wage Mexican immigrants, most illegal, for hire. Some are relatively skilled, i.e. masonry, tile, and concrete layers, and others are generalists, or what would be considered unskilled.

This has an effect on wages. There is no way it can’t, given the number of labor buyers and housing boom in this market. And it does “take jobs away.” (There is an offset here as well: Manuel gets the job at a lower cost to James, who is better off, until Manuel gets injured at his next job and takes advantage of James’ free healthcare system – free to Manuel. That’s not counting the other concealed costs, like education of Manuel’s kids, English translation services, etc. You get the idea.) Because of the black-market that has evolved, it is not easily measured either on the supply or demand side.

Phoenix has even put up “day-laborer centers,” thereby exacerbating and encouraging the problem. Many areas have posted signs “No day laborer pickup here. Violators prosecuted” but many more gatherings spring up elsewhere.

Side note: The Dallas Fed estimates Mexicans – legal & otherwise – remitted $20 billion (3% Mexican GDP) back to Mexico in 2005. [http://www.dallasfed.org/research/swe/2006/swe0601c.html ]

The problem with our acceptance of the current situation is manifold: what happens when this housing boom ends (shortly)? If [many of] these people are poor and unskilled in Mexico, what size problem are we importing? What is the total impact on our infrastructure, schools, etc? Given our generous welfare state (not present during other waves of mass-immigration), we are sitting on a potential time bomb if we start granting full access to state services. With our current non-enforcement scenario, we have no way of separating the “good” immigration effects (increased potential labor force), from the attendant “bad” effects (increased trans-border drug- and human-trafficking, increased property crime, etc.) That’s why the “speed-limit analogy doesn’t apply to this scenario: in most municipalities, some attempt is made to enforce speed limits and traffic laws. That’s not the case with immigration law.

There is another more sinister dynamic at work here: what happens if we start issuing driver’s licenses and allowing “undocumented immigrants” to vote? Answer: AZ, NV, CO, TX go blue – bigger welfare state, higher taxes, stifled growth. This is a blueprint for Democrat hegemony into the 22nd century, and constitutes an enormous transfer payment to the Mexican government, hence, their vested ineptitude and unwillingness to reform their own economy now.

Given our government’s inherent inability to detect economic problems, and historical propensity to cause them, it’s probably not in our best interest to blindly allow this to continue.

Greg April 4, 2006 at 9:32 pm

A big reason people hire illegal day labor is that it's not just cheap, it's easy. What if we leveled the tax and regulation playing field between legal and illegal? In southern CA construction, hiring a day laborer for $10/hr cash is considered cheaper than hiring a documented worker for minimum wage ($6.75/hr). Labor regulations discourage documented work and make undocumented status pay. Cut the marginal tax rate for low wage workers, cut the regulatory burden on employers, and let undocumented workers compete on a level playing field. I think a lot of legal workers would pick up $10/hr work if they got to keep the $10. Revorm Social Security by switching to funding it with a gasoline tax. It'll never happen, but I wish someone would try…

Tom Kelly April 4, 2006 at 11:41 pm

Andrew:

Day labor is only the visible tip of the iceberg. I have lived on the border for my entire adult life and business career.

The 90% invisible part of the iceberg are the millions of "documented" illegal immigrants. I'm sure I've employed many in my years of business though I have no way of knowing who is or isn't.

Since 1986 they have shown up for jobs with authentic looking driver's licenses and social security cards. As long as these documents look authentic, we have complied with the law.

These documented illegal immigrants pay taxes, often own homes, and participate in our economy like any other person does. The day laborers that I have hired, not for business, but to help with the occasional home landscaping project, are always recent arrivals who have not yet gotten their hands on good enough documents and learned the minimal "skills" necesary for a "real" job.

But all this is still minutae. Let's look at the global picture. Anything that helps our poor brothers and sisters around the world to be more productive also helps us as citizens of the only entity that is enduring, Earth.

There's no reason why construction workers should be exempt from the same global competitors that are now faced by computer programmers, phone salespeople, and any number of other occupations.

There's also no reason why we should, as consumers, not enjoy the benefits of this global competition to best meet our wants and needs on the most favorable terms to each of us.

Freedom works, have faith in it.

JohnJ April 5, 2006 at 1:47 am

John D, you make some excellent points.
I don't think anyone is advocating the oppression of groups of people. People are responding emotionally with arguments that appeal to different aspects of their fears and ideals. Many considerations need to be taken, aside from purely economic ideas. While it would be nice if the labor "playing field" were leveled off, it's not gonna happen. I wish it would, but it's just not going to. As for attempting to deport the estimated 12 million illegal immigrants, also unlikely. Again, there are legitimate, non-racist reasons that make it a compelling argument, but it's not realistic. Ideals are what we should do, but ideas are what we do. Ideals take much longer to implement. The only reasonable alternative I see is to offer a program to illegal aliens that would give them incentives to get themselves on the rosters. The rosters are the really important part. That's how we keep track of people, make sure they're being treated fairly and paying their taxes, and how we identify them should they die and get tossed without identification. Popular support is also a serious consideration. People, in general, aren't in favor of amnesty. Arguements that our immigration rules should be more flexible are also valid. I don't know what the current rules are, and I would wager that most of the people in here have very little of an idea as well, since I see no one providing facts and statistics as to how many people come into the country from a region over a given period of time, or how many people are waiting in line, or even how many different ways there are to come into the country (i.e. student visas, work visas, general immigration). It would seem to me that any reasonable discussion of immigration should contain these facts. Also, many people seem to enjoy equating being against illegal immigration with being against immigration. I think a reasoned discussion of the facts would separate those two issues. I suppose I'll have to break down and blog about it myself.

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