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2011 November 08 Tuesday
Immigrants To Sweden Heading For Old Age Poverty

Naturally, the more productive will be made to pay more to support them.

Unless action is taken, Sweden will soon have a large new group of poor pensioners – immigrants with a weak attachment to the labour market. This gloomy future scenario is revealed by a new government inquiry on the pension system carried out by researchers from the School of Business, Economics and Law of the University of Gothenburg on behalf of the Social Council at the Ministry of Social Affairs. But the inquiry also shows that there are ways of improving the expected standard of living.

"When we looked at the economic resources of immigrants from a country outside the OECD area, we found that this group has far worse prospects of achieving a high standard living as pensioners than those born in Sweden. And the public pension system in its present form will not succeed in evening out these differences when the pensions are taken," says Lennart Flood, professor of economics and one of the members of the inquiry.

The better solution: stop letting in low-skilled immigrants. Will the pain on the public purse ever become large enough to stop the influx of the poor? This isn't the 19th century with lots of factories to give them jobs.

By Randall Parker    2011 November 08 07:58 PM Entry Permalink | Comments (6)
2010 October 03 Sunday
Arizona Sheriff: Obama Hands Around Throat

Larry Dever thinks Barack is insincere about border security. Sure 'nuff.

Sheriff Larry Dever of Cochise County, Ariz. told CNSNews.com that President Barack Obama has “got his hands wrapped around our throat” as his administration sues the state of Arizona for trying to enforce the immigration laws that the federal government itself will not enforce.

Dever repeats a familiar argument: Obama is holding border security hostage in exchange for amnesty. Worse yet in my view: the USG will not make the border secure even if the elites get another amnesty. They want more unskilled immigrants who will vote for the Democrats while simultaneously lowering living standards for the lower classes. They do this while pretending to represent the interests of the lower classes. Cheeky devils.

Dever also said he has “zero confidence” Obama will secure the border before his presidential term is up in two years and that the president is putting the people who live and work in Cochise County at risk by willfully failing to secure that border so that he can maintain political leverage for his goal of winning an amnesty for illegal aliens.

This battle over immigration happens against a backdrop of worse than stagnating incomes.

The inflation-adjusted income of the median household—smack in the middle of the populace—fell 4.8% between 2000 and 2009, even worse than the 1970s, when median income rose 1.9% despite high unemployment and inflation. Between 2007 and 2009, incomes fell 4.2%.

A rational person who had the best interests of the American people at heart would see these results and recognize the need to stop the influx of immigrants from south of the border. If we can't have a government that pursues policies in the national interest then I really want to join the top 1% who are having a party.

Since Hispanics are the most rapidly growing portion of the US population and they aren't exactly tearing up academically it bodes poorly for the future median income of America that Hispanics have a high rate of poverty.

The Census report showed increases in poverty for whites, blacks and Hispanic Americans, with historic disparities continuing. The poverty rate for non-Hispanic whites was 9.4 percent, for blacks 25.8 percent and for Hispanics 25.3 percent. The rate for Asians was unchanged at 12.5 percent.

You can see how things are going per ethnic group in America with figure 1 of Mish's post on the lost decade. I'm pretty confident that we are starting into another lost decade. Too many factors are working against rising living standards in America.

By Randall Parker    2010 October 03 10:39 PM Entry Permalink | Comments (2)
2009 November 14 Saturday
Farm Automation Replacing Humans

Why let in low skilled immigrants to do manual labor on farms when we are at the transition point where lots of farm jobs are going to get taken over by computer automation. That automated equipment doesn't need taxpayer subsidized health care, unemployment benefits, or schooling for children.

It was 1903 when Robert Blair’s great-grandfather began farming the dry ridge overlooking the Clearwater River near Lewiston, Idaho. In 2001, when Blair took the reins, the farm’s books were still kept by hand. Now, he has deployed a set of Darpa-like technologies, including unmanned aerial vehicles and self-steering tractors.

“In six years, I went from just having a cell phone to my tractor driving itself, and having a small airplane flying and landing itself on a farm,” Blair said.

The new precision farmers are hacking together a way of making food in which the virtual and physical worlds are so tightly bound that having his tractor steered by GPS-guidance with inch-level accuracy is ho-hum. Autosteering of farm machinery has exploded over the past several years, according to an annual survey by Purdue University’s Center for Food and Agricultural Business. In 2004, just 5 percent of agricultural retail outlets offered autosteering. In 2008, more than half did.

Autosteering of farm equipment is a lot easier than autosteering of cars because lots of tractors move around in fields that contain no humans aside from the guy in the cab. The big benefits include the ability to put rows closer together and even vary application of fertilizer and pesticides by area of each field based on historical yields per area. Also, the tractor operator can do other tasks (e.g. surf the internet or do accounting tasks on a laptop during periods when the autosteering is in operation). Further maturation of this technology will eliminate the need for humans in control cabs. Picture huge fields with robotic combines sweeping across, with no human in sight, harvesting wheat and corn crops.

The biggest labor-saving advances will probably come with better automated picking equipment that removes most of the existing use of manual labor for picking vegetables.

By Randall Parker    2009 November 14 12:59 PM Entry Permalink | Comments (5)
2009 May 23 Saturday
Imperial County California 26.9% Unemployment

An LA Times story about the long term lasting harm from California's budget crisis (they claim less educational spending will decrease intellectual capital - I'm skeptical) includes a link to a flash control with California's unemployment rate by county by month since January 2007. Well, Imperial County in Calfornia's southeastern corner (right on the border with Mexico and Arizona) has an eye-popping depression-level unemployment rate of 26.9%! You might think that the recession has hit that county especially hard. But if we back up the time line to January 2007 when the overall state unemployment rate was 5.4% Imperial's unemployment rate was already 15.3%.

What might account for that disaster? Oh, I'm sure you can guess. According to Wikipedia 72.2% of the population are Hispanic and 65.7% speak Spanish. That's not a recipe for economic success in America. But it is a recipe for America's economic future and the ascendance of the Democratic Party. In 1972 62.1% of its electorate voted Republican. It dropped below 50% starting in 1992 (38.5% and the Republican Party in Imperial County is basically road kill at this point. Well, the Democrats have won a great victory there. With a large Hispanic population and 26.1% unemployment the Democrats can count on the voters of Imperial County. This is the Democratic Party's future for America. The Democratic Party reminds me of the scheming of Dagny Taggart's brother James to use political machinations to make their railroad do better in business. Problem was, his machinations contributed to the collapse of the country. His victory over other railroads had a very pyrrhic quality.

By Randall Parker    2009 May 23 09:50 AM Entry Permalink | Comments (5)
2008 October 20 Monday
Immigrant Wage Improvements Smaller Than Previously Thought

Immigrants do not improve their incomes as much as previously thought.

Economist Darren Lubotsky says immigrants close the earning gap with American-born workers about half as fast as previously thought.

CHAMPAIGN, Ill. — Immigrants whittle into a broad earnings gap with American-born workers only about half as fast as long-accepted estimates suggest, according to new research by a University of Illinois economist.

Darren Lubotsky says immigrants’ typically low starting wages grow just 10 to 15 percent faster than native-born workers over their first 20 years in the U.S., well short of the 26 percent catch-up rate in widely used, census-based projections.

Lubotsky says census estimates are flawed because they only compare wages of immigrants and native workers polled in the once-a-decade surveys, and fail to factor in the roughly third of immigrants – most low paid -- who come to the U.S. then leave.

“The reason it appears immigrants catch up quicker based on census data is because, in that data, we’re mostly seeing the successful ones, those who decided to remain here,” said Lubotsky, a member of the U. of I. Institute of Government and Public Affairs.

“Immigrants who have been in the U.S. for decades tend to have relatively high earnings, but the data don’t include many low-earning immigrants who left and therefore weren’t surveyed,” he said. “The earnings of those who stay do grow, but only about half as fast as previous estimates indicated.”

Census estimates are further skewed, he says, because seasonal workers and other low-earning immigrants who routinely go back and forth between the U.S. and their home countries are sometimes misclassified as new arrivals, inflating the pay averages for long-term immigrants.

The longer term prospects for wage increases across generations are poor as well. After the second generation Mexican immigrants show no academic performance improvement. The libertarian Benthamite arguments for open borders are wrong. Immigration is causing a general dumbing down which will lower the quality of life in America.

By Randall Parker    2008 October 20 09:57 PM Entry Permalink | Comments (2)
2008 October 12 Sunday
11% Drop In California Per Capita Income By 2020

Brenda Walker points to a new Heather Mac Donald article about how Hispanics are failing to rise up to white levels of education and skills.

John McCain and Barack Obama have largely avoided discussing immigration during the presidential campaign. But when it comes to the legal side of the issue, they both seem to support the status quo: an official policy centered around low-skilled, predominately Hispanic immigrants. A forthcoming book shows just how misguided that policy is, especially in light of the nation’s current economic woes. The Latino Education Crisis: The Consequences of Failed Social Policies, by Patricia Gandara and Frances Contreras, offers an unflinching portrait of Hispanics’ educational problems and reaches a scary conclusion about those problems’ costs. The book’s analysis is all the more surprising given that its authors are liberals committed to bilingual education, affirmative action, and the usual slate of left-wing social programs. Yet Gandara and Contreras, education professors at UCLA and the University of Washington, respectively, are more honest than many conservative open-borders advocates in acknowledging the bad news about Hispanic assimilation.

Hispanics are underachieving academically at an alarming rate, the authors report. Though second- and third-generation Hispanics make some progress over their first-generation parents, that progress starts from an extremely low base and stalls out at high school completion. High school drop-out rates—around 50 percent—remain steady across generations. Latinos’ grades and test scores are at the bottom of the bell curve. The very low share of college degrees earned by Latinos has not changed for more than two decades. Currently only one in ten Latinos has a college degree.

I bet the difference in college degree rates in engineering and the hard sciences is much larger.

The state of California will experience almost a 1% decline in per capita income per year from now to 2020.

California provides a glimpse of what such changes might mean for America’s economic future. The Center for Public Policy and Higher Education predicts that unless the rate of college matriculation among “underrepresented” minorities (that is, Hispanics) immediately rises, the state will face an 11 percent drop in per capita income by 2020.

California already has high sales and income taxes. Yet we will see a big push for higher tax rates to make up for tax revenue losses as average incomes decline. Take this as a message to higher wage earning Californians that an exit strategy is worth considering.

The US is on its way to creating a permanent underclass? No, we already have one. But it is going to get much larger.

The Latino Education Crisis pulls no punches in its conclusions: “With no evidence of an imminent turnaround in the rate at which Latino students are either graduating from high school or obtaining college degrees, it appears that both a regional and national catastrophe are at hand.” The United States is well on its way to creating a “permanent underclass,” the authors write. They even have the nerve to discuss the calamity of Latinos’ rapidly rising illegitimacy rate—which now stands at 50 percent. Gandara and Contreras had better get used to being called racists from open-borders supporters, as anyone who dares to point out Hispanic family breakdown can attest.

By Randall Parker    2008 October 12 06:19 PM Entry Permalink | Comments (6)
Sydney Australia Can Not Afford Immigration

The state government can not afford to build the infrastructure needed to support a large population increase.

SYDNEY has grossly under-estimated the population explosion that will squeeze its resources over the next 20 years, but the cash-strapped Premier admits it is "pointless" to promise the billions of dollars in extra spending the city will need.

Nathan Rees yesterday signalled deep cuts in the capital spending program and a radical departure from the $140 billion infrastructure strategy of the former premier, Morris Iemma.

On the same day that it emerged Sydney will need almost 900,000 extra homes by 2031 - a third more than estimated three years ago - Mr Rees told a news conference: "Governments can boast about capital works programs extending out five, 10, 15 years. But essentially what you're boasting about is the level of debt you have."

Mr Rees said income or revenue was needed to service the debt.

"If we can't, it's pointless boasting about a capital works program," he said.

One of the problems: medical costs are going up 8% a year and threaten to eat all the state's budget.

When Peak Oil hits infrastructure will become even less affordable. Tax revenues will decline while the costs of construction rise. Better to have a constant population level at that point. So stop the immigration.

By Randall Parker    2008 October 12 05:02 PM Entry Permalink | Comments (1)
2008 September 07 Sunday
Obama And McCain Fail To Address 2 Major US Problems

Robert Samuelson says our terrible US Presidential candidates aren't seriously addressing two of our biggest problems. (Hat tip to Michael Blowhard)

Though echoed by policy wonks, pundits and politicians -- last week, Bill Clinton -- the conventional wisdom is wrong or, at least, misleading. Here's a more accurate assessment. For most Americans, living standards are increasing, albeit slowly, over any meaningful period. But rising health spending is eroding take-home pay, and immigrants are boosting both poverty and the lack of health insurance. Unless we control health spending and immigration, the economic report card will continue to disappoint. Unfortunately, neither Obama nor McCain seriously addresses these problems.

McCain and Obama support illegal immigrant amnesty that would make these problems worse. They aren't just not addressing these problems. They are supporters of the growth of these problems. Both candidates for President of the United States are wrong on a huge and growing problem and yet substantial portions of the US population support one or the other of them. How tragic. McCain's presidential bid almost failed because he is wrong on immigration. But we did not get lucky.

Immigration's effects on poverty and health insurance coverage are greater. Since 1990, Hispanics numerically account for all the increase in the number of officially poor. Similarly, immigrants represented 55 percent of the increase of the uninsured from 1994 to 2006, says the Employee Benefit Research Institute. Many unskilled workers can't get well-paid jobs with insurance.

Immigration not only grows the size of America's lower class. It also increases the burden on the higher productivity net taxpayers (those who pay more in taxes than they receive in benefits) in a few ways. First off, the net taxpayers need to pay more in taxes to pay for health care, education, police, prisons, and other costs generated by the poor. Plus, the net taxpayers pay more in medical insurance to pay for medical costs of the uninsured that governments do not reimburse. This medical cost shifting onto the insured is a substantial portion of medical costs of the insured. Plus, poor people create crime and other problems that are burdens to net taxpayers. All these costs are rising due to immigration. The shift of money toward taking care of the poor pulls productive people away from wealth-creating activities such as research and development toward just providing services. This slows economic growth.

From 2000 to 2007, only 53 percent of the increase in average compensation came from wages and salaries, says economist Gary Burtless of the Brookings Institution. The rest went to health insurance (21 percent), pension contributions (19 percent) and payroll taxes (6 percent).

These numbers are even worst than they look. Not only are employers shifting more compensation toward paying rising health insurance costs but they are also shifting more medical costs directly onto employees. So that 53% of compensation increase that actually becomes taxable income not only gets a piece taken out of it by taxes but also more of it needs to go to pay for higher medical costs. Higher deductibles bite.

But it gets worse. The use of mortgage equity withdrawal (MEW) to boost disposable income is rapidly declining with declining home prices. So people are feeling the effect of less money to spend from borrowing.

From 2004 to 2006, Americans took almost $700 billion per annum of net equity out of their homes through borrowing and spent as much as 50% of it on consumables. The most highly regarded study on mortgage equity withdrawals (MEW) is “Estimates of Home Mortgage Originations, Repayments, and Debt On One-to-Four-Family Residences,” by Prof. James Kennedy and none other than Alan Greenspan (Federal Reserve Board FEDS working paper No. 2005-41); Kennedy has been updating his numbers on an ongoing basis, as set forth in the graph below.

...

In addition to the wealth effect resulting from the housing bubble, Kennedy has concluded that MEW, at its peak, constituted as much as 8% of all disposable personal income and a correspondingly higher percentage of non-housing spending.

MEW declined 60% from 1Q 2007 to 1Q 2008. It peaked at 8% of disposable income and as of 1Q 2008 was at 2% of disposable income. It probably has dropped further in the mean time and will drop further still. The housing price decline is far from over because the housing price-to-rent ratio is still well above historical norms. So is the price of a single family home as a percentage of median household income.

The bursting real estate bubble, immigration, and the rising cost of medical care are some of the bad trends in the United States. Add in the coming retirement of the Baby Boomers, the need to end the trade imbalance, and dwindling oil and natural gas reserves and I'm expecting slower rates of per capita economic growth in the coming years. We might even experience declining living standards.

By Randall Parker    2008 September 07 09:40 PM Entry Permalink | Comments (6)
2008 August 11 Monday
Housing Boom Caused By Flight From Illegal Immigration?

Steve Sailer sees illegal immigration as a big driver of the housing boom that recently crashed.

Similarly, in trying to explain this decade's socioeconomic logic, you end up with thought processes like this:

Q. Why did we need so many illegal immigrants?

A. To build all those McMansions out in the distant exurbs.

Q. Yes, but why did so many Americans want to move to the exurbs?

A. To escape all the illegal aliens flooding their neighborhoods and schools.

Q. Okay, so then why did we need so many illegal aliens?

A. To build all those McMansions out in the distant exurbs.

Everything just spins around and around, like those chrome wheel rims, those insanely expensive hubcaps that were the signature useless extravagance of this decade.

But now that the boom has crashed in part due to rising fuel prices Americans are becoming less able to move away from poor criminals and poorly performing schools overrun by our imported and growing lower classes. The coming world decline in oil production is going to force our middle class back toward cities. I'm expecting a new boom in building jails as the new form of construction aimed at allowing the middle and upper middle classes to live near cities. Also, home schooling and private schooling will become more popular. Though even at $10 per gallon some will find commuting from distant suburbs cheaper than private school tuition. The more kids you have the more a Prius and gasoline make sense as a way to escape cities and near suburbs. People with school age kids will be most reluctant to abandon the exurbs.

By Randall Parker    2008 August 11 10:39 PM Entry Permalink | Comments (4)
2008 January 29 Tuesday
Hispanic Immigrants Lower Black Wages And Raise Black Unemployment

Steven Malanga describes rising black opposition to Hispanic immigration and what it costs blacks.

This Latino “tsunami,” as Los Angeles–based Hispanic-American writer Nicolás Vaca calls it, has intensified the well-founded feeling among blacks that they’re losing economic ground to immigrants. True, early research, conducted in the wake of the big immigration reforms of the 1960s, suggested that the arrival of newcomers had little adverse impact on blacks—one study found that every 10 percent increase in immigration cut black wages by only 0.3 percent. But as the immigrant population has in some places grown six or seven times larger over the last four decades, the downward pull has become a vortex. A recent study by Harvard economist George Borjas and colleagues from the University of Chicago and the University of California estimates that immigration accounted for a 7.4 percentage-point decline in the employment rate of unskilled black males between 1980 and 2000. Even for black males with high school diplomas, immigration shrank employment by nearly 3 percentage points. While immigration hurts black and white low-wage workers, the authors note, the effect is three times as large on blacks because immigrants are more likely to compete directly with them for jobs.

Blacks don't get deported as the Hispanics flood in. The blacks are still here in even worse shape than they were before. It is ridiculous to think we all come out ahead when our most impoverished group becomes even more impoverished and more idle.

Blacks used to be able to get jobs in janitorial work. It is low status work. But it is real necessary work. In LA the blacks have been replaced by Hispanics.

A case study of Los Angeles janitorial services cited in a Government Accounting Office report captures the enormity of the shift. It began in the late 1970s, as several small firms began hiring Mexican janitors at low pay, prompting building owners to drop contracts with the companies that employed blacks in favor of the cheaper upstarts. As the immigrant-dominated firms grabbed more business, industry wages slipped from a peak of $6.58 an hour in 1983 to $5.63 an hour in 1985. The number of black janitors in L.A. plummeted from about 2,500 in the late 1970s to only 600 by 1985. Today, the city’s janitorial industry, like apparel manufacturing and hotel services, is almost entirely immigrant.

We've already got the consequences of globalization where lower paid manufacturing work such as in the garment industry has mostly been sent abroad. For the remaining low paid work to get shifted over into the hands of a newly arrived group just makes a bad situation worse.

Body shop work used to earn a decent hourly wage in LA but no more.

Former mechanic Anderson felt the effects of low-wage immigrant competition in his old line of work. “I used to sell parts to body shops, and I knew Americans who were making $20 an hour repairing dented fenders,” he says. “Now, 95 percent of South Central L.A. body-shop jobs are held by recent immigrants making $7 or $8 an hour.” Says Joe Hicks, former chair of Los Angeles’s Human Relations Commission and now head of the nonprofit Community Advocates: “It’s hard to find a black face on a construction site or in a fast-food restaurant around here any more. People from the black community have noticed.”

The poor folks are going to vote for Robin Hood taxes that will make the open borders libertarians quite unhappy. Yet many of the libertarians will avoid connecting the dots, being strong in faith.

Blacks are getting ethnically cleansed from LA.

The Latino influx into formerly black-majority urban neighborhoods has sparked deadlier kinds of conflict. While most violent crime in these areas is still black-on-black or Latino-on-Latino, interethnic violence is mounting, and in some locales, much of it—perhaps surprisingly, given high overall black crime rates—is Hispanic-on-black. In the heavily mixed-race community of Harbor Gateway in Los Angeles, for example, Latinos now commit five times more violent crimes against blacks than vice versa. Countywide numbers are just as startling. Though blacks make up just 9 percent of L.A. County’s population, they were the victims of 59 percent of all racially motivated attacks in 2006, while Latinos committed 52 percent of all racially motivated attacks.

The problem for blacks looking to leave is to figure out where to go to. Huge growth in Hispanics in the Old South makes those states less appealing though probably still the best bet.

By Randall Parker    2008 January 29 08:30 PM Entry Permalink | Comments (6)
Dollar Drop Cuts Allure Of US For Third World Immigrants

US dollars sent abroad don't buy as much back in the home country.

Cambridge, Mass. - Working in the kitchen at a mid-priced restaurant in Cambridge, Mass., Jose Lucas managed to cover all the expenses of his wife and three kids in his native Brazil. But that changed when the real appreciated 60 percent against the US dollar in the past three years.

"I had to get more hours at work so I could send more money," says Mr. Lucas. "I used to work 40 hours a week. Now, I work 56." So far, the extra hours have made up the difference.

Across the US, the falling dollar value has sent ripples through immigrant communities that send money to family overseas. As some currencies for developing countries have risen substantially against the dollar, many immigrant workers are increasing their workweek by up to 20 hours or taking second jobs. If the dollar's slide continues, the US may become less attractive to migrant workers, analysts say.

Although it's too early to tell whether this will cause a major shift in immigration, a number of migrants in Ecuador, Peru, and Bolivia are already choosing Spain over the US.

Fewer will come. Low wage jobs in the US don't generate enough extra income to make it worth the effort. But since some of those here are sending home more dollars I wonder what the net effect has been so far. But in the longer run the weaker dollar will reduce immigration and increase the number who return.

By Randall Parker    2008 January 29 06:03 PM Entry Permalink | Comments (5)
2007 November 07 Wednesday
No Farm Labor Shortage Seen

In spite of the self-serving calls of fruit and vegetable farmers for more imported cheap laborers the farming industry does not show signs of a labor shortage or of high wages due to a labor shortage.

For several years stories in the media have reported a farm labor shortage. This study examines this question and finds little evidence to support this conclusion. First, fruit and vegetable production is actually rising. Second, wages for farm workers have not risen dramatically. Third, household expenditure on fresh fruits and vegetables has remain relatively constant, averaging about $1 a day for the past decade.

Among the findings:

  • Production of fruits and vegetables has been increasing. In particular, plantings of very-labor intensive crops such as cherries and strawberries have grown by more than 20 percent in just five years.
  • The average farm worker makes $9.06 an hour, compared to $16.75 for non-farm production workers.
  • Real wages for farm workers increased one-half of one percent (.5 percent) a year on average between 2000 and 2006. If there were a shortage, wages would be rising much more rapidly. 
  • Farm worker earnings have risen more slowly in California and Florida (the states with the most fruit and vegetable production) than in the United States as a whole.
  • The average household spends only about $1 a day on fresh fruits and vegetables.
  • Labor costs comprise only 6 percent of the price consumers pay for fresh produce. Thus, if farm wages were allowed to rise 40 percent, and if all the costs were passed on to consumers, the cost to the average household would be only about $8 a year.
  • Mechanization could offset higher labor costs. After the “Bracero” Mexican guestworker program ended in the mid-1960s, farm worker wages rose 40 percent, but consumer prices rose relatively little because the mechanization of some crops dramatically increased productivity.
  • Labor-saving mechanization can be difficult for one farmer, since packers and processors are usually set up to deal either with hand-picked or machine-picked crops, but not both. Government has a key role to play in facilitating mechanization.

We can stop the influx of illegal aliens and we can deport all the illegal aliens already here without damaging the US economy. A reduction in the supply of cheap low skilled labor would increase the rate of innovation in farm equipment design. The rate of growth of productivity would be accelerated if illegals were deported and manual labor wages increased as a result.

Hordes of Mexican and Central American farm workers just lower the wages of farm workers and stifle innovation in agriculture. Plus, these low skilled and poorly paid workers create health, welfare, and educational burdens we all have to pay for. Cheap labor for farmers is subsidized labor. The labor is subsidized with taxes on all of us.

By Randall Parker    2007 November 07 11:15 PM Entry Permalink | Comments (1)
2007 October 31 Wednesday
Immigrant Remittance Growth To Mexico Stagnates

Those illegal immigrants we subsidize with health care and education send a lot of money home.

But after years of strong increases, the amount of migrant money flowing to Mexico has stagnated. From 2000 to 2006, remittances grew to nearly $24 billion a year from $6.6 billion, rising more than 20 percent some years. In 2007, the increase so far has been less than 2 percent.

That quadrupling speaks volumes about Clinton and Bush Administration laxness toward illegal immigration.

Tougher border and interior enforcement of immigration laws has helped stop the remittance growth. But the downturn in the housing market has thrown a lot of illegals out of work too.

Migrants and migration experts say a flagging American economy and an enforcement campaign against illegal workers in the United States have persuaded some migrants not to try to cross the border illegally to look for work. Others have decided to return to Mexico. And many of those who are staying in the United States are sending less money home.

Remittances seem like a good way to measure immigration law enforcement. If the influx of illegals reverses we should see a big downturn in remittances. The fact that remittances have only stopped growing means that the immigration law enforcement improvements haven't gone far enough.

By Randall Parker    2007 October 31 08:11 PM Entry Permalink | Comments (3)
2007 October 25 Thursday
Immigration Raids Cut Illegal Alien Use On American Farms

Businessweek, using the politically correct term "undocumented immigrant", reports on how recent raids have driven many illegal aliens out of farm work.

A climate of fear is spreading among undocumented immigrant workers, causing turmoil in industries dependent on their labor. In August the Homeland Security Dept. announced that employers would be required to terminate workers who fail to produce valid Social Security numbers. Implementation of the new rule is delayed pending the outcome of a lawsuit brought against the government by the umbrella labor union group, the AFL-CIO.

But while the new rule has yet to take effect, its impact is already being felt by farmers like Torrey. An estimated three-quarters of agricultural workers in the U.S. are undocumented, and growers are starting to feel the paralyzing effects of losing their workforce. They say that unless the government implements workable reforms, the future of the U.S. as a food-producing nation is in jeopardy.

This demonstrates how immigration law enforcement against fairly small numbers of illegal aliens can compel much larger numbers of them to leave. Raids conducted across many industries in an area could drive the bulk of the illegals from an area. This happened with Pakistani illegals in the New York City area when federal agents targeted them after 9/11. Most of them fled back to Pakistan before they were caught.

The farmers who want hordes of low paid and low skilled illegal immigrants use labor far in excess of the amount of economic value they produce. Farmers use 2% of the workers but produce less than 1% of the total economic value of the US economy. We shouldn't subsidize the farm corporations with Third World laborers. What is the point of having an industry in the United States that pays so poorly that Americans do not want to do the bulk of that industry's work?

Agriculture does not play the role it once did in the U.S. economy, of course. Though the amount of farmland used has remained fairly steady over the past century, changes to the structure of farms and improvements in productivity have cut the number of people involved dramatically. In 1900, for example, 41% of the U.S. population was employed in agriculture, while that number now stands at less than 2%. Farmers hire workers for about 3 million agricultural jobs each year, but only one-quarter of that workforce is legally authorized. Agriculture also makes up a lower share of the U.S. gross domestic product than ever, accounting for less than 1%.

The farmers enjoy big subsidies on their crops. Plus, they get ethanol subsidies. On top of all this, their illegal alien workers cost us far more (e.g. in education and health care for them and their kids) than they pay those workers in salaries. Enough already.

An end to the use of illegal alien workers would reduce the vegetable crops more than the grain crops since grain crops are less labor intensive. In time the vegetable and fruit crops would recover since an end to cheap illegal alien labor would spur more rapid development and deployment of innovations for automation of farm work.

By Randall Parker    2007 October 25 10:57 PM Entry Permalink | Comments (4)
2007 August 27 Monday
Manhattan Illegal Aliens Try To Unionize Restaurant

They've been fired for their trouble.

NEW YORK -- The deliverymen of Saigon Grill labored for years at the bottom of Manhattan's food chain. Biking swiftly down the avenues in biting cold and searing heat, they schlepped up high-rises and walk-ups with bags of steaming noodles and shrimp fried rice.

Then they surprised their bosses -- and others in this seen-it-all town -- by serving up something unexpected: a revolt.

The 30 men -- all immigrants, including undocumented workers frustrated with the poor conditions and low wages that are often a fact of life in America's underground economy -- banded together in an effort to unionize. They demanded an end to what they say were salaries less than half the minimum wage, and to penalties that included $20 fines for late deliveries and $50 for shutting the restaurant's glass doors with a bang.

How about some labor law enforcement against a restaurant that will pay less than minimum wage? How about immigration law enforcement with deportation for these illegals?

The Washington Post refer to illegal aliens by the Orwellian left-liberal term "undocumented immigrants". They haven't been documented yet.

But the number of immigrants, documented and undocumented, represented by unions surged to 2 million last year, up from 1.6 million in 1996, according to a study by the Washington-based Migration Policy Institute that is scheduled for release next week. By comparison, the number of union-represented U.S.-born citizens dropped to 14.8 million last year, down from 16.5 million in 1996, the study said.

Undocumented? So if the US government identified them all and wrote their names on documents that listed them all as illegal aliens who should be deported would the Post start referring to them as documented? Not unless that meant they gained the legal right to stay here.

By Randall Parker    2007 August 27 11:58 PM Entry Permalink | Comments (4)
2007 August 16 Thursday
Tyler Cowen On Poverty And Immigration

While commenting on a book about poverty Tyler observes that descendants of immigrants do not respond to the same incentives as productively as the first generation does.

The more the poor regard themselves as lagging the rich (rather than doing better than, say, their peers back home in Gujarat), the more stupid risks they will take. That's why poor immigrants are more value-maximizing than the poor that have lived in America a long time and adapted to American norms and expectations. The immigrants don't regard their burdens as insuperable and they are on standard downward-sloping marginal utility curves.

Immigrant groups who do worse than the US average in education and achievements will have kids who will compare themselves to the middle and upper classes and become demoralized. The poor second and third generations who see no reasonable way up will take bigger risks and engage in more destructive behavior. The first generation immigrants who come Mexico or El Salvador will compare themselves to people in Mexico and El Salvador. Therefore they will feel relatively successful. But their kids will compare themselves to the average in America and feel woefully inadequate, frustrated, and very low status. They won't see long hours at menial jobs as the road to success. They'll see those jobs as the road to perpetual low status.

We should not allow in people who will do poorly. When we let such people in we are just creating a larger class of people at the bottom who will look upward resentfully at the people who earn more money than they do.

By Randall Parker    2007 August 16 12:58 AM Entry Permalink | Comments (2)
2007 July 15 Sunday
Robots Can Replace Immigrant Field Labor

An article in MIT's Technology Review reports on yet another promising agricultural robot that demonstrates we can eliminate the need for low skilled labor in agriculture.

Scientists in Denmark are developing an agricultural robot for identifying and eliminating weeds. While this might seem like a relatively easy task, it actually requires a lot of machine intelligence to pick out the weeds among the crops. The robot is still in the early stages of development, but the researchers hope that it will ultimately lead to a reduction in the amount of herbicides used by farmers and therefore cut costs.

Called Hortibot, the semi-autonomous robot is a navigational platform designed to have different agricultural tools fitted to it to either mechanically remove weeds or precision-spray them with herbicide.

The cheap labor lobby argues the United States must let in huge numbers of low skilled illegal aliens from Mexico to do grunt work. But necessity is the mother of invention. Take away the supply of cheap (really subsidized) labor to farmers and then the market will produce many more robots to do every job in farm fields.

This robot can identify rows of crops and navigate the rows.

At a recent Field Robot Event, held in Wageningen, in the Netherlands, Hortibot was able to follow furrows and autonomously turn in the appropriate direction when it reached the edge of the crop rows.

The ability to recognize different kinds of leaves in order to selectively spray herbicides only on weeds reduces chemical use and reduces the need for labor. The navigational ability has applications beyond spraying of herbicides. Initial crop planting and harvesting both would benefit from autonomous machines that can navigate farm fields and stay oriented in row direction.

This robot still needs a human handler to watch it in case it gets off track. But cameras mounted on such robots could allow a single handler to sit at a desk and track multiple robots watching for mistakes that require manual correction.

By Randall Parker    2007 July 15 11:03 PM Entry Permalink | Comments (6)
2007 June 21 Thursday
Immigration Opponents Speed Robotics Technology

Hey there immigration restrictionists, your opposition to importation of a large and growing low skilled labor force has spurred growers associations to fund development of fruit picking robots.

As if the debate over immigration and guest worker programs wasn't complicated enough, now a couple of robots are rolling into the middle of it. Vision Robotics, a San Diego company, is working on a pair of robots that would trundle through orchards plucking oranges, apples or other fruit from the trees. In a few years, troops of these machines could perform the tedious and labor-intensive task of fruit picking that currently employs thousands of migrant workers each season.

The robotic work has been funded entirely by agricultural associations, and pushed forward by the uncertainty surrounding the migrant labor force. Farmers are "very, very nervous about the availability and cost of labor in the near future," says Vision Robotics CEO Derek Morikawa.

If we can defeat the Imperial Senate's immigration amnesty bill and deport all the illegal aliens we will see a boon in investments in robotic technology to automate manual labor. This will raise living standards and improve the quality of products and services. The Imperial Senators are effectively Luddites who prefer a large human servant class to robots.

Thanks to Ivan Kirigin for cherry picking this story for me.

By Randall Parker    2007 June 21 11:32 PM Entry Permalink | Comments (11)
Ted Kennedy Serves Business Owners?

Mickey Kaus (who does great coverage of the immigration battle) pointed out a foolish thing Senator Ted Kennedy (D Mass) had to say about the price of labor for plucking chickens.

"I would like the chicken pluckers to pay $10 or $15 an hour. They do not do it. They are not going to do it. Who are you trying to kid? Who is the Senator from North Dakota trying to fool?

These are the realities, the economic realities. No one has fought for increasing the minimum wage more than I have. But you have got realities that employers are not going to pay it."

The way to raise the wages of chicken pluckers is to reduce the supply of low skilled laborers.

Remember when the Democrats were the party that wanted to restrict the supply of labor in order to drive up wages? That's what unions do. Nowadays, the upper class Democrats appear to be more worried about getting cheap gardeners, cheap nannies, and cheap maids. Plus, the Democrats have allied themselves with the owners of capital to drive down the value of labor versus capital. Mickey wonders if Ted supports the import of cheap laborers to break strikes and unions.

Weren't Democrats (especially liberal Democrats) the people who wanted chicken pluckers--and others doing lousy jobs at the bottom of the pyramid--to be paid $10 an hour? Yet here we have the putative lion of liberalism declaring this modest goal (less than $3/hour above the new scheduled minimum wage) to be impossible. Employers just won't do it! They'll hire illegals instead. But what if the flow of illegals is curtailed--something Kennedy's immigration bill promises to do. Why not see if a tight labor market can boost wages above the new $7.25 minimum--instead of caving and providing employers with cheap temporary "guest workers" from abroad? If chicken pluckers organized and their union went on strike demanding $10 an hour, would Kennedy ask them who they were "trying to kid" (and support breaking the strike with "temporary" employees)? They told us in the '60s that Kennedy was the tool of the bourgeoisie!

Maybe Ted Kennedy just isn't capable of logical consistency in his thinking? Maybe long chains of cause and effect (those involving more than 2 steps) are just beyond his ken?

I say we should look a lot more at track records of people who advocate policies. For example, George W. Bush has been so wrong on Iraq regime change, Iraqi democracy, Palestinian democracy, and assorted other subjects that discounting his advice of the "just trust me" sort seems very wise. Similarly, when Ted Kennedy spouts obvious nonsense about the unskilled labor market while advocating for a massive illegal alien amnesty it is very useful to remember how monumentally wrong Ted Kennedy was about the 1965 labor law revision.

In 1965, Sen. Edward Kennedy, D-Mass., was chairman of the Senate Subcommittee on Immigration and Naturalization.

He ushered through the Senate the immigration policy of President Lyndon B. Johnson, stating Feb. 10, 1965:

"I want to comment on ... what the bill will not do. First, our cities will not be flooded with a million immigrants annually. Under the proposed bill, the present level of immigration remains substantially the same. ..."

Kennedy continued:

"Secondly, the ethnic mix of this country will not be upset. ... Contrary to the charges in some quarters, [this bill] will not inundate America with immigrants from any one country or area. ..."

Kennedy assured:

"Thirdly, the bill will not permit the entry of subversive persons, criminals, illiterates or those with contagious disease. ... As I noted a moment ago, no immigrant visa will be issued to a person who is likely to become a public charge. ..."

His enormous wrongness goes on beyond my excerpt. This is a man whose position we should listen to in order to find out what not to do. Ted's for it? You should probably oppose it. Ted and Dubya are both for it? Rarely do indicators line up so strongly to tell you to march in the opposite direction.

By Randall Parker    2007 June 21 08:52 PM Entry Permalink | Comments (3)
2007 May 28 Monday
Canadian Study: Immigrants Lower Wages

Businesses would have us believe that the law of supply and demand in economics fails to work in the labor market. But a new study in Canada finds that an increased supply of labor from immigrants lowers wages of the natives.

Immigrants to Canada are depressing domestic wages by increasing the pool of people competing for jobs, according to a study released yesterday.

The Statistics Canada study found that when an influx of migrants raises the labour supply by 10 per cent, wages fall by between 3 per cent and 4 per cent.

Abdurrahman Aydemir, co-author of the Statscan study, said that doesn't mean new immigrants are necessarily finding jobs in their chosen field. "Even if they are sending in their résumés and applying, that increases competition and in turn wages."

The natives are gullible enough to get fooled by propaganda and to let their government and businesses to conspire to lower their wages.

The disproportionately large numbers of highly-skilled immigrants coming to Canada has had the biggest impact on the earnings of highly educated workers, the study said. Canadians with postgraduate degrees saw their real weekly wages tumble 7 per cent between 1980 and 2000. During that time, immigration helped boost the number of Canadians with more than an undergraduate degree by 5.7 per cent to 38.2 per cent.

Plus, you get to pay more for housing and drive on more crowded highways and breathe more polluted air.

Canada gets more skilled immigrants.

In 2001, roughly four in 10 people who came to Canada had more than an undergraduate degree, compared with about one in five in the U.S.

This probably isn't just due to Canada's points system. Canada has the advantage of not having Mexico on its southern border.

By Randall Parker    2007 May 28 07:39 AM Entry Permalink | Comments (1)
2007 May 17 Thursday
US Senate Proposal For Massive Illegal Alien Amnesty

The US Senate has reached a political deal with US Senate Democrats and some US Senate Republicans for a massive illegal alien amnesty encompassing 12 million or more illegal aliens and their families. Ted Kennedy led the Democrats in creating this potentially disastrous legislation.

The crux of the complex plan announced by Senator Edward Kennedy (D-Mass.), Democrats' chief negotiator on the deal, would give currently illegal immigrants a path to U.S. citizenship by allowing them to apply for permanent residence after working for eight years in the U.S. Applicants would have to pay penalties of $5,000 and would have limited ability to bring in family members. Kennedy, chairman of the Senate Health, Education, Labor & Pensions Committee, called the compromise "the best possible chance we will have in years to secure our borders and bring millions of people out of the shadows and into the sunshine of America."

For corporations which want to pay their engineers and software developers lower salaries the proposal would double to triple H1-B visas.

One positive aspect of the bill comes from restrictions on chain migration.

In perhaps the most hotly debated change, the proposed plan would shift from an immigration system primarily weighted toward family ties toward one with preferences for people with advanced degrees and sophisticated skills. Republicans have long sought such revisions, which they say are needed to end ``chain migration'' that harms the economy.

Family connections alone would no longer be enough to qualify for a green card - except for spouses and minor children of U.S. citizens. Strict new limits would apply to U.S. citizens seeking to bring foreign-born parents into the country.

Care for the parents typically gets dumped onto American taxpayers.

Robert Rector of the Heritage Foundation estimates this amnesty could cost American citizens $2.5 trillion.

Giving amnesty to illegal immigrants would increase the costs outlined in this testimony. Some 50 to 60 percent of illegal immigrants lack a high school degree. Granting amnesty or conditional amnesty to illegal immigrants would, overtime, increase their use of means-tested welfare, Social Security and Medicare. Fiscal costs would go up significantly in the short term but would go up dramatically after the amnesty recipient reached retirement. Based on my current research, I estimate that if all the current adult illegal immigrants in the U.S. were granted amnesty the net retirement costs to government (benefits minus taxes) could be over $2.5 trillion.

The $2.5 trillion cost estimate understates the cost for several reasons. First off, that does not include the cost to people who are victims of crime and the cost of avoiding crime victimhood. Second, it doesn't include costs from successive generations of low IQ descendants of the amnestied first generation of low IQ immigrants. Third, it doesn't include the higher cost of housing as higher population densities push up housing prices. Fourth, it doesn't include the health costs of pollution due to higher population densities. Fifth, it doesn't include the deadweight cost of higher taxes to subsidize the immigrants.

The higher taxes will slow economic growth as will other effects of having a lower IQ society. You might think only lower IQ people will receive lower salaries. But the slope of a curve of per capita income versus national average IQ is too steep for only low IQ people to pay a price for having lower IQs. Countries which have low average IQs pay less to higher IQ technical workers as compared to countries which have higher average IQs.

The US Senators are hopeless cases. Some represent capitalists who want cheap laborers. Others just want to pose as acting on noblesse oblige. Still others want to bring in more Democrats as voters. For a variety of reasons the best interests of the commonwealth are not their chief concern.

We have reached the time where we need to send letters, emails, faxes, and phone calls toward our Representatives in the House. The Senate slime are firmly in the devil's camp. Time to make massive efforts to persuade our House reps and the public at large that we need real border enforcement and a huge reduction in immigration.

Update: Lawrence Auster argues that liberals see nothing to protect in America as a group of citizens with a common culture or entity.

It’s not that the senators seek the destruction of America as a concrete historical entity. It’s that, as liberals, they have no concept of America as a concrete historical entity. And that is why there is no real deliberation. There can only be real deliberation and debate if there is something substantive to talk about. But for our leaders, there is no substantive thing called America that is at stake in this immigration bill. There is just a varied collection of special interests, human needs, and economic issues, all filtered through constituent pressures, and all overlaid by the Prime Directive to be tolerant and non-discriminatory.

Those who believe in a "proposition nation" think of America more as a secular religion which anyone can and even should join. I lack their secular faith and find it repellant.

By Randall Parker    2007 May 17 11:44 PM Entry Permalink | Comments (13)
2007 May 04 Friday
Canadian Spouse Immigrants Go On Welfare

The Candian government has started going after people who do not pay for welfare costs of foreigners they bring into Canada.

Nedzad Dzihic, a 37-year-old Bosnian immigrant, did not marry Edina Zurko. Instead, according to court documents, she used him as a ticket to Canada and then dumped him almost as soon as she arrived, on Feb. 25, 2003.

An embarrassed Mr. Dzihic promptly informed Citizenship and Immigration Canada, according to the documents filed Friday in Ontario Superior Court of Justice. He says he never saw her again and assumed the government had deported Ms. Zurko.

Instead, Mr. Dzihic was shocked last year to get a bill from the Ontario government to repay thousands of dollars his former girlfriend has been collecting since she went on welfare in June of 2006.

Mr. Dzihic is suing the national and provincial governments to halt their attempts to collect money from him. Gotta say, I'm ambivalent about this one. On the one hand, I think people who bring others into a country should be financially responsible for them. On the other hand, if the original reason for bringing a person (e.g. a marriage that never happens) ceases to exist then why does the government allow the would-be immigrant to remain in the country and collect welfare?

The Canadian government has a serious flaw in its immigration policy. The Canadian government should not allow people to come into Canada based on a reason they can abandon shortly after they arrive. Marriages to foreigners ought to have some sort of vesting period before a spouse gains permanent residency rights. But people who bring in foreigners should be on the hook for some of the costs. They should put up a bond which they lose if the person they bring in becomes a criminal or needs expensive medical care or creates other costs for society.

This idea of placing more costs on those who bring in foreigners should get extended into the realm of the labor market. In the United States employers who bring in visa workers should be required to buy medical insurance and to put up bonds that they lose if a worker they bring in commits criminal acts or damages the property of others.

In the United States some immigrants bring their parents over and then dump the care of their parents onto the welfare system. Some who do this are quite affluent and successful Asians. Such people should be required to prepay years of future medical insurance and the government should bill the children for any welfare services the parents used.

People and companies who dump costs on taxpayers are part of general growing problem where profits get privatized and costs get socialized. We need to stop treating legal residency and citizenship as prizes we give to lucky foreign winners.

By Randall Parker    2007 May 04 08:28 PM Entry Permalink | Comments (4)
2007 February 21 Wednesday
Less Immigration Raises Farm Labor Rates $2 Per Hour

All the money that Congress has felt pressured into spending on border security has begun raising farm labor wages.

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.

Growers want passage of the AgJOBS bill in Congress so that a flood of immigrant labor can drive down their labor costs. Never mind that the rest of us will pay more for police, schools, prisons, Medicaid. and other social programs. Never mind that less skilled and lower wage natives will see their incomes fall. The farmers want what is good for them at our expense.

If we stopped all legal and illegal immigration of low skilled workers then many industries would invest more in automation and the rate of increase in worker productivity would rise. We'd enjoy higher living standards and a less costly welfare state. Plus, our crime rates would be lower.

By Randall Parker    2007 February 21 10:43 PM Entry Permalink | Comments (5)
2007 January 26 Friday
Higher Salaries Pull Skilled Workers Into California Prisons

A single day reading the Los Angeles Times is enough to see the problems caused by the changing immigrant-driven demographics of California. Due to a court ordered increase in pay psychiatrists are flocking to the California penal system.

ATASCADERO — Court orders mandating drastic pay increases for health personnel in California prisons have led to an exodus of workers from state mental hospitals and left the facilities struggling to provide adequate patient care.

Staff shortages at Atascadero State Hospital, where psychiatrist vacancies stand at 70%, have caused the facility to all but freeze new admissions.

All the state's mental hospitals, which like the prisons are also under federal scrutiny, report staff departures for prison jobs that now pay about 40% more. And they fear that many more staffers will leave.

Your government at work, wreaking havoc.

The pull to the prison system is strong. A psychiatrist at Atascadero can make between $13,000 and $14,000 a month, but those in the prison system can make between $19,000 and $21,000 a month.

Psychiatrists used to peak at $160k per year in California prisons. But with the court order they can peak at $248k per year in 2007 and at mental hospitals they peak at $143,460 per year. The state mental hospital salaries haven't gone up enough to keep psychiatric staff. Vacancies were 17% in 1990, 34% in 2000, and now 70% as of January 1 2007 and rising. My guess is salaries didn't keep up as money was funneled into schools in a futile attempt to pull up very low Hispanic test scores.

High salaries for prison workers, police, prosecutors, investigators, crime lab scientists, and others in the criminal justice system pull smart people away from lines of work that create wealth. Lower IQ people commit crimes at higher rates than high IQ people. As I've argued previously, low IQ immigrants pull smarter people away from more productive work. Court ordered salary increases for prison workers accelerate that process.

California needs to spend billions to expand its prison system.

SACRAMENTO — Three decades of tough-on-crime lawmaking has sent California's prison system into a "tailspin," creating the most pressing crisis facing the state, the government's own watchdog panel declared Thursday.

In a blistering 84-page report, the nonpartisan Little Hoover Commission linked the problems plaguing the correctional system to political cowardice among governors and lawmakers fearful of being labeled soft on crime.

Immigration is driving California's population increase and the low IQ and low skilled immigrants commit crime at higher rates than the whites they are displacing. So the growing demand for prison staff, court workers, prosecuting attorneys, court-appointed defense attorneys, investigators, and other skilled workers is pulling higher IQ workers away from more productive occupations. Plus, the costs are a growing burden on higher productivity and higher income taxpayers.

The state's 33 prisons are packed to twice their intended capacity, with more than 16,000 inmates bunking in hallways, classrooms and other areas not designed as housing. Prison leaders say they will be out of room for new inmates by summer, and concern about riots is extremely high.

A federal judge, meanwhile, has given the state until June to relieve the crowding or face a possible cap on the inmate population, now about 172,000.

Though Gov. Arnold Schwarzenegger has unveiled an ambitious $10.9-billion prison building and reform plan, its fate in the Legislature is uncertain, and most of the proposed solutions would take years to enact.

We have a choice. Spend more and pull smarter people away from wealth creation. Or spend less and get murdered, raped, robbed, and defrauded more often by criminals. Why not adopt a tough and enforced immigration policy that stops and reverses the influx of low IQ people? Why inflict these burdens on ourselves?

By Randall Parker    2007 January 26 09:18 PM Entry Permalink | Comments (2)
2007 January 05 Friday
Bush Signed Secret Agreement With Mexico On Social Security

Elitist George W. Bush does not think we have a right to know when he makes deals that are bad for our interests. Bush wants to make America's retirement funding crisis bigger with benefits for Mexicans who make little, pay little in taxes, and cost in welfare and medical benefits and higher crime.

An agreement the Bush administration reached with Mexico on Social Security benefits would allow illegal aliens granted amnesty in the future to claim credit for the time they worked illegally.

The deal was reached in 2004 but never released publicly because it hasn't been submitted to Congress. The TREA Senior Citizens League, a Social Security advocacy group, recently obtained the document through a Freedom of Information Act, and said it confirms the group's worst fears.

The document is a jumble of definitions and legal language, but a spokesman for the group said what's important is what's not in the text: It does nothing to prevent undocumented aliens who later get legal status from receiving benefits for the time they worked illegally. And that comes as the Social Security system's finances are about to be put under greater strain by the retirement of baby boomers.

Bush is like the Manchurian Candidate. He wastes American lives and money in a pointless war that actually harms US national security. He promotes immigration policies that will bankrupt the country with a continuing huge wave of low IQ immigrants who contribute little to the high tech industries that are the best part of the US economy and who are net liabilities. Bush acts as if we do not already have a big enough problem with an aging population and huge unfunded old age pension and health care liabilities. He wants to make the problem even worse. I think he'd prefer a future America with an Idiocracy populace which would be too stupid to ask all those challenging questions that vex him. Bush wants us to continue down a path that will produce a low trust society. Well, he's already succeeded. I do not trust George W. Bush. He's a disaster.

By Randall Parker    2007 January 05 10:58 PM Entry Permalink | Comments (15)
2006 December 25 Monday
Cheap Subsidized Immigrant Labor Discourages Farm Automation

An article in the editorially pro-Open Borders Wall Street Journal conveys facts which very much contradict the Open Borders argument that we need cheap subsidized (we pay their medical, educational, and other costs) immigrant labor.

Immigration restrictionists, among others, point to the success of mechanical tomato harvesting when the Bracero guest worker program for seasonal Mexican farm workers ended in 1964. Since then, harvests of tomatoes that go into processed foods have quadrupled, while labor use has dropped by 72%, says the Western Growers Association, a California trade group.

Some other industries that rely on low-skilled labor also have mechanized. The poultry industry now uses machines to catch, kill, pluck and eviscerate chickens. The housing industry is moving more work onto factory assembly lines.

But labor economists say that's not much headway. "What struck me was how few examples there were of employers thinking ahead," says University of California at Davis economist Philip Martin, who spent a month last year looking for innovations that lessen U.S. reliance on illegal, low-skilled labor, and found almost none.

Take away the necessity that drives so much invention and industries will not innovate. If Washington DC would send a clear loud signal that the supply of subsidized cheap foreign labor is coming to an end then and only then would the row crop farmers get serious about making a huge step forward in automation.

Much of the problem, he says, is that guest worker proposals circulating in Washington are "sending the signal that the supply of unskilled labor will continue" to be high. That has largely dissuaded government and industry from investing in research and development, he adds.

The Agriculture Department -- which helped pay for the tomato-harvest research at UC Davis -- ended all funding for mechanization in 1979 after unions representing agriculture workers sued the university for endangering their jobs.

As Socrates said in Plato's Republic long before Benjamin Franklin strode this Earth:

" A State, I said, arises, as I conceive, out of the needs of mankind". . ."let us begin and create in idea a State; and yet the true creator is necessity, who is the mother of our invention."

If Congress wants productivity of American industry to grow by leaps and bounds then it should cut off the supply of cheap imported subsidized foreign labor. Force industries to find ways to get tasks done with less labor and industries will invest in the engineering development to bring new labor saving equipment to market.

Also see Robert Samuelson and Steve Sailer on Philip Martin's views about agricultural automation and cheap labor.

By Randall Parker    2006 December 25 08:27 PM Entry Permalink | Comments (4)
2006 December 23 Saturday
Illegal Alien Meat Packing Plant Raids Raise Wages

Immigration agents raided 6 Swift & Co. meat packing plants in 6 states and rounded up over a thousand people. The result? Large numbers of US citizens queued up in line to get the new job openings created by round-up of illegals.

GREELEY - The line of applicants hoping to fill jobs vacated by undocumented workers taken away by immigration agents at the Swift & Co. meat-processing plant earlier this week was out the door Thursday.

We keep getting told there are jobs we won't do. We keep getting lied to by companies and lobbyists who just want to pay less to get the work done.

Swift plants were raided in Hyrum Utah, Worthington Minnesota, Greeley Colorado, Grand Island Nebraska, Cactus Texas, and Marshalltown Iowa.

The raids have created job openings for white workers.

OMAHA - Fewer Hispanic immigrants are being hired to replace meatpacking workers arrested at Swift & Co. plants in Grand Island and Greeley, Colo., during last week's immigration raid, union officials said Tuesday.

Local 22 union president Dan Hoppes said Tuesday that 40 to 50 new workers have been hired at the Grand Island plant since the raids.

“The lion's share of those people were Caucasian,” Hoppes said.

9% of Swift's 15,000 meat packers were arrested.

Washington, D.C. — The arrest of workers at meatpacking giant Swift & Co. — the largest such raid in U.S. history — shows that the government is serious about cracking down on illegal immigration, officials say.

This time, federal agents were armed with criminal charges, accusing some workers of identification theft and forgery, and disrupted not just one work site but an entire company. Arrested were 1,282 Swift workers, about 9 percent of the work force at six plants.

The Feds were asking Swift for employee records in the months leading up to the raids. Swift started interviewing employees about whether they are here legally and managed to scare off or fire 400 illegals before the Feds did a formal raid.

About 400 workers were fired or left the plants voluntarily in the fall after Swift demanded interviews of workers it suspected of being in the country illegally. Immigration officials criticized Swift for not notifying the government that the employees had left. The agency has been unable to find them.

You have to figure that during this time Swift also became pickier about who they hired. So the 400 departures probably understates how much their work force shifted toward legal workers before the raid. Also, some workers were sick, on vacation, or not working the shift when the raids happened. So many got away.

The departure of 400 illegal workers before the raid was enough to raise salaries by $1.95 per hour. Maybe the raid will force salaries up by another $1 per hour.

The United Food and Commercial Workers filed grievances over the company’s interviews, although after the workers left, the Marshalltown plant raised its starting wage from $9.55 to $11.50 in an attempt to fill the vacancies, said Jim Olesen, the union’s local president.

Swift has been getting ready for the raid by raising salaries.

Meanwhile in Nebraska, union officials said Tuesday that 40 to 50 workers had been hired at the Grand Island plant, one of six Swift plants raided by the ICE in a sweep that led to nearly 1,300 arrests. And funny thing — they say Swift has been improving its wages, benefits and bonuses since before the raids.

As United Food and Commercial Workers spokeswoman Jill Cashen told the Associated Press: "They're trying to staff up their plants, and they've been raising their wages the past few weeks."

It's not clear at this writing if Swift saw the raids coming. What's clear is that its upgraded compensation is drawing more non-Hispanic white job-seekers, who made up most of the new hires at Grand Island.

Swift officials tried to prevent the raid and even went to court to try to stop it.

Consider this: Swift & Co. executives have said they tried to work with immigration officials to prevent the raid and that - once they became aware of government interest in their work force in March - conducted internal interviews of employees.

More than 400 workers left the company. According to Swift's general counsel, at one point, Immigration and Customs Enforcement investigators asked company officials to stop the interviews - which probably alerted workers a sweep was coming.

So Swift managed to scare off a few hundred illegals since they knew the feds were watching. To compensate Swift had to raise salaries by a couple of bucks an hour. But their processing plants did not stop running. The new salaries are still too low to buy medical insurance for a family. The jobs are difficult and unappealing. Yet they only need to offer $11.50 per hour to get them filled. The argument that the US economy can't operate without illegal alien labor is a big lie.

Here is a familiar pattern: Immigration law enforcement is causing many more illegals to self-deport before they get caught.

That's where a half-dozen processing plants between Worthington and Madelia employ hundreds of immigrants, most of whom are Hispanic.

"They're afraid to go to the bank, to the stores," Amaya said. "They don't take their things. They just pick up and go, and it's hard, because they work really hard."

Hours after the Worthington raid, much of the city's Hispanic community, estimated at 3,500 people -- about half of whom are thought to be in the country illegally -- began clearing out.

After 9/11 more intense immigration law enforcement caused tens of thousands of Pakistani illegals to deport themselves back to Pakistan before they got caught.

Worthington police Sgt. Kevin Flynn said officers frequently encounter the problem while responding to calls or making traffic stops. Illegal workers would identify themselves by their real names, but also carried documentation stolen from U.S. citizens.

"They'd just be real upfront with us," Flynn said. "And the documents they had were actual documents. They weren't forgeries or fakes of any kind. They were the real deal."

By Tuesday night, immigration agents had arrested 230 workers at the Swift plant. But Andrade and others in the community say maybe twice as many workers fled town, or plan to leave soon, to avoid the risk of being arrested.

Tens of thousands of people work in meat packing plants in the United States. They could all enjoy higher salaries, better benefits, and better working conditions if the Tyson, Swift, and Cargill had no more access to labor from Mexico, Guatemala, and El Salvador.

By Randall Parker    2006 December 23 12:12 PM Entry Permalink | Comments (12)
2006 October 03 Tuesday
Pear Farmers Complain About Smaller Supply Of Illegal Aliens

Pear farmers are complaining because their supply of subsidized illegal alien labor has been reduced by tougher border enforcement.

LAKEPORT, Calif. – The pear growers in Lake County waited decades for a crop of shapely fruit like the one that adorned their orchards last month.

"I felt like I went to heaven," said Nick Ivicevich, recalling the perfection of his most abundant crop in 45 years of tending trees.

Now harvest time has passed and tons of pears have ripened to mush on their branches, while the ground of Mr. Ivicevich's orchard reeks with rotting fruit. He and other growers in Lake County, 90 miles north of San Francisco, could not find enough pickers.

Stepped-up border enforcement kept many illegal Mexican migrant workers out of California this year, farmers and labor contractors said, putting new strains on the state's shrinking seasonal farm labor force.

Ron Guhname saw a CNN show about pears rotting on the ground due to lack of illegal immigrant workers to pick them cheaply. Guhname is unsympathetic to the complaints of the pear farmers.

I say serves you right: you got it coming when you make your living off of illegality, and when you impose all the costs of illegals on your neighbors.

In the comments at that link Steve Sailer asks whether the pears are rotting due to excess supply. It turns out that increased foreign pear and apple supplies have sent prices plummeting and acreage dedicated to them has been shrinking for years before the illegal alien supply started to get undercut.

Orchard acreage in Oregon has fallen about 20 percent over the past two decades, according to a new fruit tree inventory compiled by the federal government.

Apples, in particular, has taken a hit, with the 4,835 acres of apples in production in 1986 dwindling to 1,340 acres in Hood River, Wasco, Josephine and Jackson counties.

Increased foreign competition and oversupply have sent apple and pear prices plummeting. And as orchards are turned into golf courses, or preserved as parks, agriculture employment declines too, with the closure of packing houses.

All this was happening while the illegals were flooding into the country.

Recent years have seen a drop in pear prices.

The price for No. 1 grade pears last season was $215 a ton, compared with $210 in 2004, $246 in 2003, and $243 in 2002.

The price willl be higher in 2006 and 2007 than 2005 but still lower than 2003 and 2002.

Think the shortage of illegal alien labor is going to drive up the prices we pay for pears? Foreign competition is driving the price of pears, not labor costs. Pear farmers are faced with cheap labor in China that drives down the price of pears.

Ivicevich said production costs for his crop are about $2,500 an acre, with an additional $1,000 an acre needed to cover harvest costs. The past few years have been financially challenging, he said. Rising production costs, competition from China and weather conditions have all made it hard for Lake County pear growers to make a profit.

If the pear farmers want a source of cheap illegal alien labor they should recruit from North Carolina where the Hispanics are literally hungry.

WINSTON-SALEM, N.C. – Wake Forest University School of Medicine researchers have found high rates of hunger in surveys of immigrant Latino families in eastern and western North Carolina, southwestern Virginia and Forsyth County.

"Although the United States enjoys a relative lack of hunger, there are segments of the N.C. population – Latino immigrants – with hunger more severe than areas of persistent poverty like Appalachia," said Sara A. Quandt, Ph.D. The overall hunger rate for the U.S. is 4.3 percent. The Wake Forest surveys found that rates of hunger among Latino immigrants ranged from almost twice the national rate (8 percent) to more than eight times the national rate (35.6 percent). The results were reported in the October issue of the Journal of Nutrition.

"About 40 percent of the respondents in each study reported worrying that food would run out and that food bought would not last," said Quandt, the lead author. That combination, less severe than "hunger," is viewed as "food insecurity" and includes such actions as relying on just a few kinds of food and cutting meal size for children and adults.

...

In Forsyth, 15.8 percent of those surveyed reported children had had to go all day without food in the past year and 21.8 percent reported that children were hungry because they couldn't afford more food. And yet the researchers also found that only 12.9 percent of those in Forsyth reported receiving food from a food pantry compared to 25 percent of those in eastern North Carolina.

The farmers should embrace automation and stop bringing in illegal aliens whose health care, education of children, crime, and other costs are paid for by the rest of us.

Update: The whining farmers are losing their laborers to construction companies which pay more money.

As the border tightens, Mexican workers who once spent part of each year in American fields without a work permit fear that if they go back to Mexico, they will be trapped behind the border, farmers say. Instead, they stay in the United States, taking year-round jobs that pay more and are less backbreaking than farm work, such as cleaning hotels or working in construction in cities on the Gulf Coast devastated by last year's hurricanes.

"Frequently you hear, especially from California, complaints about construction companies actually recruiting workers from the sides of the fields," said Craig Regelbrugge, co-chair of the Agriculture Coalition for Immigration Reform.

I heard an anecdotal report about a big grower about 100 miles from where I live that was losing farm workers to construction companies hiring them to move to Bakersfield to build houses. So I'm not surprised to read this. Where do the farmers get off thinking they have a God given right to cheap labor?

Some farmers are automating.

Some farmers said they have invested in machines to take the place of workers, though some tasks, such as picking soft fruit, cannot be mechanized.

Soft fruit picking could be automated. It'd take some robotic technology with pressure sensors to prevent the pickers from squeezing too hard. It is not impossible.

By Randall Parker    2006 October 03 10:17 PM Entry Permalink | Comments (8)
2006 August 25 Friday
Senate Immigration Amnesty Bill Cost Estimate Over $200 Billion

The elites of America think nothing of formulating radical unpopular policy changes that cost us big time.

WASHINGTON – The price tag for comprehensive immigration reform was not a key issue when the Senate passed its bill last May. But it is now.

One reason: It took the Congressional Budget Office (CBO) - the gold standard for determining what a bill will cost - until last week to estimate that federal spending for this vast and complex bill would hit $127 billion over the next 10 years.

At the same time, federal revenues would drop by about $79 billion, according to the CBO and the Joint Committee on Taxation. If lawmakers fix a tax glitch, that loss would be cut in half, they add.

That is just the first 10 years.

Real immigration reform: Deport the illegals, build a wall, and cut back on legal immigration.

Businesses who use cheap foreign workers do not mind these huge costs. Most of the costs will be paid by other busineses and private citizens. Use of the government to cost shift business expenses onto the rest of us has become a very popular activity for businesses in pursuit of bigger profits.

By Randall Parker    2006 August 25 12:04 AM Entry Permalink | Comments (10)
2006 August 16 Wednesday
Steven Camarota On Costs Of Immigrants

Testifying before the US Congress House Ways and Means Committee Steven A. Camarota of the Center for Immigration Studies summarized many immigration economics findings.

  • The National Research Council (NRC)1 estimated that immigrant households create a net fiscal burden (taxes paid minus services used) on all levels of government of $20.2 billion annually.
  • The NRC estimated that an immigrant without a high school diploma will create a net lifetime burden of $89,000, an immigrant with only a high school education it is negative $31,000. However, an immigrant with education beyond high school is a fiscal benefit of $105,000.
  • Estimating the impact of immigrants and their descendants, the NRC found that if today’s newcomers do as well as past generations, the average immigrant will be a fiscal drain for his first 22 years after arrival. It takes his children another 18 years to pay back this burden.
  • The NRC also estimated that the average immigrant plus all his descendants over 300 years would create a fiscal benefit, expressed in today’s dollars of $80,000. Some immigration advocates have pointed to this 300-year figure, but the NRC states it would be “absurd” to do so.

Note that the net fiscal burden on government is not the only source of economic costs of immigrants. Immigrant groups that commit crime at higher rates (e.g. Hispanics commit crime at over 3 times the rate of whites) impose economic losses on businesses and private individuals. Also, their higher rate of medical uninsurance imposes costs on hospitals and other health care provides and those costs get passed on those who pay medical insurance in the form of higher medical insurance rates.

Illegal immigrants area net burden on government coffers. If they were legalized the burden they impose would increase substantially.

  • The Center for Immigration Studies (CIS) estimates that in 2002 illegal alien households imposed costs of $26 billion on the federal government and paid $16 billion in federal taxes, creating an annual net fiscal deficit of $10.4 billion at the federal level, or $2,700 per household.2
  • Among the largest costs, were Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and free school lunches ($1.9 billion); the federal prison/court systems ($1.6 billion); and federal aid to schools ($1.4 billion).
  • If illegal aliens were legalized and began to pay taxes and use services like households headed by legal immigrants with the same education levels, CIS estimates the annual net fiscal deficit would increase to $29 billion, or $7,700, per household.
  • The primary reason illegal aliens create a fiscal deficit is that an estimated 60 percent lack a high school degree and another 20 percent have no education beyond high school. The fiscal drain is not due to their legal status or unwillingness to work.
  • Illegal aliens with little education are a significant fiscal drain, but less-educated immigrants who are legal residents are a much larger fiscal problem because they are eligible for many more programs.
  • Many of the costs associated with illegal aliens are due to their US-born children who have American citizenship. Thus, barring illegal aliens themselves from federal programs will have little impact on costs.
  • Focusing just on Social Security and Medicare, CIS estimates that illegal households create a combined net benefit for these two programs in excess of $7 billion a year. However, they create a net deficit of $17 billion in the rest of the budget, for a total net federal cost of $10 billion.

I've just excerpted from a much longer article. Camarota also explains how immigrants do not help with the unfunded old age pension liabilities. The average age of immigrants is close to the average age of the existing population. Plus, the lower skilled immigrants earn less and therefore pay much less in taxes. They are not going to bail out Social Security and Medicare.

Lots of costs caused by immigrants do not show up in the form of taxes. Higher medical insurance rates are a major way that immigrant costs get shifted onto the middle and upper classes. To get a sense of the size of the costs getting transferred onto natives see my posts Medical Cost Shifting Onto Privately Insured Rises, Illegal Immigration Drives Up Number Of Medically Uninsured, and Immigration And Heavy Burden Of Medically Uninsured.

By Randall Parker    2006 August 16 09:44 PM Entry Permalink | Comments (6)
2006 July 25 Tuesday
Raise Minimum Wage To Reduce Illegal Immigration

Former Democratic Governor of Massachusetts Michael Dukakis and Daniel Mitchell, a professor of management and public policy at UCLA, argue that raising the minimum wage would effectively reduce illegal immigration.

There is a simpler alternative. If we are really serious about turning back the tide of illegal immigration, we should start by raising the minimum wage from $5.15 per hour to something closer to $8. The Massachusetts legislature recently voted to raise the state minimum to $8 and California may soon set its minimum even higher. Once the minimum wage has been significantly increased, we can begin vigorously enforcing the wage law and other basic labor standards.

Millions of illegal immigrants work for minimum and even sub-minimum wages in workplaces that don’t come close to meeting health and safety standards. It is nonsense to say, as President Bush did recently, that these jobs are filled by illegal immigrants because Americans won’t do them. Before we had mass illegal immigration in this country, hotel beds were made, office floors were cleaned, restaurant dishes were washed and crops were picked — by Americans.

Americans will work at jobs that are risky, dirty or unpleasant so long as they provide decent wages and working conditions, especially if employers also provide health insurance. Plenty of Americans now work in such jobs, from mining coal to picking up garbage. The difference is they are paid a decent wage and provided benefits for their labor.

However, Americans won’t work for peanuts, and these days the national minimum wage is less than peanuts. For full-time work, it doesn’t even come close to the poverty line for an individual, let alone provide a family with a living wage. It hasn’t been raised since 1997 and isn’t enforced even at its currently ridiculous level.

A big rise in the mimimum wage would reduce the incentive for businesses to hire illegals because it would reduce the ability of businesses to reduce labor costs by using illegals.

The economic downside for the economy as a whole would be fairly small. People who are making $6 and $7 an hour receive such a low percentage of total income that doubling their incomes would have little impact on prices of goods and services. Fewer people would have jobs. But that would not make poor people poorer on average. They'd get more money when they did work.

Also, a reduction in the number of illegal aliens would reduce other costs for poor people such as by reducing the number of people making demands on government-funded medical services. Poor American citizens would therefore get better medical care. They'd also be less victimized by criminals.

Update: A rise in the minimum wage would also increase the quality of those who enter and stay in the United States illegally. Those who come would have to have better skills in order to justify their higher hourly wages. Otherwise they would not get hired. So with higher minimum wages less skilled immigrants would be more likely to self-deport and less likely to come in the first place.

By Randall Parker    2006 July 25 09:21 PM Entry Permalink | Comments (11)
2006 May 25 Thursday
Blacks Seen As Most Harmed By Hispanic Immigration

While Jesse Jackson and Al Sharpton think Hispanic immigration is a good thing a lot of blacks think their supposed leaders are betraying them. Blacks are aware they are being displaced by Hispanics.

LOS ANGELES – From where Johnny Blair Vaughn sits outside Lucy Florence Coffee House in the heart of Los Angeles's black community, he can feel the temperature rising over immigration.

The biggest reason, says the father of seven, is jobs.

"If you drive across this city, you will see 99 percent of all construction is being done by Hispanics.... You will see no African-American males on these sites, and that is a big change," says Mr. Vaughn, who has worked in construction for two decades. His two oldest boys, in their early 20s, have been turned down so many times for jobs - as framers, roofers, cement layers - that they no longer apply, he says.

I do not want the ranks of black unemployed to rise even higher. As my grandmother used to say, "Idle hands are the devil's workshop".

I think Vernon Briggs gets it right here:

"In this era of mass immigration, no group has benefited less or been harmed more than the African-American population," says Vernon Briggs, a Cornell University professor who researches immigration policy and the American labor force.

A new black coalition has formed to oppose mass illegal immigration.

Black leaders from across the country yesterday decried a guest-worker "amnesty" plan that would legalize millions of illegal aliens and threatened to sue the U.S. government if such legislation is passed.

"We're on the cusp of very critical legislation that centers on immigration -- both legal and illegal," Frank Morris Sr., chairman of Choose Black America, a new coalition of black Americans opposed to illegal entry, told reporters at the National Press Club in Northwest. "African Americans are going to be hurt if this legislation moves forward, [and] we are here to sound the alarm."

Blacks notice they are getting pushed out of some cities.

It just infuriates me that our children's education has to be shortchanged for a subculture that in many instances doesn't want to assimilate," said the Northwest resident, who is in her 60s and has watched the D.C. landscape change for more than 30 years.

"We are being pushed out of the way because there is a push to legalize an illegal act," she said. "I personally know fine educators who are losing their jobs because they can't speak Spanish. Well, in that case, pay them pesos."

This is a familiar pattern. When Hispanics come into an area some businesses and governments discriminate against English-only speaking natives because the employers want to have front line people who speak Spanish and English.

Choose Black America folks think the Hispanic deluge is a disaster for blacks.

Mass illegal immigration has been the single greatest impediment to black advancement in this country over the past 25 years. Blacks, in particular, have lost economic opportunities, seen their kids’ schools flooded with non-English speaking students, and felt the socio-economic damage of illegal immigration more acutely than any other group.

Here is information about some of the Choose Black America founders:

Ted Hayes -- Has worked tirelessly to attract national and international attention to the problem of homelessness in America. Ted is the creator of the Dome Village Community, a prototype shelter-housing facility located in down town Los Angeles. Ted Hayes has delivered his proposals on homelessness to the White House for the creation of a national homeless plan to eradicate homelessness in the United States. Ted has worked with national and international leaders in his effort to end the criminalization of Homeless persons in the United States.

Dr. Rosie Milligan -- In 1990, Dr. Milligan founded a publishing company, Milligan Books, where she has published over 100 new African-American authors in the past five years. Her publishing company is the fastest growing publishing company owned by an African-American female in the nation. Dr. Milligan is an entrepreneur and economic empowerment activist and owner of Professional Business Management Consulting Services - which provides consultation for new and small businesses and staff development training for corporations.

Kevin Fobbs -- Kevin Fobbs has more than 25 years of wide- ranging experience as a public relations consultant, business executive, political advisor, writer, and national lecturer. And is the founder of NuPac, the National Urban Policy Action Council, a civic and citizen action organization that focuses on community empowerment and promotes fiscally responsible compassionate conservative public policies. In addition, Fobbs is the Director for Government and Civic Affairs for Soul Source, a monthly full-color Christian news magazine.

Rev. Jesse Peterson -- Rev. Peterson is the Founder and President of the national non-profit organization BOND, the Brotherhood Organization of a New Destiny. He is the author of many books, and is frequently seen on major TV networks such as Fox, CNN, and MSNBC. Reverend Peterson is an advisory board member of Project 21, a national black conservative public policy organization

There is not enough demand for low skilled labor. International trade and automation are both decreasing the demand for manual labor and low skilled labor. In the face of these two trends it is stupid to import even more lower IQ and low skilled people to compete against the tens of millions already here who the labor market already attaches a low value on. This would be obvious enough for our elites to see and acknowledge in their deliberations. But they are all part of a joint lie where thinking true facts about human nature is a thought crime. Their secular religious madness has blinded them to the glaring truth.

By Randall Parker    2006 May 25 09:56 PM Entry Permalink | Comments (17)
2006 April 27 Thursday
End To Illegal Alien Labor Would Cost Farmers Little

The Utah Farm Federation Bureau tries to argue that a loss of illegal alien labor would cause US farmers big costs.

“Utah will not be immune from the costs if Congress ultimately approves a new immigration law that does not account for agriculture’s needs for guest workers, like the bill passed by the U.S. House of Representatives last year,” said Leland Hogan, President of the Utah Farm Bureau Federation. “The consequences for American agriculture including Utah’s farmers, ranchers, food processors, nursery industry and landscapers will be dire.”

Failure to include a comprehensive guest-worker provision in any new or reformed immigration law could cause up to $9 billion annually in overall losses to the U.S. agriculture industry and losses of up to $5 billion annually in net farm income, according to the Farm Bureau study.

Referring to the article above a correspondent (who prefers to remain anonymous) says clearly the relatively small amount of money quoted in the study as saved by farmers using illegal aliens show that US agriculture can get along quite easily without cheap illegal workers.

The article below [above] was clearly written to promote guestworkers/Open Borders/illegal immigration/etc. However, the numbers point rather strongly in the other direction. The Farm Bureau estimates total losses of only $9 billion if illegal immigration was controlled/stopped. This is around 0.077% of U.S. GDP. Of course, the costs of illegal immigration dwarf this number. Note that the estimated net losses are even smaller, only $5 billion.

The other useful note is that only one sixth of the farm labor force is illegal (based on the article below [above]). Family members account for two thirds of the workers and lawful laborers another sixth. Obviously the illegal workers could be readily replaced with a few more hired workers and additional mechanization.

Farm subsidies are currently running around $18 billion per year (far less than most people imagine). Raising that amount to $25 billion a year to eliminate illegal aliens would be far cheaper than any of the guestworker programs currently under consideration. I don't advocate this course of action (expanding farm subsidies). However, the numbers show a clear lack of any economic rational for guestworkers/illegal immigration for agriculture.

The United States has a long and honorable tradition of family farms. Within reason it is a tradition that should be promoted, encouraged, and preserved. Stopping illegal immigration and enabling family farms to continue to rely on their own family labor to competitively produce agricultural products would be a net plus for our nation. Certainly we should not allow illegal immigration to drive family farms out of business.

My most fundamental objection to the "we can't get along without cheap foreign labor" argument is that low salaries are a strong indicator that poorly paying jobs have low economic value and loss of foreign workers to do those jobs will cost the US economy very little, if anything. Of course, absent the cheap foreign workers many of the jobs now done by illegals would still get done by Americans, albeit at higher salaries. Also, employers would make bigger use of capital equipment and of production methods that reduce labor needs.

The deportation of illegal aliens would have little impact on prices of agricultural goods because field hands are just one small cost among many costs in the chain of production that brings crops into stores. Farmers spend on fertilizer, tractors, seed, harvesters, fuel, water, insurance, taxes, marketing (big fruit vegetable farms have full time sales forces), and office work to do billing, ordering, and regulatory compliance.

Since illegals create many costs that are not directly paid by farmers (e.g. medical care, crime, education for children, etc) the farmers who hire illegal aliens effectively get subsidized labor which is partially paid for by taxpayers. Cut off that supply of labor and the small cost increases for fruits and vegetables will be more than made up in the system as a whole by reductions in costs to the rest of society in other areas.

A US Department of Agriculture web page puts the $5 billion figure above into perspective. An end to illegal alien labor on farms would reduce net farm income perhaps 7.8% if the Utah study is correct.

In 2005, net farm income is forecast to be $64.4 billion, down $9.2 billion from the record $73.6 billion estimated for 2004. Income is forecast down in 2005 only because in 2004 income rose $14.4 billion over the previous year to reach an unprecedented level. In 2004, both crop and livestock commodities experienced exceptionally favorable market and/or production conditions. Corn production set a new record and harvests of other crops were large. Prices for major crops declined late in the year and are forecast to be lower in 2005.

Most financial indicators for 2005 are forecast to fall between the levels of the two prior successive record years – 2003 and 2004. The value of production in the U.S. farm sector is forecast to be $249.2 billion in 2005, following successive record levels of $240.9 billion in 2003 and $270.5 billion in 2004. Farms are forecast to contribute $109.4 billion in net value-added to the U.S. economy in 2005, following successive record levels of $101.4 billion in 2003 and $118.0 billion in 2004. Farm operators are forecast to earn collective net farm income of $64.4 billion in 2005, following two successive years of record income, $59.2 billion in 2003 and $73.6 billion in 2004.

Net cash income is forecast to exceed the record level of 2004 because farmers postponed sales of portions of the bumper harvests from 2004 into 2005, anticipating that market prices will rise as the markets work through the large quantities. Total crop revenues from cash receipts and government payments are forecast to be a record $128.7 billion in 2005, exceeding the successive records of $127.7 and the $122.1 billion in the 2 prior years. Large crop supplies have dropped market prices low enough to bring government programs into play.

But the people who work for farmers would experience a rise in living standards. Plus, farmeres would adopt labor saving technologies at a faster rate. In the medium to long run farm productivity would rise so much in response to higher labor costs that prices for farm products would drop more rapidly and we'd all be better off.

By Randall Parker    2006 April 27 08:00 PM Entry Permalink | Comments (2)
2006 April 09 Sunday
Immigration Lowers Home Ownership

Over at Audacious Epigone crush41 continues to crush thru numbers doing economic analyses of immigration. His attention has shifted toward patterns of home ownership. More foreigners means less home ownership.

It's been awhile since President Bush has touted his push for an Ownership Society. Given the intensity of the current immigration debate, it's prudent of him to keep his mouth shut. Why? Because the larger the foreign-born population, the lower the home ownership rate becomes.

Running a regression on the home ownership rate and foreign-born proportion of the population by state yields a significant factor of zero (it's definitely not random) and an r-squared of just over .42 (42% of the home ownership rate of a state can be explained by number of the foreign-born in that state). For each 1% increase in the foreign-born population as a portion of the state's entire population, the home ownership rate correspondingly decreases .65%.

Some parts of the country are filling up. Real estate prices rise because land prices rise. That phenomenon used to be restricted to fairly small areas. But as populations rise the land cost problem is hitting progressively larger areas of America. This is a situation that only a libertarian or an economist could see in a positive light.

But this trend holds appeal to anyone who likes a heavily class-oriented society with lots of social stratification. I guess that is why the Democrats like immigration. Can't have class warfare without a large lower class.

States with high foreign-born populations are beginning to look like manors. I'm going to look at metropolitan areas with high foreign-born populations to try and focus the effect. It seems reasonable that the inverse correlation between foreign-born and affordability will be even higher. Peasants come because the keeps have plenty of menial chores to be done. The peasants have work, but they can't afford to buy part of the manor. This situation is bad for the burghers, who leave because earning power is being pushed down while costs are going up. It's bad news for natives (future voters) that don't already own a home.

Existing home owners do fine but what about later generations?

The correlation between home ownership and house price is .41. Between home ownership and affordability (home price adjusted for income) it is .34 (both statistically significant; the former being higher at least in part due to folks with moderate incomes in high-priced areas taking their savings to plant roots in cheaper places). Land is becoming more expensive in real terms because of an increase in the foreign-born population. This is making home ownership increasingly difficult for those who do not already own a home.

Ever notice when watching 1950s and 1960s movies how much open space California had? The white population of LA from that era has mostly left for other states. The state continues to fill up. The whites continue to leave. Why should we support high levels of immigration? Time to buld a wall.

Large scale immigration is suicide for the Republican Party for a number of reasons. Housing prices are one of those reasons. See Steve Sailer's The GOP’s Third Electoral Secret: Marriage, Fertility…And Cheap Housing.

By Randall Parker    2006 April 09 12:20 PM Entry Permalink | Comments (17)
2006 April 02 Sunday
Benthamite Libertarian Collectivists Wrong On Open Borders

Many economists find the idea of Open Borders and the free movement of labor appealing in part because they see the influx of poor immigrants as leading to a net increase in total utility which English philosopher Jeremy Bentham described as "the greatest happiness principle". Like the 20th century socialists and communists who pursued collectivist goals these modern day free market collectivsts are promoting policies which will backfire and harm the interests of both natives of Western developed countries and the vast bulk of the poor people in the world. I'm going to argue a few points here:

  • Low IQ immigrants will inevitably lower the living standards of higher IQ natives by lowering incomes, raising taxes, increasing labor market distorting racial preferences, raising crime, and lowering the quality of government.
  • Low IQ immigrants pull higher IQ people away from creative design, engineering, and science work.
  • Therefore one result of an influx of lower IQ immigrants will be to slow the rate of technological advances. This will delay technological advances which are the only hope for that half of humanity that have IQs below 90.
  • One obvious piece of evidence for my argument can be seen from the incomes and occupations of higher IQ people in lower IQ countries. High IQ people earn less on average if they live in low IQ countries. This suggests they are less productive in low IQ countries.
  • Another obvious piece of evidence is found in the steepness of the slope of lines in charts of national per capita GDP versus IQ. The slopes of graphs of per capita GDP versus IQ are even getting steeper with time. The steeper the slope the wronger the Benthamites. Steeper slopes mean lower IQ people lower the productivity of higher IQ people.
  • Higher IQ people have rights too and their well being should not be sacrificed by altruistic collectivist Benthamites.

First off, some basic observations: Richard Lynn and Tatu Vanhanen have observed in their book IQ and the Wealth Of Nations that per capita GDP is strongly correlated with national average IQ (and this is a link to Phil Rushton's review) (also see Steve Sailer's review). This shouldn't be surprising. Higher intellectual ability enables greater feats of engineering, science, management, cooperation, and problem solving.

Building on this idea La Griffe du Lion proposed his Smart Fraction Theory of IQ and the Wealth of Nations and further refined this theory in his Smart Fraction Theory II: Why Asians Lag. Well, look at table 7 of the latter link, which is a graph of per capita GDP versus mean verbal IQ. I argue that table 7 demonstrates why the Benthamite Libertarian Collectivists are wrong - even for achieving the goals they want to achieve. In a nutshell: the steeper the slope of that curve the less it makes sense to mix lower IQ populations with higher IQ populations. Why? Total output and the rate of technological advance will be slowed by mixing higher and lower IQ populations.

I do not share the collectivist goals of the Benthamites and think they are sacrificing my own best interests (and, might I add, the interests of the vast majority of the American people) in the pursuit of their collectivist Benthamite utilitarianism. But so bent are they on their goals that they, like socialists and communists of the 20th century, haven't stopped to notice that their preferred policy prescriptions are counter-productive for their own goals.

Think higher IQ people are better off in lower IQ countries? That's basically the argument that Jane Galt (Megan McArdle in real life) and Bryan Caplan would have you believe. First Caplan:

Suppose we have an isolated society in which everyone is a genius. Let's call them the Brains. Who takes out the garbage? A Brain, obviously. Who does the farming? Again, Brains.

Now what happens if the geniuses come into contact with a society where everyone is of average intelligence at best? Let's call them the Brawns. If the Brains allow the Brawns to join their society, the average genetic quality of the Brains' society plummets. But everyone is better off as a result! Now the Brains can specialize in jobs that require high intelligence, and the Brawns can take over the menial labor. Total production goes up.

Megan is persuaded by this argument.

Make sense? One problem: Show me a country with a low average IQ where 125 IQ computer programmers or electrical engineers make more money than they do in the United States or Japan or Germany. Anyone? Anyone? Show me the low IQ country where smart people earn so much that European and American corporations can't skim off the smart cream with first world job offers. In low IQ countries the smart fraction is not making so much money that they do no want to leave. Now, you can point to elites that own 95% of Mexico or Brazil who are fat and happy. But right below the capitalists who own those countries there is a small layer of smart people who can be hired away for less than the average American techie makes.

Another obvious problem with this argument: Dumber people create needs for services which can only be provided by smarter people. How? Lots of ways: Picture 100 million 90 IQ people added to the US population. Caplan would expect this to be a boon to all concerned. But those 100 million 90 IQ people would need medical doctors. Great, right? After all, more smart people will make the high wages of doctors. Well, not so fast.

The Panglossian view is that dumb people will create demand for services provided by high IQ people and therefore benefit high IQ people. Wrong. First, the 90 IQ people won't be able to afford the medical care provided the doctors, lab technicians, drug company manufacturing facility engineers, hospital administrators, and the many other smart people who provide modern medical care. So that care will be paid for by taxpayers with higher IQs. Second, those smarter people who will be paid to deliver services in the medical industry to lower IQ people will get pulled away from jobs doing more productive work such as designing new energy sources, new cars, new manufacturing equipment designs, and so on. Lots of smarter people will be moved into positions to provide services using existing technologies rather than work to develop newer and better technologies. Those so diverted would otherwise have worked to develop new products for other smarter people who, absent the low IQ influx, would have been taxed less and would have therefore had more after-tax income to buy new products and services.

Taxes reduce incentives to work in paying jobs. The taxes on smarter people levied to pay for the needs and problems of an increasing number of dumber people will reduce the incentives for smarter people to work in industry. Smarter people therefore will do more do-it-yourself work rather than hiring specialists and manual laborers. So the average productivity of smarter people will drop.

Another problem with lower manual labor costs due to the influx of large numbers of low IQ people comes from the incentives in businesses. The short term effect on a single industry of lower labor costs will be to lower production costs of products. Economists of course like lower costs. But lower labor costs also reduce the incentive to develop technology that will increase the productivity of capital. Only increases in knowledge and capital productivity can raise living stanards. As Socrates said in Plato's Republic long before Ben Franklin strode this Earth:

" A State, I said, arises, as I conceive, out of the needs of mankind". . ."let us begin and create in idea a State; and yet the true creator is necessity, who is the mother of our invention."

Cheap low IQ laborers reduce the necessity to develop new labor-saving technology. Why reduce the necessity to develop labor saving devices? This seems shortsighted folly. Steve Sailer points out how unionization drove up coal miner wages which gave coal mine owners incentives to develop technologies that automated much of a terrible job.

There used to be a huge number of coal miners and a huge number of fatalities, but United Mine Workers leader John L. Lewis led strikes to drive up wages so high that mine owners heavily mechanized the business. When warned that high wages would drive down the number of jobs, Lewis replied, good, it's a crummy job and if my guys make enough money to educate their kids won't have to work in the mines, we all win.

Why should anyone want to keep pulling in more low IQ people to keep wages down in lousy manual labor jobs?

Faced with more needs and demands from less bright populations governments will also shift money away from longer term goals such as medical research. The resources will get shifted toward shorter term goals such as the immediate provision of medical services and policing. So, for example, the United States government's budget for medical research is currently rising more slowly than the inflation rate while medical care spending by government is rising more rapidly than the inflation rate plus economic growth. This shifting of money pulls people away from research and development, thereby slowing the rate of advance of medicine and other fields.

The medical industry won't be the only set of occupations pulling in higher IQ people to deal with problems stemming from a growing portion of lower IQ people. The lower IQ commit crimes at much higher rates. So more people will get pulled into work as police (who pretty much need bachelor's degrees these days), detectives, prosecutors, judges, parole boards, prison administrators, and the like. Other occupations such as social workers will similarly experience a boom. So will teachers and school administrators (for a really lousy return on money spent I might add).

The myriad needs, demands, and costs generated by lower IQ people are one of the reason graphs of per capita GDP versus IQ are so steep. Lower IQ people create more problems for society. Resources spent dealing with those problems are resources diverted away from wealth creation and technological advance. Only technological advances and capital accumulation in the higher IQ countries can solve the problems of perpetual poverty and pathology in the lower IQ countries.

Take Caplan's argument to its logical conclusion. Imagine spreading the smartest people evenly across all the countries of the world. A smaller fraction of those smart people would manage to do science and engineering development. They'd live under governments that can't afford to fund much research. They'd spend time and money trying to avoid getting kidnapped. They'd spend more time defending themselves and their families against criminals. They'd find it harder to come into contact with other smarter people to collaborate.

For more on this issue see TangoMan's post on Jane Galt and Bryan Caplan's argument. In the discussion thread of that post I summarized my argument as follows: (this version has been slightly edited)

1) Lower income people do not earn enough money to pay for the work of smart people for medical care for example or for teachers or detectives or prosecutors. Smarter people have to pay taxes to fund smart people to provide services and otherwise deal with the dummies. Those taxes immediately lower living standards and also lead to decreases in the specialization of labor.

2) When the dummies flood in a larger number of existing smart people have to get shifted toward intellectually demanding occupations which provide services. Doctors are the primary example. Therefore fewer smart people are available to do engineering, scientific research, etc.

3) Smarter people in their own lives - regardless of whether they work in jobs that serve the dummies - have to exert more effort (e.g. hours spent commuting, money spent on private schools and time spent taking the kids to those schools) dealing with the consequences of having so many dummies around.

4) The lower cost of low IQ labor shifts smarter people toward managing that labor. People who spend time managing lots of cheap labor are people who are not spending time figuring out how to use capital to lower production costs.

5) Capital that costs slightly more to do a job than cheap imported labor can fall in cost in successive design generations. The initial higher cost is a temporary thing. Forcing the market to innovate to reduce the need for labor will raise living standards in the longer term.

In short, the Benthamite Libertarians are ignoring longer term effects and indirect effects of low IQ immigration. Their intellectually lazy happy-talk utopianism is doing real damage to both lower and higher IQ societies.

Update: Griffe has charted how a country which lets in a large low IQ population will decline.

"The slope of the line in Figure 2 is -0.7604, which gives us the Fourth Law. That is, each percentage point increase in the third-world immigrant population, will eventually cause the per capita GDP of a Western nation to drop by approximately 0.76 percent of its zero-immigrant value.

"As the third-world component of a Western nation builds, per capita GDP begins to drop. Ultimately, the Western nation will itself become part of the third world. Equation (5) traces its path to le tiers monde."

I do not want that future. Do you?

By Randall Parker    2006 April 02 01:17 AM Entry Permalink | Comments (45)
2005 December 25 Sunday
Foreign Tech Workers Brought In Mainly For Lower Costs

Once again the evidence demonstrates that the law of supply and demand applies to labor markets just as much as it applies to other markets. John Miano at the Center for Immigration Studies finds that unsurprisingly, the major attraction of foreign tech workers is that they cost less than Americans.

  • In spite of the requirement that H-1B workers be paid the prevailing wage, H-1B workers earn significantly less than their American counterparts. On average, applications for H-1B workers in computer occupations were for wages $13,000 less than Americans in the same occupation and state.
  • Wages for H-1B workers in computer programming occupations are overwhelmingly concentrated at the bottom of the U.S. pay scale. Wages on LCAs for 85 percent of H-1B workers were for less than the median U.S. wage in the same occupations and state.
  • Applications for 47 percent of H-1B computer programming workers were for wages below even the prevailing wage claimed by their employers.
  • Very few H-1B workers earned high wages by U.S. standards. Applications for only 4 percent of H-1B workers were among the top 25 percent of wages for U.S. workers in the same state and occupation.
  • Many employers use their own salary surveys and wage surveys for entry-level workers, rather than more relevant and objective data sources, to make prevailing-wage claims when hiring H-1B workers.
  • Employers of large numbers of H-1B workers tend to pay those workers less than those who hire a few. Employers making applications for more than 100 H-1B workers had wages averaging $9,000 less than employers of one to 10 H-1B workers.

Mentally I file this under the heading of "totally predictable result". Of course employers take the trouble to bring in foreigners because the foreigners are cheaper. Why else do it? I hear the claim "but they are smarter or more talented". No, they are smarter at a given wage level. A US employer could staff up to a higher average talent level using domestic workers if the employer was willing to pay more to get the best. Most aren't willing to pay more to get the best.

Note that given a supply of smart foreign workers with time an increasing fraction of employers will turn toward using them. Any company that does not avail itself of a way to lower costs puts itself at a competitive disadvantage against companies that will use a lower cost source of labor. So companies that use foreign labor will be able to undersell companies that use only domestic labor and will therefore displace those companies from markets.

I'm ambivalent about smart immigrant workers. On the one hand, they really are used mainly to lower skilled labor costs and that lowers wages for smarter American workers. Also, they have different interests and different political loyalties than native Americans. On the other hand, the huge Hispanic influx is lowering the average IQ in America. Importation of tech workers helps to reduce the rate at which the American national average IQ is dropping.

An argument can be made in favor of bringing in tech workers if above some level of IQ (perhaps 130 or 135?): the super-smarties generate work for many others and produce designs and processes that raise living standards. For example, if a super-smartie develops a new product then less smart people are needed in marketing, manufacturing, tech support, testing, and in other support roles.

Perhaps a salary threshold on foreign tech workers would effectively create an IQ threshold to keep out those with a mere 110 or 115 IQ (which are still above the white average) and let in the super-smarts. But I'm not sure that would work well in practice. Employers are not good at evaluating the relative ability of even the employees they already employ, let alone people in face-to-face job interviews or, worse yet, foreigners hired sight unseen through tech body shops. What we really need is a repeal of Griggs v. Duke Power, the ignorant US Supreme Court decision that, in order to enable racial preferences, made it extremely difficult for employers to administer IQ tests to prospective employees. Widespread testing combined with minimal salary thresholds on foreign workers would improve the quality of foreign workers imported into the US and also would make the US labor market much more efficient.

Update: Randall Burns points out that citizenship and residency rights have cash values.

Here is the note I sent them: There is one big thing that you are missing here, US citizenship and permanent residency have substantial economic value.

Unless companies profiting from immigration are required to pay market rates for those immigration rights, there will always be a severe disconnect here. Programs like H-1b essentially allow companies to pay employees in immigration rights rather than cash.

Burns proposes a number of policy changes to account for the economic value of citizenship and residency. He recommends auctions for H-1B visas. I'd love to see what those visas would go for per year. I would simply add that the economic cost to citizens already here has to be calcualted as well and that cost depends on the individual immigrant. Some immigrants pay little in taxes, make small economic contributions (no, picking cabbage is not a large economic contribution), and generate costs from crime, welfare dependency, uninsured medical expenses, and progeny who are as costly or even more costly.

By Randall Parker    2005 December 25 10:52 AM Entry Permalink | Comments (15)
2005 December 06 Tuesday
Reduced Immigrant Labor Pushes Farmers To Technology

Necessity is a mother.

WENATCHEE, Wash. -- Stymied in efforts to ease labor problems through a guest worker immigration program, Washington state orchardists have been advised to seek relief through technology.

...

Meanwhile, orchard operators are looking at wireless networks, database applications, electronic weather systems and digital sensors as well as new mechanical harvesters and robot tractors to reduce their dependence on human labor.

Steve Faivre, a John Deere Co. representative, displayed a model of a driverless tractor that could operate around the clock to gather climate information, apply insecticides or mow weeds.

Automation will reduce the amount of labor on farms. Higher labor costs combined with advances in computing and communications technologies will accelerate the move toward automation.

Heightened border enforcement is having an effect on labor costs for California farmers.

California and Arizona farmers - producers of half the nation's citrus and 90 percent of its vegetables and nuts - are struggling with an acute labor shortage. The situation, worsened by crackdowns on illegal immigration since 9/11, also extends to other states and is no longer just a matter of possible price increases on lettuce, oranges, or almonds, farmers say. Rather, it is a turning point in the nation's ability to produce its own food - and possibly the loss of major parts of its agriculture industry.

The farmers face a basic problem: Illegal immigrants or "guest workers" on worker permits are still going to cost more than labor on farms in Mexico or Brazil. Only advances in technology will give industrialized nation farmers a chance of competing against countries which have longer growing seasons and much lower labor costs.

By Randall Parker    2005 December 06 11:43 PM Entry Permalink | Comments (20)
2005 October 26 Wednesday
Wal-Mart Wants Healthier And Cheaper Workers

The New York Times got hold of an internal Wal-Mart memo on benefits costs written by Wal-Mart executive vice president for benefits M. Susan Chambers. Read their new article on the memo. Also, after telling Wal-Mart they have the memo Wal-Mart furnished the Times with the final memo version that went to the Wal-Mart board of directors: (PDF format)

Growth in benefits costs is unacceptable (15 percent per year) and driven by fundamental and persistent root causes (e.g., aging workforce, increasing average tenure). Unabated, benefits costs could consume an incremental 12 percent of our total profits in 2011, equal to $30 billion to $35 billion in market capitalization.

Wal-Mart's benefits costs are growing faster than their sales. Wal-Mart believes its least productive workers are most likely to stay in their jobs.

While Associates are satisfied overall with their benefits, they are opposed to most traditional cost-control levers (e.g., higher deductibles for health insurance). Satisfaction also varies significantly by benefit and by segment of Associates. Most troubling, the least healthy, least productive Associates are more satisfied with their benefits than other segments and are interested in longer careers with Wal-Mart.

I wonder how they measure "least productive".

They want to change jobs in order to attract healthier workers. One way to do that would be to inject physically demanding tasks into more jobs so that less healthy workers decide to leave or to not apply in the first place. See further below for that proposal.

Redesign benefits and other aspects of the Associate experience, such as job design, to attract a healthier, more productive workforce.

Of course a younger workforce is a healthier and therefore cheaper and more productive workforce. But the Wal-Mart worker population is aging more rapidly than the American population:

Our workforce is aging faster (0.50 years per calendar year) than the national average (0.12 years per calendar year).

Our workers are getting sicker than the national population, particularly with obesity-related diseases. For example, the prevalence of coronary artery disease in Wal-Mart’s population grew by 6 percent compared to a national average of 1 percent, and the prevalence of diabetes in our population grew by 10 percent compared to a national average of 3 percent. (That said, our workforce is no sicker at present in absolute terms than the national population.)

Wal-Mart does not believe its workers become more productive with time. Makes sense. The tasks to perform in a retail store are fairly simple and rapidly mastered. Yet Wal-Mart pays their longer term employees more and those employees also cost more in benefits. For example, the longer term employees are older and hence use more medical benefits. Also, those more likely to be unhealthy are less likely to leave Wal-Mart.

Moreover, because we pay an Associate more in salary and benefits as his or her tenure increases, we are pricing that Associate out of the labor market, increasing the likelihood that he or she will stay with Wal-Mart.

Oh heavens! They pay their longer term workers more and therefore those workers can't make as much by switching jobs. Therefore those workers stay with Wal-Mart and drive up benefits costs! The audacity of these workers, responding to economic incentives created by their employer.

Wal-Mart is feeling the heat from the increased costs state governments are shouldering for Medicaid.

Moreover, federal and state governments are increasingly concerned about healthcare costs, and many view Wal-Mart as part of the problem (a view due, in part, to the work of Wal-Mart’s critics). Medicaid costs are a major priority on most governors’ agendas; already a quarter of states are spending more than 25 percent of their budgets on Medicaid, and observers across the political spectrum assert that the current system – with spiraling costs, a large population of uninsured, and an increasing number of medical bankruptcies – is unsustainable (although there is little consensus on what should take its place). In this environment, we can expect efforts like those in Maryland (which is trying to mandate that companies spend a certain percentage of revenue on healthcare) and New Hampshire (which requires health services to track where Medicaid enrollees are employed) to accelerate.

A large percentage of children of Wal-Mart employees are on Medicaid or are medically uninsured.

We also have a significant number of Associates and their children who receive health insurance through public-assistance programs. Five percent of our Associates are on Medicaid compared to an average for national employers of 4 percent. Twenty-seven percent of Associates’ children are on such programs, compared to a national average of 22 percent (Exhibit 5). In total, 46 percent of Associates’ children are either on Medicaid or are uninsured.

The children who are uninsured end up showing up in emergency wards seeking care. We pay. In the United States cheap labor is subsidized labor. Low paid Wal-Mart employees aren't making enough to pay the taxes that fund schooling or medical care of their kids.

Wal-Mart wants to drive off unhealthy workers by injecting more outside manual labor requirements into all job descriptions.

Design all jobs to include some physical activity (e.g., all cashiers do some cart gathering);

Offer savings via the Discount Card on healthy foods (e.g., fruits and vegetables);

Offer benefits that appeal to healthy Associates (e.g., an education offering targeted at students).

Reductions in retirement benefits combined with increases in educational benefits would tend to pull in more younger workers and fewer older and less healthy and more expensive workers.

I wonder what Wal-Mart's position is on Bush's half-baked foreign worker permit proposal. Such a proposal should hold considerable appeal for American corporations because the workers would all be temporary. After several years of gradually rising costs from employing such workers a company like Wal-Mart could say "Oh sorry, we'd love to keep you but your temporary worker permit has expired and you have to go back to Mexico or El Salvador". A huge workforce of workers who have to leave after a fixed amount of time would allow US corporations to avoid higher costs associated with longer term workers. Though as I point out at that previous link, such a program would work much different in practice than it is proposed to work in theory.

Imagine the United States government functioning as a corporation setting immigration policy with the same cut-throat view toward the bottom line that Wal-Mart uses to modify benefits packages and drive off and attract employees. Also imagine that all state and local governments effectively were subsidiaries so that their costs and revenues showed up on a consolidated financial statement for the federal government. US immigration policy would get reformed over night with the goal of driving off the low revenue (i.e. low income earning potential) and high cost (tendency to commit crimes, have illegitmate children, etc) immigrants while at the same time attracting the highly profitable (likely to earn high incomes and generate low costs) immigrants.

By Randall Parker    2005 October 26 01:45 PM Entry Permalink | Comments (6)
2005 September 28 Wednesday
Since 1980 Hispanics Almost Three Quarters Of Poverty Increase

Robert Samuelson takes on myths about poverty and notes that trends in poverty would be much more favorable without Hispanic immigration.

Ron Haskins of the Brookings Institution reports that the share of never-married mothers working rose from 46 percent to 66 percent from 1994 to 2002. The number of families receiving traditional welfare dropped from 5 million in 1994 to 2 million in 2003.

Given these trends, the overall poverty rate should be drifting down. It isn't. The main reason, as I've written before, is immigration. We have uncontrolled entry of poor, unskilled workers across our southern border. Although many succeed, many don't, and many poor Latino immigrants have children, who are also poor. In 2004, 25 percent of the poverty population was Hispanic, up from 12 percent in 1980. Over this period, Hispanics represented almost three-quarters of the increase in the poverty population.

Aside: I'd like to know how many previously on the traditional welfare rolls have gotten themselves reclassified as disabled so that they get Social Security disability benefits instead. I've read the number is sizable but haven't seen it quantified. Anyone know a source of data on this? In the Netherlands the shift of people into the ranks of the disabled makes their welfare rolls look smaller too. Same game, different country.

Why let in lots of people who are going to expand the size of the dysfunctional lower class? Not all Hispanics wind up that way. But skills requirements on Hispanic immigrants could drastically cut down the number who do.

The big Hispanic influx has kept up black and white poverty rates as well by driving down wages and benefits for jobs which require less skills and less intellectual ability. George W. Bush has made it easy for illegals to come into Louisiana and take jobs reconstruction the devastated areas. But as we've been reminded of late, there's no shortage of poor natives in southern Louisiana available to do the work if immigration laws were enforced.

If the Democratic Party was not as morally and intellectually corrupt as the Republican Party then Democratic Party leaders would be fighting to keep the illegals out of Louisiana in order to give construction jobs and other jobs to the poor natives of Louisiana. Liberals in politics talk a good game on race and compassion. But that's all moral posturing. They do not mean it. They just want to make it clear that they are morally superior to conservatives.

By Randall Parker    2005 September 28 05:37 PM Entry Permalink | Comments (8)
2005 September 02 Friday
Halt To Illegal Immigration Would Increase Convenience In Everyday Life

Steve Sailer argues that Illegal aliens could be replaced by automation that would make daily life much more convenient.

Low productivity labor: The huge supply of cheap immigrant labor in the US means that we lag at increasing productivity, which is the main engine of higher standards of living. For example, in LA it's very hard to find the kind of automated robot car-washing facilities that many gas stations offer in Chicago. In LA, you can only get your car washed by a swarm of illegal immigrants. I'm sure in ancient Rome, you could only get your chariot washed by a crew of slaves with buckets and sponges, but you might think we would have progressed since then.

Further, while Chicago's automated washing systems are open 24/7, in LA it doesn't pay to have the illegals work before noon (when demand for car washing is light). So, if you get told by your boss to go pick up a client and your car is filthy, well, you're out of luck.

Or, how come the waitress has to come to your table four times at the end of restaurant meal?

First, you call her over to tell her you'd like your check.

Second, she brings the check.

Third, she comes back to pick up your credit card.

Fourth, she comes back with the credit card slip for you to sign.

Couldn't this all be done electronically right at your table with no visits at all by the waitress?

Yes, and the automation would save us time and make life more convenient.

I'd like to add some more suggestions: How about plumbing that would bring water dispensers to each restaurant table? Then one would not have to spend a few minutes at a time on the look-out for one's waitress to ask for more water in those small water glasses some restaurants provide. That would be so convenient.

Also, why not have the ability to enter one's order on a touch panel at each table? Again, one would not have to waste time waiting to get the waitress's attention once everyone decided what they wanted to order. Also, each individual in a group could order as soon as they are ready. Also, ordering additional items would be easy. Also, electronic ordering would lead to fewer mistakes with orders.

An electronic ordering system could also provide ways to ask for more napkins, forks, condiments, or other items that might be missing. Can't start your burger without ketchup? If you do not see ketchup at the table request it when you order your meal and it may arrive before the meal does.

An electronic ordering system could get tied in with an electronic routing system that would indicate to a waitress a list of things to take with her on her way out of the kitchen with a map display showing what goes to which tables. An electronic ear piece hooked into a system that also tracks her movements could even optionally suggest that a waitress is passing near a table that needs mustard or a table that needs a glass of water.

Very high levels of convenience and quality can only be achieved through higher levels of automation. Low market price immigrant labor (subsidized by taxpayers who pay for all the external costs) slows progress.

Update: If a restaurant is busy and one has to wait for one's table then a display device ought to provide a way to order before one even gets a table. Imagine sitting down at a table and getting one's food a few minutes later. Imagine drinks and appetizers brought to the table as soon as one sits down.

What I want in stores: A display device and keyboard to enter in searches to find stuff. Even if one can find a store employee sometimes they do not know where something can be found or whether they even have in stock normally.

Can you think of other conveniences automation could bring to everyday life?

Update II: Automated ordering would also eliminate the need for waitresses to bring a check. No paper check would ever get filled in with an order in the first place. At the end of a meal one could punch up the total of the bill on the same device one placed the order. Then a card could get slid through the ordering machine to pay for the meal.

Also, automated ordering would help with kitchen automation. Why not automatically put burgers and steaks onto grills from dispensing refrigerators as the orders are entered by the customers? Glasses could move down a conveyor belt to stop under drink dispensers to be filled and then routed to pick-up stands for delivery to tables. The output of automated dishwashers could feed into the drink dispenser conveyor system.

By Randall Parker    2005 September 02 09:02 AM Entry Permalink | Comments (20)
2005 August 14 Sunday
Whites Still Do Manual Labor In Wisconsin

Over at No Speed Bumps Dan reports on how during a vacation trip in Wisconsin he found white people doing all the manual labor jobs that are done by Hispanics in Texas.

Two weeks ago I vacationed near Oshkosh, Wisconsin. One thing strikingly different than living in Texas was that there were few Hispanics. In Texas, Hispanics are found in all walks of life, from doctors to janitors.

With so many impoverished Hispanics illegally moving to Texas over the southern border each year, they have taken over most of the lower-skill jobs because they will work for less than American citizens. Go to any restaurant, hotel, or construction site and all of the basic manual labor tasks are being done by low-income Hispanics.

Anyway, while on vacation, in the hotels we stayed in all of the maid staff and other help were white. The same was true of all of the restaurants we ate in, from the cooks, to the bus boys, to the grounds keepers. I felt like we were in a time machine and in a strange land.

An interesting note about the maid staff at the hotels was the good cheer that they were in. They were constantly chatting among themselves and seemed very content as they went about their work. This reminded me that, yes, there is dignity to manual labor, and yes, white people can still do manual labor.

This runs counter to the fashionable argument today justifying the open border policy with Mexico. The argument goes that America could just not function without all of the low-skill workers coming in to do all of the manual labor. Well, that is ridiculous. It may drive prices up some, if American citizens (whether white, black, or any other race) must do the work – but the work will still get done, one way or another.

One of the big whopper lies told by open borders advocates such as George W. Bush is that there are "jobs that Americans won't do". This is nonsense. One only need travel to those places where the bulk of the population is still white to see that this claim is false propaganda.

As for the argument that a lack of cheap immigrant labor will drive up prices, it rests on three fallacies:

  • That low skilled labor makes up much of total costs. Wrong-o sleigh bell lovers. The bottom quintile of the United States population earns only 3.5% of national income. 20% get 3.5%. If we deported all the illegal aliens and stopped all low skilled and moderate skilled immigration the bottom 20% would see some significant increase in their wages. But that increase would be unlikely raise total prices by even a couple of percent. We don't pay them that much. A 10% or 20% increase in their salaries won't matter much to the rest of the population.
  • That there are no substitutes for cheap labor. Again, wrong-o sleigh bell lovers. Necessity is the mother of invention. In all likelihood, faced with higher labor costs industry would be more eager to develop and buy more capital equipment and to arrange the methods of purveying goods and services to decrease the amount of labor needed. In fact, we have an example available for what the lack of cheap immigrant labor will do to an industry. The Australian wine industry is more automated than the American wine industry due to lack of cheap immigrant labor in Australia. Ben Franklin was right. We'd advance more rapidly without simple minds available to do simple tasks cheaply.
  • That there are no external costs to cheap unskilled immigrant labor. And once again, wrong-o sleigh bell lovers. Low skilled laborers can not afford to pay for their own medical care. They don't pay enough in taxes to pay for the educations of their children. They do not make enough to pay for their retirements in the United States. The list goes on. Oh, and they commit crime at higher rates. So they cost crime victims and also the criminal justice system. A year for an inmate at Rikers Island in New York costs $47,000. Criminals are expensive for the rest of us in many ways.

The Open Borders advocates are deeply dishonest. They know their propaganda is based on fallacies. America's elites are corrupt. They lie. They can not be trusted. America is going down a very wrong path. Our leaders in business and politics are to blame. But so are apathetic members of the public. It is time to wake up and demand a stop to massive immigration. The costs have become far too high and will be with us for decades to come.

Update: Linda Thom reports that whites still do manual labor on Whidbey Island in Washington State.

By Randall Parker    2005 August 14 06:44 PM Entry Permalink | Comments (18)
2005 August 10 Wednesday
On The Costs Of Illegal Aliens

An Arizona news report on illegal immigrant medical costs probably underestimates the real medical costs from illegals.

Under a new federal program, $1 billion over four years will be allocated to reimburse hospitals nationwide, plus certain physicians and ambulance providers for emergency services provided to illegal immigrants, according to Walz.

He estimated that Yuma will receive about half of what the hospital pays each year for uncompensated illegal immigrant health care, a projection he based on Arizona's allocated portion of the funds.

The estimated annual cost to hospitals and other providers of emergency health care nationwide for illegal aliens — mandated but not funded by the federal Emergency Medical Treatment and Labor Act (EMTALA) — is $1.45 billion, according to congressionally commissioned research from the MTG Corporation.

The $1 billion over 4 years amounts to $250 million per year. So that is only one sixth of what the hospitals pay for uncompensated care for illegals. But that $1.45 billion per year cost seems awfully low. Note the native born children of illegals get many of their costs paid by local, state, and national governments. Also, some of the illegals manage to fraudulently qualify for Medicaid.

Arizona's Yuma county, in which one third of babies are born to illegal aliens, has a hospital that claims it provides $2 million in care to illegals. But what is the cost of delivering all those babies?

Walz's estimate comes after news that nearly one in three babies born in Yuma County Arizona in 2002 were born to illegal immigrant mothers, according to a recent report by the Center for Immigration Studies, a Washington, D.C., think tank that pushes for anti-immigration policy. The rate is the highest in all of Arizona and among the highest in the country.

With weak verification of citizenship for Medicaid applicants my guess is that a lot of these babies are getting paid for under Medicaid.

Illegals are 43% of all medically uninsured. Many have legal children who are also uninsured. Also, some of those illegals and children who are insured are insured under government subsidized programs. So the money doesn't show up as uncompensated care. in heavily Hispanic Texas 24% of the population is medically uninsured while in heavily white Minnesota only 8% of the population is uninsured.

California spends nearly $8 billion per year educating illegals and children of illegals with $3.2 billion for illegal students and $4.5 for legals born to illegals. Note the proportion. A similar proportion probably holds for the medically uninsured. Also, nationally the educational costs for illegals and their children is over $28 billion. Also, in California native pay over 3 times as much in taxes per person per year as Mexican immigrants.

Florida spends at least $4.3 billion on illegals.

Analysis of the latest Census data indicates Florida’s illegal immigrant population is costing the state’s taxpayers $4.3 billion per year for education, medical care and incarceration. Even if the estimated taxes collected from illegal immigrant workers are subtracted, net outlays still amount to more than $3.3 billion per year. The annual fiscal burden amounts to about $575 per Florida household headed by a native-born resident.

Those costs do not include local jail costs, law enforcement activities to catch illegals who commit additional crimes, or the costs to victims of crimes committed by illegals, or security costs expended due to higher risk of crime from higher crime rate immigrant groups. Costs of welfare and education for the children of illegals are not included. Also, higher costs of teaching English to their kids are not included nor are the costs of white flight from neighborhoods that become heavily Hispanic.

Aging Mexican illegals in the United States are seen as a growing economic problem. (same article here and here)

While much of the attention remains on the persistent inflow of illegal workers, a new question is beginning to worry some analysts and policy makers on both sides of the border: What will happen when the 10 million Mexicans living in the United States become too old to work? Will they retire in the United States or will they return to Mexico?

The number of old illegals in the United States growing very rapidly.

In 2003, an estimated 710,000 Mexicans over 60 lived in the United States, 63 percent more than a decade earlier, the National Population Council of Mexico concluded, based on Census Bureau figures.

You can bet that growth rate is going to continue. When they get old and sick they will show up at hospital emergency rooms seeking treatment. The law requires the hospitals to pay. Therefore American citizens will pay.

Cheap labor is subsidized labor. Our immigration policy is increasing the size of the recipient class who are net drains on everyone else. People who can not provide for their own retirement end up getting paid for by taxpayers one way or another. One out of every 12 dolllars spend on medical insurance pays for medical care of the uninsured. So the tax system is just one of the ways we pay for medical care for poor illegals and poor legal immigrants as well.

Keep all the above in mind next time you hear George W. Bush arguing for his harmful Mexican worker permit program.

By Randall Parker    2005 August 10 11:13 PM Entry Permalink | Comments (3)
2005 August 04 Thursday
Weak Citizenship Verification For Medicaid Applicants

One of the costs of large scale immigration (both legal and illegal) is the subsidies for medical care and other social services. Employers get cheap labor and the rest of us pick up the bill. In theory applicants for Medicaid are supposed to be American citizens. How well is this requirement enforced? Not well at all in turns out. A report from the Office of Inspector General Daniel R. Levinson of the Department of Health & Human Services has found that most states make little effort to prove citizenship of Medicaid benefits applicants. (PDF format)

Forty-seven States allow self-declaration of U.S. citizenship for Medicaid; nearly all of these require evidence if statements seem questionable. Pursuant to Federal policy, States may accept a signed declaration as proof of U.S. citizenship from applicants seeking Medicaid benefits. Currently, 40 Medicaid directors report that their State allows self-declaration of citizenship. An additional seven report that self-declaration is sometimes allowed. The four remaining directors report that self-declaration is not permitted in their State. These States are Montana, New Hampshire, New York, and Texas.

Forty-four of the forty-seven States that allow or sometimes allow self-declaration have “prudent person policies” which require evidence of citizenship if statements seem questionable to eligibility staff.

I bet in practice welfare office workers rarely ask for evidence of citizenship even when someone can barely speak English. The ethos of such agencies very frequently is to help the poor and down trodden.

Thirty-two of these have written prudent person policies, and the remaining 12 have unwritten, informal policies requiring documentation for questionable statements.

Twenty-seven States do not verify the accuracy of any U.S. citizenship statements as part of their posteligibility quality control activities.

In fiscal year 2003, 27 of the 47 States that allow self-declaration did not conduct quality control activities that included verification of statements of U.S. citizenship. Of the 20 States that did review statements, 9 did so for a nonrepresentative sample of the entire Medicaid population. Consequently, some groups that could pose vulnerability to Medicaid integrity were not included in the review sample.

Some States use types of evidence that are not accepted by CMS or SSA to document citizenship for Medicaid. As reported earlier, seven States sometimes allow and four States do not allow Medicaid applicants to self-declare citizenship. Of these 11 States, 4 use types of evidence to document citizenship that are not accepted by CMS or SSA. Furthermore, 13 of the 20 States that report conducting quality control to verify statements of U.S. citizenship use types of evidence that are not accepted by CMS or SSA, such as school records, family Bibles, voter registration records, and marriage licenses.

Social Security is tougher on eligibility than Medicaid.

Medicaid-related programs are more likely to verify citizenship; their verifications may be a useful resource for Medicaid. SSA states that all applicants must provide documentary evidence of U.S. citizenship in order to receive a Social Security number or qualify for Supplemental Security Income (SSI) benefits. Forty-two of fifty-one foster care directors report that staff document U.S. citizenship when determining eligibility for Title IV-E foster care maintenance payments. Twenty-seven of fifty-one TANF directors report documenting or sometimes documenting citizenship for purposes of eligibility.

In the majority of instances, we found that these Medicaid-related programs draw on evidence accepted by CMS or SSA to document statements of U.S. citizenship. These citizenship verifications may be a useful resource for Medicaid.

Oregon is the only state to have done an audit looking for non-citizen beneficiaries and they were able to establish that in their sample about 3% of the audited cases were non-citizens and therefore not eligible. Well, imagine what the rate of non-citizen usage must be in states like California which have much higher percentages of illegal aliens living in them.

Only one State reports conducting an audit looking at self-declaration of U.S. citizenship, and it found vulnerabilities

We asked States for any quality control audits or evaluations that looked at self-declaration of citizenship. Only one State director provided an audit on this topic. This audit report found vulnerabilities related to the process of self-declaration of U.S. citizenship.

Specifically, the audit, conducted in January 2002 by the Secretary of the State of Oregon, found that the State provided full Medicaid benefits to 25 beneficiaries (of the sample of 812) who were noneligible noncitizens. The audit report concludes that there are potential risks involved in allowing applicants to self-declare their U.S. citizenship on mail-in applications, which do not allow workers to verify the accuracy of statements of U.S. citizenship.

Well, no kidding. If someone doesn't even have to show up to apply then that person could make up all the fake documents they need and simply assert their citizenship. The claims processing offices are ill-equipped to do much in the way of verification.

My guess is that official estimates of the medical costs which immigrants impose on the US citizenry greatly underestimate the real costs because a big chunk of the money going to non-citizens is labelled as money going to citizens.

Tax money going to pay for medical care for illegals is just one way we pay more for their medical care. First off, illegals are now having about 10% of the babies being born in the United States. Those babies, as US citizens, are eligible for government funded medical care. So we pay that way too.

Illegal immigration is driving up the number of medically uninsured and also one in every twelve dollars spent on medical insurance premiums goes to the cost of paying for the medically uninsured. So illegal immigration and also legal immigration of low wage workers drives up the costs of medical insurance that natives pay. The illegal immigrants can not possibly pay for their own medical insurance because low wage workers can not afford to pay medical insurance premiums.

“The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum wage worker,” said Drew Altman, President and CEO of the Kaiser Family Foundation. “If these trends continue, workers and employers will find it increasingly difficult to pay for family health coverage and every year the share of Americans who have employer-sponsored health coverage will fall.”

Low wage jobs are effectively taxpayer subsidized jobs. When people advocate for large scale immigration of people with few talents effectively they are advocating for more taxpayer subsidized work.

Cheap immigrant laborers, by going to emergency rooms for medical care, by having children they can't afford to pay for, by reducing native employment, and also by driving down wages for lower income native workers, is creating a growing segment of society that lives off of government provided subsidized paid for by middle and higher income workers.

By Randall Parker    2005 August 04 09:40 PM Entry Permalink | Comments (4)
2005 June 09 Thursday
Immigration And Heavy Burden Of Medically Uninsured

The costs we pay for the medically uninsured are high and rising rapidly.

This study quantifies, for the first time, the dollar impact on private health insurance premiums when doctors and hospitals provide health care to uninsured people. In 2005, premium costs for family health insurance coverage provided by private employers will include an extra $922 in premiums due to the cost of care for the uninsured; premiums for individual coverage will cost an extra $341.

Nearly 48 million Americans will be uninsured for the entire year in 2005. What happens when some of these 48 million Americans get sick? Research has shown that the uninsured often put off getting care for health problems—or forgo care altogether.1 When the symptoms can no longer be ignored, the uninsured do see doctors and go to hospitals. Without insurance to pay the tab, the uninsured struggle to pay as much as they can: More than one-third (35 percent) of the total cost of health care services provided to people without health insurance is paid out-of-pocket by the uninsured themselves.2

To find out who pays the remainder of this bill—the portion that the uninsured themselves simply cannot manage to pay—Families USA contracted with Dr. Kenneth Thorpe, Robert W. Woodruff Professor and Chair of the Department of Health Policy and Management, Rollins School of Public Health, Emory University, to analyze data from the U.S. Census Bureau, the federal Agency for Healthcare Research and Quality, and the National Center for Health Statistics, and other data. Through this study, we found that the remaining $43 billion is primarily paid by two sources: Roughly one-third is reimbursed by a number of government programs, and two-thirds is paid through higher premiums for people with health insurance.

As the costs of care for the uninsured are added to health insurance premiums that are already rising steeply, more employers can be expected to drop coverage, leaving even more people without insurance. And as more people lose coverage and the cost of their care is added to premiums for the insured, still more employers will drop coverage. It’s a vicious circle that will not end until we as a nation take steps to solve the underlying problems.

A significant portion of the uninsured are illegal aliens and their children (who in some cases are US citizens). Another significant portion are legal aliens. Higher medical insurance premiums and government support for the uninsured are two more ways that native born American citizens pay for low skilled and low wage immigrants and their children. Hispanics are medically uninsured at two and a half times the rate of whites. The medical uninsurance rate is higher still among illegals and their children. Stop the Hispanic influx and deport all the illegal aliens and the ranks of uninsured would drop by millions and perhaps even by tens of millions.

Some estimates put the ranks of illegals as high as 20 million. Estimates for the rate of increase are around a half million a year. So a lot of the projected increase in medical insurance by 2010 is to support the additional illegal aliens who wll enter the US in the next 5 years and the children who will be born to the illegal aliens who are already here.

The additional costs for medical insurance due to the uninsured will go up much more in just the next 5 years.

Washington, D.C. Premiums for employer-provided family health insurance will cost, on average, an extra $922 in 2005 to cover the unpaid expenses of health care for the uninsured, according to a report released today that quantifies such costs for the first time. These added costs account for one out of every $12 spent for employer-provided health insurance.

The report, issued by the health consumer organization Families USA, projects that these costs will rise to $1,502 in 2010.

According to the report, health insurance premiums for family coverage in six states will be at least $1,500 higher in 2005 due to the unpaid cost of health care for the uninsured. These states are New Mexico ($1,875); West Virginia ($1,796); Oklahoma ($1,781); Montana ($1,578); Texas ($1,551); and Arkansas ($1,514).

“The large and increasing number of uninsured Americans is no longer simply an altruistic concern on behalf of those without health coverage but a matter of self-interest for everyone,” said Ron Pollack, Executive Director of Families USA. “The stakes are high both for businesses and for workers who do have health insurance because they bear the brunt of costs for the uninsured.”

By 2010, there will be 11 states in which employer-provided family health coverage will cost more than $2,000 extra to pay for health services to the uninsured. These states are New Mexico ($3,169); West Virginia ($2,940); Oklahoma ($2,911); Texas ($2,786); Arkansas ($2,748); Florida ($2,248); Alaska ($2,248); Montana ($2,190); Idaho ($2,152); Washington ($2,144); and Arizona ($2,028).

Ouch. So the employers who pay medical insurance are subsidizing the employers who do not pay medical insurance. As more employers drop insurance coverage the burden will fall more heavily on the remaining employers and more of those will drop coverage. This could snowball.

Note that New Mexico, which is getting flooded with illegal aliens will be worst hit in 2010 with family health coverage costing an extra $3169 per year to pay for the uninsured.

We could reverse this trend by deporting all the illegal aliens and stopping more illegals from entering the United States.

By Randall Parker    2005 June 09 12:11 PM Entry Permalink | Comments (9)
2005 June 02 Thursday
Teen Unemployment Rate Higher Due To Immigration

Employers prefer cheap immigrants with work experience over cheap teens.

But the number of adolescents nationwide embarking on that annual rite of passage is abating. Last summer, the teen employment rate was the lowest since 1948, with only 36 percent of those ages 16 to 19 holding jobs, down from 45 percent in 2000. This year, although some economists say an improving economy may boost the prospects of older teens, the latest forecast by Northeastern University's Center for Labor Market Studies in Boston shows no budge in the overall summer employment rate.

...

The teen employment rate typically falls with national recessions, but it is not expected to recover this summer despite an improved economy, according to the Northeastern report. It is attributed, in part, to immigrants and older workers turning to hourly work. Employers often perceive older workers to be more mature or reliable and still available long after teens have returned to school.

Take away the foreign labor supply and suddenly employers want to hire teenagers.

Demand is particularly high in tourist-heavy areas, such as Cape Cod, where employers found themselves shut out of a seasonal worker visa program earlier this year.

What, economics works in the labor market too? You'd never believe it if you listened to open borders advocates who claim foreigners do jobs that Americans do not want to do. No, foreigners do jobs at lower wages and in ways more convenient to employers. But we end up subsidizing those foreigners through health care, social services, and the criminal justice system. Plus, we get lots of unemployed teens about whom my grandmother said it best: "Idle hands are the devil's workshop".

Andrew Sum, Director of the Center for Labor Market Studies at Northeastern University, says teens are getting fewer jobs and lousier jobs and he fingers immigration as a cause.

Sum argued that the nation’s youth are still “young, restless, and jobless.” He focused on the labor market experiences of the nation’s teens (16-19) and young adults (20-24) over the past four years: the steep decline in their employment rates and accompanying deterioration in job quality; the adverse affects of the substantial influx of unskilled, immigrant labor and the unprecedented “age twist” in employment rates in the past four years. While the national teen employment rate declined to a new historical low in 2004, the nation experienced continuous growth in payroll employment, and the nation’s overall unemployment rate declined to 5.4 percent. The latter labor market developments normally would have been expected to raise teen employment rates.

Sum uses the employment/population ratio (E/P) as the best available indicator, he asserts, of the overall success of teens in the labor market. The official unemployment rate for teens can be misleading, Sum said, due to the high cyclical sensitivity of teen labor force behavior, and the fact that many teens simply do not enter the labor force when job prospects are negatively perceived. Thus, many jobless teens will not be classified as unemployed in the official labor force statistics.

Since 2000, the E/P ratio of the nation’s teens has fallen by nearly 9 percentage points, a drop more than four times as high as the E/P ratio decline for adults 20 and older. Young adults (20-29), except for those with a bachelor’s or graduate degree, also experienced a sharp decline in their E/P ratios, in contrast to the older segment of the population (55 and over) who experienced job growth between 2000 and 2004. Sum asserted that the magnitude of this “age twist” in the structure of employment rates is historically unprecedented.

Large foreign worker supply decreases demand for teen workers.

Why the huge loss of jobs for teens over the past four years? Sum believes a variety of demand and supply forces are at work, including increased competition from jobless adults, new college graduates, and immigrants. New foreign immigration has remained at high levels, and the influx of many low educated young immigrants over the past four years is an important reason why teens and young adults have found work at much lower rates than before. While there typically is no statistically significant wage difference between native born teens and young immigrants having the same skill sets, Sum said, employers are more likely to hire immigrants for a variety of reasons, such as easier recruitment, ability to work full-time as compared to part-time teenage employees, and a perceived reputation of many immigrants as hardworking and loyal. Moreover, due to the young age structure of the population of new immigrant workers, with 51 percent under the age of 30 and two-thirds under the age of 35, older adults have not faced as much competition for positions as do younger adults and teens. “For example, 70 of every 100 new immigrants between the ages of 25-34 were actively participating in the civilian labor force in 2004 versus only 31 of every 100 new immigrants 55 and older.”

Teen employment provides many benefits to the teens and to society at large.

Teen employment is important for a variety of reasons, including the fact that “early work experience begets more work experience.” Youth who work during their teen years are more likely to work as young adults. Early work experience is even more important for those students who are not planning to continue onto post-secondary education immediately upon graduation. National longitudinal evidence reveals that high school senior year work experience has economic payoffs until youth at least reach their mid-20s. Metropolitan areas with high teen employment rates have significantly higher E/P rates for young adults 5 years later.

Employment in school also can have educational benefits for youth. Economically disadvantaged youth, both men and women, who work during high school, are less likely to drop out of school than their non-working peers. In addition, African American males who work between 21-30 hours a week are more likely to graduate from high school and attend college than their peers with no paid work experience. Sum noted that existing research also shows that metropolitan areas with higher rates of employment for teen females are characterized by significantly lower teen pregnancy rates.

Among Sum's recommended policy changes:

Enforce the immigration laws of the nation and require employers to live up to the spirit as well as the letter of the law;

Also see "Native Worker Employment Drops Greatest In High Immigrant States", "Black Unemployment Rate Has Risen During Economic Recovery", "Hispanics Have Taken Bulk Of New Jobs In Last 4 Years", "Immigrant Population Growth Disconnected From American Economic Cycle", and "Immigration Driving Up Native Unemployment".

By Randall Parker    2005 June 02 10:36 AM Entry Permalink | Comments (9)
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 don’t 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.

By Randall Parker    2005 May 19 08:19 AM Entry Permalink | Comments (11)
2005 May 17 Tuesday
Cheap Immigrant Labor, California Wine, And Australian Vintner Automation

Steve Sailer points to an Across Difficult Country post which (and I hope I don't lose you) points to a Professor Bainbridge post which excerpts a Wine Spectator article arguing that cheap Hispanic laborers are needed in the California wine industry.

Hispanics are the backbone of the wine industry, pure and simple, says Pete Seghesio, CEO of Seghesio Family Vineyards in Sonoma County. Year-round, most of the vineyard work is done by Hispanics—everything from pruning vines in the winter months, to thinning grapes and leaves during the growing season, to the actual harvest.

"We can't do what we do without them," Seghesio says. "California cannot make 90-point wines without the hand care of these individuals. We're not Australia, where many of the [farming operations] are done by machines. It's impossible to make the kind of quality wine we're making in California today without this labor force of hands." ... The bottom line, though, is this, says Seghesio: "If people really knew the percentage [of Hispanics working in California] that's driving our economy, there wouldn't be any of this talk from our government."

The UCLA corporate law professor has got the evidence to understand this whining right there in front of him. But he fails to notice it. I bet all my readers already see the problem. But then, unlike Professor Bainbridge (and did I mention he's a corporate law prof at a prestigious university?) they had the advantage of my bolding. Oh, and think about Down Under in the unlikely chance you haven't figured it out yet.

People who do not get paid much are the backbone of California's wine industry because the labor is plentiful. It is plentiful and therefore it is cheap. If it was not plentiful it would cost more. In my youth high priced labor was considered to be a wondrous thing that made America the envy of the world. Some of you may be too young to remember those times. But they did exist and the Democratic Party of those times even thought that high priced labor was a good thing. Really, I'm not making this up.

What is with the California wine industry? Is it impossible for Californa vintners to use machines? Are the wine company owners all just mechanically incompetent and incapable of installing and running and servicing machines? Are there no people in California (maybe in car repair shops?) who could run those Down Under automated gadgets for processing wine? Or are the vineyards too poor to afford machines? No, it can't be that. A lot of those winers are rich people who took up wine making as a hobby. Or are California's capital markets too unsophisticated to be able to provide funds to buy capital equipment? Nope, that's not it. Look at Hollywood, Silicon Valley, and the biotech start-ups in San Diego. Funds are very obviously available.

Being the kind of guy who thinks automation is the road to higher living standards I see the trailing technological edge of the California whine (er, wine) industry as a sign that something is amiss. One wants to ask the professor whether cheap low skilled immigrant labor is a disincentive to innovation and capital investment? Is the necessity born from high labor costs the mother of invention?

Professor Bainbridge then whines:

Unfortunately, if my hate mail is any indicator, Seghosio's wrong. People know and an awful lot of them don't seem to care. They don't want the illegals here, no matter how much they contribute to our culture and economy.

Poor baby. Bainbridge wants locally grown fine wines. He feels culturally uplifted from refined local wines grown by lots of very poor low wage workers. He can't imagine it any other way. Never mind what getting that wine does to the local schools, pollution from crowding, crime rates, welfare rolls, tax rates (which, er, are kinda anti-business, no?), and jail crowding. He's getting his culture from a wine bottle apparently.

Across Difficult Country blogger C. Van Carter sees a form of the "Let them eat cake" attitude coming from the professor.

Speaking of professors, UCLA professor of law Steven Bainbridge observes that without illegal alien serfs, wealthy gluttons like himself would have to pay more to get drunk on California wine. Bring this up the next time you encounter some pathetic slob who doesn't know Merlot from Pinot Noir complaining about illegal aliens ruining his children’s schools or driving up his costs of buying a home, it should shut him up.

When I was a kid (yeah, back when high wages were considered a virtuous state of affairs and the Democratic Party was the party of the working class) I used to think that college profs must know everything. Now I know better.

By Randall Parker    2005 May 17 02:02 PM Entry Permalink | Comments (9)
2005 May 09 Monday
Black Unemployment Rate Has Risen During Economic Recovery

The Economic Policy Institute has released a new report stating that black unemployment is rising during an economic recovery.

The first chart shows the change in unemployment rates by race and gender over two time periods: the first 13 quarters of this recovery and the same time period over the early 1990s recovery. While the overall rate (i.e., the rate for all jobseekers) and the white rate specifically both fell by 0.4 percentage points in the first three years of the early 1990s recovery, the rate fell slightly faster, by 0.6 points, for African Americans. This relationship is the long-held historical pattern for minorities, as their employment opportunities tend be more responsive than whites to changes in economic conditions (e.g., minority unemployment rates tend to worsen faster in a downturn and improve more quickly in an expansion, where as white rates tend to be more stable).

Surprisingly, in this recovery, the opposite pattern has prevailed thus far. The overall rate is down slightly, as is the white rate. But the unemployment rate for African Americans is up by 0.8 percentage points overall, driven by the 1.4 point increase for African American men. By the first quarter of 2005, the overall African American unemployment rate was 10.6%, while the overall rate--5.3%--was half that level.

Blacks are doing worse in an economic recovery and so they will do even worse in the next economic downturn.

But conspicuous differences are apparent between the last two business cycles. In the early 1990s, the overall employment rate began to climb by around the 10th quarter, and the African American rate follows the overall rate fairly closely. In the current case, however, employment rates have yet to trend up very convincingly, and African American rates actually have continued to fall. Almost four years after the recession began in March 2001, employment rates remain down by 2 percentage points overall and almost twice that much (3.7 points) for African Americans.

The Economic Policy Institute's writers list a few unlikely causes for this phenomenon including racism. Meanwhile they predictably miss the elephant in the room: Massive amounts of Hispanic immigration. Edward Rubinstein points out why the EPI is wrong.

But if racial discrimination is such a factor, why has Hispanic job growth outpaced that of whites? (For example, Hispanics got 60 percent of the new jobs created in March; in the entire Bush II era Hispanic employment has grown 14.3 percent vs. just 0.3 percent for non-Hispanic employment growth).

In fact, discrimination is the best explanation for persistent Black unemployment - but not the sort of discrimination EPI has in mind.

Arguably the most racist policy in this country for the past quarter century has been immigration policy. The onslaught of poorly educated, mainly Hispanic immigrants has stymied good faith efforts of African Americans to climb up the economic ladder.

Blacks overwhelmingly vote for the Democrats while the Democrats strongly support massive Hispanic immigration that harms blacks economically. The Democrats correctly perceive Hispanics as mostly expanding the lower class and therefore see most Hispanics as future Democrats. The Democrats are willing to sacrifice black interests in order to ensure future Democratic Party majorities. Therefore the Democrats care far more about winning elections than helping the poor people we already have. (and I'm not saying the Republicans are ethically any better)

A new study from the Pew Hispanic Center reports that Hispanic salaries have fallen for the last 2 years in a row.

Washington, DC - Hispanic workers accounted for more than 1 million of the 2.5 million new jobs created by the U.S. economy in 2004. But Hispanics are the only major group of workers to have suffered a two-year decline in wages and they now earn 5 percent less than two years ago, according to a Pew Hispanic Center analysis of latest data from the Bureau of Labor Statistics and the Census Bureau. The report is available on the Center's website: www.pewhispanic.org.

Recently arrived Hispanic immigrants were a leading source of new workers to the economy but also among the principal recipients of wage cuts in 2004.

"Despite strong demand for immigrant workers, their growing supply and concentration in certain occupations suggests that the newest arrivals are competing with each other in the labor market to their own detriment," said the report's author, Rakesh Kochhar, a senior research associate at the Center.

The vast majority of new jobs for Hispanic workers were in relatively low-skill occupations calling for little other than a high school education. In contrast, non-Hispanic workers secured large increases in employment in higher-skill occupations requiring at least some college education.

The Hispanic wage decline is accelerating and only Asians are experiencing a wage gain.

• Real weekly earnings for Hispanics declined by 2.2 percent in 2003 and by another 2.6 percent in 2004. Latinos are the only major group of workers whose wages have fallen for two consecutive years.

• Meanwhile, wages of non-Hispanic white and black workers increased in 2003 but declined by 1.8 percent and 1 percent respectively in 2004. Asian workers are the only group to have increased their earnings each of the past two years.

• Recently arrived Latino immigrants saw their wages fall by 2.6 percent in 2004. This was matched by recently arrived non-Hispanic immigrants whose earnings fell by the same amount in 2004.

Edward Rubinstein again says basic economics explains why wages are falling.

The author of the Pew study professes "surprise" that Hispanic wages would fall at a time when they are having such "luck" in getting jobs.

A refresher course in Economics 101 is in order here.

Falling prices denote a surplus. That is a basic principle of economics. Falling Hispanic wages are thus a signal sent by a labor market that is saying what many of us have been saying for years: Immigrant workers are simply not needed. Far from doing the jobs that Americans "won't do," Hispanic immigrants are displacing low wage natives—Hispanic and non-Hispanic alike.

Immigration is growing the size of America's lower class. Why do that? This harms the interests of the vast majority of the American people. More people can not afford to pay for their own medical care. More people do not pay enough taxes to fund the education of their children. More people are criminals. The list of harmful consequences is long. We should stop the illegal influx, deport all the illegals who are here, and raise the standards on who can immigrate legally. We do not need more poorly educated and low skilled workers.

By Randall Parker    2005 May 09 12:18 PM Entry Permalink | Comments (13)
2005 April 26 Tuesday
Aging Population Funding Crisis Not Helped By Immigrants

Immigrants are not a net benefit to the Social Security Trust Fund.

Many advocates of high immigration argue that it fundamentally changes the nation’s age structure, and is very helpful in solving the problem of an aging society. Demographic data, however, show that immigration has only a very small impact on the problem. While immigrants do tend to arrive relatively young, and have higher fertility than natives, immigrants age just like everyone else, and the differences with natives are not large enough to fundamentally alter the nation’s age structure. The debate over immigration should focus on other areas where it actually has a significant effect.

Among this Backgrounder’s findings:

  • In 2000 the average age of an immigrant was 39, which is actually about four years older than the average age of a native-born American.
  • Even focusing on only recent immigration reveals little impact on aging. Excluding all 22 million immigrants who arrived after 1980 from the 2000 Census increases the average age in the United States by only about four months.
  • In 2000 66.2 percent of the population was of working-age (15 to 64). Excluding post-1980 immigrants it is 64.6 percent.
  • Looking at the full impact of post-1980 immigrants reveals that if they and all their U.S.-born children are not counted, the working-age share would have been 65.9 percent in 2000, almost exactly the same as the 66.20 percent when they are all included.
  • Immigration also does not explain the relatively high U.S. fertility rate. In 2000 the U.S. fertility rate was 2.1 children per woman, compared to 1.4 for Europe, but if all immigrants are excluded the rate would still have been 2.0.
  • Looking to the future, Census Bureau projections indicate that if net immigration averaged 100,000 to 200,000 annually, the working age share would be 58.7 percent in 2060, while with net immigration of roughly 900,000 to one million, it would be 59.5 percent.
  • Census projections are buttressed by Social Security Administration (SAA) estimates showing that, over the next 75 years, net annual legal immigration of 800,000 a year versus 350,000 would create a benefit equal to only 0.77 percent of the program’s projected expenditures.
  • It is not clear that even this tiny benefit exists, because SSA assumes legal immigrants will have earnings and resulting tax payments as high as natives from the moment they arrive, which is contrary to a large body of research.

Next time someone tells you we need more immigration to pay for an aging society point them at this study. That claim is a myth that deserves to die.

Given the unrealistic Social Security Administration assumptions immigration may well be a net detriment to the financial position of the Social Security Trust Fund.

Keep in mind that illegal immigrants are, on average, less educated, less skilled less well paid, and large net drains on the public purse. Amnesties for illegals shift them into the category of those eligible for Social Security and Medicare. Financially we'd be much better off if we deported the illegals and also imposed much higher standards on legal immigrants. People who come in to take lower paying jobs should simply not be allowed in. Only the more productive and highly paid immigrants are going to pay more in taxes than they receive in benefits.

The European Union mandarins in Brussels argue that immigration in Europe is essential to deal with Europe's aging population. But have the EU mandarins done the sorts of calculations for Europe that Steve Camarota did for the United States? I'm guessing the answer is "no". After all, here we are in the year 2005 and only now has someone done the sort of analysis that Steve Camarota has done for aging populations and immigration in the United States. Europe has less of a developed network of think tanks for analysing policy issues. So their elites are probably just guessing when they advocate for large scale immigration. Or they want the immigrants for other reasons and are putting forth false arguments that sound plausible on first hearing.

By Randall Parker    2005 April 26 11:06 AM Entry Permalink | Comments (7)
2005 April 05 Tuesday
Hispanics Have Taken Bulk Of New Jobs In Last 4 Years

Edward Rubinstein pours over the latest employment numbers and long term trends.

From the start of the Bush Administration in January 2001 through March 2005:

  • Total household employment rose 2,730,000, or 2.0 percent
  • Hispanic employment rose by 2,312,000, or by 14.3 percent
  • Non-Hispanic employment rose by 416,000, or by 0.3 percent

Hispanic immigrants are displacing American workers and driving down wages. The unemployment rate does not tell the whole story for a couple of reasons. First, the number of people in the labor force is probably larger than the government assumes because the government is undercounting illegals. Also, in order to be counted as unemployed you have to be classified as in the labor force. A lot of workers have become discouraged and their labor market participation has declined. The non-Hispanic part of the US working age population probably grew by a lot more than 0.3 percent over the last 4 years.

America does not need a bigger lower class. The Bush Administration seems intent on turning the United States into Latin America with a small middle class and larger upper and especially lower classes. I wonder if Bush even understands what he is doing. My guess is he has deluded himself.

Former Colorado Governor Richard Lamm says illegal immigrant labor costs are subsidized for employers by the taxpayers. Lamm goes on to list other ways that taxpayers subsidize illegal immigrant labor including medical care.

By Randall Parker    2005 April 05 02:33 AM Entry Permalink | Comments (45)
2005 March 28 Monday
Steve Sailer: We Need More Robots, Not Illegal Aliens

Steve Sailer just bought a Roomba robotic vacuum cleaner so that one of his children could get a rabbit even though another of his children is allergic to animal fur. Steve uses his Roomba as a starting point to examine labor shortages as an incentive for very beneficial innovation.

Recall that a 1997 National Academy of Sciences study  found that an immigrant with less than a high school education will on average cost the taxpayers $100,000 more in government spending over her lifetime than she will pay in taxes.

One lesson of history since the start of the Industrial Revolution 250 years ago is that countries don't advance economically by importing unskilled workers to "do the jobs that natives won't do," but by substituting machines for human labor.

For example, because the Roman Empire exploited countless slaves conquered in foreign wars, it lacked incentives to increase labor efficiency through mechanization. Productivity never took off, and eventually the civilization collapsed into poverty.

In contrast, Britain, which, until the second half of the 20th Century, had far more emigrants than immigrants, had the right incentives for an Industrial Revolution.

As I pointed out here a year ago [Japanese Substitute Inventiveness for Immigration], the Japanese have become obsessed with the promise of robots.

It is extremely disappointing to me when I read some supposed expert or commentator arguing for more immigration claim that the United States will be short x many million workers 10 or 20 years from now. There was a time in this country when the standard response to labor shortages was to look for ways to automate. American business developed the automated factory to the point of becoming an envy for the entire world. The term "Yankee ingenuity" embodied a major part of America's image at home and abroad.

Nowadays throwing more labor at a problem is the first solution proposed in political discussions. Schools perform poorly? Hire more teachers. Crime too high? Hire more police. Why not automate instead? Most teachers are mediocre. Why not film the very best teachers and let everyone watch the best? We could simultaneously improve quality and lower costs! Why not develop more automated means to detect and track criminals and to protect assets from being stolen? Why not stop letting in people who commit crimes at high rates and deport the foreign criminals who are already here? We should innovate our way to a better society rather than import labor that pays little in taxes while imposing medical and other costs.

People who have 8th grade educations bring more costs than benefits. Few Hispanic immigrants are going to be technological innovators. They come from societies that are notably lacking in scientific and technological achievements. In America as a group they do poorly in school across generations. They are not going to supply many engineers to develop more efficient factories or better product designs. They are not going to produce many medical researchers.

Cheap labor decreases the incentive to automate. Businesses derive a short run benefit to their bottom lines but at the cost of delaying efforts to improve productivity and quality through automation. Innovations that automate production can improve quality and lower costs more effectively than cheap imported labor.

Even with a large pool of cheap foreign labor, there will always be some increases in harvest labor productivity. Capital or machines are normally substituted for workers when wages rise, but there may be reasons to substitute capital for labor that aren't related to wages. For example, as water became scarcer and more costly in the 1980s and 1990s in California, more farmers turned to drip irrigation — it uses less water and, almost as an afterthought, also saves millions of hours of labor. Similarly, picking wine grapes by machine can improve the quality of the wine in hotter areas because the machines can harvest at night, so most of California's wine grapes are now picked by machine.

But the basic truth still holds — foreign farm labor keeps wages low and serves as a disincentive to mechanization. In fact, the wages of farmworkers have been decreasing over the past decade. A March 2000 report from the Labor Department found that the real wages of farmworkers have fallen from $6.89 per hour in 1989 to $6.18 per hour in 1998. A new guestworker program, or continued official encouragement of illegal immigration, is likely to continue this downward trend in farmworker wages. This may seem superficially appealing to farmers, but from a competitive point of view, vying with low-wage countries on the basis of labor costs is a dead end — no modern society, will ever be willing to reduce farmworkers' wages enough to match those paid in third world countries.

Toyota, faced with the competitive threat of cheap Chinese labor, has opted to pursue development of robots that will allow Toyota to compete while still retaining production facilities in Japan. We can relearn from the Japanese an attitude our society used to accept as a given: Continuously increasing productivity is the path to higher living standards, not the importation of low skilled laborers who drive down the hourly labor costs of the lower classes while simultaneously sticking American taxpayers will big bills for police, jails, medical care, and other costs.

By Randall Parker    2005 March 28 11:30 AM Entry Permalink | Comments (23)
2005 February 24 Thursday
Columbia Economists Estimate $68 Billion Yearly Cost From Immigrants

Columbia University economists David Weinstein and Donald Davis present a new approach for analysing the costs of immigrants.

This study employs a new approach to examine the impact of immigration on the U.S. economy. Unlike earlier studies, we do not treat the movement of immigrant labor into this country in isolation. Older studies assumed that abundant resources and demand for labor was the primary reason for immigration, assumptions more appropriate to the 19th century. We start by assuming that the technological superiority of the modern American economy and resulting high standard of living is the primary factor motivating immigration. The study also takes into account the new global economy, including the movement of capital as well as trade. Our findings show that immigration creates a net loss for natives of nearly $70 billion annually.

Among the report’s findings:

  • In 2002, the net loss to U.S. natives from immigration was $68 billion.
  • This $68 billion annual loss represents a $14 billion increase just since 1998. As the size of the immigrant population has continued to increase, so has the loss.
  • The decline in wages is relative to the price of goods and services, so the study takes into account any change in consumer prices brought about by immigration.
  • The negative effect comes from increases in the supply of labor and not the legal status of immigrants.
  • While natives lose from immigration, the findings show that immigrants themselves benefit substantially by coming to America.
  • Those who remain behind in their home countries also benefit from the migration of their countrymen.

The model used in this study can be summarized as follows: High U.S. productivity motivates the entry of foreign workers and capital. As a consequence, the movement of foreign labor and capital into the United States expands U.S. exports and reduces exports by foreign countries who now have fewer workers and less capital. This depresses the prices of U.S. exports while raising the price of its imports, which is bad for U.S. natives. While the addition of immigrant workers makes the overall U.S. economy larger, natives in the United States are worse off because immigrants take not just the increase in income, but other income as well. This is because American workers are now competing with foreign workers who, because they have entered the United States, now have access to superior American technology, which is the primary source of American workers’ competitive advantage in the international economy. In other words, American workers are better off competing with foreigners if the foreign workers stay in their own countries and don’t have access to American technology. By allowing the foreign workers into the United States, Americans face competition with foreigners equipped with American technology.

This is an interesting argument. Their approach is valuable because they at least put the higher productivity of the US economy at the center of their analysis. But the analysis fails to take account for the reasons why American workers have access to superior technology. Most notably, American workers possess the capacity to develop advanced technology in the first place. Therefore it makes sense to differentiate between those immigrants who enhance our ability to develop productivity-increasing technology and those immigrants who detract from it. For example, engineers who develop ways to make car factories more productive are assets to the economy as a whole because they do work that raises the productivity of the American work force. By contrast, low riders who develop new ways to steal cars are quite glaring drags on the economy.

One of the reasons I favor a far more restrictionist approach to immigration is that our current mix of immigrants includes too many people who are not contributing to making the economy more productive and who are instead contributing to making the economy less productive. Take criminals for example. They destroy things and harm victims. But they also cause the labor of many more skilled workers to be diverted away from productivity-enhancing work. People who work as prosecuting attorneys and defense attorneys are people who are not working as patent lawyers, accountants, architects, engineers, or medical researchers among other more constructive occupations. Social workers spend their days dealing with the problems created by lower classes of society. Those social workers might otherwise be more productively employed in customer service and technical support of medical devices and software companies for example.

Put aside the mythology which has been promoted about all immigrants as beneficial to America and look at the actual empirical social science evidence on Hispanic immigrants in particular. The Hispanics create a number of problems for Americans. Hispanics are very poorly educated when they arrive, do not rise scholastically to American average levels over successive generations (and, generally speaking, immigrants quickly reach the level of scholastic achievement that their group will stay at in later generations, earn lower incomes (and hence pay less in taxes than they receive in benefits), have kids illegitimately at higher rates, and commit crimes at higher rates (and also see here).

Our country is made richer by innovators, inventors, venture capitalists, engineers, scientists, and sharp managers. Those people tend to be smarter and have advanced training in quite difficult subjects. Immigrant groups whose members are greatly underrepresented in higher educational attainment and in those occupations are not raising America up to higher living standards and better environments. The mythology that argues that all immigrants are beneficial to America is obviously false and we can no longer afford to embrace it just because it sounds nice and makes lots of people feel good.

Steve Sailer has a great quote from social scientist James Q. Wilson (whose books Thinking About Crime and Crime & Human Nature are worth the time to read btw) that sums up my own attitude about immigration:

The great achievement of Western culture since the Enlightenment is to make many of us peer over the wall and grant some respect to people outside it; the great failure of Western culture is to deny that walls are inevitable or important.

By Randall Parker    2005 February 24 11:00 AM Entry Permalink | Comments (2)
2005 January 10 Monday
Toyota Opts For Robots As Japan Rejects Unskilled Immigrants

With Japan's population projected to shrink Toyota is embracing more advanced robots as the solution to a dwindling work force.

Toyota plans to become the first in the industry to use the advanced robots in all production processes, the Nihon Keizai Shimbun reported Thursday.

The newspaper said the move is aimed at improving production efficiency as the automaker foresees anticipated labor shortages in Japan due to the country's declining birthrate.

Toyota is going to partner with Yaskawa Electric Corp. to develop more advanced robots and Toyota expects to develop robots to do tasks which have been too complex for existing robots.

The new robots would also be used in finishing work, such as installation of seats and car interior fixtures, that have been too complex for conventional robots up to now, the daily said.

Toyota is also going to redesign parts to make robotic placement easier.

Necessity is the mother of invention. (same article here)

"We aim to reduce production costs to the levels in China," the daily quoted an unnamed company official as saying.

...

Japan has so far rejected calls to open up to large numbers of unskilled immigrants, fearing the effects on the country's social framework.

The future for advanced economies is not in importing large amounts of cheap low-skilled labor. Companies that most competently pursue the development of robots and other forms of automation can ultimately achieve lower production costs than can companies that focus on chasing sources of lower priced human workers. If American companies use low-skilled imported labor as a crutch they will eventually be beat in the market by companies that aim to lower costs by putting far greater emphasis on reducing the amount of labor need to manufacture and service products.

Necessity really is the mother of invention. Import of low-cost low-skilled labor reduces the sense of urgency that firms feel to cut costs and hence functions as a disincentive for innovation.

By Randall Parker    2005 January 10 02:52 AM Entry Permalink | Comments (17)
2004 December 21 Tuesday
Economic Study Finds Immigrants In Holland Net Burden

Many immigrants are a net economic burden in the Netherlands.

Immigration and the Dutch economy
Introduction

  1. The Netherlands Bureau for Economic Policy Analysis, part of the Ministry of Economic Affairs[1], has produced a wide-ranging study of the impact of immigration on the economy of the Netherlands. The web site is www.cpb.nl
  2. The main results confirm findings in the US, Canada, and the UK that the benefit of large scale immigration to the resident population is very small and can sometimes be negative.
  3. Main results

    The study, published in June 2003, concluded that immigration of labour has the following effects:

    1. the gross domestic product will increase, but this increase will accrue largely to the immigrants in the form of wages;
    2. the overall net gain in income of residents is likely to be small and maybe even negative;
    3. the amount of redistribution between residents is substantial;
    4. the more the skill distribution of immigrants differs from that of residents, the larger the amount of redistribution will be;
    5. residents will skills comparable to those of immigrants will lose;
    6. residents will skills complementary to those of immigrants will win in the long run;
    7. capital owners will win in the short run, but in the long run their gains will disappear;
    8. due to labour market imperfections, part of the income effect for resident workers will be replaced by employment effects (unemployment instead of a wage decrease).

Note the language here. The writer says that immigrants who are like the average Dutch immigrants are a burden. This is a rather indirect way of stating that the average Dutch immigrant is an economic burden.

For all entry ages, however, immigrants turn out to be a burden to the public budget if their social and economic characteristics correspond to those of the present average non-Western resident. Accordingly, budget balances are affected negatively.

So net economic effect of immigrants on the native Dutch in Holland is negative. So immigration's net effect in Holland is similar to its net effect in the United States.

The report concludes that the current mix of immigrants to the Netherlands is not a solution to the financial problems caused by their aging population:

The results indicate that immigration cannot offer a major contribution to alleviate public finances and thus become a compensating factor for the rising costs for government due to the ageing of the population.

The report also acknowledges environmental costs.

The further population density increases, the more economies of scale are likely to be outweighed by negative external effects related to such phenomena as traffic congestion, pollution, and loss of open space, landscape and nature.

One aspect of environmental costs that is not widely appreciated is that the cost of pollution reduction per person goes up as population increases. Why? Because in a less dense population less emissions reduction is needed per person. Imagine that there were only 300 million people in the world. They could all be living at US standards of living but would not require as much spent per person on air or water pollution reduction because their pollution would be spread out so widely and also just not add up to all that much.

Imagine you live in a city with 2 million people and in order to make the air healthy enough to breathe 95% of the emissions from cars and factories has to be caught and broken down or converted to safe form. Then imagine 2 million more people move to that city and engage in just as much economic activity as the original 2 million. Well, in order to keep total pollution at the same acceptable level 97.5% of all pollution must by captured and converted to safe substances. The cost of each additional 1% reduction in pollution is not linear. Each additional percentage is much more expensive to stop. At the extreme the cost of stopping 100% of all pollution would be prohibitive and would require a huge reduction in living standards. So population increases impose not just crowding and higher prices per unit of housing but also much higher pollution control costs.

The original Dutch report is available here (in PDF format).

By Randall Parker    2004 December 21 02:24 PM Entry Permalink | Comments (14)
2004 December 03 Friday
Immigrant Population Growth Disconnected From American Economic Cycle

Advocates of high levels of immigration who favor toleration of illegal immigrants often claim that immigrants do jobs that no one else wants to do. But of course in a labor market, like any other market, there is always a price at which demand and supply equal. Absent the influx of low ability immigrants many of the jobs they do would still get done, albeit at a higher price. In many cases work would be restructured, innovative ways to get tasks done with less labor would be found, and more capital equipment and automation would be utilized.

A recent report from the Center for Immigration Studies

Among the findings:/p>

  • The 34.24 million immigrants (legal and illegal) now living in the country is the highest number ever recorded in American history and a 4.3-million increase since 2000.
  • Of the 4.3 million growth, almost half, or 2 million, is estimated to be from illegal immigration.
  • In the data collected by the Census Bureau, there were roughly 9 million illegal aliens. Prior research indicates that 10 percent of illegal aliens are missed by the survey, suggesting a total illegal population of about 10 million in March of this year.
  • The same data also show that in the years between 2000 and 2004, nearly 6.1 million new immigrants (legal and illegal) arrived from abroad. Arrivals are offset by deaths and return migration among immigrants already here, so the total increased by 4.3 million.
  • The 6.1 million new immigrants who arrived in the four years since 2000 compares to 5.5 million new arrivals in the four years prior to 2000, during the economic expansion.
  • The pace of immigration is so surprising because unemployment among immigrants increased from 4.4 to 6.1 percent, and the number of unemployed immigrants grew by 43 percent.
  • States with the largest increase in their immigrant population were Texas, Georgia, North Carolina, New Jersey, Maryland, Washington, Arizona, and Pennsylvania.
"The idea that immigration is a self regulating process that rises and falls in close step with the economy is simply wrong,” said Steven Camarota, the report’s author and the Center’s Director of Research. “Today, the primary sending countries are so much poorer than the United States, even being unemployed in America is still sometimes better than staying in one’s home country.”

Note that in the 2000-2003 period total native employment was falling by a couple of million people while immigrant employment increased by about the same number. However, since total number of immigrants in the country was rising the immigrant unemployment rate was rising. So illegals came in larger numbers into a worsening job market to become unemployed here.

The areas with high concentrations of brains have low unemployment rates while high immigrant areas have high unemployment rates.

The lowest unemployment rate was in Bryan-College Station, Texas, at 1.7 percent. Of the 25 metro areas with unemployment rates below 3 percent in October, about half were homes to large state universities, the statistics bureau noted.

The nation's highest unemployment rate was in Yuma, Ariz. — 23.6 percent. All of the next-highest jobless rates were in six metro areas in the agricultural central valley of California.

Brains, not brawn, create the highest value jobs. Our immigration policy should reflect this fundamental fact.

By Randall Parker    2004 December 03 04:07 PM Entry Permalink | Comments (2)
2004 October 27 Wednesday
Immigration Driving Up Native Unemployment

The Center for Immigration Studies has a new report out on how immigrants are driving down native labor market participation.

The recovery from the recession of 2001 has been described as “jobless.” In fact, an analysis of the latest Census Bureau data shows that between March of 2000 and March of 2004, the number of adults working actually increased, but all of the net change went to immigrant workers. The number of adult immigrants (18 years of age and older) holding a job increased by over two million between 2000 and 2004, while the number of adult natives holding a job is nearly half a million fewer. This Backgrounder also finds that the number of adult natives who are unemployed or who have withdrawn from the labor force is dramatically higher in 2004 than it was in 2000. These findings raise the possibility that immigration has adversely Affected the job prospects of native-born Americans.

Among our findings:

  • Between March of 2000 and 2004, the number of unemployed adult natives increased by 2.3 million, while the number of employed adult immigrants increased by 2.3 million.
  • Half of the 2.3 million increase in immigrant employment since 2000 is estimated to be from illegal immigration.
  • In addition to a growth in unemployment, the number of working age (18 to 64) natives who left the labor force entirely has increased by four million since 2000.
  • Even over the last year the same general pattern holds. Of the 900,000 net increase in jobs between March 2003 and 2004, two-thirds went to immigrant workers, even though they account for only 15 percent of all adult workers.
  • In just the last year, 1.2 million working-age natives left the labor force, and say that they are not even trying to find a job.
  • Immigrant job gains have occurred throughout the labor market, with more than two-thirds of their employment gains among workers who have at least a high school degree.
  • There is little evidence that immigrants take only jobs Americans don’t want. Even those occupations with the highest concentrations of new immigrants still employ millions of native-born workers.
  • The decline in native employment was most pronounced in states where immigrants increased their share of workers the most.
  • Occupations with the largest immigrant influx tended to have the highest unemployment rates among natives.
  • ...

  • Recent immigration has had no significant impact on the nation’s age structure. If the 6.1 million immigrants (in and out of the labor force) who arrived after 2000 had not come, the average age in America would be virtually unchanged at 36 years.

It would be an oversimplification to assume that each job taken by an immigrant is a job lost by a native. What is clear is that the current economic downturn has been accompanied by record levels of immigration. Given the labor market difficulty of many natives, the dramatic increase in the number of immigrants holding jobs certainly calls into question the wisdom of proposals by both presidential candidates to increase immigration levels further. While the findings of this study may seem stark, they are consistent with other research on this subject.

The last bullet point about immigration not lowering average age is very strong evidence that immigration is making the aging population fiscal crisis larger, not smaller.. Immigrants who are as old as the existing population who make less money and pay less in taxes are net liabilities. Immigrants who push natives out of the labor force also drive down the amount of taxes that natives will pay and the amount that natives will save for their retirement. This makes the unfunded retirement liabilities problem bigger still.

The retirement of the baby boomers is going to bring on an enormous US federal government financial crisis. Whether the unfunded liability is $53 trillion (according to the previous link) or $70 trillion and growing it is enormous and it will cause both large tax hikes and benefits cuts. Thehuge sovereign debts due to aging populations are growing.

The scale of the building crisis is being ignored in the US election and in political debates in other countries. George W. Bush and John Kerry compete to make more damaging proposals for immigration policy changes. Bush's half-baked immigrant worker permit proposal will make the plight of lower class Americans even worse and will not decrease illegal immigration. John Kerry wants another illegal alien amnesty. We are in huge financial trouble. We can not afford more stupidity. Low skilled immigrants make our financial situation worse while raising crime rates and increasing a whole assortment of social pathologies. Current immigration policy is lowering the quality of life a growing portion of the American population. We need to reverse course rather than pile on with more business as usual.

By Randall Parker    2004 October 27 12:53 PM Entry Permalink | Comments (5)
2004 October 18 Monday
Wealth Gap Widening Between Whites, Hispanics, Blacks

The wealth gap between the races is widening. (PDF format)

WASHINGTON, DC—(October 18, 2004) —A new study from the Pew Hispanic Center finds that the wealth gap between Hispanic and non-Hispanic White households is bigger now than in the recent past. And the gap in wealth is far greater than the gap in income.

According to the study, the median net worth of Hispanic households in 2002 was $7,932. This was only nine percent of $88,651, the median wealth of non-Hispanic White households at the same time. The net worth of Non-Hispanic Blacks was only $5,988. Thus, the wealth of Latino and Black households is less than one-tenth the wealth of White households even though Census data show their income is two-thirds again as high.

The economic situation is worse now than before the latest recession. A Pew Hispanic Center analysis of data from the Census Bureau finds that the 2001 recession and the jobless recovery that followed were much harder on the net worth of minority households. Between 1999 and 2001, the net worth of Hispanic and non-Hispanic Black households fell by 27 percent each while the net worth of non-Hispanic White households increased by 2 percent.

Whites have 11.17 times as much wealth per household than Hispanics. Whites have an even greater 14.8 times as much wealth per household as blacks. My guess is that white households are smaller on average due to smaller numbers of children born to whites. So the wealth gap per person is probably even wider.

Here are some of the bullet points from the press release:

Twenty-six percent of Hispanic, 32 percent of non-Hispanic Black and 13 percent of non-Hispanic White households had zero or negative net worth in 2002. These proportions are essentially unchanged since 1996.

Fifty-five to 60 percent of Hispanic and Black households had wealth less than one-fourth the national median level of wealth between 1996 and 2002. Fewer than 40 percent have middle-class levels of wealth and this proportion has not changed since 1996. Nearly 75 percent of White households have middle-class or higher levels of wealth.

The wealthiest 25 percent of Hispanic and non-Hispanic Black households own 93 percent of the total wealth of each group. Among non-Hispanic White households, the top 25 percent own 79 percent of total wealth. The percentage of White households who owned homes in 2002 was 74.3 percent. The homeownership rates for Hispanic and non-Hispanic Blacks were 47.3 percent and 47.7 percent respectively.

Hispanic immigrants from Central American and Caribbean countries had a net worth of only $2,508 in 2002. Cuban immigrants led the way for first-generation Hispanics with a net worth of $39,787. Mexican immigrants are in the middle with a net worth of $7,602 in 2002.

You can read the full report in PDF format.

Republican strategists such as George Bush's advisor Karl Rove are spewing utter nonsense when they talk about how Republicans can capture more of the Hispanic vote. Poor non-white people faced with the Democratic Party's offer of racial preferences and Robin Hood taxing for their benefit are not going to vote Republican. Hispanics are going to remain Democrats. The Republicans are going to become the White Party. Racial divisions in America are going to become sharper and racial relations are going to become worse as the fight over money and crime intensifies.

Ethnic groups that do much worse than whites in school and in the job market are growing as a percentage of the US population. This is just one of America's two developing great demographic disasters. The other is the financial disaster which will be precipitated by the retirement of the baby boomers. These negative trends are going to develop into a political and economic "Perfect Storm" in the 2010s and 2020s. An extremely aggressive immigration policy aimed at deporting all the illegal aliens while simultaneously imposing high skills requirements on prospective immigrants could make that coming disaster less severe. But even with wise policies (which few in Washington DC advocate) things are still going to get pretty bad.

Update: What is missing from the above report? Asians. South Asians. East Asians. They live in the United States. But to the leftist intellectuals who write about ethnic groups in America they are largely invisible. Why? They are inconvenient. They do at least as well as whites economically and yet they are not white. How can the failures of blacks and Hispanics be the result of white oppression and white racism if there are non-white groups that have equal or higher average incomes and educational attainments in the United States? How can systematic government sanctioned institutional racism against whites be justified if there are non-white groups in America doing better than whites? How inconvenient. So the intellectuals ignore them and ignore the real reasons different ethnic and racial groups do differently on average.

By Randall Parker    2004 October 18 01:17 PM Entry Permalink | Comments (23)
2004 September 13 Monday
Rising Health Costs Increasing Cost Of Low Wage Immigrants

The Kaiser Family Foundation has released their Employer Health Benefits 2004 Annual Survey. The survey shows that lower income people (a large and increasing fraction of which are immigrants) can not afford health care insurance. (same press release here)

Washington, DC – Employer-sponsored health insurance premiums increased an average of 11.2% in 2004 -- less than last year’s 13.9% increase, but still the fourth consecutive year of double-digit growth, according to the 2004 Annual Employer Health Benefits Survey released by the Kaiser Family Foundation and Health Research and Educational Trust (HRET). Premiums for employer-sponsored health insurance rose at about five times the rate of inflation (2.3%) and workers’ earnings (2.2%).

In 2004, premiums reached an average of $9,950 annually for family coverage ($829 per month) and $3,695 ($308 per month) for single coverage, according to the new survey. Family premiums for PPOs, which cover most workers, rose to $10,217 annually ($851 per month) in 2004, up significantly from $9,317 annually ($776 per month) in 2003. Since 2000, premiums for family coverage have risen 59%.

The survey also found that the percentage of all workers receiving health coverage from their employer in 2004 is 61%, about the same as in 2003 (62%) but down significantly from the recent peak of 65% in 2001. As a consequence, there are at least 5 million fewer jobs providing health insurance in 2004 than 2001. A likely contributing factor is a decline in the percentage of small employers (three to 199 workers) offering health insurance over this period. In 2004, 63% of all small firms offer health benefits to their workers, down from 68% in 2001.

“The cost of family health insurance is rapidly approaching the gross earnings of a full-time minimum wage worker,” said Drew Altman, President and CEO of the Kaiser Family Foundation. “If these trends continue, workers and employers will find it increasingly difficult to pay for family health coverage and every year the share of Americans who have employer-sponsored health coverage will fall.”

“Since 2000, the cost of health insurance has risen 59 percent, while workers wages have increased only 12 percent. Since 2001, employee contributions increased 57 percent for single coverage and 49 percent for family coverage, while workers wages have increased only 12 percent. This is why fewer small employers are offering coverage, and why fewer workers are taking-up coverage,” said Jon Gabel, vice president for Health Systems Studies at the Health Research and Educational Trust.

When people can not afford their own medical insurance then they join the Recipient Class who get more than they pay. Taxpayers who pay more in taxes than they receive in benefits end up footing the bill. Demographic trends worsened by immigration are increasing the size of the Recipient Class (see second table on that page in particular). But rising costs for medical care also do so because higher medical costs raise the level of income one has to earn in order to reach the break even point where one pays as much in taxes as one receives in government-provided (i.e. taxpayer-provided) benefits.

High levels of Hispanic immigration, Staggering Hispanic immigrant illiteracy rates, and sustained poor academic performance even into the 4th generation descendants of Hispanic immigrants already are producing a growing recipient class. But the higher costs for medical care will increase the amount that taxpayers will pay to subsidise "cheap" immigrant labor. On top of that we get the burden of higher rates of Hispanic criminality and the spread of Hispanic criminal gangs.

If crowding, pollution, crime, and higher taxes aren't all reasons enough to do something about this huge and growing problem then perhaps the threat of terrorists coming across the border will eventually force effective border control. Though I suspect we will have to wait till a bunch of Americans are dead before the anger of the public becomes large enough to overrule the desires of the elites.

By Randall Parker    2004 September 13 01:23 PM Entry Permalink | Comments (2)
2004 August 25 Wednesday
Illegal Immigrants At Least $10 Billion Net Cost At Federal Level

The Center for Immigration Studies has a new study on the costs to the federal government of illegal aliens written by Steven A. Camarota. The net cost of illegal immigrants to the US government is conservatively at least $10 billion per year.

This study is one of the first to estimate the total impact of illegal immigration on the federal budget. Most previous studies have focused on the state and local level and have examined only costs or tax payments, but not both. Based on Census Bureau data, this study finds that, when all taxes paid (direct and indirect) and all costs are considered, illegal households created a net fiscal deficit at the federal level of more than $10 billion in 2002. We also estimate that, if there was an amnesty for illegal aliens, the net fiscal deficit would grow to nearly $29 billion.

Among the findings:

Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household.

• Among the largest costs are Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and free school lunches ($1.9 billion); the federal prison and court systems ($1.6 billion); and federal aid to schools ($1.4 billion).

• With nearly two-thirds of illegal aliens lacking a high school degree, the primary reason they create a fiscal deficit is their low education levels and resulting low incomes and tax payments, not their legal status or heavy use of most social services.

• On average, the costs that illegal households impose on federal coffers are less than half that of other households, but their tax payments are only one-fourth that of other households.

• Many of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth. Thus, greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them.

If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion.

• Costs increase dramatically because unskilled immigrants with legal status — what most illegal aliens would become — can access government programs, but still tend to make very modest tax payments.

• Although legalization would increase average tax payments by 77 percent, average costs would rise by 118 percent.

A few points to note about this study:

  • They do not appear to have factored in costs and revenues at the state and local levels of government. So, for example, most of the costs of educating the children of illegal aliens are not included. Higher law enforcement costs for the local commuities due to higher crime rates among illegals are similarly not included.
  • The costs that victims pay (emotional, financial and from loss of loved ones) from crime is not factored in.
  • The need to build more public infrastructure such as roads and schools due to immigrant population growth does not appear to be included. Los Angeles is currently in the middle of a $10 billion school building project due to illegal immigrant-caused population growth.
  • The cost of racial preferences is not factored in. The bigger the Hispanic population gets the higher the costs that Caucasians and East Asians and South Asians will have to pay for racial preferences. Businesses and governments will run less efficiency as larger portions of their work forces are hired to satisfy quotas and so-called "diversity" goals.
  • Environmental costs are not considered. The higher the population density gets the higher the costs must be per person to keep total pollution down.

The problem caused by illegal immigration does not last only until descendant generations get educated to American levels. As Steve Sailer points out the Hispanic-white achievement gap is going to prevent Hsipanics as a group from ever rising to white levels of education, income, and tax paying.

Recently, while browsing Tom Wood's new "Right on Race" blog, I had a chance to ask Stefan Thernstrom what the NAEP data actually showed. He graciously provided the following raw data, to which I've added some straightforward calculations. (Number fans click here for table).

Conclusion: overall, the white-immigrant Hispanic achievement gap is actually 14% worse than the notorious white-black disparity.

But for American-born Hispanic children (not just second generation, as many might assume, but the second up through the seventh generation), the gap is 67% as large as the white-black variance.

Exactly as I predicted!

(It’s interesting that the gaps between whites and blacks and native-born and foreign Hispanics are widest among 8th graders and narrowest among 12th graders. Presumably this narrowing is partly caused by differing high school dropout rates, which remove more of the lowest-scoring minorities from the ranks of the test-takers.)

The good news: if we cut off all immigration from Latin America tomorrow, the total white-Hispanic achievement chasm would narrow over the next, say, 30 years, from more than 90% of the white-black difference down to 67%.

Steve's numbers above are consistent with Hispanic high school graduates across generations from first generation immigrants all the way through 4th generation descendants. We pay for the first generation and we keep paying for the later generations.

We should stop the influx of illegal aliens and deport the illegals that are already here. We should also change legal immgration qualifications to make college level education as the minimum required for prospective immgrants.

By Randall Parker    2004 August 25 02:29 PM Entry Permalink | Comments (16)
2004 August 13 Friday
What Would Revenue Positive Immigrants Look Like?

The redoubtable Tyler Cowen of Marginal Revolution has posted a bullet of policy items he's like to see implemented in Bush's second term (assuming Bush gets reelected). One of Tyler's items concerns immigration and, practical economist that he is, Tyler argues for the benefits of immigrants who pay more in taxes than they receive in benefits.

7. Take in more immigrants, but demand higher levels of skills and education. At the very least, take in any revenue-positive immigrant.

A thought occurs to me: We are so far in the hole with tens of bllions of unfunded liabilities that under current entitlements rules most US citizens are currently scheduled to get more in benefits than they paid in taxes in the course of their working lives. Let us leave aside for the moment the fact that this can not work and that a financial train wreck looms in our future.

What I'm wondering is just how high would a native born person's yearly average or total working life income have to be for that person to be truly revenue-positive after retiring and having Social Security and Medicare paid for them until they die? Has anyone ever tried to calculate the answer to that question? Is the average medical doctor revenue-positive? The average lawyer? (leaving aside the externalities some of them cause) The average truck driver? The average welder? You get the idea.

Granted, all sorts of assumptions have to be made. We could assume, for example, that a person was never jailed and never collected welfare. Of course, if someone was jailed for some years they'd have to make much larger sums after release to pay back the cost of jailing plus the lost taxes on wages not collected while they are in jail.

The same question can be asked about immigrants. For immigrants the picture is more complicated. One who arrives at age 18 wasn't educated at taxpayer expense for grade school and high school for example. But the later they arrive in adulthood the less total they will pay in taxes. So there is obviously an ideal age of entry and skill level and type of education.

I can not offer a model and a set of calculations for how to determine who is "Revenue Positive" and who isn't. But think about some basic numbers. One estimate for the size of the unfunded US Social Security and Medicare liabilities is over $70 trillion. Another estimate puts it at $50 trillion. But that estimate probably doesn't take full account of the new drug benefit. That is a huge unfunded liability that is in need of some solutions that will reduce its size. As Alex Tabarrok has pointed out " demographics are the problem not the solution". But could a radical change in immigration policy at least make future immigration part of the solution?

Well, here's a step in the direction of an analysis of who pays more in taxes than they get in benefits. First off, consider the $70 trillion in unfunded liabilities could be divided across about 280 million people in America. The number may he higher than 280 million. But some of those are illegals and are not yet guaranteed to be eligible for Medicare some day. So lets go with 280 is a rough cut on the permanent US population. Well, $70 trillion divided by 280 million is an astounding $250,000 per person. A cool quarter million dollars is needed additional per person to pay current unfunded liabilities.

Any immigrant needs to pay as much as the average American does in taxes over a work career plus an additional $250,000 in taxes in order to be "Revenue Neutral" - and even more in order to be "Revenue Positive". Does that make sense? How much does the average American earn over their lifetime? How much more than that would an immigrant have to earn in order to be "Revenue Positive"?

An immigrant male who brings a foreign non-working spouse with him would have to earn enough and pay enough taxes to pay for both their liabilities. So the working male would need to pay $500,000 more in lifetime taxes than the average American. If that immigrant was taxed an average of 33% on the additional income then the immigrant would have to earn $1.5 million more of lifetime income to pay his and his wife's liabilities. Over a 40 year working career that immigrant would have to have an income that averaged $37,500 more per year than the average American worker. earns. Well, we have millions of immigrants who do not even make that amount total per year, let alone that amount more per year above the average. However a working immigrant couple would have to average only $18,750 each more per year than the average American

Of course tax rates could be raised. But some people never make much money to be taxed in the first place. Even if they worked for 50 years they still couldn't come up with enough extra income to be taxed to yield an additional $5000 per year average in taxes collected. So others will have to pay even more taxes to fund the $250,000 per person in in unfunded liability.

Currently the United States has a per capita GDP of $37,800. If every person could somehow work 7 more years and turn over all the wealth they generated to the government that would be enough to pay the unfunded liabilities. Of course that isn't possible. Aging people become less productive and less able to work. Also, most people are not going to work purely to pay taxes. So delayed retirement. while it would help, would not entirely solve the problem of unfunded liabilities.

General tax rates could be raised. But some people, if taxed at a higher level, would treat the higher taxes as a disincentive to work and would opt to produce less and spend more in leisure time or by performing activities that personally benefit them without generating taxes. For instance, one could work fewer hours at a job, earn less income, and compensate for the lower income by no longer paying for some services. For instance, a person could stop paying a house cleaner and gardener and then do that work one self. This would reduce the amount of taxes collected on activities that used to be performed as a consequence of taxable market transactions. Higher tax rates will reduce the use of services and increase the frequency with which people pursue do-it-yourselfer options.

So how high would the incomes of immigrants have to be in order for those immigrants to pay more in taxes over their working lives than they receive in beneifts while working and after retirement? That is the question we need to answer if we are going to pursue an immigration policy that is a net economic benefit for the American public.

Aside: It occurs to me that it is more expensive for society to jail a high income person (at least if the person has a productive job earning an honest income in addition to whatever got them thrown in jail) than a low income person because the lost of wages and therefore taxes while the person is jailed. For example, what taxes are never collected as a result of putting Martha Stewart in jail? Will we reach a point due to the old age funding crisis that jail sentences will be changed in ways designed to reduce losses from income lost due to incarceration? Will higher income people be given sentences that require them to get out of jail part of the day to go to work and earn taxable income? In the 2010s and 2020s the United States government (like a number of European governments) is going to become desperate for revenue. I would not rule out jail work release programs for high income criminals as one response to the country's financial plight.

By Randall Parker    2004 August 13 02:27 AM Entry Permalink | Comments (9)
2004 July 27 Tuesday
Black Male Labor Market Participation Declines In Face Of Immigrant Influx

Andrew Sum, a professor of economics and director of the Center for Labor Market Studies at Northeastern University, is lead author on a new report “Trends in Black Male Joblessness and Year-Round Idleness: An Employment Crisis Ignored”.

Employment rates among black male teens and young adults ages 16 to 19 have dropped considerably over the past 50 years, the study found. In 1954, a slight majority -- 52 percent -- of black male teens worked, a rate slightly in excess of their white peers. By 2003, however, only one of five black male teens was employed in a typical month – just 20 percent -- only half the employment rate of white male teens. Among 20 to 24 year old black males, employment rates also have declined considerably from their peak values of 77 to 83 percent in the mid to late 1960s to dramatic 50-year lows more recently. During 2003, for example, just 56 percent of such young black men ages 20 to 24 was employed.

Among older black men, the same dramatic declines were noted over time, according to the report. While the employment rates of black men rise from their late teens through their mid 30s, high levels of joblessness prevail among these men into their late 20s (30 percent of 25 to 29 year old black men were jobless in 2003, for example), then rise sharply as they reach their mid-50s. One of the most disturbing findings was the high share of black males ages 20 to 64 that were jobless year-round. In 2002, one of every four black men in this age group – a full quarter of the entire population within this wide age range -- was idle all year-round, up from 20 percent in the peak labor market year of 2002.

...

The year-round idleness rate for black men varies by age, educational attainment, and geographic location. Idleness rates in 2002 ranged from a low of 18 percent for those ages 35 to 44 to a high of nearly 42 percent for those 55 to 64. Forty-four percent of black men with no high school diploma were idle year-round versus 26 percent of high school graduates and only 13 percent of those with a bachelor’s or higher degree.

Labor market participation rates are a better indicator than the much more widely publicised unemployment rates. Imagine a quarter of all the adult males you know sitting around and doing no legal job for a full year. What effects do you suppose this has on these people, their behavior, and their communities?

The full report (PDF format) is available for download.

Andrew Sum is also lead author on another new report, "Foreign Immigration and the Labor Force of the U.S." (along with co-authors Ishwar Khatiwada and Sheila Palma) which takes a look at the trend of a growing immigrant labor force in the face of declining net native-born employment in some sectors of the economy.

The number of new immigrants who joined the labor force between 2000 and the first four months of 2004 was between 2.260 and 2.35 million representing 60 to 62 percent of labor force growth.

Between 2000 and April 2004, the total number of new foreign-born workers who were employed was 2.1 million. During that same period, employment of native-born workers and established foreign immigrants declined by 1.3 million, due to higher unemployment and reduced labor force participation.

...

Nearly 320,000 new immigrants garnered employment in the nation’s manufacturing industries at a time when total wage and salary employment in these industries nationwide declined by more than 2.7 million jobs.

This report makes a mockery of the argument that foreign laborers are needed to do work that noone else will do. The labor market participation rates of natives are declining as immigrants come in willing to take jobs at lower salaries.

It is not too hard to connect the dots to understand what is going on here. What advantage could possibly be gained for the nation as a whole by letting in a large number of low-skilled workers to drive down the wages and drive out of the labor market our existing native-born low-skilled workers?

Also see my previous post Non-Citizens And Illegals Getting Over A Quarter Of New Jobs.

By Randall Parker    2004 July 27 02:02 PM Entry Permalink | Comments (6)
2004 July 21 Wednesday
Many Mexican Immigrant Men Abandon Families In Mexico

The Christian Science Monitor has an article on men who leave Mexico to sneak into United States and who then abandon their families they left behind.

San Pablito is emblematic. It now has some 70 madres solteras, or single moms like Mrs. Bocato de la Pila, struggling to care for their children because their husbands abandoned them for a better life in the US. Six years ago, her husband left to be a house painter in Durham, N.C. She says he never sent anything home to support her or their two daughters. Lucia Aparicio Espiritu's husband also left for North Carolina around the same time. She hasn't heard from him since, despite his promise to send money for his son. Mrs. Aparicio later found out her husband met another woman and has two other sons.

"Men promise to send money, but they slowly stop," says the Rev. Javier Galindo Castro, a priest in the nearby town of Pahuatlán. "I know one mother in San Pablito who received $100 after 15 days. Then another two months passed before she received more money. Then nothing."

Mexico would benefit far more from a growing domestic economy than it does from money flowing back from immigrants living both legally and illegally in the United States.

In spite of the supposed benefits of cash sent home by illegal aliens working in the US and the lower trade barrieres brought by NAFTA per capita GDP has declined during Vicente Fox's term as President of Mexico.

During Fox's regime, Mexicans have seen continued erosion of purchasing power and job opportunities, the two key issues every government since the 1982 debt crisis has struggled to address.

With a GDP of nearly $1 trillion dollars the amount sent home by Mexicans in the US amounts to only about 1.4% of the Mexican GDP.

Each month the Gils wire between $100 and $200 back to Piaxtla. It's just some of the $13.3 billion sent home by Mexicans last year, up from $9.8 billion the year before, according to the Bank of Mexico. It reports that remittances are already up 22 percent this year.

Of course, if millions of Mexicans hadn't left Mexico in the first place the Mexican economy would be bigger because it would have more workers. Though they would not be getting paid as much as they do in the United States. The problem is that the jobs they have in the US are subsidized by US taxpayers who pay for their police, courts, jails, medical costs, education for their kids, welfare, and many other costs. Market prices do not equal costs when it comes to wages in the United States.

The amount sent to Mexico and other countries by immigrants in the US is dwarfed by the costs of immigrants to the US taxpayers and society as a whole.

A more recent Columbia University study pegs the net cost of immigration at $52 billion a year, or about half of 1 percent of gross domestic product, the nation's total output of goods and services.

"Generally, people don't want to hear these results," says David Weinstein, economist and coauthor with Donald Davis of the Columbia study. "They want to hear why immigration is good for America. We get a big number [for costs]. That makes it politically charged."

Think of it this way: You have to permanently pay more in higher taxes, crowding, pollution, higher crime rates, and more affirmative action racial preferences (many of which costs are probably not part of the Columbia University cost/benefit model) support indirect and temporary foreign aid to countries that show little sign of deriving much benefit from that aid.

The immigrants will gradually taper off the amount of money they send back to Mexico and other Latin American countries as they have children and form more connections in immigrant communities in the US. But the costs to the American people from the various costs of immigrants and the poor group average scholastic achievements of Hispanic immigrants will be generating costs for Americans for generations to come.

By Randall Parker    2004 July 21 04:40 PM Entry Permalink | Comments (10)
2004 June 17 Thursday
Non-Citizens And Illegals Getting Over A Quarter Of New Jobs

The Pew Hispanic Center has released a new report documenting how illegal aliens are taking a disproportionate fraction of new jobs while wages decline at the low end. (PDF format) (full report avaiable here also PDF format)

WASHINGTON, D.C.--(June 16, 2004)--While an increase in Latino employment is driving the revitalization of the U.S. labor market, the hiring surge has not translated into higher wages. The weekly earnings for Hispanics and most other workers remain stagnant.

The “jobless recovery” may have turned around, but gains for Latinos have not been widespread. Immigrant Latinos, especially the most recent arrivals, have captured the most jobs. Non-citizens, Hispanics and others, who will not be able to vote in the November election are accounting for more than a quarter (28.5 percent) of the total increase in employment. But the improved employment picture has not delivered higher wages to workers overall and to Latinos in particular. The median weekly wage for Hispanics has declined in all but one of the past eight quarters. As a result, median wages for Latinos have also lost ground in comparison with the national median wage.

These are among the key findings of a new Pew Hispanic Center report, “Latino Labor Report, First Quarter 2004: Wage Growth Lags Gains in Employment.” The developments come at a time when jobs and wages are central issues in the presidential campaign. The report, which also deals with the political impact of the employment picture, includes an analysis of job gains by citizens and non-citizens, and a breakdown in the so-called battleground states.

In the 12 months ending March 31, the economy added a net total of 1.3 million new jobs. Non-citizens captured 378,496 or 28.5 percent of those jobs. Employment growth for non-citizens was twice as fast as their population growth nationwide. The proportion of new jobs captured by non-citizens was also much larger than their share of overall employment (8.6 percent). Thus the political impact of job gains may be dampened by the fact that non-citizens, who do not vote, are benefiting disproportionately from the turn around in the labor market.

The picture is somewhat different in the 18 so-called battleground states that have been the targets of intense advertising campaigns by both major political parties and that are generally considered up for grabs by the news media. These states have taken most of the job gains, scoring nearly 75 percent of the increase. In these states, non-citizens accounted for 20.1 percent of the employment increase, which is small than their share nationwide. Moreover, the non-citizen working-age population is growing faster in these states, 26.1 percent a year, than nationwide, and the job gains did not keep up with population growth.

What is going on here is really simple: employers prefer to hire people who will work for less. Newly arrived illegals will work for less than legal Hispanics and native born Americans. The illegals accept lower salary jobs and the wages go down for everyone they compete against. Harvard labor economist George Borjas has made a career out of trying to make all economists acknowledge the obvious: the demand curve for labor has a negative slope. As the quantity of a type of labor increases its price declines. See his paper "The Labor Demand Curve is Downward Sloping: Reexamining the Impact of Immigration on the Labor Market," (PDF Format) for a scholarly treatment of the subject.

Getting back to the Pew report: Note that the absolute number of employed Hispanics has increased in the last year by more than the number of employed non-Hispanics. So most new jobs now go to Hispanics.

The number of employed Hispanics increased by 704,779 workers from the first quarter of 2003 to the first quarter of 2004. The number of unemployed Latinos fell by 18,590 works in contrast to an increase of 111,281 in the preceding year. Across the same time frame from 2003 to 2004, the number of employed non-Hispanics increased by 622,565 and the ranks of unemployed non-Hispanics decreased by 249,996.

Gains in Hispanic employment are driven by recently arrived immigrants with those entered the country since 2000 showing an increase of 748,305 jobs from the first quarter of 2003 to the first quarter of 2004. Meanwhile, immigrants who arrived previously as well as native-born Latinos showed net decreases in employment.

Real weekly earnings for Latino workers in the first quarter of 2004 were lower than their level in the first quarter of 2003. Wages were also stagnant or declining for Hispanic males and construction workers, but on the increase for Hispanic females and immigrant Latino workers.

Median Latino wages have declined.

The median, or midpoint, weekly earnings for Latinos dropped from $402 in the first quarter of 2003 to $395 during the same period this year, after adjusting for inflation. They lost ground when compared with African American and white workers.

A person earning about $20,000 a year is not paying much in taxes. If that person has even a single child then the cost of that child's education per year is way more than the person pays in taxes. Add in subsidized medical care and other subsidies it is easy to see that the employers of the low salaried workers are getting labor subsidized by taxpayers.

That decline in wages translates into more demand for government services and less taxes paid to the government. The middle and upper classes have to pay more in taxes and get less in government services to pay for this trend in labor costs and the growth in the number of illegal Hispanics living in the United States.

George W. Bush is a big supporter of massive amounts of immigration and would like to give amnesty to illegals. So Bush is effectively a supporter of illegal immigration. The irony of this situation is that illegal immigrants, by driving down the wages of natives and out-competing them for jobs, may make the mood of the electorate sufficiently pessimistic about economic conditions to cost Bush reelection.

Declines in labor force participation rates - even during the recovery phase - have caused the real unemployment rate to be underestimated.

Haseeb Ahmed, an economist with Economy.com, studied labor-force trends from November 2001, when the recession ended, through February 2004. During that period, overall labor-force participation fell, compared with an increase in other recoveries dating back to 1970.

The drop in the labor force participation rate -- the share of the adult population working or looking for a job -- was about 0.8 percentage points for whites, compared with an average 0.7-point gain 27 months into other recoveries; 1.3 points for blacks, compared with a 0.5-point gain; and 1.8 points for Hispanics, compared with a 0.7-point gain.

Hispanic labor-force participation rates have been rising in recent months, one reason the unemployment rate is actually higher than in December. The African-American participation rate is about the same.

Note that the black labor force participation rate is not recovering. That is bad news for America.

The National Economic Development and Law Center and Dr. Carol Zabin, Dr. Arindrajit Dube, and Ken Jacobs of the Center for Labor Research and Education, UC Berkeley which documents how taxpayers essentially subsidize low wage jobs through various benefits that flow from higher income taxpayers to those who have low wages. The report is entitled The Hidden Public Costs of Low-Wage Jobs in California

  • Public assistance was concentrated among workers in several sectors. For instance, workers in the retail industry collectively received about $2 billion of public assistance, over twice the amount received by workers in any other sector.
  • Most of the public assistance that went to working families went to families with workers earning very low wages: $5.7 billion went to families whose workers had average wages of under $8 per hour. Another $1.9 billion went to those with wages between $8 and $10 per hour.
  • Most of the public assistance to working families went to families with full-time workers, dispelling the notion that part-time work largely accounts for the low earnings of poor working families. Seventy-six percent ($7.63 billion) went to single earner families with over 35 hours of work per week or dual earner families with over 70 hours of work per week. Moreover, 82 percent ($8.26 billion dol-lars) of public assistance benefits went to families with at least one full-time job (over 35 hours per week).
  • The simulation we conducted on wages predicts that a drop in public assistance payments from $10.1 billion to $7.4 billion (a $2.7 billion difference) would occur if the current group of public assistance recipients earned at least $8 per hour. Simply raising wages for these workers earning minimum wage and slightly above would help the working families and could potentially save billions of dollars in program expenditures.
  • The simulation we conducted on employer-provided health insurance predicts that, at current wage levels, public assistance payments would drop from $10.1 billion to $7.9 billion (a $2.2 billion difference) if the working families currently receiving assistance had access to affordable health insurance through their employers. When combined with employer-provided health insurance, pay-ments would fall to $5.4 billion with a wage floor of $8 per hour, $4.4 billion with a wage floor of $10 per hour, $3.7 billion with a wage floor of $12 per hour, and $3.2 billion with a wage floor of $14 per hour.

This report greatly underestimates the costs of low wage jobs because it leaves out subsidies such as education where the lower wage people get benefits for their families that they do not pay for through the taxes that they pay. The real problem with the "Open Borders" argument for unlimited immigration is that when it comes to low wage jobs price does not equal total costs.

So what are our "leaders" in Washington DC doing about this state of affairs? They are trying to make it worse. Powerful US Senators are determined to get the AgJobs immigration amnesty bill passed and they have lined up 62 Senate sponsors.

Senators Edward Kennedy (D-MA) and Larry Craig (R-ID) have vowed to enact an amnesty program for millions of illegal aliens, even if it means holding every other piece of Senate legislation hostage to accomplish it. The two senior legislators have promised to attach their Agricultural Jobs, Opportunity, Benefits and Security Act (AgJobs) to every Senate bill for the remainder of the year. Their first target is the Defense Authorization bill now being debated in the Senate.

Ted Kennedy is a member of the US political party that used to be in favor of higher wages for the lower classes. Now he and most other elected Democrats in Washington actively work to lower wages in the United States. This is madness.

By Randall Parker    2004 June 17 01:06 PM Entry Permalink | Comments (10)
2004 May 17 Monday
Bush Administrations Wants Immigrants To Send More Money Home

Immigrants are sending a lot of money home.

In tiny ethnic groceries and check-cashing shops, immigrants in the Washington area line up every day to send $200 or $300 to families back home. Now, a detailed study has concluded those payments add up to more than a billion dollars a year that goes to Latin America from workers in the District, Maryland and Virginia.

The massive flows are part of an estimated $30 billion annually that Latin American immigrants in the United States convey to their home countries, according to the study, to be released today by the Inter-American Development Bank.

California is the biggest source of remittances.

California ($9.6 billion), New York ($3.6 billion), Texas ($3.2 billion) and Florida ($2.5 billion) lead the ranking, but Georgia ($947 million), North Carolina ($833 million) and Virginia ($586 million) are among the top 10 states.

During the past decade, industries such as poultry processing, meatpacking, hotels, restaurants and construction attracted Latin American migrants to these non-border states and others in the Midwest. As a result, remittances from the Mid-Atlantic region (Virginia, Maryland and the District of Columbia) are over $1 billion a year, largely to countries in Central America and Mexico.

On average, Latin American immigrants send money home once a month, typically in amounts ranging from $150 to $250. Unlike previous surveys among remittance senders, this one found a great number of people who make money transfers more than once a month, probably a reflection of the fact that services have become cheaper over the past few years.

This $30 billion estimate does not include money sent home by immigrants from Haiti, English speaking Caribbean countries, or immigrants from other parts of the world.

Nearly eight in 10 remittances senders use money transfer companies. Others use informal couriers known viajeros, banks and credit union or mail. Only half the Latin American immigrants have bank accounts.

According to the responses, 24 percent of the interviewed were U.S. citizens, 39 percent were legal residents and 32 percent are undocumented. The survey was based on 3,802 interviews conducted between January and April. The states and the district covered in this survey represent more than 99 percent of the population of Latin American-born adults in the United States. It did not include Haitians and immigrants from the English-speaking Caribbean.

Poor immigrants cost middle and upper class taxpayers more than the immigrants pay in taxes. Therefore Americans who pay a lot of taxes are subsidizing the transfer of money abroad. This money transfer makes the already large US trade deficit even worse. The money these legal and illegal immigrants send abroad is money that is not used to buy goods and services locally. The immigrants also drive down the wages of Americans and therefore also decrease the taxes paid and increase the demand for social services by the native poor. Immigration is causing a shrinking of the size of the middle class in states which are receiving the most number of immigrants. This could all be avoided since immigration law really could be enforced if only our elites were not so opposed to the will of the majority on immigration.

Of course we can not expect the United States government to be bothered about money flowing out of the country in a way that involves an appreciation of American interests. Deputy Treasury Secretary Samuel Bodman wants to make it easier for leagl and illegal immigrants in America to send money back home.

"The goal here is two-fold: first to increase overall awareness of the range of services that are available; and secondly, to foster more competition, which in turn will result in affordable and accessible remittance services," Bodman said. He also re-stated the United States' support for the goal of cutting the average remittance cost by half in the Americas region by 2008.

The Bush Administration views remittances as a rapidly growing market and a market that they would like to see become more efficient. The Bush Administration sees a growing market in remittances and obvious thinks all growing markets are just peachy.

Washington -- In recognition of the growing importance of remittances (money transfers) sent from people in one country to recipients in another, two international conferences will be held on the subject: in Washington on May 17, and on May 31 in Rio de Janeiro, Brazil.

The scheduled keynote speaker at the Washington conference, sponsored by the Inter-American Development Bank (IDB), is Samuel Bodman, the U.S. Treasury Department's deputy secretary. Prior to Bodman's speech, a news conference will be held by pollster Sergio Bendixen to present the results of his survey on how much money is being transferred by immigrant workers in the United States to their home countries in Latin America and the Caribbean.

The conference in Brazil, also sponsored by the IDB, will focus on the theme of "Remittances as a Development Tool in Economic Development." Scheduled speakers at that event include Bendixen (president of the Miami-based polling firm Bendixen and Associates), a number of Brazilian government and banking officials, and representatives from the IDB.

The IDB says remittances are nowhere more important than in Latin America and the Caribbean, now the fastest-growing and largest remittances market in the world.

The IDB said that in 2003, the region received more than $38 billion from its expatriates around the world. About 75 percent of the money was sent from the United States.

These money transfers, said the IDB, outstripped the combined flow of all foreign direct investment and official development assistance to the region. The IDB added that remittances substantially exceed tourism income in each country of Latin America and the Caribbean, and account for at least 10 percent of the region's gross domestic product.

Immigrants should be made to pay for all the costs they create for American taxpayers (health care, education for their children, crime, and other costs) before being allowed to send money home. But don't expect our nation's traitorous elites to get behind that idea.

Update: Two more points should be noted about the remittances from a tax revenue perspective: First of all, money sent abroad is not going to generate local US sales tax revenue when it is spent. So that is a negative on the tax revenue side which means native Americans will have to pay more in taxes to compensate. Also, money sent abroad is far more easily hid from US tax collection agencies. The earners show a lower living standard in the United States because they do not spend here. Many illegals in particular tend to work under the table and hence their shipment of their earnings abroad makes it even less likely they will pay anything in taxes to compensate for the costs they generate for American taxpayers.

By Randall Parker    2004 May 17 03:43 PM Entry Permalink | Comments (11)
2004 February 11 Wednesday
Welfare Costs Not The Only Costs Of Immigrants

Tyler Cowen responds to some Volokh Conspiracy libertarian-minded readers who wonder whether free immigration into the US could be allowed if only welfare benefits were denied to immigrants.

Can immigration without welfare work? Yes and no. I favor increasing legal immigration, and I have no problem with restricting welfare benefits for new arrivals. That being said, completely open doors and zero welfare won't work. I see two major and related problems:

1. Even with zero welfare, large number of immigrants will show up hoping for something good to happen. Read my MR post on current life in Haiti, for instance.

2. The welfare state, whether you like it or not, exists for a reason. Every wealthy nation has a welfare state, nor has any reforming economy (e.g., Chile, New Zealand) gotten rid of its welfare state. The Eastern Europeans aspire to build new welfare states. For whatever reasons, it has proven politically unacceptable to have large numbers of non-welfare-protected individuals in a society. Calling these people "immigrants," or seeing them with a different skin color, won't make this problem any easier.

I will present an even broader argument than Tyler's in order make a wider point about how we can not escape costs that come from low income and low tax-paying people in our presence, whether they be natives, legal alien immigrant residents, naturalized immigrants, or illegal aliens. What are popularly called "welfare benefits" are just one category of costs to government that comes from having low income folks in our midst. Even if the majority of the public was willing to take a libertarian approach to illegals by totally denying them benefits (and that is not the case) it is not, practically speaking, possible to eliminate all the costs incurred by their presence because, to take just one example, we can't just not hire police to patrol in a neighborhood of poor illegal immigrants or not jail illegals who have committed crimes just because they haven't paid much in taxes. Ditto for their use of roads and many other services of government.

The libertarians who focus on welfare benefits are missing the bigger picture when they focus on the term "welfare". First of all, not all costs to government that come from immigrants come in the form of what most people could consider "welfare spending". The common use of the term "welfare" usually refers to such things as food stamps or subsidized housing or checks handed out to people of working age (or, very notably, their underage children) who are not working or who are making so little that they are considered (at least by many people) in need of government assistance. The 1996 welfare reform act was aimed at toughening eligibility for such things as food stamps, monthly welfare checks, and other sorts of spending that are considered to be what most people would consider to be "welfare". But obviously the government spends more on lower income people than on higher income people in a lot of other ways that are not what would be considered to be part of a welfare benefits package. For instance, here are some costs that absolutely must be borne by government if people from other countries, whether here legally or illegally, are in the US:

  • Investigation of criminal activity committed by legal and illegal aliens.
  • Prosecution of crimes committed.
  • Incarceration of convicted criminals.
  • Deportation-related costs for investigators, courts, incarceration, and paying to transport them to wherever they came from.
  • Physical facilities upkeep for any facilities (e.g. roads, parks) they use.
  • Responding to car accidents caused by foreigners.
  • Intervention in disputes between natives and immigrants or among immigrants.

This list is not meant to be exhaustive by any means. The point is that there are costs to government in handling individuals within US territory. Even if the welfare state could be selectively abolished for immigrants (and I place higher odds on a mass extinction from an asteroid collision) there would still be costs that could not be eliminated that would need to be weighed against what each individual or group was paying.

Before someone goes accusing me of stereotyping illegal aliens as criminals (and I agree that most are not) be aware that not only are illegal aliens making incomes much lower than the US average and paying far less in taxes than the average American but also the foreign born are 30% of the US federal prison population. (and if anyone knows what percentage of them are legal versus illegal residents please post that info in the comments section) By contrast, foreign born are about 10% of the US population as a whole. So their presence in prisons is far in excess of their presence in the US population as a whole. That means the native born are paying more in taxes for this and also more by being victimized by criminals at a higher rate than would otherwise be the case if there were fewer foreign born and if those people were more carefully chosen by using tougher entry criteria.

Even if conventional welfare payments could be withheld from legal aliens there are other forms of costs which we can reasonably expect that the citizenry of this country will insist government pay for when the costs are caused by illegal or legal immigrants:

  • Cost of emergency room medical care. Any poor person, native, legal alien, or illegal alien is going to be treated in emergency wards.
  • Cost of post-emergency room medical care for those in accidents. Libertarian open borders advocates should not expect that there is any chance that the US government will decide that illegal aliens should not be fully treated for injuries.
  • Medical care for US-born (and hence US citizens) babies of legal and illegal aliens. This is a huge cost because the immigrant parents are lack medical insurance at a much higher rate than the population as a whole with Hispanics lacking medical insurance at two and a half times the rate of whites..
  • Education for the US citizens born to aliens.
  • Various welfare benefits that US citizens born of aliens are entitled to.
  • An increase in population that necessitates spending to expand various government-funded capital infrastructure such as highways and government buildings.

Again, the above is not an exhaustive list. These are costs we can't get rid of. What the libertarian-minded folks who are debating immigration ought to be focusing on is the question of total costs and benefits likely to accrue from allowing each person to enter the US. If we let in lots of people who are, statistically speaking, more likely to generate costs and less likely to earn large incomes that generate lots of tax revenue then their presence here ends up generating more costs for everyone else.

Another form of cost that is not well appreciated is environmental. Take California cities like Fresno and Bakersfield which are experiencing large population growth because of immigration. That causes more cars to be driven and more industrial activity and hence more pollution. The cost of controlling the pollution goes up even faster. To illustrate why that happens consider this hypothetical: If a mllion cars are on the road and their pollution needed to be reduced by, say, 90% to make the air quality acceptable then let us suppose reducing their emissions 90% costs, say, $100 per car or $100 million dollars. But suppose instead there were 2 million cars on the road. Then the pollution per car would need to be reduced by 95% to achieve the same total allowable total emissions. Well, the cost per car would go up. So the total cost would not just double with the doubling in the population. If the cost per car to reduce pollution by 95% goes up to $150 then the pollution control cost would triple even though the population only doubled. The same holds true for electricity generation plants and other sources of pollution. Costs of pollution control per unit of economic output goes up when the amount of allowable pollution per unit output goes down.

A completely free immigration policy with complete open borders would bring in literally hundreds of millions of immigrants. Most would be low-skilled. In fact, a total Open Borders policy would cause many existing US citizens to flee the country. An Open Borders policy would cause hundreds of millions of poior people to enter the United States. Such an influx of low-skilled workers would put such a huge burden on US citizens that not only would higher skilled workers opt not to come to the US but many high skilled US citizen workers in the US would try to emigrate to go to countries that have more selective admissions criteria.

Trying to deport illegal aliens has costs as mentioned above. Currently many people caught at the US-Mexican border who are not from Mexico are immediately released because the US government agency that deports illegal aliens does not have enough money in its budget to pay for detention, legal processing, and travel costs for sending illegals back to the countries of their origin.

David Venturella, assistant director of Immigration and Customs Enforcement, acknowledges that the ''catch and release'' policy has raised security concerns and even angered federal agents.

He says the policy is driven by the lack of federal money to rent space in local jails to detain illegal aliens. The U.S. government pays localities about $54 a day to house each detainee, and in January housed more than 22,600 illegal aliens -- above its budgeted capacity of 19,444.

Venturella, who oversees the detention and removal of illegals, says that Homeland Security officials are asking Congress to boost the government's $680 million budget for detaining and deporting illegal immigrants. The budget has been static for two years.

But deportation costs are dwarfed by immigrant medical care costs alone.

By Randall Parker    2004 February 11 01:33 AM Entry Permalink | Comments (4)
2003 December 21 Sunday
Big Medicare Bill Has $1 Billion For Illegal Alien Medical Care

The big multi-billion dollar Medicare bill for retiree prescription drug benefits also includes a big chunk of money for illegal alien immigrant medical treatments.

A study by the U.S.-Mexico Border Counties Coalition, an American lobbying group, last year found that U.S. border hospitals provide at least $200 million a year in uncompensated emergency care to illegal immigrants, $74 million of that in Texas.

When approving the Medicare bill last month, Congress allocated $1 billion to help border hospitals cover those costs. President Bush is expected to sign the bill Monday.

Of course most illegal aliens move further into the United States and so the costs for the border hospitals is a small fraction of the total illegal alien medical costs that taxpayers have to pay for.

Federal spending for illegal alien medical care has been increased by $250 million per year.

Texas also stands to benefit from a provision that grants $1 billion – $250 million annually over four years – to reimburse hospitals for uncompensated emergency care provided to undocumented immigrants. Texas hospitals probably would receive $43 million to $50 million per year, Mr. Knaupe said.

That $1 billion could be more usefully spent building a barrier on the US-Mexican border to keep out illegal aliens. The cost of such a barrier would be much less than the yearly medical costs for illegal aliens. See my previous post: One Year Of Illegal Alien Health Care Costs Would Pay For Border Barrier.

By Randall Parker    2003 December 21 01:09 PM Entry Permalink | Comments (0)
2003 December 08 Monday
On Automation, Job Losses, And Immigration

Glenn Reynolds of Instapundit fame has a column up on Tech Central Station which explores the question of whether robots will lead to mass unemployment (my guess: YES!). Along the way he points out that the rise of unemployment due to robotic automation may lead to an increase in anti-immigration sentiment.

First, lots of low-skill jobs are disappearing forever. Second, that trend is likely to accelerate. Third, even if (as I suspect) the economy generates new jobs to replace the old ones, the new jobs may not be as low-skill, and they won't magically appear in synchrony with the disappearance of the jobs they replace. The upshot is that there are likely to be both economic and political repercussions from technological change, and the technological change that drives them is likely to occur at an accelerating pace. That will produce both short-term and long-term consequences.

In the short-term, we're likely to see a swing toward protectionism and perhaps even a growth of anti-immigrant sentiment; the former is already beginning to show up in the 2004 election dialogue, and the latter may still appear before things are over. In the longer term the consequences are likely to be more significant than Brain thinks, though it's hard to say exactly how.

The part where he says "the new jobs may not be as low-skill" is the most important for setting immigration policy in the short and medium term. If automation is going to lead to unemployment among lower skilled workers first then it certainly makes sense to adjust immigration policy to keep out the lower skilled immigrants. The selective growth of the skilled part of the workforce would help delay the day when automation leads to the problem of mass unemployment.

Does it make sense to translate this growing sentiment against immigration into changes in public policy? Do technological trends provide a compelling argument for changing immigration policy? Reynolds points out that people have been predicting mass unemployment due to automation for decades and yet this has not yet come to pass. However, a very worrying trend in the United States and other Western nations has been the relative and absolute decline in wages of the lower skilled and unskilled workers. One of the causes of this trend is the large influx of low skilled immigrants.

In Britain the real wages of the bottom 10 percentage have stagnated for two decades.

UK workers in the bottom 10% of the income distribution have seen almost zero real growth in their wages over the last 20 years. In contrast, workers in the top 10% of the income distribution have had real wage increases of around 50%. Two potential causes have been cited for this widening wage gap: international trade and technical change.

An article from The Economist published in 2000 reports real wages for the least educated have been declining for at least 20 years.

As the demand for brains has risen relative to the demand for brawn, so wage differentials have widened in favour of the better-educated. Since 1979, average weekly earnings of college graduates in America have risen by more than 30% relative to those of high-school graduates (see chart 12), increasing the wage gap to its widest for at least 60 years. The wage gap between college graduates and high-school drop-outs has grown by twice as much. Since average real wages rose relatively slowly for much of this period, the real pay of the least educated has actually fallen over the past 20 years.

Technological advances are causing a widening gap between skilled and unskilled workers.

This paper confronts a CGE model to observed evolutions in France, between 1970 and 1992, through a structural decomposition analysis. The choice of the model and the assumption of constant elasticities over time enable the structural change of the economy between two equilibria to be summarised through a set of four types of state variables, reflecting the effect of technical change, changes in factor supplies, shifts in consumption patterns, and international trade. Simulations then allow the contribution of each of these shocks to be assessed. We find that technical change had a strong positive impact on the relative wage of skilled to unskilled workers, while the impact of changes in factor supplies is strongly negative. The effect of international trade is far less important. However, if we take into account a trade-induced effect on productivity, then we find that trade substantially increased wage inequalities.

Declining demand for unskilled labor has driven down wages rates for the least skilled in the US while it has caused persistent high unemployment in continental European countries.

In the United States, for example, wages of less-skilled workers have fallen steeply since the late 1970s relative to those of the more skilled. Between 1979 and 1988 the average wage of a college graduate relative to the average wage of a high school graduate rose by 20 percent and the average weekly earnings of males in their forties to average weekly earnings of males in their twenties rose by 25 percent. This growing inequality reverses a trend of previous decades (by some estimates going back as far as the 1910s) toward greater income equality between the more skilled and the less skilled. At the same time, the average real wage in the United States (that is, the average wage adjusted for inflation) has grown only slowly since the early 1970s and the real wage for unskilled workers has actually fallen. It has been estimated that male high school dropouts have suffered a 20 percent decline in real wages since the early 1970s.

In other countries, the impact of the demand shift has been on employment rather than on income. Except in the United Kingdom, the changes in wage differentials have generally been much less marked than in the United States. Countries with smaller increases in wage inequality suffered instead from higher rates of unemployment for less-skilled workers.

Technological advances in combination with a continuing large influx of low skilled immigrants will eventually combine to make the supply of unskilled labor so great in the United States that even the US minimum wage will be too high to prevent mass unemployment. In Europe the more regulated labor market is causing this effect already. Unemployment rates in many European countries are several points higher than US rates and this has been true since at least some time in the 1980s (see the graphs here where the unemployment gap between the US and Europe opens around 1984). America's labor market in the future will have many similarities to the current labor markets in Europe with high unemployment and high welfare payments to support the unemployed. A drastic reduction in unskilled immigration could delay the day when mass unemployment becomes common in the United States.

Update: Georges Vernez, then director (not sure if he still is) of Rand Corporation's Center for Research on Immigration Policy, testified to Congress on April 21, 1998 about the lack of job growth for unskilled jobs in California and the resulting flight of native born along with a decline of labor market participation among the least skilled.

On the cost side, however, the employment prospects and wages of less-educated workers have dropped steadily because a greater number of workers--both native-born and foreign-born--are competing for a fixed number of jobs. Of the 7 million new jobs created in California from 1960 to 1990, 85 percent were filled by workers with one or more years of college and 15 percent were filled by workers with only a high school degree. Since there has been no job growth in the unskilled sector, less-educated newcomers are now taking jobs vacated by retirees or by workers moving out of the state.

These immigrants are also taking jobs from native-born high school dropouts. The employment rate among these workers fell from 67 percent in 1970 to 47 percent in 1990. Although the main reasons for this decline are increased world-wide competition, technological advances, and the availability of cheap labor in developing countries, immigration to the state has also been a factor. We estimate that immigration has caused 15 to 25 percent of this decline. Employment among high school graduates has also declined, although not as sharply.

Overall, between 1960 and 1990, we estimate that between 130,000 to 190,000 native-born people were not working as a result of immigration. This figure represents about 3 to 5 percent of all those unemployed or out of the labor force.

Immigration has also had a downward effect on the wages of unskilled workers. Between 1970 and 1990, the real wages of native-born high school dropouts declined by 24 percent in California, with about one-tenth of this decline attributable to immigration. Foreign-born workers have also suffered wage erosion.

Labor market participation among the least educated and least skilled has declined quite dramatically. People are leaving California because their wages have declined due in part to immigration. The vast bulk of job growth is happening for the more highly educated. The future of declining availability of work for the less skilled is already here. It is already happening.

By Randall Parker    2003 December 08 04:20 PM Entry Permalink | Comments (8)
2003 November 07 Friday
Foreign Employment Rises In US As Native Employment Declines

The Center for Immigration Studies has an astouding new study out about how the number of foreigners employed in the US rose even as native employment declined and percentage of foreigners unemployed rose.

  • Since 2000, 2.3 million new immigrant workers (legal and illegal) have arrived in the United States — almost exactly the same as the 2.2 million who arrived during the three years prior to 2000, despite dramatic change in economic conditions.
  • At the state level, there seems to be no clear relationship between economic conditions and trends in immigration. Immigration levels have matched or exceeded the pace of the late 1990s in Texas, New Jersey, Virginia, Maryland, Illinois, Arizona, Washington, North Carolina, Georgia, and New York — even as all these states experienced a significant increase in unemployment.
  • Nationally, about half (1.2 million) of those who arrived in each three-year time period (1997-2000 and 2000-2003) are estimated to be illegal aliens. These figures are only for those in the workforce who were captured in Census Bureau data.
  • Looking only at the net increase in employment, the number of foreign-born adults (legal and illegal) holding a job has grown 1.7 million since 2000, while among natives the number working fell by 800,000.
  • Although the number of foreign-born adults holding a job has increased since 2000, the number unemployed also increased, by 600,000, and unemployment rose among the foreign born from 4.9 to 7.4 percent.
  • It is the very rapid growth in the foreign-born population that makes it possible for the number of immigrants holding jobs and the number unemployed to increase at the same time.

As the CIS folks point out, this makes the argument that the US economy needs these foreign workers into something of a joke.

The current economic slowdown represents a real-world test of the often-made argument that immigration is primarily driven by economic need in the United States. The fact that immigration has not slowed significantly since 2000, even though unemployment has increased significantly, indicates that immigration levels do not simply reflect demand for labor in this country. Rather, immigration is a complex process driven by a variety of factors, many of which have little to do with prevailing economic conditions in the United States. The idea that record levels of immigration in the 1990s were caused by a strong economy is a gross oversimplification and perhaps not even very helpful in understanding immigration.

Poor foreigners come here because they make less in their home countries, are willing to work for less than the native born Americans, and because they want the better welfare and medical benefits they can get here that the rest of us pay for. Businesses want the cheaper labor. Democratic Party politicians want them because when the immigrants (especially the less skiled ones) become citizens the vast majority will vote Democrat. Ideological big "L" Libertarians want them because the big "L" Libertarians are running a really defective model in their minds of human nature and think everyone else would think like they do if only they could be made to understand. Never mind the empirical evidence that massive amounts of unskilled immigration lead to bigger government. Ideology trumps evidence when one is a firm believer. Still others are sold on the beautiful myth that immigration of all kinds helped make America great and would just as soon not take off their rose-colored glasses and look closely at the ugly details.

By Randall Parker    2003 November 07 03:48 PM Entry Permalink | Comments (0)
2003 October 23 Thursday
One Year Of Illegal Alien Health Care Costs Would Pay For Border Barrier

Non-citizens cost billions per year in uninsured health care.

Non-citizens are putting the hurt on our hospitals. A study by the Florida Hospital Association estimates that uninsured non-citizens cost the state's hospitals an average of $63,612 per patient last year.

The tab is rising as the number of immigrants continues to swell from coast to coast. The American Hospital Association reported that its member facilities provided $21 billion in uncompensated health-care services last year.

While not all those costs can be attributed to undocumented aliens, new Census data show that non-citizens are, by far, this country's largest group of uninsured residents — 43 percent of the total.

The costs of health care are just one way that low skilled low wage immigrant non-citizens cost the US economy and citizens money. Keep in mind that these figures above underestimate even the medical costs of low skilled immigrants because millions of illegals were granted citizenship thru amnesties and a large portion of them are uninsured. Also, the costs above do not include costs at government clinics and private practices or the costs of the US citizen children who are born in the United States to illegal aliens whose parents use Medicaid and other government programs to pay their health care. Even with this narrow definition on the costs of low skilled immigrants for health care the cost for less than a single year of paying the health care of non-citizens would pay for a barrier to keep illegal aliens from crossing into the United States from Mexico. Various cost estimates (see here and here and here) for the West Bank-Israel fence structure , if extrapolated to the longer US border with Mexico, suggest that the US could stop the flow of illegal aliens from Mexico for a cost of between $2 billion and $8 billion dollars. The range of cost estimates reflects the fact that the Israelis are building more and less formidable barriers in different sections depending on perceived risk. If we go for the more deluxe barrier structure for the entire border it would still cost less than a single year of uninsured and unpaid health care bills run up by non-citizens living within the US borders.

By Randall Parker    2003 October 23 11:06 AM Entry Permalink | Comments (86)
2003 October 02 Thursday
Medical Uninsurance Rates Especially High Among Immigrants

As the rate of medically uninsured hits a decade high in the United States immigrants stand out as having especially high rates of being uninsured for medical costs.

Texas has the largest number of uninsured people, with one in four (24%) of its population without health care, while the lowest rate (8%) is in Minnesota.

About 30% of those in poverty, and one-third of foreign immigrants, lacked health care coverage.

The large border between Texas and Mexico makes Texas a major destination for illegal immigrants from Mexico. Note that foreign immigrants lack health care insurance at rates even higher than all those who are living in poverty. Now, immigrants make up a substantial portion of those who are in poverty. So there is considerable overlap between the two groups. But it is likely that immigrants in poverty are, on average, poorer than native born who live in poverty.

The figures provided in this report for overall lack of medical insurance seem low. This may be because all seniors have medical insurance thru Medicare and therefore they raise the average rate of those insured. It isn't clear from the report whether they were included in the total. Also, it is not clear whether those who have Medicaid coverage are included in those who are listed as uninsured.

Illegal aliens receive 30% of the money spent on Medicaid. Hispanics are medically uninsured at about two and a half times the rate of whites. It makes no sense to import large numbers of high school and even grade school drop-outs into the most advanced economy in the world. Current US immigration policy is incredibly stupid.

By Randall Parker    2003 October 02 04:20 PM Entry Permalink | Comments (0)
2003 July 22 Tuesday
Illegal Immigration Drives Down Wages, Raises Taxes

Fred Dickey has written a long excellent article on immigration for the Los Angeles Times entitled Undermining American workers

What frustrates him is his conviction that a procedure is already in place that would "immediately identify 70% of the illegal workforce." He explains that as a part of the 1986 immigration law, a voluntary employee verification pilot program was established, and is still operating. Under the program, the validity of Social Security cards and green cards can be quickly checked on all new employees by phone or online. He says the system could easily be expanded into a mandatory nationwide computer hookup by cross-indexing the data bases of the immigration service with the Social Security Administration. The effect would be that honest employers could instantly ascertain the legality of their workforce, and dishonest employers would have no excuse for hiring undocumented workers.

Bill Strasberger, a spokesman for the immigration service, says the pilot program is considered successful. "Employers using it are pleased, and so are we. It provides verification with confidentiality." Asked if it would be expanded or made mandatory by Congress, he laughed briefly, then said, "It really is the direction we need to move in."

Dickey describes the process of how in areas with large numbers of illegal aliens in many industries companies that hire legal native workers and pay taxes are being driven out of business by illegal workers and businesses that pay under the table. It is not possible to compete legally with the underground economy that illegal aliens are creating. This drives down wages of unskilled legal workers, decreases tax collection, and at the same time increases the demand for government services for health care and other services. Poor legal workers make even less money and so can't afford health care insurance and other basics. At the same time, illegals also get medical care and other services paid for by governments while many of them get paid under the table.

There are solutions to the illegal alien problem that the article doesn't mention. One is to build a wall on the entire border with Mexico. Another is to authorize and order state and local law enforcement authorities to take illegals into custody and hold them for deportation. Illegal immigration is a solvable problem if only the politicians were willing to try to solve it.

By Randall Parker    2003 July 22 12:03 AM Entry Permalink | Comments (4)
2003 June 26 Thursday
Immigration Lowers The Price Of Labor

George J. Borjas of the Kennedy School of Government at Harvard University has been working on the problem of labor market effects of immigration for 20 years. He is coming out with an important new paper in the Quarterly Journal of Economics on the subject entitled "The Labor Demand Curve Is Downward Sloping: Reexamining The Impact Of Immigration On The Labor Market (PDF format).

This paper introduces a new approach for estimating the labor market impact of immigration. The analysis builds on the assumption that similarly educated workers who have different levels of experience are not perfect substitutes. Defining skill groups in terms of educational attainment and work experience introduces a great deal of variation in the data. In some years, the influx of immigrant with a particular level of schooling mainly affects younger workers, in other years it mainly affects older workers. In contrast to the existing literature, the evidence reported in this paper consistently indicates that immigration reduces the wage and labor supply of competing native workers, as suggested by the simplest textbook model of a competitive labor market. Moreover, the evidence indicates that spatial correlations conceal around two-thirds of the national impact of immigration on wages.

My estimates of the own factor price elasticity cluster between -0.3 and -0.4. These estimates, combined with the very large immigrant influx in recent decades, imply that immigration has substantially worsened the labor market opportunities faced by many native workers. Between 1980 and 2000, immigration increased the labor supply of working men by 11.0 percent. Even after accounting for the beneficial cross-effects of low-skill (high-skill) immigration on the earnings of high-skill (low-skill) workers, my analysis implies that this immigrant influx reduced the wage of the average native worker by 3.2 percent. The wage impact differed dramatically across education groups, with the wage falling by 8.9 percent for high school dropouts, 4.9 percent for college graduates, 2.6 percent for high school graduates, and barely changing for workers with some college.

The paper is 55 pages long and the body of it features a great many equations that are only going to be of interest to economists with the requisite training to make sense of them. However, he has a few pages of introduction and a conclusion that are both readily understandable by the layman.

Notice that he italicises the "is" in the title of the paper. A downward sloping demand curve refers to a plot where supply is on the X horizontal axis and price is on the Y vertical axis. As more supply becomes available the price that purchasers are willing to pay drops. Some have argued that increasng the supply of labor does not exert downward pressure on labor pricing. The demand curve, in their view, does not slope down because, presented with more labor, the economy expands and develops greater economies of scale and greater demand for labor. Borjas's result suggests that labor really does follow the pattern of classic supply curves and slopes down to have lower prices when more supply is available.

Borjas acknowledges that his work is far from a complete study of all the effects of immigration. He even explicitly acknowledges that an influx of high skill immigrants may spur technological changes that may bring important benefits. However, one big problem with the current influx of immigrants is that most of them are low skilled (two thirds of Mexican immigrants did not graduate from high school - note that some never attended high school at all) and hence not going to make contributions to advances in science and technology.

By Randall Parker    2003 June 26 05:13 PM Entry Permalink | Comments (7)
2003 June 22 Sunday
Illegal Immigration Drives Up Number Of Medically Uninsured

Bruce Crawford argues that the high percentage of illegal immigrants with few skills and with less than a high school education is driving down wages among the poorest sector of society while driving up the number of people who have no medical insurance.

It is true since 1989 the national population without health insurance has grown by 7.8 million to 41.2 million in 2001. This is almost exactly the incease in the number of illegals in the U.S. When one counts both immigrants and children born to them, over 95 percent of the increase in uninsureds is the result of immigration, more than half of which (by some estimates, 70 percent) is attributable to illegal immigration.

This is a plausible argument. The level of uninsured among the Hispanic population in the United States is much higher than that of other ethnic and racial groups.

In early 2001, 16.7 percent of the U.S. civilian noninstitutionalized population (45.9 million people) were uninsured and 18.8 percent (45.7 million people) of these Americans under the age of 65 were uninsured (data not shown). Age plays a key role in whether a person has health insurance coverage. Young adults ages 19-24, 33.9 percent of whom were uninsured, were the age group at the greatest risk of being uninsured (Figure 1). This group composed 9.4 percent of the total non-elderly population but 16.8 percent of the uninsured population (data not shown). For children (age less than 18) 14.5 percent were uninsured, 62.4 percent had private insurance and the remainder (23.1 percent) had public insurance only. This compares to 13.9, 64.1, and 22.0 percent respectively for 2000 (data not shown). For children, estimates between the two years are not significant.

Among people under age 65, minorities were substantially more likely than whites to lack health insurance. For all Hispanics under 65, 37.7 percent were uninsured, compared to 20.2 percent of black non-Hispanics and 14.9 percent of white non-Hispanics (Figure 2). Although 68.4 percent of non-elderly Americans were white non-Hispanics, they accounted for only 54.3 percent of uninsured persons (Figure 3). Among males under age 65 (Figure 4), being uninsured was more likely among Hispanics (39.9 percent) than among black non-Hispanics (21.3 percent) or white non-Hispanics (15.7 percent). Similarly, among females under 65, being uninsured was more likely among Hispanics (35.5 percent) than among black non-Hispanics (19.2 percent) or white non-Hispanics (14.2 percent).

Persons who never married accounted for nearly a quarter (23.2 percent) of the non-elderly population but over a third (35.3 percent) of the uninsured population (data not shown). Also, about a third (32.3 percent) of all persons under 65 who were separated were uninsured (Figure 5).

Crawford argues that the support for the "living wage" political movement is coming about as a result of immigration driving down wages among the low-skilled people who are already here as citizens. Immigrants compete for jobs with poor folks and drive their wages down even further. It is not surprising that all those who have low and stagnant wages would be supportive of efforts to guarantee them higher wages.

Immigration, both legal and illegal, is driving the country as whole politically leftward because it is increasing the number of people who are medically uninsured and earning very low wages. Impoverished people are far more likely to support increased entitlements spending for their benefit. The problem is not just that the low-skilled immigrants can not earn much or get jobs that have good benefits. These immigrants drive down the wages of the poor people who are already here because they compete for jobs with those people. Therefore, the US population of effectively lower class people is increasing as a result of immigration.

The poor immigrants from Mexico are not catching up.

For example, while Mexican immigrants and their young children comprise 4.2 percent of the nation’s total population, they comprise 10.2 percent of all persons in poverty. They also comprise 12.5 percent of those without health insurance. Perhaps most troubling, the findings show that the welfare use, income, and other measures of socio-economic status of legal Mexican immigrants do not converge with natives over time. Legal Mexican immigrants who have lived in the United States for many years do not enjoy a standard of living similar to that of natives.

Read more on the cost of low skilled immigrants.

If America adopted an immigration policy that effectively only allowed in highly skilled workers then the political, social, and economic costs of immigration could be reduced so far that those who immigrated would be a large net benefit to the country. Here are some policy changes that would make US immigration policy more beneficial to the nation:

Illegal immigration could be reduced by orders of magnitude if the federal government got serious about it. The average skill level and success of legal immigrants could be raised dramatically as well.

By Randall Parker    2003 June 22 02:40 AM Entry Permalink | Comments (9)
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