[Marxism] Do Latino immigrants drive down wages (was:"RE:immigration issues")

Marvin Gandall marvgandall at videotron.ca
Thu Apr 20 07:39:39 MDT 2006

Sartesian wrote:

> 1.  immigrant labor does not drive down wages.  Wage rates are, and have
> been historically, independent of immigration flows.  Real wages in the
> US declined between 1973 and 1993 regardless of immigration flows.  Real
> wages increased 1994-2000 coincident with increased immigration.  Real
> wages 2001-2005 have not been determined by immigration flows as the
> jobs "taken" by immigrants are mostly jobs vacated by previous
> immigrants.
More support for this view:

Cost of Illegal Immigration May Be Less Than Meets the Eye
New York Times
April 16, 2006

CALIFORNIA may seem the best place to study the impact of illegal
immigration on the prospects of American workers. Hordes of immigrants
rushed into the state in the last 25 years, competing for jobs with the
least educated among the native population. The wages of high school
dropouts in California fell 17 percent from 1980 to 2004.

But before concluding that immigrants are undercutting the wages of the
least fortunate Americans, perhaps one should consider Ohio. Unlike
California, Ohio remains mostly free of illegal immigrants. And what
happened to the wages of Ohio's high school dropouts from 1980 to 2004? They
fell 31 percent.

As Congress debates an overhaul of the nation's immigration laws, several
economists and news media pundits have sounded the alarm, contending that
illegal immigrants are causing harm to Americans in the competition for

Yet a more careful examination of the economic data suggests that the
argument is, at the very least, overstated. There is scant evidence that
illegal immigrants have caused any significant damage to the wages of
American workers.

The number that has been getting the most attention lately was produced by
George J. Borjas and Lawrence F. Katz, two Harvard economists, in a paper
published last year. They estimated that the wave of illegal Mexican
immigrants who arrived from 1980 to 2000 had reduced the wages of high
school dropouts in the United States by 8.2 percent. But the economists
acknowledge that the number does not consider other economic forces, such as
the fact that certain businesses would not exist in the United States
without cheap immigrant labor. If it had accounted for such things,
immigration's impact would be likely to look less than half as big.

Mr. Katz was somewhat taken aback by the attention the study has received.
"This was not intended," he said.

At first blush, the preoccupation over immigration seems reasonable. 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

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.

Mr. Borjas said that while the numbers were not large, the impact at the
bottom end of the skill range was significant. "It is not a big deal for the
whole economy, but that hides a big distributional impact," he said.

OTHERS disagree. "If you're a native high school dropout in this economy,
you've got a slew of problems of which immigrant competition is but one, and
a lesser one at that," said Jared Bernstein of the Economic Policy
Institute, a liberal research group.

Mr. Katz agreed that the impact was modest, and it might fall further if
changes in trade flows were taken into account - specifically, that without
illegal immigrants, some products now made in the United States would likely
be imported. "Illegal immigration had a little bit of a role reinforcing
adverse trends for the least advantaged," he said, "but there are much
stronger forces operating over the last 25 years."

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