New study: Immigrants little effect on jobs of US high school dropouts

One of the most contentious arguments in the debate over the economic effects of immigration has been whether the influx new immigrants has had an adverse effect on the wages of native-born workers with the lowest levels of education. It has been widely accepted that for those native workers at the higher levels education and job skills, immigrants generally provide economic benefits, but the debate over how they effect those who labor at low-skill jobs or jobs requiring less educational attainment has fostered debate.

A new study from Giovanni Peri of the University of California, Davis and Chad Sparber of Colgate University has tackled this thorny issue and found that foreign and native-born workers with similarly low educational attainment in fact compliment each other in the workforce rather than compete.

This idea of "complimentary skills" is not a new one and has been examined not only by Professor Peri before, but numerous other economists. This study differs from those in that it contains forty years of data and looked at the actual tasks performed by each class of workers to see what jobs were being done by native-born workers as opposed to foreign born workers.

The study found that foreign born workers perform more manual and physical tasks, while native-born workers do tasks that are more language-intensive and interactive, and that native-born workers benefit from this specialization.

The study also examines the work of economist George Borjas that claimed that immigrant labor decreased the overall wages of less educated native workers by 8%. Peri and Sparber found that overall, the negative effects of foreign workers was only 0.7%.

Documented and undocumented immigration has significantly affected US labor supply during the last few decades, though the economic effects of this immigration remain subject to debate. The most contentious issue is whether the particularly large inflow of immigrants with low levels of schooling has decreased the wage of native-born workers with similarly low educational attainment. If workers’ skills are differentiated only by their level of educational attainment, and workers of different skill levels are imperfectly substitutable, then a large flow of immigrants with limited schooling should reward more educated natives and hurt less educated ones.

This intuitive approach receives support in papers by George Borjas (2003, 2006) and George Borjas and Larry Katz (2005), which argue that immigration reduced real wages paid to native-born workers with no high school degree by four to five percent between 1980 and 2000. In contrast, Card (2001) and Lewis and Card (2005) employ city and state level data and find almost no effect of immigration on the relative wages of less educated workers. Moreover, their results are robust to the migration decisions of native-born workers, as they find that natives do not choose to move to areas with fewer immigrants. Thus, the relationship between immigration and wages appears to be more nuanced.

Ottaviano and Peri (2006) note that the effect of immigration depends crucially on the degree of substitution between native and foreign-born workers within each education group. That is, workers’ skills may be differentiated by more than traditional measurable characteristics such as educational attainment (and experience level). Native and foreign-born workers may have quite different skills, leading them to specialize in different productive tasks. For example, immigrants — particularly those with low levels of formal schooling — are likely to have inadequate language skills, imperfect knowledge of productive networks, and only limited awareness of social norms and intricacies of productive interactions. However, they have manual and physical skills similar to those of native-born workers. Therefore, foreign-born workers have a comparative advantage in occupations performing manual labor intensive tasks. On the other hand, native workers with little education will have a much better mastering of the language, local norms, rules, and networks. Thus, they have an advantage in performing interactive and coordination tasks. If less educated immigrants work in occupations that mostly perform manual tasks, natives move to occupations requiring more interactive tasks, and the two types of tasks are complements in production, then native workers can protect themselves against wage competition and benefit from immigration through specialization.

Though the assumptions in Ottaviano and Peri (2006) seem reasonable and are supported by anecdotal evidence, they require empirical verification. This paper employs US data for all 50 states (plus the District of Columbia) from 1960 to 2000 to determine whether task-specialization among native and foreign-born workers truly occurs.

…snip…

The data strongly support three key implications of our theory, which we formalize in a simple model in the first section of the paper. In states with large inflows of less educated immigrants: i) less educated native-born workers shifted their supply towards interactive tasks; ii) the total supply of manual relative to interactive skills increased at a faster rate than in states with low immigration and iii) the wage paid to manual relative to interactive tasks decreased. Less educated natives have responded to immigration by upgrading their occupations. That is, they leave manual task-intensive occupations for interaction-intensive ones. Given the positive wage effect of specializing in interactive skills, this shift augmented real wages paid to native-born workers.

..snip…

Finally, we use the structure of our model and our empirical results to calculate the effect of immigration and the related adjustment in task supply on average wages paid to native-born workers with a high school degree or less. Task complementarities and changes in native-born task supply together imply that the wage impact of immigration is quite small. These findings agree with those of Card (2001), Card and Lewis (2006), and Ottaviano and Peri (2006). At the same time they enrich the structural framework to analyze the effect of immigration first proposed by Borjas (2003) and then used in Borjas and Katz (2005), Ottaviano and Peri (2006), and Peri (2007).

…snip…

Our empirical analysis employed a dataset developed by Autor, Levy, and Murnane (2003) that measures the task-content of occupations in the United States between 1960 and 2000. We find strong evidence supporting three implications of our theoretical model:

i) On average, less educated immigrants supplied more manual relative to interactive tasks than natives
supplied. This tendency became stronger during the 1980s and 1990s.

ii) In states with large immigration among the less educated labor force, native workers shifted to occupations
intensive in interactive tasks, thereby reducing native workers’ relative supply of manual tasks. In states with
low immigration, native-born workers maintained a higher relative supply of manual tasks.

iii) In states with large immigration among the less educated labor force, there is a larger relative supply
of manual production tasks than in states with low levels of immigration. This implies that immigrants more
than compensate for the reduced manual skill supply among natives, and it ensures that manual task-intensive
occupations earn lower wages.

Since native-born workers respond to inflows of immigrant labor by specializing in interactive tasks, wage losses associated with immigration are minimal. Immigration caused wages paid to native-born workers with less than a high school degree to drop by just 0.7% between 1990 and 2000.

Comparative Advantages and Gains from Immigration Giovanni Peri (University of California, Davis and NBER), Chad Sparber (Colgate University) April, 2007
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The disingenuous benevolence of nativist rhetoric

This past Sunday, as is my usual weekend routine, I sat through the weekly carnival of double-talk and spin that make up the Sunday morning TV gab-fest.

At the top of the list of this week's topics was the compromise immigration reform measure announced last Thursday.

Demonstrating the fact that opinions really are like buttholes – and everybody's got one, I watched as one pundit or politician after the next took a whack at reducing this complex issue down to a 15 second sound bite.

But what was most revealing about these gaseous exchanges was not what they exposed about the speakers limited knowledge of the intricacies of the issue or detialed facts, but rather how willing they were to play fast and loose with them to make a point.

Perhaps nowhere was art of obfuscation brought to such a masterful level then during the rants of America's favorite crotchety old racist, Pat Buchanan, during his weekly stint of on John McLauglin's shouting match.

Buchanan has never failed to demonstrate why he's been a national embarrassment for over forty years. Yet, given a forum to discuss his views on the non-white population under the guise of the immigration reform was like listening to a barrage of off-color, racists jokes from a drunken relative at a wedding …you can't believe this stuff is coming out of his mouth and you just wish he'd pass out already.

MR. BUCHANAN: -- a complete sellout of working America. The vast majority of these 12 million folks are uneducated and unschooled. They compete directly against African-Americans, single moms, people who didn't get out of high school….

…snip…

MR. ZUCKERMAN: High school graduates do not want to take these menial jobs. We have a shortage of employees at the low end of the employment spectrum and at the high end. And this bill is going to help us in both areas. It's exactly what we need.

MR. BUCHANAN: All right, let me tell you --

MR. ZUCKERMAN: It's the first rational bill we have, instead of pandering to all the people who just want to condemn immigration, which has been the DNA of this country.

MR. BUCHANAN: You made your point. You made your point, Mort. Half the African-Americans in this country and half the Mexican- Americans don't graduate from high school. And the ones that do have got eighth-grade educations. You're taking their jobs away and you're bringing in millions of workers to compete with them. You're betraying these people.

MR. MCLAUGHLIN: Also, to add to what Pat's saying, teenage unemployment is at its highest level ever. Do we really need to bring in unskilled workers to take the jobs right out of the hands of those teenagers?

McLaughlin
Group

Before we look at what Pat was really saying during his little tirade, lets look at some facts:

First off, half of all Black and Hispanic kids are not high school dropouts. While dropout rates are higher for minority students…it's far from 50%.

Black and Hispanic youth are more likely than non-Hispanic whites to drop out of high school. In 2004, 7 percent of non-Hispanic whites ages 16 to 24 were not enrolled in school and had not completed high school, compared with 12 percent of blacks and 24 percent of Hispanics. The high rate for Hispanics is in part the result of the high proportion of immigrants in this age group who never attended school in the U.S. Asian youth, with a dropout rate of 4 percent, had the lowest dropout rate among all racial and ethnic groups in 2004.
link

Secondly, the most recent study on the effects of immigrant labor on the wages of native workers with lower educational levels shows it to be negligible.

Using individual data on the task intensity of occupations across US states from 1960-2000, however, we find that foreign and native-born workers with low levels of education supply very different occupational skills. Immigrants specialize in manual tasks such as cleaning, cooking, and building. Native-born workers — who have a better understanding of local networks, rules, customs, and language — respond to immigration by specializing in interactive tasks such as coordinating, organizing, and communicating. This increased specialization in tasks complementary to those performed by immigrants implied that wages paid to native workers — even those with little formal education — experienced little decline both in the aggregate and in states with large immigration.
…snip…

Since native-born workers respond to inflows of immigrant labor by specializing in interactive tasks, wage losses associated with immigration are minimal. Immigration caused wages paid to native-born workers with less than a high school degree to drop by just 0.7% between 1990 and 2000.

Comparative Advantages and Gains from Immigration Giovanni Peri (University of California, Davis and NBER), Chad Sparber (Colgate University)
April, 2007

So basically, Pat was only doing what he's been doing for the past forty years …talking out of an orifice not located on his head.


But that's really neither here nor there, because he wasn't really talking about immigration, job loss or his ideas on protecting US workers.

What he was talking about was his belief that people of color are inherently inferior and unable to perform educationally, so they need his protection in order to keep the social status quo.

If in fact the majority of minority children weren't graduating from high school, and those that did only mastered the skills of an eight grader, as Pat believes, why wouldn’t he be outraged by that? Instead he's trying to make sure they have menial, dead end jobs awaiting them.

If 50% of white children failed to graduate from high school rather than the current 7%, Pat would be calling it a national crisis and demand the heads of the educators and government leaders who had failed to do their job.

Yet, in Pat's world, due to their obvious inferiority, people of color cannot be expected to excel academically and it's best off if they just stick to jobs more suited their limited intellects. The jobs he believes that "12 million uneducated and unschooled" immigrants are threatening to steal.

It’s amazing to see the confluence of all of Pat's warped visions about race come together in one neat little package.

And let's not forget McLaughlin's final remark on teenage unemployment. Because if the uneducable Blacks and Latinos don't want those menial jobs meant for them, surely some white children would be capable of doing them... at least after school or during the summer.

Jeez

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New Study: Effects of Immigrant Workers on Wages and Employment.

One of the most heated debates over immigration and immigration reform has not been taking place in Congress or on the campaign trail. Over the last few years in the halls of academia a debate has raged between two opposing schools of labor economists trying to understand the ultimate costs and benefits of immigrant workers to the US economy. One camp claims that immigrants provided a net benefit to the economy and US workers, the other claims immigrants take jobs from US workers, particularly those with the least education and opportunities. Armed with statistical data, mathematical formulas, charts, and analytical theories, they have argued back and forth trying to answer a key question to any successful immigration policy: Are immigrant workers good or bad for the US economy and more importantly how do they effect the wages and job prospects for native-born workers?

The debate has focused mostly on the relationship between immigrant and native-born workers at the bottom of the economic ladder where competition between the two groups would seem to be the most intense. Conventional wisdom would dictate that given the basic laws of supply and demand, an increase in low-skilled workers would increase competition and drive down wages for all those in that job category.

A new report by the Public Policy Institute of California should change the nature of that debate.

Released last week, "How Immigrants Affect California Employment and Wages", by Giovanni Peri, Associate Professor of Economics at the University of California, Davis, looks at over 40 years of data to determine what effect increasing immigrant populations have had on the job market for native Californians.

As the home to almost 30 percent of all foreign-born workers in the United States, California was chosen as the subject of the study not only because of its large immigrant population, with 1/3 of its workforce being foreign-born, but because 2/3 of its immigrant workforce are without high school diplomas – a demographic believed to have the greatest negative effect on native workers with similar educational backgrounds. Additionally, the state's experience with immigrant populations can be viewed as a model for the entire country as immigrant populations begin to disperse into more non-traditional areas and regions.

The study found that increased immigrant populations had an overall positive effect for American workers across all age and educational levels.

• First, there is no evidence that the inflow of immigrants over the period 1960–2004 worsened the employment opportunities of natives with similar education and experience. The study finds no association between the inflow of immigrants and the out-migration of natives within the same education and age group.


• Second, according to our calculations, during 1990–2004, immigration induced a 4 percent real wage increase for the average native worker. This effect ranged from near zero (+0.2%) for wages of native high school dropouts and between 3 and 7 percent for native workers with at least a high school diploma.


• Third, the results indicate that recent immigrants did lower the wages of previous immigrants. Wages of immigrants who entered California before 1990 were 17 to 20 percent lower in 2004 than they would have
  been absent any immmigration between 1990 and 2004

The positive effect of immigrantion for the vast majority US workers and on the overall economy is not a new finding, numerous studies have drawn the same conclusions. Most notably were last years, "Rethinking the Effects of Immigration on Wages." by Università di Bologna's Gianmarco Ottaviano and Giovanni Peri from UC Davis, "Growth in the Foreign-Born Workforce and Employment of the Native Born", by the Pew Hispanic Center, and 2005's "Is the New Immigration Really So Bad?" by Andrew Card of UC Berkeley. All came to the same general conclusion to varying degrees.

What is new, is that Peri's study shows a net positive effect for all workers, even those with limited educations and low skills. Perhaps even more important is that he has managed to document the concept of "imperfect substitutes" and "complimentary" workers first explored in earlier studies.

In essence his hypothesis is that simple supply and demand models are not applicable to the current immigration situation since immigrants bring different skills and experiences to the workplace and rather than being "substitutes" for native workers they are most likely to "compliment" US workers, increasing overall productivity and opportunities for the native born.

In nontechnical terms, the wages of native workers could increase because the increased supply of migrants is likely to put native workers in jobs where they perform supervisory, managerial, training, and in general interactive and coordinating tasks, which makes them more productive. Moreover, the presence of new workers also implies higher demand for consumption, so that immigration might simply increase total production and demand without depressing wages.
PPIC

The concept is not new, economist Rachel M. Friedberg, of Brown University documented it in 1997 in her study of Russian immigrants in Israel, "The Impact of Mass Migration on the Israeli Labor Market". Friedberg found that "… the Russians had, if anything, improved wages of native Israelis. She hypothesized that the immigrants competed more with one another than with natives. The Russians became garage mechanics; Israelis ran the garages."

After analyzing 40 years of census and other data Peri expands on those findings and explains his results with a simple explaination:

Typically, two very important dimensions of workers’ skills are their education and their labor market experience. Workers with different education and experience tend to fill different jobs. Rather than competing with each other in the labor market, they complement each other.

We say that two types of workers are “substitutes” (competitors) if the increased supply of a group decreases the wages of the other (other things equal). They are complements if the increased supply of a group increases the wage of the other.

As an example, think of the construction sector. Workers with a college degree in that sector are likely employed as structural engineers, whereas workers with some college education would be employed in accounting and secretarial jobs, and workers with a high school diploma or less (but with applied skills) might be masons, plumbers, or electricians. The increased supply of masons, plumbers, and electricians would allow more construction companies to start up (or existing ones to expand). In the long run, it would increase the demand for and wages of (complementary) secretaries and engineers.

At the same time, the availability of young, inexperienced masons may increase the need for older, more experienced masons in the role of supervisors, coordinators, and team leaders. Hence, across education and experience groups, the increased supply of one group increases the demand (and productivity) of other groups through these linkages.

….

Even workers with the same education and experience but in different occupations are usually not purely competing with each other. In our previous example, a mason and a plumber, both with a high school diploma and between ages 27 and 36, complement each other to a significant degree: An increased supply of masons allows construction of more homes, increasing the demand for plumbers.

However, if the supply of plumbers becomes small enough (or the supply of masons large enough), some masons may adapt themselves to do plumbing work, implying some degree of competition (substitutability) between the two groups.

Complementarities between different workers are particularly important in evaluating the labor market effect of foreign-born immigrants. Because of their skills, informational constraints, preferences, and history, recent immigrants are usually employed in jobs, occupations, and sectors where previous immigrants were already predominantly employed. Hence, the jobs they compete for are most closely substitutes for those held by other immigrants, whereas they tend to be more complementary to jobs held by natives. For instance, many past and new immigrants are employed as plaster and stucco masons or as agricultural laborers. In contrast, occupations such as plumbers or farm managers require similar degrees of formal education and experience but employ mainly native workers. Therefore, recent immigrants affect the productivity and wages of previous immigrants and natives differently and are potentially beneficial to natives.
PPIC

The importance of Peri's new study cannot be overestimated. In addition to looking at the effects of immigrants on wages he also addresses the theory that as immigrants moved into a workforce, native workers, facing added competition, relocate to other states with fewer immigrants. His results showed that "immigrants do not displace native workers with similar education and age. Natives did not systematically move out as new immigrants moved into California. Instead, the net effect was an increase in the overall supply of California labor in
each age-education group."

As of now, one-third of California’s total labor force consists of immigrants, two-thirds of its uneducated workers come from abroad, and a burgeoning foreign-born population has grown by over 40 percent in the last 14 years.

As a result, one might think that native Californians (particularly the unskilled ones) must have suffered, to an extreme, the negative effects of this “immigration crisis” on their employment opportunities and wages.

The present study seems to say otherwise. Immigrants evidently do not increase the tendency of natives with similar skills (education and experience) to migrate out of state or to lose jobs. Moreover, between 1960 and 2004, immigration had a much more negative effect on the wages of previous immigrants than on those of native workers. This suggests that native and foreign-born workers perform complementary rather than competing tasks in production. In fact, an increase in the number of immigrants evidently increases the demand for tasks performed by native workers and raises their wages. Our median estimates indicate that these complementarities of immigrants spurred wage growth of natives by about 4 percent in 14 years.

These results should certainly be taken into account by policymakers as they consider immigration reform. The findings would seem to defuse one of the most inflammatory issues for those who advocate measures aimed at “protecting the livelihood of American citizens.”

Because California leads the nation in immigration trends, this study may provide glimpses into the future and the potential effects of immigration on wages and employment at the national level. PPIC

Related media coverage
Sacramento Bee
Press Telegram
San Jose Mercury News
LA Times
McClatchy Newspapers
AP

tags: immigration, studies , wages, PPIC

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Debunking the myth that there are no jobs American's won't do

"There are no jobs Americans won't do – just jobs that don't pay enough to get Americans to do them." It's a phrase that's been repeated ad nauseum by immigration restrictionist from Lou Dobbs to Tom Tancredo.

It's claimed that no matter how backbreaking, temporary or dangerous, if they paid more, Americans would line up for jobs picking lettuce, mopping floors, plucking chickens or doing any of a myriad of other jobs currently held by the over 7 million undocumented workers in the US today.

Yet, in the wake of increased border enforcement and workplace raids we've had the opportunity to test this little theory…..and thus far it appears to have failed the test.

ALONG US-MEXICO BORDER, NOT ENOUGH HANDS FOR THE HARVEST

Arizona farmers cite tighter border security and limits on guest workers. They're paying field hands $2 more per hour.

The nature of farming is that it comes with many unknowns: weather, pests, competition from abroad, effectiveness of new machinery. Rick Rademacher isn't clear why the labor pool needs to be another one – especially since so many day laborers from Mexico would be eager to work in his lettuce fields here in the midst of America's "winter salad bowl."
…snip…

"We struggle daily," he says. "We just hope every day that we can fill the orders."

Empty stations on the harvest lines are more common this year throughout this swath of Arizona farm country, says Rademacher, who serves as president of the Yuma Fresh Vegetable Association. The reasons are many: a 40,000-person limit on the number of foreign guest workers allowed into the US, tighter borders that are discouraging illegal crossings, and rising demand for day laborers in other industries, such as higher-paying construction work.

The shortage of farm workers has been driving wages higher. Last season, base pay for day laborers working in this area was $6.50 an hour. Now it's $8.50. Rademacher says it may go higher because farmers here can't attract enough employees.

Chistian Science Monitor, Feb 22, 2007

The situation was the same last year also.

Situated between the Colorado and Gila rivers, Yuma is blessed with fertile land and abundant water.

Because of its proximity, 20 miles from the Mexico border, Yuma also has what few other agricultural regions do: access to a large pool of legal immigrant workers like Jose Navarro, 45, and Martin Contreras, 32.

They are among the thousands of Mexicans who have gained U.S. citizenship or legal permanent residence but live across the border in San Luis Rio Colorado, Mexico, where the cost of living is cheaper than in the U.S.

…snip…

Navarro and Contreras said they would earn $6.25 an hour that day working the lettuce fields.

During the harvest, lettuce pickers earn a base pay of $8 an hour, plus bonuses the faster they pick. The best lettuce pickers can earn as much as $12 to $14 an hour.

…snip…

The long waits to cross the border also are driving workers to leave farmwork, while the increased presence of Border Patrol agents has scared some already in the U.S. away from Arizona.

In the past, migrant farmworkers, including many undocumented immigrants who get jobs with fake papers, followed the harvest from California to Arizona and back. Rather than risk arrest passing through Border Patrol checkpoints that ring Yuma, many migrants avoid the state.

"In the past, there were a lot of undocumented doing this work, but now there is so much border enforcement," said Glafira Sanchez, a lettuce crew foreman for Valley Pride, a vegetable harvester in Yuma.

Arizona Republic, Nov 21, 2006

While $8.50 an hour with the possibility to make $12 to $14 might not be enough to attract some native workers to the fields, one would certainly think that it would entice at least a few. The pay is certainly better than that offered by the nation's largest private employer, Walmart.

With over 1 million US employees, Walmart is the biggest employer in twenty-five states. Yet, it only pays an average wage of $8.23 an hour to sales associates, it's most common job classification, and $7.92 to cashiers, the second largest group of employees in the company. Given the company's policy to limit full time employees to a 34 hour workweek, the average associate makes $14,221 a year; a cashier makes $13,733 - far bellow the Federal poverty level for a family of four.

Between its low wages and lack of the company benefits, the average Walmart also costs the taxpayers $420,750 annually for such things as subsidized school lunches, food stamps, housing credits, tax credits, energy assistance, and health care. It's safe to say that its employees are not reaping the benefits of Walmart's preeminent position as a leading force in the global economy.

So why aren't enterprising Walmart cashiers from all over the southwest heading to Yuma for the possibility to earn nearly twice what they're making now? Even the base pay for a 40-hour workweek would translate into a 25.9 % raise for the average cashier.

Certainly, the simple "supply and demand" arguments of those like Mark Krikorian of the Center for Immigration Studies would dictate that the rising wages in Yuma's lettuce fields should be attracting native workers by the droves. He speculated so much in a 2004 article in the National Review when he wrote, "If the supply of foreign workers were to dry up (say, through actually enforcing the immigration law, for starters), employers would respond to this new, tighter, labor market … they would offer higher wages, increased benefits, and improved working conditions, so as to recruit and retain people from the remaining pool of workers."

So how come none of the 300,000 odd cashiers and sales associates at Walmart are not standing in Rick Rademacher's fields right now?

The flippant answer would be; "Because THESE ARE the jobs Americans won't do." … But the real answer is of course more complex than that.

It's not only the physical nature of the job that prevents native workers from taking to the fields, since native workers are willing to take many physically demanding jobs for relatively low wages. Demographics might play a role. Agricultural work is labor intensive but takes place in rural areas not always near enough to population centers to tap into that workforce. Also, by its very nature, the work is seasonal and temporary, forcing the workforce to either migrate or find other work in the off season.

Whatever the reason, it doesn't matter to growers throughout the country who have been reporting labor shortages since last summer. Reports from around the country of fruit and vegetables rotting in the fields are not uncommon and the situation worsens with each growing period.

Of course Krikorian would argue that growers simply have not increased wages high enough yet to attract native workers.

Anti-immigration advocates like Krikorian and Lou Dobbs love to quote from a study done by Iowa State University titled "How Much Is that Tomato in the Window?" that stated that labor accounts for only 10% of the average cost for a head of lettuce and that the elimination of all undocumented workers would only increase produce prices by about 6%. They claim that given these numbers growers could easily double the wages paid to most workers with little real effect to US consumers. They argue that this small price to pay to eliminate undocumented workers, and a burden they'd be more than willing to bear.

But the real world doesn't work that way.. And Rademacher has an answer for those who say they wouldn't mind paying 5 of 10 cents more for a head of lettuce.

"We have to offer more to get the workers, but we try to keep our costs in line, too," he says. "If we set the price [of vegetables] too high, one of our competitors will get the business, or the markets will get the vegetables from out of the country."

The vegetable and fruit businesses are businesses of scale, with profits and losses made in small individual increments, nothing is bought or sold in single units. It's traded in cases, bushels, pallets, truckloads, or shipping containers. Here is where a 6% increases here and a 10cent a unit increase there starts to add up. Today the going price for Mr Rademacher's iceberg lettuce in a major East Coast produce terminal like New York or Boston is about $15 a case of 24 heads. A 6% increase would raise that price nearly one dollar. Large scale food distributors like Walmart can buy hundreds if not thousands of cases a day. Given the ready availability of foreign produce, how long would they be willing to absorb the added costs? More importantly … will the American people really be willing to pay extra for US produce when cheap foreign produce is available? From experience it certainly doesn't look like it.

Despite all the jingoistic rhetoric, and "Buy American" or "Look for the Union Label" campaigns, the American people continually flock the very same Walmarts that pay workers below poverty level wages to load up Levis made in China by workers making 31 cents an hour and strawberries picked in Guatemala for 90 cents a day. All just to save a few cents here or there. They have been complicent in the outsourcing of whole sectors of the economy in order to have "everyday low prices." It's easy for Lou Dobbs to pronounce that the American people would pay a nickel or a dime more for a head of lettuce for the chance to remove the "scourge of illegal aliens", but experience tells us something different.

The growers are well aware of this fact. They deal every day with trying to supply cost-cutting giants like Walmart looking for the lowest prices available on the one hand, while completing with Mexican, South and Central American, and other foreign growers trying to figure out ways to more effectively ship their goods to US markets on the other.

If US workers won't take the jobs done by immigrants for $8.50, $12 or $14 an hour when they're currently making $7.92, what in fact is the magic number? $18 an hour - $22? I'd like, just for once, to have Lou Dobbs or Tom Tancredo answer that question. At what point will native workers actually pack their bags and head off to the fields?

The anti-immigration camp is right when they say "There is no job Americans won't do for the right price," John McCain learned that the hard way when he claimed no one would pick lettuce for $50 an hour and thousands volunteered for the job. But at $50 an hour how long do you think it would take before the Walmarts of the world were on the phone ordering up truckloads of lettuce from Mexico or other countries.

The question should be "Are there jobs Americans won't do for a 'reasonable' price given our current globalized economy ... The answer to that question is obviously yes.

And that's the problem no one seems to want to address.

Until such time as the anti-immigration camp starts to talk about solutions to the real problems facing American workers - when they demand that Walmart stop paying poverty wages as it suckles on the teat of government social programs, and call for the unionization of all workers - those in the fields and meatpacking plants as well as those behind the counters of Walmart ...When they demand that the government start to enforce labor and safety regulations with the same new-found zeal reserved for chasing down immigrants, or force their legislators to re-negotiate trade agreements that have devastated workers on a global scale and fostered a wave of economic migration of epic proportions. ... When they stop demanding the cheapest goods available without regard for how they were produced and think of the global ramifications of their selfish disposable lifestyles ... then, and only then, might there actually be "no job Americans won't do."

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Studies show immigrants driving force in tech growth

For the most part, the debate over immigration reform has centered on the influx of millions of low-skilled, economic migrants entering the country without documentation to take jobs in agriculture, construction and service industries.

Yet, behind the scenes, a controversy has been raging that does not deal with those who entered the country illegally, but rather with those who have entered through legal channels with visas issued for work. The debate over reform of the work visa program, and particularly H1b specialty visas, has been the most contentious of all. The H-1B visa program allows American companies and universities to hire foreign scientists, engineers, computer programmers and other high-skilled workers. In 2003, in response to the bursting tech bubble, the yearly cap on H1b visa was decreased from 195,000 to 65,000. Since then a war of words has raged between businesses who claim they must have access to the worlds brightest minds and professional organization and unions that feel the H1b system is too easily manipulated by corporate interests to the detriment of US workers.

A couple of new studies shed some light on this debate

tags: immigration, studies , H1b visa, tech workers

As with all things immigration related, there are arguments on both sides of this debate that are black and white … but as usual the truth lies in the area that is considerably more gray.

Do H1b workers lower the wages of native-born tech workers? Do US businesses need these workers for their special skills? Compelling arguments have been made on both sides of the issue. Just like the arguments over the economic benefits and costs of undocumented, low-skilled workers, the arguments for and against these highly educated, skilled workers cannot be viewed in a vacuum devoid of the complexities of long term economic and societal trends.

Two complementary studies have recently been released looking at one long term effect of immigration of high skilled workers. "American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness", released last November by the National Venture Capital Association, looked at immigrant participation in launching venture capital backed business, and "America’s New Immigrant Entrepreneurs", released yesterday by Duke Universities Pratt School of Engineering and University of California, Berkeley, examined the role immigrants have played in engineering and technology company start-ups from 1995-2005. Both studies concluded that immigrants, and the H1b visas that allow them to work and live in the US, have played a major role in creating many of the companies and jobs that keep the tech industry running.

"America's New Immigrant Entrepreneurs'' found that nationwide, 25 percent of all tech and engineering start-ups have founders who are immigrants while "American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness" found that 47 percent of venture-backed start-ups were started by foreign born entrepreneurs. These numbers are striking given the fact that the foreign-born represent only 11.7% of the total population.

The Duke study looks at two main aspects of immigrant contributions to the economy; companies started by immigrants and international patents issued to immigrant inventors.

What is clear is that immigrants have become a significant driving force in the creation of new businesses and intellectual property in the U.S. — and that their contributions have increased over the past decade.

Here are some characteristics of the engineering and technology companies started in the U.S. from 1995 to 2005.

• In 25.3% of these companies, at least one key founder was foreign-born. States with an above-average rate of immigrant-founded companies include California (39%), New Jersey (38%), Georgia (30%), and Massachusetts (29%). Below average states include Washington (11%), Ohio (14%), North Carolina (14%), and Texas (18%).


• Nationwide, these immigrant-founded companies produced $52 billion in sales and employed 450,000 workers in 2005.


• Indians have founded more engineering and technology companies in the US in the past decade than immigrants from the U.K., China, Taiwan and Japan combined. Of all immigrant-founded companies, 26% have Indian founders.


• Chinese (Mainland- and Taiwan-born) entrepreneurs are heavily concentrated in California, with 49% of Mainland Chinese and 81% of Taiwanese companies located there. Indian and U.K. entrepreneurs tend to be dispersed around the country, with Indians having sizable concentrations in California and New Jersey and the British in California and Georgia.


• The mix of immigrants varies by state. Hispanics constitute the dominant group in Florida, with immigrants from Cuba, Columbia, Brazil, Venezuela, and Guatemala founding 35% of the immigrant-founded companies. Israelis constitute the largest founding group in Massachusetts, with 17%. Indians dominate New Jersey, with 47% of all immigrant-founded startups.


• Almost 80% of immigrant-founded companies in the US were within just two industry fields: software and innovation/manufacturing-related services.


• Immigrants were least likely to start companies in the defense/aerospace and environmental industries. They were most highly represented as founders in the semiconductor, computer, communications, and software fields.

…
…based on an analysis of the World Intellectual Property Organization (WIPO) patent databases, that foreign nationals residing in the U.S. were named as inventors or co-inventors in 24.2% of international patent applications filed from the U.S. in 2006.

Over half (52.4%) of Silicon Valley startups had one or more immigrants as a key founder, compared with the California average of 38.8%.

"America’s New Immigrant Entrepreneurs"

Duke researchers started with a list of 28,766 companies founded in the U.S. in the last ten years classified as technology and engineering companies in Dun and Bradstreet's Million Dollar Database. The list contains U.S. companies with more than $1 million in sales, and 20 or more employees, and company branches with 50 or more employees. This database is commonly used by researchers and is considered a reliable source. Researchers were able to reach senior executives to determine the backgrounds of key founders for 2,054 of the tech startups.

This study builds on the 1999 research of AnnaLee Saxenian, dean of the School of Information at UC-Berkeley, which focused on the development of Silicon Valley’s regional economy and the role immigrant capital and labor in the process. “Silicon Valley’s New Immigrant Entrepreneurs” found that that Chinese and Indian engineers ran a growing share of Silicon Valley companies and they were at the helm of 24% of the technology businesses started from 1980 to 1998.

The study from NVCA, although obviously from a more partisan source than the other studies, compliments and highlights much of the same ground covered by both Saxenian in 1999 and the current Duke/Berkley study. Using the Thomson Financial database the authors surveyed over 340 privately held venture-backed companies to discern the demographic data on their founders.

Immigrant-Founded Public Venture-Backed Companies

• Over the past 15 years, immigrants have started 25 percent of U.S. public companies that were venture-backed, a high percentage of the most innovative companies in America.



• The current market capitalization of publicly traded immigrant-founded venture-backed companies in the United States exceeds $500 billion, adding significant value to the American economy. This is an example of the enormous wealth-creating abilities of immigrant entrepreneurs.



• Immigrant-founded venture-backed companies are concentrated in cutting edge sectors: high-technology manufacturing; information technology (IT); and life sciences.



• As evidence of how important immigrant entrepreneurs have been to the U.S. technology base, the study found 40 percent of U.S. publicly traded venture-backed companies operating in high-technology manufacturing today were started by immigrants. Moreover, more than half of the employment generated by U.S. public venture-backed high-tech manufacturers has come from immigrant-founded companies.



• The largest U.S. venture-backed public companies started by immigrants include Intel, Solectron, Sanmina-SCI, Sun Microsystems, eBay, Yahoo!, and Google.



• The data shows immigrants possess great entrepreneurial capacity, particularly in technical fields. The proportion of immigrant entrepreneurs among publicly traded venture backed companies is particularly impressive when compared to the relatively small share of legal immigrants in the U.S. population. Today, legal immigrants encompass approximately 8.7 percent of the U.S. population and represented only 6.7 percent of the population in 1990.



• Most venture-backed companies started by immigrant entrepreneurs are technology-related companies that pay high salaries for white collar professional positions but employ fewer people than, for example, venture-backed retail stores such as The Home Depot or Starbucks.



• Immigrant-founded venture-backed public companies today employ an estimated 220,000 people in the United States and over 400,000 people globally.



• While immigrant founders in venture-backed public companies come from across the globe, the leading countries of origin are India, Israel, and Taiwan.



• California is the leading state by headquarters for immigrant-founded venture-backed public companies, followed by Massachusetts, New Jersey, Washington, and Texas.



• A key lesson of the study is the importance of maintaining an open legal immigration system. Few of the immigrant entrepreneurs identified came to America ready to start a company capable of attracting venture capital. As the data, profiles, and interviews revealed, most entered the country either as children, teenagers, or graduate students, or were hired on H-1B visas to begin a first job while in their mid-twenties.

NVCA conducted a survey, with 342 respondents, to gather data on immigrant entrepreneurs at today’s smaller, private venture-backed companies and to gain a wider perspective on company viewpoints on immigration.

• Looking to the future, among today’s cutting edge privately held venture-backed companies, the percentage of immigrant founders remains as high, if not higher than their public counterparts. Of those responding to the NVCA survey, nearly half (47 percent) of the founders of private companies were immigrants.



• In one important indicator of the job creation abilities of immigrants, the NVCA survey found that almost two-thirds (66 percent) of the immigrant founders of privately held venture backed companies have started or intend to start more companies in the United States.



• Immigrant-founded privately held companies in the survey held an average of 14.5 patents, with a median of four. This was slightly higher than the number of patents held by companies responding with exclusively U.S.-born founders.



• Private immigrant-founded venture-backed companies mirror public companies in their location and industry concentration, with 56 percent of the emerging companies headquartered in California.



• The top industry sectors for private immigrant founded venture-backed companies were software, semiconductors, and biotechnology.



• India was the most common place of birth for foreign-born founders in the survey, followed by the United Kingdom, China, Iran, and France.



• Nearly all the immigrant founders in private companies (95 percent) would still start their companies in the United States if given the choice today.

American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness

One reason for the disproportionate amount of immigrants leading US tech firms might be found in some data from Saxenian's 1999 study.

Not surprisingly, Silicon Valley's Indian and Chinese workforce is highly educated. In 1990, they earned graduate degrees at significantly greater rates than their white counterparts: 32 percent of the Indian and 23 percent of the Chinese employed in Silicon Valley in 1990 had advanced degrees, compared to only 11 percent for the white population. Their superior educational attainment is even more pronounced in technology industries: 55 percent of Indian and 40 percent of Chinese technology workers held graduate degrees, compared to 18 percent of whites.
Silicon Valley’s New Immigrant Entrepreneurs

This educational gap between US and foreign workers was also noted in testimony before the Senate Judiciary Committee back in September of 2005 when the Subcommittee on Immigration, Border Security, and Claims was investigating the possibility of foreign nationals engaging in economic or military espionage. William A. Wulf, Ph.D., President of the National Academy of Engineering warned of the growing educational gap between US workers and their foreign counterparts.

After WW II, the U.S. forged a mutually reinforcing triad of complementary R&D strengths in industry, academia and government. However, U.S. industrial laboratories have greatly reduced their support for long-term basic research; and many U.S. corporations are shifting research and development to overseas locations—not just because foreign labor is cheaper, as is the common and comfortable myth, but because it is of higher quality! U.S. government laboratories are in various states of disarray, and no longer maintain the stature that they did in 1960’s. Government support for the physical sciences and engineering at universities has declined in real terms, and is suffering further under present budget pressures – clearly, a strong research capability is not a current federal priority. Enrollment in the physical sciences and engineering, as a percentage of undergraduates, is among the lowest in the industrialized world – the U.S. now graduates just 7% of the world’s engineers, for example. Given that our 12th graders score among the lowest in the world in science and mathematics, the ranks of U.S. born scientists and engineers are not likely to expand dramatically anytime soon. Our once strong triad of R&D capabilities is crumbling.

At the same time, science and technology are growing rapidly in other parts of the world. Over 70% of the papers published in the American Physical Society’s world leading journals, The Physical Review and Physical Review Letters, now come from abroad

The Importance of Foreign-born Scientists and Engineers to the Security of The United States

As stated earlier, nothing about immigration and the debate that swirls around it is ever easy to analyze in simple terms of black and white. These entrepreneurs and the businesses and jobs they create are only one small part of the big immigration puzzle. Clearly they have made great contributions to our economy and society, but the H1b story is complex and multifaceted. Next month the anti-immigration advocacy group, Center for Immigration Studies (CIS) will be issuing their own study on H1b visas and their effects on the economy. Their finding…the bulk of H1b visas are issued to low-level workers that receive low wages that undercut US workers.

All I can say is ….you be the judge.

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New study finds immigrants no effect on US jobs

One of the mantras continually repeated by advocates of stemming the flow of further immigration, and closing the borders, has always been that the millions of immigrants who have entered the country over the last fifteen years have taken jobs away from American workers. Whether its Lou Dobbs bemoaning the "sorry state" of our "broken borders," or the House Republicans touring the country with their traveling immigration hearings, the story is always the same; "the American worker suffers because immigrants unfairly complete for jobs with native workers." But a new study released yesterday found that there was no evidence to support the claim that increased immigration over the last fifteen years has had any ill effect on the job market for the country as a whole.


tags: immigration, Pew Hispanic Center, Immigration Study , immigration job loss, George Borjas, Growth in the Foreign-Born Workforce and Employment of the Native Born


The study, "Growth in the Foreign-Born Workforce and Employment of the Native Born", by the Pew Hispanic Center, examined data from the 1990's economic boom, through the recession and gradual recovery after 2000, and found that at the state level there was no correlation between rapid increases in the foreign born population and employment of native born Americans. The analysis of data from all 50 states and the District of Columbia revealed wide variations from state to state, but no consistent pattern in the relationship between native-born employment and increases in the foreign born population.

Clearly, evidence is mounting that outside of a few contrarian economists like George Borjas (the darling of the anti-immigration crowd), the vast majority of current academic thought leans in the direction of the Pew study in regards to the effects on immigration on the US economy.

In June, a group of the nations leading economists sent a letter to Congress and the President stating that it was their belief that immigration had no ill effects on the US economy or on its workforce when taken as a whole. Entitled, “Open Letter on Immigration", the letter, signed by over 500 signatories, including those of 5 Nobel Laureates-Thomas C. Schelling (University of Maryland), Robert Lucas (University of Chicago),Daniel McFadden (University of California, Berkeley), Vernon Smith (George Mason University), and James Heckman (University of Chicago), clearly stated that immigrants don't take jobs from US workers.

Perhaps even more significant was the study released on Aug 1st by the National Bureau of Economic Research entitled, "Rethinking the Effects of Immigration on Wages." By Università di Bologna's Gianmarco Ottaviano and Giovanni Peri from UC Davis, the study found that there is "a positive and significant effect of immigration on the average wage of U.S.-born workers" and that there is only "a small negative effect of immigration on wages of uneducated US born workers and a positive wage effect on all other US-born workers."

Additionally, the NBER study directly challenged the assertions of Prof. Borjas’ oft quoted study, "The Impact of Immigration and the Labor Market", that has become a cornerstone in the anti-immigration argument.

Using the same methods of analysis of Census data used by Borgas, Ottaviano and Peri dispelled his findings that wages for native born, high school dropouts declined by 8% over the study period due to increased competition from foreign born workers. Instead they found that the wage decline was closer to 1%, and that for 90% of US workers immigration had a positive effect on their wages.

This new study from Pew only reinforces the argument. Using Census data, the study found that other factors such as general economic growth played a much larger role in determining native-born employment rates.

"We are simply looking for a pattern across 50 states, and we did not find one," Rakesh Kochhar, principal author of the report and an economist at the Pew Hispanic Center. "We cannot say with certainty that growth in the foreign population has hurt or helped American jobs."

MAJOR FINDINGS

Eight states had above-average growth in the foreign-born population from 1990-2000 and below-average employment rates for native-born workers in 2000. Those states, where immigration may have had a
negative impact, include North Carolina, Tennessee and Arizona and accounted for 15% of all native-born workers.

Fourteen states with above-average growth in the foreign-born population and above-average employment rates for native-born workers in 2000. Those states, where rapid immigration appears to have not harmed nativeborn workers, included Texas, Nevada and Georgia and accounted for 24% of all native-born workers.

The growth in the foreign-born population from 1990-2000 was below average in 16 states with above-average employment rates for native-born workers in 2000. Those states, in which the native born may have
benefited from the slow pace of growth in the foreign-born workforce, include Illinois, Michigan and Virginia and represented 23% of the native born workforce.

The growth in the foreign-born population was below average in 12 states and the District of Columbia with below-average employment rates for native workers in 2000. Those states, in which the slow growth in the
foreign-born workforce may not have benefited native workers, include California, New York, New Jersey and Florida and represented 38% of the native-born workforce.

Between 2000 and 2004, there was a positive correlation between the increase in the foreign-born population and the employment of native-born workers in 27 states and the District of Columbia. Together, they accounted for 67% of all native-born workers and include all the major destination states for immigrants. In the remaining 23 states there was a negative correlation between the growth of the foreign-born population and the employment of native-born workers. Those states accounted for 33% of the native born workforce in 2004.

The share of foreign-born workers in the workforce of a state is not related to the employment rate for native-born workers in either 2000 or 2004.

Many immigrant workers lack a college education and are relatively young, but the analysis found no evidence that they had an impact on the employment outcomes of those native-born workers who also have low
levels of education and are ages 25-34.

Growth in the Foreign-Born Workforce and Employment of the Native Born Pew Hispanic Center

The overall finding of the study was that, “…the weight of the evidence presented shows … that there is no consistent relationship between the growth in the foreign-born population and employment outcomes for native-born workers. As a result, it is not possible to state with certainty whether the inflow of foreign-born workers has hurt or helped the employment outlook for native-born workers.”

With each new study released, those who advocate for the curtailing the influx of new immigrants due to detrimental effect on the economy have less and less ammunition at their disposal. Although they will nit-pick each individual study on the merits of its methodology or analysis, when taken in totality, the evidence has become overwhelming in favor of the majority position that immigration has no ill effects on the US economy or its workforce.

The Pew Hispanic Center is a non-partisan research group whose mission is to develop and distribute unbiased information on topics relevant to the Hispanic community. Like all groups funded by the Pew Charitable Trusts that study a wide variety of controversial topics from climate change and genetic engineering, they make no policy recommendations although their polls and reports are well respected and have been used by policy makers both in Washington and at the state level.

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Over 500 economists refute right-wing immigration myth.

We all know the drill by now. When science or academics studies don't jive with a right-wing position, they just ignore it, usually finding some "expert" or think tank to formulate an alternative reality for them. Global warming becomes just a natural fluctuation in climate, evolution is just a theory and cavemen really did ride dinosaurs, sex education makes teenage girls get pregnant, and giving rich people huge tax cuts always benefits the poor.

For the past year, Republicans and their media minion have relentlessly waged a campaign to create another alternative reality, this one dealing with the "immigration crisis." Using statistics from right-wing think tanks like CIS, and the Heritage Foundation, or studies from carefully selected academics like George Borjas, they have managed to do with immigration what they've done with other wedge issues; create a narrative that runs contrary to most accepted scientific and academic knowledge. They have created the great immigration myth. Last month 500 leading economists took that myth on and refuted it.



tags: immigration, Economic studies, immigrants jobs



Like parading out a few snowflake babies to cloud the issue with statistically irrelevant anomalies, the right wing has taken a mixture of anecdotal evidence, widely accepted misconceptions, and situations that deviate from the norm and transformed them into the universal truths in their immigration myth. It's a myth that revolves around the great price paid by average hardworking American citizens because of the influx of those who flaunt their disrespect for our laws by their very presence amongst us.

We've all heard the claims before, repeated nightly on the evening news, or screaming from the headlines of newspapers or weeklies. We've been told of the threat to American workers from cheap-labor undocumented workers, or the raising costs of healthcare and education due to the "illegals" in our mist. All have heard about the economic drain and social upheaval caused by a horde uninvited guests suckling on the national teat.

It's a compelling myth. It's a myth that serves the same purpose all myth has served since the beginning of time. It explains to a people, with a mix of fantasy and simplicity, the causation of that which they fear or creates anxieties.

In this case it addresses a core insecurity that prevails in much of working and middle-class America. It's a myth about the causes of their growing apprehension that the current economic system is no longer working to their advantage.

Like all mythology, the right-wing immigration myth cannot hold up to scientific or academic investigation. This is why they must rely on their own "experts" to perpetuate it. But like the "science" that explains creationism or intelligent design, the vast majority mainstream academics find their claims to be faulty.

Last month, the challenging of the right-wing immigration myth took the form of an open letter to President Bush and Congress signed by a collection of the nations top economists. Entitled, "Open Letter on Immigration," the letter contained a list of over 500 signatories, including those of 5 Nobel Laureates-Thomas C. Schelling (University of Maryland), Robert Lucas (University of Chicago),Daniel McFadden (University of California, Berkeley), Vernon Smith (George Mason University), and James Heckman (University of Chicago).

Throughout our history as an immigrant nation, those who were already here have worried about the impact of newcomers. Yet, over time, immigrants have become part of a richer America, richer both economically and culturally. The current debate over immigration is a healthy part of a democratic society, but as economists and other social scientists we are concerned that some of the fundamental economics of immigration are too often obscured by misguided commentary.

Overall, immigration has been a net gain for American citizens, though a modest one in proportion to the size of our 13 trillion-dollar economy.

Immigrants do not take American jobs. The American economy can create as many jobs as there are workers willing to work so long as labor markets remain free, flexible and open to all workers on an equal basis.

In recent decades, immigration of low-skilled workers may have lowered the wages of domestic low-skilled workers, but the effect is likely to have been small, with estimates of wage reductions for high-school dropouts ranging from eight percent to as little as zero percent.

While a small percentage of native-born Americans may be harmed by immigration, vastly more Americans benefit from the contributions that immigrants make to our economy, including lower consumer prices. As with trade in goods and services, the gains from immigration outweigh the losses. The effect of all immigration on low-skilled workers is very likely positive as many immigrants bring skills, capital and entrepreneurship to the American economy.

Legitimate concerns about the impact of immigration on the poorest Americans should not be addressed by penalizing even poorer immigrants. Instead, we should promote policies, such as improving our education system, that enable Americans to be more productive with high-wage skills.

Link

Representing the bipartisan nature of the letter, signatories include noted economists that have worked for both Republican and Democratic administrations. These included, N. Gregory Mankiw (Harvard University), former Chairman of President Bush’s Council of Economic Advisers, and J. Bradford DeLong (University of California, Berkeley), Deputy Assistant Secretary of the Treasury under President Bill Clinton, as well as Alfred Kahn (Cornell University), Chairman of the Civil Aeronautics Board under President Jimmy Carter, and Paul McCracken (University of Michigan), Chairman of the Council of Economic Advisors under President Richard Nixon.

When these eminent economists talk about are their "concerned that some of the fundamental economics of immigration are too often obscured by misguided commentary," they speak directly to the right-wing immigration myth-makers. Just as is the case with global warming and evolution, the Republican mythologists present their fringe beliefs as having equal credibility with mainstream scientific and academic knowledge. They present their views as accepted fact.

For every academically sound economic study on immigration presented by a well respected social scientist, the mythmakers counter with one of their dubious reports put out by a right-wing think tank. The American people rarely read economic journals, or academic papers, but they do watch their nightly news, and it is here where the mythmakers make their mark. The right-wing needs but one talking-head from CIS to make the rounds of the evening news to counter the work of hundreds of academic studies and surveys sitting on dusty library shelves.

Hopefully the words of these 500+ economists and social scientist will somehow make an impact on this debate and finally force the conversation to move from the realm of the mythological to the world of the logical. Perhaps those who control the means of information dissemination will finally allow the American people to form their opinions based on facts readily available as opposed to fantasies and mythologies spun by masters of deception.

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The Immigration Equation: Summer reading for wonks

For the time being the immigration issue has moved from the front pages to be replaced by more pressing world affairs. Yet with both houses of Congress out on the road holding public hearings on the topic, it will only be a matter of time before the big wedge issue of 2006 returns. Looming large on the midterm election horizon, the debate over immigration reform has been the subject of numerous studies, polls and research papers, many of them highly partisan and of dubious academic merit. Recently the New York Times Magazine separated the wheat from the chaff when it published an article recapping the work done by leading labor economists on the issue.

While most look at the summer as a time to catch up on some light reading, something frivolous and entertaining; for the wonkish it's the perfect time to bone up on some solid academic research on immigration and it's real effects on our economy.

The Times article, "The Immigration Equation" is a great primer on the subject and looks at the two competing schools of thought of leading labor economists on immigration and how their work plays out in the current debate.



tags: immigration, George Borjas, David Card , economic studies, HR4437, S.2611

To Borjas, a Cuban immigrant and the pre-eminent scholar in his field, the truth is pretty obvious: immigrants hurt the economic prospects of the Americans they compete with. And now that the biggest contingent of immigrants are poorly educated Mexicans, they hurt poorer Americans, especially African-Americans, the most.
Borjas has been making this case — which is based on the familiar concept of supply and demand — for more than a decade. But the more elegantly he has made it, it seems, the less his colleagues concur. ‘‘I think I have proved it,’’ he eventually told me, admitting his frustration. ‘‘What I don’t understand is why people don't agree with me.''

It turns out that Borjas's seemingly self-evident premise — that more job seekers from abroad mean fewer opportunities, or lower wages, for native workers — is one of the most controversial ideas in labor economics. It lies at the heart of a national debate, which has been encapsulated (if not articulated) by two very different immigration bills: one, passed by the House of Representatives, which would toughen laws against undocumented workers and probably force many of them to leave the country; and one in the Senate, a measure that would let most of them stay.

You can find economists to substantiate the position of either chamber, but the consensus of most is that, on balance, immigration is good for the country. Immigrants provide scarce labor, which lowers prices in much the same way global trade does. And overall, the newcomers modestly raise Americans' per capita income. But the impact is unevenly distributed; people with means pay less for taxi rides and household help while the less-affluent command lower wages and probably pay more for rent.

The debate among economists is whether low-income workers are hurt a lot or just a little — and over what the answer implies for U.S. policy. If you believe Borjas, the answer is troubling. A policy designed with only Americans' economic well-being in mind would admit far fewer Mexicans, who now account for about 3 in 10 immigrants.

-snip-

Easily the most influential of Borjas's critics is David Card, a Canadian who teaches at Berkeley. He has said repeatedly that, from an economic standpoint, immigration is no big deal and that a lot of the opposition to it is most likely social or cultural. "If Mexicans were taller and whiter, it would probably be a lot easier to deal with," he says pointedly.

Economists in Card's camp tend to frame the issue as a puzzle — a great economic mystery because of its very success. The puzzle is this: how is the U.S. able to absorb its immigrants so easily?

After all, 21 million immigrants, about 15 percent of the labor force, hold jobs in the U.S., but the country has nothing close to that many unemployed. (The actual number is only seven million.) So the majority of immigrants can't literally have "taken" jobs; they must be doing jobs that wouldn't have existed had the immigrants not been here.

The economists who agree with Card also make an intuitive point, inevitably colored by their own experience. To the Israeli-born economist whose father lived through the Holocaust or the Italian who marvels at America's ability to integrate workers from around the world, America's diversity — its knack for synthesizing newly arrived parts into a more vibrant whole — is a secret of its strength.

-snip-

In a recent paper, "Is the New Immigration Really So Bad?" Card took indirect aim at Borjas and, once again, plumbed a labor-market surprise. Despite the recent onslaught of immigrants, he pointed out, U.S. cities still have fewer unskilled workers than they had in 1980. Immigrants may be depriving native dropouts of the scarcity value they might have enjoyed, but at least in a historical sense, unskilled labor is not in surplus. America has become so educated that immigrants merely mitigate some of the decline in the homegrown unskilled population. Thus, in 1980, 24 percent of the work force in metropolitan areas were dropouts; in 2000, only 18 percent were.

Card also observed that cities with more immigrants, like those in the Sun Belt close to the Mexican border, have a far higher proportion of dropouts. This has led to a weird unbalancing of local labor markets. For example, 10 percent of the work force in Pittsburgh and 15 percent in Cleveland are high-school dropouts; in Houston the figure is 25 percent, in Los Angeles, 30 percent. The immigrants aren't dispersing, or not very quickly.

So where do all the dropouts work? Los Angeles does have a lot of apparel manufacturers but not enough of such immigrant-intensive businesses to account for all of its unskilled workers. Studies also suggest that immigration is correlated with a slight increase in unemployment. But again, the effect is small. So the mystery is how cities absorb so many unskilled. Card's theory is that the same businesses operate differently when immigrants are present; they spend less on machines and more on labor. Still, he admitted, "We are left with the puzzle of explaining the remarkable flexibility of employment demand."

alternate link

The article also references other academic studies and reports and gives good historical background on the topic. It's a great starting point for acquiring a good understanding of current debate amongst social scientists in the field.

With all the hyperbole and partisan rhetoric passing for information in the immigration debate, this little lull in activity presents an ideal opportunity for those truly interested in immigration reform to bone up on some solid reality-based information.

For further reading see:

Is the New Immigration Really So Bad?
David Card, Department of Economics, UC Berkeley, January 2005

This paper reviews the recent evidence on U.S. immigration, focusing on two key questions: (1) Does immigration reduce the labor market opportunities of less-skilled natives? (2) Have immigrants who arrived after the 1965 Immigration Reform Act successfully assimilated?

Looking across major cities, differential immigrant inflows are strongly correlated with the relative supply of high school dropouts. Nevertheless, data from the 2000 Census shows that relative wages of native dropouts are uncorrelated with the relative supply of less-educated workers, as they were in earlier years. At the aggregate level, the wage gap between dropouts and high school graduates has remained nearly constant since 1980, despite supply pressure from immigration and the rise of other education-related wage gaps. Overall, evidence that immigrants have harmed the opportunities of less educated natives is scant. On the question of assimilation, the success of the U.S.-born children of immigrants is a key yardstick. By this metric, post-1965 immigrants are doing reasonably well: second generation sons and daughters have higher education and wages than the children of natives. Even children of the least educated immigrant origin groups have closed most of the education gap with the children of natives.

"The Impact of Immigration and the Labor Market" , George J. Borjas, Harvard University, January 2006

Not surprisingly, the impact of immigration on the host country’s labor market is now being heatedly debated in many countries. In the U.S. context, this concern has motivated a great deal of research that attempts to document how the U.S. labor market has adjusted to the largescale immigration of the past few decades. Three central questions have dominated much of the research: What is the contribution of immigration to the skill endowment of the workforce? How do the employment opportunities of native workers respond to immigration? And, who benefits and who loses?

The policy significance of these questions is evident. For example, immigrants who have high levels of productivity and who adapt rapidly to conditions in the host country’s labor market can make a significant contribution to economic growth. Conversely, if immigrants lack the skills that employers demand and find it difficult to adapt, immigration may increase the size of the population that requires public assistance and exacerbate ethnic and racial inequality. Similarly, the debate over immigration policy has long been fueled by the widespread perception that immigration has an adverse effect on the employment opportunities of natives.
Which native workers are most adversely affected by immigration and how large is the decline in the native wage?

The Impact of Mass Migration on the Israeli Labor Market, Rachel M. Friedberg, Brown University and NBER, August 1997

Rachel Friedberg, an economist at Brown, added an interesting twist to the approach. Rather than compare the effect of immigration across cities, she compared it across various occupations. Friedberg's curiosity had been piqued in childhood; born in Israel, she moved to the U.S. as an infant and grew up amid refugee grandparents who were a constant reminder of the immigrant experience.

She focused on an another natural experiment — the exodus of 600,000 Russian Jews to Israel, which increased the population by 14 percent in the early 1990's. She wanted to see if Israelis who worked in occupations in which the Russians were heavily represented had lost ground relative to other Israelis. And in fact, they had. But that didn't settle the issue. What if, Friedberg wondered, the Russians had entered less-attractive fields precisely because, as immigrants, they were at the bottom of the pecking order and hadn't been able to find better work? And in fact, she concluded that the Russians hadn't caused wage growth to slacken; they had merely gravitated to positions that were less attractive. Indeed, Friedberg's conclusion was counterintuitive: the Russians had, if anything, improved wages of native Israelis. She hypothesized that the immigrants competed more with one another than with natives. The Russians became garage mechanics; Israelis ran the garages.

After plowing through these studies, a good romance novel, or a spy thriller might be in order, but you'll be glad you put in the effort.



here's some additional reading for those who can't get enough economic studies


Borjas, George J., and Lawrence F. Katz. 2006. Evolution of the Mexican-Born Workforce in the United States. NBER Working Paper No. 11281. Cambridge, Mass.: National Bureau of Economic Research.

Card, David. 2005. Is the New Immigration Really So Bad? NBER Working Paper No. 11547. Cambridge, Mass.: National Bureau of Economic Research.

Card, David, and Ethan G. Lewis. 2005. The Diffusion of Mexican Immigrants During the 1990s: Explanations and Impacts. NBER Working Paper No. 11552. Cambridge, Mass.: National Bureau of Economic Research.

Couch, Jim F., Brett A. King, William H. Wells, and Peter M. Williams. June 2001. Nation of Origin Bias and the Enforcement of Immigration Laws by the Immigration and Naturalization Service. Independent Institute Working Paper. Oakland, Calif.: The Independent Institute.

Cowen, Tyler, and Daniel Rothschild. May 15, 2006. Hey, Don't Bad-mouth Unskilled Immigrants: You Don't Have to Be a Computer Genius to Be Good for the U.S. Los Angeles Times.

__________. June 12, 2006. Blending In, Moving Up. Washington Post.

Friedberg, Rachel M. 2001. The Impact of Mass Migration on the Israeli Labor Market. The Quarterly Journal of Economics 116 (4): 1373-1408.

Friedberg, Rachel M., and Jennifer Hunt. 1995. The Impact of Immigrants on Host Country Wages, Employment and Growth, Journal of Economic Perspectives 9 (4): 23-44.

Gallaway, Lowell E., Stephen Moore, and Richard K. Vedder. 2000. The Immigration Problem: Then and Now. The Independent Review 4 (3): 347-364.

Gandal, Neil, Gordon H. Hanson, and Matthew J. Slaughter. 2000. Technology, Trade, and Adjustment to Immigration in Israel. NBER Working Paper No. 7962. Cambridge, Mass.: National Bureau of Economic Research.

Krueger, Alan B. April 6, 2006. Two Labor Economic Issues for the Immigration Debate. Washington, D.C.: Center for American Progress.

Ottaviano, Gianmarco I.P., and Giovanni Peri. 2006. Rethinking the Gains from Immigration: Theory and Evidence from the U.S. NBER Working Paper No. 11672. Cambridge, Mass.: National Bureau of Economic Research.

Powell, Benjamin. April 30, 2005. Immigration, Economic Growth, and the Welfare State. Oakland, Calif.: The Independent institute.

__________. May 18, 2005. Immigration Reform that Both Sides Can Support. San Francisco Business Times.

___________. April 4, 2006. How To Reform Immigration Laws. Atlanta Journal-Constitution.

___________. December 22, 2005. The Pseudo Economic Problems of Immigration. San Diego Union-Tribune.

Powell, Benjamin, and Peter Laufer. September 21, 2005. Immigration Wars: Open or Closed Borders for America? Transcript of Independent Policy Forum. Oakland, Calif.: The Independent Institute.

Simon, Julian. 1999. The Economic Consequences of Immigration, 2nd ed. Ann Arbor, Mich.: University of Michigan Press.

_______. 1990. Population Matters: People, Resources, Environment, and Immigration. New Brunswick,
N.J.: Transaction Publishers.

Smith, James P., and Barry Edmonston. 1998. The Immigration Debate: Studies on the Economic, Demographic, and Fiscal Effects of Immigration. Washington, D.C.: National Academies Press.

Tabarrok, Alexander. 2000. Economic and Moral Factors in Favor of Open Immigration. Oakland, Calif.: The Independent Institute.

Vedder, Richard K., and Lowell E. Gallaway. 1993. Out of Work: Unemployment and Government in Twentieth-Century America, rev. ed. New York: New York University Press for The Independent Institute.

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