Real World Economics: Consider immigrants’ impacts on wages and jobs

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Edward Lotterman

When It involves the consequences of illegal immigration on “Black jobs,” who’re you going to consider, some Nobel prize-winning economists or your individual lying eyes and ears?

Well, I’m with my very own lying eyes and with Donald Trump — and against most individual economists and revered think tanks. In the actual world, large numbers of immigrants in recent a long time, here each legally and unauthorized, do suppress wages for low-skilled native-born staff. Additionally they make it harder for native-born staff, Black or white, to seek out jobs.

It is a major reason for disaffection and anger amongst lower-education manual staff of any race in our country today, and it’s fueling Trump’s popularity. It’s a problem to which higher-education white-collar staff shamefully have turned blind eyes and deaf ears, and to which ivory-tower think tanks have tried to defuse.

Caveat: I desperately hope that Trump loses the election. But at age 78 and with multiple health risk aspects, he won’t be around ceaselessly. The problems he raises here, nonetheless, will live to tell the tale.

Even when Trump loses, it will be tragic if well-off residents who don’t support him proceed to disregard why so many Americans feel cheated and ignored — the Americans who discover with Trump on immigration. The growing inequality of income distribution in america, and the well-founded hopelessness of tens of tens of millions of households, is the central economic challenge of our age.

Now, before we get into the consequences of high immigration, legal or not, on wages and employment, let’s start by clearing the decks of some issues.

First, Trump’s casual references to “Black jobs” have racist overtones. But when as a substitute he had said, “high numbers of immigrants reduce wages and job openings for low-education, low-skilled native born U.S. staff,” his racial views wouldn’t have clouded the argument.

Secondly, Trump’s calling immigrants living and dealing in our country en-masse criminal, diseased, pet-eating drug dealers, and other tropes, is fake and vile. Let’s have some empathy here. These folks are risking their lives coming here because they know (contrary to what MAGA implies) that America already is great. They seek work and higher lives, not welfare. They commit fewer crimes than the final population. Few attempt to vote.

None of that is latest. Generations ago, it was Irish, Chinese, Italian, eastern Europeans and others who got here here and helped construct America. And so they faced similar nativist derision that the immigrants of today encounter.

Equally false, nonetheless, is the facile argument that immigrants only take “jobs that Americans should not willing to do.” That ignores the undeniable fact that the labor supply curve slopes up and to the best. Raise wages, and more people will need to do these jobs. Meatpackers, roofing contractors and dairy farmers who argue they hire immigrants “because I couldn’t get anyone else to take the roles” must add the words “on the low wages I need to pay and under bad working conditions.”

Twenty-five years ago you may find loads of native-born staff milking cows, mowing lawns, tarring roofs and troweling concrete. Forty years ago native-born staff still toiled on packing plant kill floors. The rationale these now are rare shouldn’t be that a wave of indolence swept our working classes. Fairly it was that increasingly employers found they might hire good staff at lower wages than they’d been paying.

In economics terms, your complete supply curve for unskilled staff had “shifted to the best.” Which means that at each of many possible wage rates, one could find more willing job applicants than before.

Also recognize that employers should not a vile class of exploiters. Most employers of unauthorized immigrants should not vast publicly traded corporations. Apart from in meat packing and poultry processing, they often are small- or medium-sized businesses in brutally competitive markets.

In hiring, they’re caught in a classic “prisoner’s dilemma:” If other small-business roofers, insulation installers or landscapers start hiring unauthorized staff, and so they themselves can only get native-born crews by paying higher wages, and by extension, raising prices, they are going to soon be driven out of business. Or, as has been true for Minnesota dairy farms using only family labor, they face a long time of brutally falling inflation-adjusted milk prices.

The price advantage of hiring staff not here legally goes beyond wages to working conditions. These immigrants are probably the most powerless people in our economy. Most of their employers could also be entirely honest and fair. Some are subject to federal inspection when it comes to safety and compliance with Fair Labor Standards Act provisions. But tens of millions of those immigrants also work in dangerous conditions, don’t get additional time or rest breaks or whose wages are simply stolen. They’re highly compliant staff who endure abuse because they’re vulnerable with little selection.

Also recognize that for immigrants, merely being here is “fringe profit,” since it is an investment for the long run. Working for low wages in grueling conditions, enables bringing other members of the family. It guarantees their offspring much better futures than of their countries of origin. This trend shouldn’t be latest either. It has been true for all of American history and for many of us.

All 4 of my grandparents migrated here and worked punishing jobs so their offspring could have what we do now enjoy. Realize the importance of this intangible job profit. It has little intending to native-born staff, but does affect the wage rates immigrants accept.

So why do economists differ with Trump, and think high immigration levels have small adversarial effects on native born staff? Their research is sophisticated in its use of statistical modeling and appears at effects on the economy as a complete. Search “economic research effect of immigrants on wages” to get studies from the liberal Brookings Institution and conservative Cato Institute alike, from Forbes Magazine, the Center for Immigration Studies, Congress.gov, the Penn-Wharton Budget Model and myriad scholarly journals.

These are based on econometric modeling. Many cite early work by David Card, a labor economist who shared a Nobel Prize in 2007 for work finding that minimum wages could increase employment and on the wage effects of immigration. But they broaden this across economies as a complete and in greater depth than within the “real world.”

I’m not qualified to critique this work. Nonetheless, Card’s initial work was on one unusual case, the consequences of the 1980 arrival of Cubans within the Mariel boatlift that further doomed Jimmy Carter’s reelection possibilities. Card found that subsequent unemployment within the Miami area was no higher than in similar metro areas with fewer Mariel refugees. Extending this highly unusual one-time event to your complete national economy seems a “fallacy of composition” to the nth power.

Also, some academic results seem strained, to place it politely. For a number of examples, consider that the provision of immigrant nannies allows more college educated moms to return to work, thus increasing employment. Also, remittances back to El Salvador from immigrants here amount to 18% of their GDP and thus that country can import more from us.

I suggest that the present panicked reactions of employers of immigrants to the prospect of a Trump administration forcibly expelling tens of millions of immigrants is the strongest refutation of academia’s “no effect on wages or employment” arguments. If immigration didn’t lower wages, because the economists say, why should out-migration, even forced, raise them?

The Department of Homeland Security says there are just some 82,000 unauthorized immigrants in Minnesota, but they are actually a big fraction of dairy farm employees. A recent news article quotes a dairy farm owner warning in apocalyptic terms of soaring milk prices and milk shortages if illegal staff are rounded up and expelled.

One other from a national newspaper warns of a collapse of home construction and soaring housing prices if constructing contractors lose immigrant staff. And one can find similar plaints from poultry and hog processors of no ham on tables and even Chicken McNuggets if immigrants are arrested and expelled.

But, if one argues, as Trump does, that there actually is a downward wage response to the arrival of tens of millions of immigrants, it make sense that their departure would trigger unprecedented wage and price spikes. And that is an add-on effect that Trump supporters who grouse about rising inflation should consider. If a Trump administration succeeds in deporting tens of millions, it higher be prepared for rising consumer prices.

Rather more might be said, but let’s wait for election results to set the context.

St. Paul economist and author Edward Lotterman will be reached at stpaul@edlotterman.com.






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