About a month ago, I was in Des Moines and talking with my mother. She asked me what I thought about immigration and I noted that I didn’t consider it a particular problem because immigration is natural and pretty much unstoppable. Due to my poor recollection, I can’t recall if I also noted that the U.S. has historically had a fairly decent view of immigration, much better than the proposals being floated around in congress. These proposals, ironically, are similar to the policies in Europe that recently led to rioting in France.
A few weeks after I got back, the NY Times published a lengthy article on the economics of immigration which fairly summarized my views and even brought up some great information I hadn’t heard before. I sent it to my mother, and being the former English teacher that she is, she asked me to summarize it (aka, write a book report). So, here we go – a bit out of order from the original in order to better present the material, but basically a summary of “The Immigration Equation†by Roger Lowenstein.
The article begins by noting the views of one economist who believes that increased immigration hurts the groups with whom the immigrants compete. Currently, many of our immigrants our low wage workers with little to no education and therefore they harm low wage U.S. workers.
Many economists disagree with this view and note that there are no economic reasons to oppose immigration. An assumption that immigration harms U.S. workers is based on the fallacy that there is a fixed number of jobs and so traditional supply and demand analysis suggests harm to other workers. The most obvious rebuttal of the fallacy is that there are currently 21 million immigrants holding jobs in the U.S. and yet there are only 7 million people unemployed [cec: I partially dispute this figure in that our traditional methods of computing unemployment miss a large population; however, this doesn’t change the analysis]. This means that immigrants are not only filling jobs, but they must be creating new ones too.
Another fallacy is that immigrants burden facilities and consume government resources. While this is true in some border towns, for the most part, immigrants subsidize services. They pay into social security, but don’t receive benefits. They pay taxes, but can’t receive food stamps, etc.
An analysis indicates that, overall, immigrants help the economy by a small amount. However, this benefit is not evenly distributed in our population. Immigrants help the highly paid and may harm the lower paid. But only high school dropouts appear to be negatively affected and there is some question as to the magnitude of the effect.
The article notes that the average male salary is: $73k for college graduates, $41k for those with some college, $32k for high school graduates, and only $24.8k for high school dropouts. Over the past few decades, only the dropouts have had falling incomes. However, this may not be caused by immigrants, the minimum wage has also stagnated and there are other potential factors.
Immigrants are providing skills that are in demand at a given wage, for example hotel maids, farm workers, etc. However, even with the immigrants, unskilled workers are scarcer than in the 1980s. If supply and demand were in play, then their salaries should have risen.
It is also worth noting that perhaps immigrants create their own jobs. For example, more Americans have maids than Europeans. There are also more “complementary jobs†caused by immigrants. For example, more dish washers supporting restaurants, allowing more chefs and waiters. Without immigrants, farms might use more automation.
In order to test theories regarding immigration, economists are looking for natural experiments. One such experiment was the 1980 Mariel boat lift where 125,000 Cubans emigrated to the U.S., landing in southern Florida. Economists observed job creation, wages, etc. in Miami, using Atlanta, Houston and Los Angeles as controls. They found that other low-income workers in Miami fared better in terms of wages and levels of employment than in the control cities. In 5 years, even the Cuban unemployment rate (including the immigrants) was comparable to pre-boat lift levels. Other natural experiments have found similar results.
The overall economic message is that the U.S. needs immigrants. There do need to be some limits, but we probably have not seen them yet. If anything, we need to expand the number of slots for skilled/educated workers looking to emigrate to the U.S.