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Think. Discuss. Act. Immigration

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Review: The Immigration Equation

Roger Lowenstein (2006, July 9). “The Immigration Equation.” The New York Times.

Summary

How many immigrants should the United States allow into the country? This is a contentious question, and people have very different reasons for the answers they give. Some want to prevent immigration in order to maintain the existing American culture. Others argue that America has always been a nation of immigrants and want to see people from other countries find a better life here.

In addition, arguments on both sides just about always return to the economic question: is immigration good or bad for the U.S. economy? Some say that immigrants put native-born Americans out of work, taking their jobs. Others say that the nation’s prosperity has always been built on a steady influx of immigrant labor.

Unlike the social and moral questions surrounding immigration, presumably it would be possible to prove the economic impact of allowing more people in. What do economists have to say about the value of immigration? By studying the best information available, can we learn whether immigration is good for the economy or not? In this article, a reporter from the Times talks with several top economists about the immigration question to figure out what they can agree on and where they disagree.

Economic arguments just about always come back to supply and demand. If more immigrants come to the country, then that means an increase in the supply of labor. On the surface, that would mean more people trying to apply for the same number of jobs, which would mean either more people who can’t find work or else lower wages. But it’s not so simple: those immigrants also have to buy food and housing and everything else, and that’ll create demand for more jobs. If a hundred thousand people move to your city, then someone would have to build new houses, the shops in the area would have more customers, and more shops would open. If you run a factory and you know that thousands of new people are moving to the area, then you could think about expanding production and hiring more workers than you had before.

After all, an increase in population isn’t always bad for the job market. The baby boom in the middle of the 20th century didn’t lead to lower wages among Boomers. Instead, all of those people were able to do a lot more. After all, a decline in population—whether through war or disease or emigration—is also seen as an economic disaster.

On the other hand, as economists like to say, every major event has winners and losers. If a million Irish peasants emigrate to America then Ireland as a whole get poorer, and the landowners who employed them get poorer, but the other peasants might be in a better bargaining position. Economists agree that the effect of immigration depends on who’s coming. For example, if a million people immigrate to the U.S., and all the immigrants are dentists, then it’s going to be legitimately harder for the existing dentists to find jobs. We’re not going to simply get that much more dental work done.

George Borjas, an economist at Harvard’s Kennedy School, says that immigration to the U.S. these days is bad for poor Americans. He argues that most immigrants nowadays don’t have a high school diploma, and so they really do lead to lower wages and higher unemployment for Americans who also lack high school diplomas. While he admits that immigration is beneficial for the rest of us, he asks whether it’s worth it for the effect it has on our low-income neighbors. Borjas says that in the early 20th century, immigrants were just like the existing U.S. population, but now that’s no longer the case.

However, many economists disagree with these conclusions. David Card at Berkeley says that Borjas’ arguments make sense in theory, but in practice the market for employment is more versatile than that. Card describes how when he moved to California from the East Coast, he was surprised to find that everyone in California had a housekeeper. Back east, no one had housekeepers. Immigrants, he found, were working jobs that wouldn’t have existed otherwise. They pick grapes at wineries, but if there were no immigrants, the wineries would buy machines to harvest their grapes.

Additionally, he argues that American workers compete with foreigners regardless of whether they immigrate or not. Even if workers can’t easily travel from country to country, their jobs can. If Mexican workers stay in Mexico then more factories will be built there, but if the workers come to the U.S., the factories will be built here instead. If economists agree that free trade is good for capital markets, why wouldn’t it also be good for labor markets?

Another economist, Giovanni Peri at the University of California at Davis, describes how immigration in one profession leads to more demand for related jobs. He uses the example of a restaurant: “if you have a big influx of chefs, you can use more waiters, pushing up their wages.” And with more of both, you can invest in more equipment or a bigger facility.

Peri also argues that immigrants tend to lack the social capital that native born workers possess. Native-born Americans speak English and understand American social norms. This means that when output expands as a result of the labor increase, the native-born workers tend to benefit. For example:

If enough Mexicans go into construction, some native workers may be hurt, but a few will get promotions, because with more crews working there will be a greater demand for foremen, who most likely will be natives.

While they disagree strongly over the economic effects of immigration, most economists agree that the economic side of the debate doesn’t really determine people’s opinions. While the article was being written, both Card and Borjas were requested to testify to Congress about the immigration bill then being debated, and both declined—knowing that Congress doesn’t really care what they say. Ultimately, the question of immigration is social: do you want to have foreigners living in your neighborhood or not? Card says that “If Mexicans were taller and whiter, it would probably be a lot easier to deal with.”

Interestingly, just about all the top economists debating this question are themselves immigrants. Their personal interest in the issue certainly factors into their arguments. Card, for example, is Canadian. He readily admits that he appreciates the diverse cultures immigrants bring. He feels that “Canadian cities were mostly boring” when he was a kid, before the immigrants came.

Borjas, on the other hand, is Cuban. His family fled the country after the revolution. His critics have often said that Borjas seems to have a certain bias against “unskilled” Mexican immigrants as compared to Cubans. As one Princeton professor said somewhat bluntly, Borjas feels that “Mexicans aren’t as good as Cubans like him.”

Giovanni Peri is from Italy, which is experiencing a “brain drain” of skilled workers leaving for higher wages in the United States—he himself being a good example. Back in Italy, this loss of talent is a real problem, and he can’t imagine why a country would prevent workers from coming if they wanted to come.

Of course, as Borjas argues, the problem isn’t professional immigrants—like economics professors—the problem is unskilled workers. Borjas sometimes makes his argument in explicitly racial terms: that Mexican immigration is bad for unskilled African-American workers. But even here, the social concern still outweighs the economic question: most black leaders are in favor of more immigration, if only because immigrants are likely to vote Democratic and agree with them on other political issues. As Card says flatly, “The idea that the way to help the lot of African-Americans is to restrict Mexicans is ridiculous.”

Even liberals like Card agree that immigration is likely to reduce native-born wages a little bit. Ultimately, the question is whether wages are reduced by one or two percent (as Card argues), or by seven or eight percent (according to Borjas). But as Card adds, even that’s not a huge difference. Even if Borjas is right, it only means a fifty or sixty cent per hour pay cut for a minimum wage worker. Is that really a good enough reason to maintain armies at the border? He again insists that the real argument is social. Do you care about the inscription on the Statue of Liberty, about receiving the poor and huddled masses yearning to be free, or do you care about preventing the status-quo of American culture from being influenced by outside forces?

It’s worth mentioning that the social and economic arguments about immigration haven’t changed at all in a hundred years:

Advocates of a more open policy often cite the country’s history. They argue that the racists of bygone eras were not only discriminatory but also wrong. Card, for instance, mentioned an article penned by a future U.S. senator, Paul Douglas, titled “Is the New Immigration More Unskilled Than the Old?” It was written in 1919, when many people (though not Douglas) held that Jews, Slavs and Italians were incompatible with the country’s Anglo and Teutonic stock….There remains today a palpable strain of xenophobia in the anti-immigrant movement.

So if someone says that immigration is bad because immigrants take American jobs, the correct response is either “kind of,” “not really,” or “it’s complicated.” But even better would be to ask how they would feel if an immigrant moved in next-door to them.

Questions for Reflection and Discussion

  1. How do you feel about immigration and employment? Do you think the economists’ debate sounds reasonable? How would you feel if a whole bunch of people in your line of work were to move to your area?
  2. Do you agree with Card that the social side of the immigration debate is more important than the economic side? Do you think that most people actually determine their opinions on immigration based on how they would feel about living next-door to immigrants?
  3. Do you think it’s fair to say that anti-immigration sentiment is always motivated by xenophobia?

Implications

Arguments about immigration frequently turn to economics, but the economic question of immigration is inseparable from the social question. Even professional economists are likely to disagree based on their pre-existing social opinions. However, it’s worth knowing that economists don’t fully agree about whether immigration is bad for native-born workers: there simply isn’t enough data to outweigh their social biases. If most economists say that immigration is good, that’s perhaps only because most economists are liberal and enjoy a more diverse culture.

Peter Bass
© 2017 CYS

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