May 16, 2006


Hey, don't bad-mouth unskilled immigrants (Tyler Cowen and Daniel M. Rothschild, LA Times)

Until the late 1990s, when a boom in native-born self-employment occurred, immigrants were more likely than natives to work for themselves. Immigrant small businesses, from the Korean corner market to the Mexican landscaping service, are, well, as American as apple pie. The labor market is not a zero-sum game with a finite number of jobs; immigrants create their own work.

A key question for economists has been whether the influx raises or lowers "native" American wages. UC Berkeley's David Card, who studied patterns in different U.S. cities, concludes that immigration has not lowered wages for American workers. George Borjas of Harvard counters that immigration reduced the wages of high school dropouts by 7.4% between 1980 and 2000.

Most economists have sided with Card. For one thing, his studies better capture the notion that immigrant labor makes work easier for all of us and brings new skills to the table. Additionally, as Card points out, the percentage of native-born high school dropouts has fallen sharply over the previous decades, creating a shortage of unskilled laborers that immigrants fill. In 1980, one in three American adults had less than a high school education; by 2000, this figure had fallen to less than one in five.

Gianmarco Ottaviano of the University of Bologna and Giovanni Peri of the National Bureau of Economic Research have shown that immigrants and low-skilled American workers fulfill very different roles in the economy. For instance, 54% of tailors in the U.S. are foreign-born, compared with less than 1% of crane operators. A similar discrepancy exists between plaster-stucco masons (44% immigrant) and sewer-pipe cleaners (less than 1% foreign-born). Immigrants come to the United States with different skills, inclinations and ideas; they are not looking to simply copy the behavior of American workers.

New arrivals, by producing more goods and services, also keep prices down across the economy. Even Borjas — the favorite economist of immigration restrictionists — admits that the net gain to the U.S. from immigration is about $7 billion annually.

And over the coming decades, the need for immigrant labor will increase, according to demographers. The baby boom generation will need more healthcare and more nursing homes. The forthcoming Medicare fiscal crunch will require more and younger laborers to finance the program.

Mexico: Pumping Out Engineers: The headlines are about low-wage illegals, but Mexico is swiftly upgrading its workforce (Geri Smith, 5/22/06, Business Week)

For years the Mexican workforce has meant one thing to multinationals: cheap, reliable labor, perfect for assembling cars, refrigerators, and other goods in the maquiladoras lining the border with America. More complex engineering and design work was better done elsewhere in the global economy -- usually at company headquarters in the U.S., Europe, and Japan.

But as maquila-style assembly work migrated to cheaper locales, and India and China grabbed more sophisticated design and engineering assignments, Mexican officials knew they had to do something to stay in the global race. Quietly and steadily, they have. Over the past 10 years, the country's policymakers have been building up enrollment in four-year degree programs in engineering, developing a network of technical institutes that confer two-year degrees, and expanding advanced training programs with multinationals from the U.S. and elsewhere.

The result is a bumper crop of engineers. Currently, 451,000 Mexican students are enrolled in full-time undergraduate programs, vs. just over 370,000 in the U.S. The Mexican students benefit from high-tech equipment and materials donated to their schools by foreign companies, which help develop course content to fit their needs. Many of these engineers graduate knowing how to use the latest computer-assisted design (CAD) software and speaking fluent English.

This expanding workforce is changing the way multinationals view the country. They can now shift more complex production to Mexico, along with higher-skilled jobs.

Posted by Orrin Judd at May 16, 2006 9:56 AM

Better job opportunities, along with a declining birth rate, in Mexico will do more to reduce illegal immigration than any plan devised by Congress.

Posted by: AWW at May 16, 2006 10:42 AM

"They can now shift more complex production to Mexico, along with higher-skilled jobs."

Great! So they send us lots of unskilled, low-wage workers and we send them...the higher-skilled, better paying jobs.

Posted by: sharon at May 16, 2006 10:44 AM

I wonder if it's ever occured to Borjas that a main reason why wages for high-school dropouts have dropped from 1980-2000 is because the average age of high-school dropouts has greatly increased. Think about it: Dropout rates have greatly declined from 30-40 or more years ago, when you factor GEDs into the equation. A lot of those dropouts are elderly folks, who's SSI income is not figured into wage stats.

Posted by: Brad S at May 16, 2006 10:50 AM

This has been going on for at least 15 years. The Mexicans do train good engineers. I've worked with several. I've noticed some will do some college or grad school in the States too so they can learn English and work for US companies or customers. The same thing happens in Asia. It's a lot easier to move production overseas when there are competent engineers who can support operations.

If you want to stem the flow of illegals, the best thing is to 'export'high paying jobs there as well as American business practices for suppliers. This creates a bastion of fairplay and prosperity that will attract those who might otherwise immigrate.

Posted by: JAB at May 16, 2006 10:51 AM

That Americans won't do. Engineering is too hard for natives to be bothered.

Posted by: oj at May 16, 2006 1:09 PM

Now we've got the right adopting the lump-of-labor fallacy.

Posted by: David Cohen at May 16, 2006 1:33 PM

And if they want to come here, they should have to get in the same line that my Indian, Chinese, Danish and Russian co-workers have worked their way through.

Posted by: Raoul Ortega at May 17, 2006 12:59 AM


Most of them aren't legal either, you just assume they are.

Posted by: oj at May 17, 2006 8:49 AM