April 17, 2006

IF ONLY NATIVISM HAD ANYTHING TO DO WITH THEIR REAL EFFECT ON OUR ECONOMY AND CULTURE:

Cost of Illegal Immigration May Be Less Than Meets the Eye (EDUARDO PORTER, 4/16/06, NY Times)

Since 1980, eight million illegal immigrants have entered the work force. Two-thirds of them never completed high school. It is sensible to expect that, because they were willing to work for low wages, they would undercut the position in the labor market of American high school dropouts.

This common sense, however, ignores half the picture. Over the last quarter-century, the number of people without any college education, including high school dropouts, has fallen sharply. This has reduced the pool of workers who are most vulnerable to competition from illegal immigrants.

In addition, as businesses and other economic agents have adjusted to immigration, they have made changes that have muted much of immigration's impact on American workers.

For instance, the availability of foreign workers at low wages in the Nebraska poultry industry made companies realize that they had the personnel to expand. So they invested in new equipment, generating jobs that would not otherwise be there. In California's strawberry patches, illegal immigrants are not competing against native workers; they are competing against pickers in Michoacán, Mexico. If the immigrant pickers did not come north across the border, the strawberries would.

"Immigrants come in and the industries that use this type of labor grow," said David Card, an economist at the University of California, Berkeley. "Taking all into account, the effects of immigration are much, much lower."

In a study published last year that compared cities that have lots of less educated immigrants with cities that have very few, Mr. Card found no wage differences that could be attributed to the presence of immigrants.

Other research has also cast doubt on illegal immigration's supposed damage to the nation's disadvantaged. A study published earlier this year by three economists — David H. Autor of the Massachusetts Institute of Technology, Mr. Katz of Harvard and Melissa S. Kearney of the Brookings Institution — observed that income inequality in the bottom half of the wage scale has not grown since around the mid-1980's.

Even economists striving hardest to find evidence of immigration's effect on domestic workers are finding that, at most, the surge of illegal immigrants probably had only a small impact on wages of the least-educated Americans — an effect that was likely swamped by all the other things that hit the economy, from the revolution in technology to the erosion of the minimum wage's buying power.

When Mr. Borjas and Mr. Katz assumed that businesses reacted to the extra workers with a corresponding increase in investment — as has happened in Nebraska — their estimate of the decline in wages of high school dropouts attributed to illegal immigrants was shaved to 4.8 percent. And they have since downgraded that number, acknowledging that the original analysis used some statistically flimsy data.

Assuming a jump in capital investment, they found that the surge in illegal immigration reduced the wages of high school dropouts by just 3.6 percent. Across the entire labor force, the effect of illegal immigrants was zero, because the presence of uneducated immigrants actually increased the earnings of more educated workers, including high school graduates. For instance, higher-skilled workers could hire foreigners at low wages to mow their lawns and care for their children, freeing time for these workers to earn more. And businesses that exist because of the availability of cheap labor might also need to employ managers.

Posted by Orrin Judd at April 17, 2006 12:10 AM
Comments

I have often said that the future of Hispanic assimilation into American society can be found in places like Lexington, NE. Without tapping into immigrants, both legal and illegal, the beef industry in Nebraska would be on its knees right now.

Posted by: Brad S at April 17, 2006 12:17 AM

Maybe I misunderstand the writer's purpose or misunderstand the whole article. About all I register is a balancing of disparity in labor/wages. The costs (as the title states) of illegal immigration is based on completely different sets of data.

Posted by: Tom Wall at April 17, 2006 1:23 AM

when did the ny times start being a credible source ?

Posted by: toe at April 17, 2006 12:42 PM

When reality is on your opponents side, deny it.

Posted by: oj at April 17, 2006 12:46 PM

This common sense, however, ignores half the picture. Over the last quarter-century, the number of people without any college education, including high school dropouts, has fallen sharply. This has reduced the pool of workers who are most vulnerable to competition from illegal immigrants.

And the above ignores the fact that a highschool degree is now toilet paper and a college degree is now a high school degree.

At some level, McDonald's still competes with Wolgang Puck. The idea that immigrant's don't impact every strata is silly.

This may be why it has worked up til now.

Posted by: Bruno at April 17, 2006 1:31 PM

Bruno:

As always when it comes to immigrants, note that you're complaining about something natives did to their own culture--screw up the education system--and blaming immigrants.

Posted by: oj at April 17, 2006 1:36 PM
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