2005 May 19 Thursday
Native Worker Employment Drops Greatest In High Immigrant States

Steven A. Camarota, Director of Research, Center for Immigration Studies, testifed on May 4, 2005 before the US Congress House Judiciary Committee Subcommittee on Immigration, Border Security and Claims. Camarota argued that immigrants are displacing Americans from jobs and driving down wages and benefits.

Prior to the economic slowdown that began in 2000, I had generally assumed that the primary impact of immigration would have been to reduce wages and perhaps benefits for native-born workers but not overall employment. An important study published in 2003 in the Quarterly Journal of Economics showed that immigration reduces wages by 4 percent for all workers and 7 percent for those without a high school education.1 A significant effect to be sure.

However, after a careful examination of recent employment data, I have become increasingly concerned that immigration may also be reducing employment as well as wages for American workers. A study by the Center for immigration Studies published last year shows that between March 2000 and March 2004 the number of unemployed adult natives increased by 2.3 million, but at the same time the number of employed immigrants increased by 2.3 million.2 By adults I mean persons 18 and older. About half the growth in immigrant employment was from illegal immigration. And overall the level of new immigration, legal and illegal, does not seem to have slowed appreciably since 2000. By remaining so high at a time when the economy was not creating as many new jobs, immigration almost certainly has reduced job opportunities for natives and immigrants already here.

Native employment is falling in states with high immigrant influxes.

Not only is native unemployment highest in occupations which saw the largest immigrant influx, the available evidence also shows that the employment picture for natives looks worst in those parts of the country that saw the largest increase in immigrants. For example, in states where immigrants increased their share of workers by 5 percentage points or more, the number of native workers actually fell by about 3 percent on average. But in states where the immigrant share of workers increased by less than one percentage point, the number of natives holding a job actually went up by 1.4 percent. This is exactly the kind of pattern we would expect to see if immigration was adversely impacting native employment.

Of course, businesses will continue to say that, "immigrants only take jobs Americans donít want." But what they really mean is that given what they would like to pay, and how they would like to treat their workers, they cannot find enough Americans. Therefore, employers want the government to continually increase the supply of labor by non-enforcement of immigration laws.

Employers want low labor prices. But the Americans who are displaced from jobs demand more social services such as health care, unemployment benefits, and welfare from government. Also, the lower wage immigrants, legal and illegal alike, end up using medical care and other services paid for by middle and higher income taxpayers. Plus, the illegals are driving down the benefits packages offered by employers and thereby increasing the number of people who have no medical insurance. This, in turn, increases the number of native people who turn to government to pay for medical care. So low priced immigrant labor is effectively subsidized labor for those employers who use it and the rest of us are paying for it through taxes, higher crime rates, and more pollution and crowding.

Share |      By Randall Parker at 2005 May 19 08:19 AM  Immigration Economics


Comments
Nigel said at May 20, 2005 12:26 AM:

"Plus, the illegals are driving down the benefits packages offered by employers and thereby increasing the number of people who have no medical insurance. This, in turn, increases the number of native people who turn to government to pay for medical care."

Randall, how is it that illegals are driving down benefits? Do you mean

1. Less competition for employees = lower overall benefits
2. Off-the-books employment is prevalent among illegals and almost by definition does not include benefits and that legal employers who compete with off-the-grid ones must find some way to cut corners. . .

I assume 2. since 1. would include legal immigrants. Or a combination or something else entirely?

Nigel said at May 20, 2005 12:38 AM:

Tyler Cowan in Marginal Revolution cites this paper (I haven't read it yet) and makes comments very different from what i've seen on this site and nearly elsewhere. It seems quite counter-intuitive to me.

http://www.phil.frb.org/econ/conf/immigration/card.pdf

Here is what Tyler writes:

Do immigrants depress wages?
Tyler Cowen
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.

That is from David Card, here is the paper. And there is more:

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.

May 16, 2005 at 07:46 AM in Economics | Permalink | TrackBack (3)

What do the Iraqi insurgents want?

Randall Parker said at May 20, 2005 5:53 AM:

Nigel,

David Card is wrong on some points, especially with regard to Hispanics. I saw Tyler's post and managed to find someone else to write a rebuttal to Card and have been helping that guy find material for the rebuttal. I'm going to link to that article when it comes up on the web.

For example, in the Thernstroms' book America In Black And White they show that Hispanics in 12th grade know about as much as whites in 8th grade. So level of achievement grade-wise overstates Hispanic educational progress. BTW, this is educational attainment as measured by National Association of Education Progress (NAEP) standardized tests. Also see here for more on the Thernstrom data.

Also, as I've posted previously, Hispanics do not improve much even in high school graduation rates in later generations. Also see here and here.

Randall Parker said at May 20, 2005 5:59 AM:

Nigel,

Regards worker benefits:

1) When supply increases the cost drops. Benefits are a cost. If more people are available to do a job then employers can offer less compensation - including benefits - to get the job done.

2) When supply of least skilled workers increases then the percentage of workers covered by employer-provided health insurance drops even if the employers previously offering health insurance continue to do so. Health insurance is offered more often by employers who have more skilled workers than by employers who have a less skilled work force. So, for example, an engineering company is more likely to offer health care benefits than a restaurant or a lawn mowing service. The Hispanic influx is increasing the number of employers who employ less skilled workers.

3) Legal immigrants are, on average, more skilled than illegals. A reversal of the illegal immigrant influx combined with a raising of educational standards for legal immigrants would increase the productivity level of the average immigrant and therefore greatly reduce the benefits lowering effect of immigration.

John S Bolton said at May 20, 2005 5:41 PM:

Say's law says that supply creates its own demand, and this would apply to labor supply also, so long as the wage keeps adjusting downward in the affected classes of labor. Immigration, for years now, has caused overall labor force participation to decline, as shown above. The antimerit policy of recruiting new foreigners, and in numbers which can only be described as aggression on the citizenry, is causing us to average down to the third world level of labor force participation. The old saying has it that the devil makes work for idle hands, and this must be the intention of his worshippers who would want this result to be imposed on our innocent fellow citizens by state aggression. Card's study looked at the Marielitos who went into Miami, but he simply assumed a level of labor force participation for them, there and then, which is not likely to have been accurate. Many were criminals, and many more received extended guest accomodation, during the months covered by the study. Displacement effects occur through the raising of rents for a certain class of housing, more than through wage competition. It is the housing also, in its community context, which is altered by a lowlife influx, that exerts the effects resulting in mass displacement of the population with higher standards. That the government would be enthusiastic to impose declining standards shows malice on the part of officials.

Nigel said at May 20, 2005 10:01 PM:

Randall and John,

I read these apocalyptical reports about third world immigration lowering wages, and they *do* seem to make sense to me intuitively, but then hidden in the body of these articles they typically report that the net effect of immigration lowers unskilled wages by something like 10% or less, so to me that would appear to be making a mountain out of a molehill. So I think it is important, as you both note, to look at things like rent and housing prices, availability of health care, quality of public education. Sailor has a lot of stats and anecdotes on how official GDP per capita state by state *overstates* standard of living in blue states. Bruce Bower had an *extremely* fascinating feature article in the NY TIMES on how Scandinavia's high per capita income (even in official PPP although he didn't exlicityly state that)*overestimates* their living standards by a long shot, and that people in "poor" Spain and Portugal live much better on average, esp. people with modest jobs. The article was somewhat anecdotal. Someone should do something similar but more quantitative data. Here's what he wrote

http://mailman1.u.washington.edu/pipermail/pophealth/2005-April/001080.html


Randall's clarification about the role of illegal's in driving down insurance availability is what I thought he had meant, but I still think that there's also a large component of what VD Hanson touched on in MEXIFORNIA: when people are being paid cash, no taxes, no insurance or union deductions, and their employers do not have to pay SS copayments, etc. it makes it much harder for on-the-books employers to be benevelent to their workers *and* stay above water vis-a-vis the black economy competition.

Randall Parker said at May 21, 2005 3:01 AM:

Nigel,

Wage declines understate the extent of the change. The decline in labor market participation rates at the bottom means that a larger fraction of the people at the bottom have no legal job. Lower wages is still more money than no wages.

Plus, a decline of 10% is a lot harder to take when you are only making $7 or $8 per hour. You need all that money. You don't have any discretionary income.

Also, the problem isn't just the higher cost of living in "blue" states. The problem is that the cost of highly skilled services (e.g. a doctor or lawyer) is rising relative to the incomes of poor people. So poor people are becoming relatively less able to buy the help of a doctor or lawyer or other expensive professional.

Also, the illegal alien influx is forcing our existing poor to migrate within the US to get away from the illegals. The black and white flight from California is the biggest example of this. Well, that is a hardship on those who are poor who are forced to move.

Also, the illegal immigrants increase the size of the fraction of the population that are poor. Even if that didn't drive down wages of the existing poor why do that to ourselves? Do I need to review all the things that are worse about poor neighborhoods? How about the resentment of them as voters? We should not want more of that.

Yes, employers who want to stay legal basically are forced out of business. So the result is the growth of the black market and the decline of rule of law. Again, why do that to ourselves?

scottynx said at May 21, 2005 10:12 AM:

I am a young adult in Southern California. I think I can illuminate why native worker employment might drop the greatest in high immigrant states, at least with respect to young, middle class, native Californian's who are not college bound. Many young native U.S. citizens (I'm not talking about amerindians) basically think that thier s*** doesn't stink. They have a lot of pride and expectations, and they think it is demeaning to have to work for minimum wage, even for a first job sometimes. Young, strong, men in particular don't want to work for minimum wage. Some don't think it's worth it to slave for minimum wage when thier parents still take care of them while they look for a higher paying job (those poor sucker parents, Who knows when the kids will find that higher paying job!). Maybe the parents have them do house/yard work for some spending money while giving them free food and rent. The stereotype of White parents pushing kids out the door at 18 is not totally correct (few middle class parents will shove kids out the door to live in a slum making minimum wage). In effect, for middle class, native born, non-college material young people, especially in high immigrant states, immigration has made being a stay at home loser a slightly more favorable alternative (not absolutely but relative to the alternatives).

This post is based on my experiences, and not any research.

John S Bolton said at May 21, 2005 1:20 PM:

How is it that many would try to generate disdain against our fellow citizens, where otherwise there would be sympathy, not for the foreign criminal, but for those who may be displaced from the employment ladder altogether? If all of them were black, who would say throw those lazy useless losers back into the delta? Anticaucasianism is the state religion of the government schools, or one of them, and, to such an extent by now, that no one questions how human beings can be so far out of sympathy with their fellow citizens, as to scorn and abuse them when they are being attacked by foreigners. It reminds me of the reports of the vicious scramble in the last few days of SVietnam, a ruthless devil take the hindmost attitude, indicating no solidarity and no community of values in a collapsing society.

D Flinchum said at May 22, 2005 5:28 AM:

When I read "They only want to do jobs Americans won't do" I am enraged. I lived in Northern VA for over 35 years before moving to Southwest VA. NoVA has been inundated with immigrants - legal & illegal - while SWVA has largely been spared at least for now. We are told that Americans won't do agricultural work, slaughterhouse work, restaurant work, much of construction work, etc.

Big Agriculture isn't in SWVA but I can assure you that we have plenty of small farmers and that they, some hired workers, and often their families do both farming and raising food animals. Many do their own slaughtering and packing. I know because I've bought from them.

In restaurants many of the staff are students who are working their way through college. These jobs are available because we haven't ready access to "cheap" immigrant labor, where the true costs are passed on to the community at large while the owner pockets the extra profits. Needless to say, these students don't plan on being wait staff all their lives, although some majoring in the "hospitality industry" may be getting specific experience. All are getting valuable work experience plus extra money that they won't have to add onto their student loans. I see them in nearly every restaurant that I frequent. Some of them have worked all 4 years at the same place, some advancing into floor or shift management.

I live in a house that was built in 2003 with 100% American labor from the builder to the guy who swept out at the end. And here is the most important aspect: Many of the men who worked on our house were men in their 20's who in addition to making decent money were also learning new skills. The skills they learned on the job will enable them to get better jobs in the future and so work their way up. In NoVA, many of the lower level jobs would have gone to illegal immigrants, not young men in their 20's.

The plumber who worked on our house had to make a minor adjustment after we moved in. He had to go through a ceiling in order to do so, and afterwards he expertly fixed the ceiling so that you couldn't even tell where he had cut into it. I told him what a great job he'd done on the repair and he said that he had started out in wall-board, etc. and had learned the construction trade from the ground up. Just like the 20-somethings who worked on our house. In NoVA, this path is being denied to many American citizens who would love to get in on the ground floor - not to stay there forever but to get a chance to learn and advance.

Even if we wise up and put an end to the idiocy that we are now inflicting on ourselves, the damage done to American workers will follow many of them all of their lives. Also, we have had next to no problems with the house while some friends in NoVA who have also recently built houses have had major problems and little success in getting them fixed satisfactorily.

John S Bolton said at May 22, 2005 5:55 PM:

That brings up another cost of mass antimerit immigration which is under a baneful speech taboo. Those who are closed out of such occupations in their youth will often be less productive for decades to come, than they otherwise would have been.


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