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November 06, 2007
Do Immigrants Depress Wages?
The yes" side says "of course they do, more labor supply means lower wages." The no side says, "If a million people migrate to the UK, who is going to sell them food and clothes, build them houses, teach their children? When the population is larger there is more demand for workers."*
Luckily, we have economists to untangle the mystery for us. And over at The Financial Times, Tim Harford does exactly that. "It is fair to say that economists do not really agree," he says.
Well, glad we cleared that up.
*I guess I should say that my read of the evidence is that both things are true: Immigrants increase wages in the aggregate while exerting a mild downward drag for unskilled workers.
November 6, 2007 in Immigration | Permalink
Comments
Short term immigration lowers wages. Long term raises wages (better divition of labor).
Posted by: Floccina | Nov 6, 2007 2:23:40 PM
"I guess I should say that my read of the evidence is that both things are true: Immigrants increase wages in the aggregate while exerting a mild downward drag for unskilled workers."
I'd change the "mild" to "moderate", but otherwise agree.
Immigration, like trade, requires a robust welfare state to make sure that the benefits are spread to everyone.
Posted by: Petey | Nov 6, 2007 2:24:49 PM
Also, considering national wages is pretty arbitrary. Immigration increases wages globally (even, or especially, for unskilled workers).
Posted by: JP | Nov 6, 2007 2:26:25 PM
An economic downturn - like what we face in the months ahead - is going to make this undocumented worker issue come to a boil. The housing and commercial construction industry is going into the cesspool and is a huge employer of hispanic workers. Similarly, the 'hospitality' industry (restaurents, hotels, conventions) is going to suffer hard (they always do) in a recession.
There will be many unemployed, and that will have the short-mid-term effect of pressuring wages downward.
This is going to be ugly.
Posted by: JimPortlandOR | Nov 6, 2007 2:29:02 PM
This post is confused:
Which type of immigrant are we talking about here?
Legal or illegal?
High skill or low skill?
Do the arguments used to support wage increases through large immigration agree with the arguments used for off shoring, if not, why not?
And let's remember it's not immigration that's an issue. It's large scale immigration that gets working class and poor agitated.
Posted by: S Brennan | Nov 6, 2007 3:03:07 PM
The paper cites primarily legal, skilled immigrants. The big issue here in the US involves primarily low skilled, illegal immigrants.
The continued conflation of legal and illegal immigrants muddies the water badly.
Illegal immigrants depress wages in a number of areas and ways. Low skilled illegal immigrants who claim to have carpentry skills have made serious inroads in the building trades in Las Vegas and other areas--because they will work a lot cheaper than truly skilled carpenters and won't complain about unpaid overtime. The hospitality industry thrives on illegal immigrants, who displace Americans in the housekeeping departments and in the kitchens. Chefs around the country have talked openly about learning Spainish on the fly so they can communicate with their line cooks. And the fact that they don't make a fuss about raises.
Please, stop comparing apples and oranges when discussing immigration. And find us some hard facts about the impact of illegal immigration.
Posted by: zak822 | Nov 6, 2007 3:06:35 PM
Don't kid yourself. Even without illegal immigration, the downward force on wages for low-skilled (and starting on medium-skilled) individuals is an INTENTIONAL POLICY OF THE FED RESERVE.
We keep wages low to "fight inflation". It's the way things are done. Blaming it on immigrants..legal or otherwise, is stupid and short-sighted.
Posted by: Karmakin | Nov 6, 2007 3:17:49 PM
Posted by: Karmakin | Nov 6, 2007 3:17:49 PM
Don't kid yourself. Even without illegal immigration, the downward force on wages for low-skilled (and starting on medium-skilled) individuals is an INTENTIONAL POLICY OF THE FED RESERVE.We keep wages low to "fight inflation". It's the way things are done. Blaming it on immigrants..legal or otherwise, is stupid and short-sighted.
However, the large scale illegal entry of workers to be illegally employed is also a policy of the US ... first established under Reagan ... and whether the rationale was union-busting or came from a parallel confusion with the Fed between wage-income and wage-cost, "its the way things are done".
The question is, of course, whether its the way things should continue being done, or whether we should change it.
Posted by: BruceMcF | Nov 6, 2007 3:28:12 PM
I think UNSKILLED immigrants reduce wages for unskilled workers. Indian IT people reduce wages for IT people.
Who immigrates is a pretty key fact in whose wages are hurt--see Dean Baker for the ad nauseum version.
Posted by: SamChevre | Nov 6, 2007 4:03:27 PM
The positive effect of immigration on incomes comes along a path not implicated merely by rising population.
A better rendition would be to say that immigrants increase the leverage available in already successful urban economies. Immigrants are not dumb. They gravitate toward economic opportunity, and, where opportunity already exists, due to some process of economic investment and expansion, their additional numbers provide additional leverage for that expansion.
So, immigrants can enhance the wages of "natives", for example, by providing the numbers, which allow a "native" to move up into a supervisory role.
Immigration, which is driven by attractions, is going to have these beneficial characteristics.
Posted by: Bruce Wilder | Nov 6, 2007 4:08:35 PM
Karmakin, are you implying that we should ignore illegal immigration? I'm not saying you're wrong about the Fed, I'm just trying to sort out the immigration piece.
Posted by: zak822 | Nov 6, 2007 4:11:25 PM
The continued conflation of legal and illegal immigrants muddies the water badly.
The conflation of legal and illegal immigration is deliberate and muddying the water is exactly what the Democrats wish to do. Why do you think they use soft euphamisms for illegal aliens such as "undocumented workers", etc. instead of calling them what they are?
Posted by: El viajero | Nov 6, 2007 4:23:13 PM
El viajero, the GOP didn't do anything about illegal immigration when it had control of all three branches of the government and the power to effect change. There was a deliberate policy of not enforcing employer sanctions for hiring illegals and the enforcement budgets for INS were cut-by the GOP.
It's not just an issue of Democrats soft peddling the problem. There's blame to go around, plenty of it.
And in any case, I meant the reference more as it applies to people writing about the topic. Like Ezra.
Posted by: zak822 | Nov 6, 2007 4:37:53 PM
Zak:What I'm saying is that in terms of raising wages for the lower classes, stopping immigration won't do very much, as the goal is lower wages. Even given a labor shortage, well, it's been shown that the powers that be would rather choke the economy than deal with rising wages.
Because of this, the entire debate feels off kilter.
Posted by: Karmakin | Nov 6, 2007 4:48:44 PM
I love how Ezra completely ignored the question of ILLEGAL immigrants by only focusing on the legal ones.
Fucking. Awesome. Not her seems to admit that immigrants fuck over the poor at the expense of the upper class.
Posted by: soullite | Nov 6, 2007 5:08:56 PM
Karm: Bullshit.
Your attitude is basically this:
Ha ha ha ha ha poor people. You are fucked so do as I say!
Imagine why that isn't really catching on.
Posted by: soullite | Nov 6, 2007 5:10:08 PM
I do have one more thing to add:
If you are all so sure that this isn't the fault of illegal immigrants, why can't you find someone else to blame? If this is just an evil racist trick of the powers that be, why don't you point to one of them and tell the American people that it's all their fault? These greedy, fat, old bastards refuse to let them make any money. They let their children die so they can eat foie gras and caviar. Do you not really believe that? Do you not really care? Are you so pathetically inept you can't make it work for you?
If none of these are the case, you're all just too weak to play this game as hard as you think it needs to be played, and you're whining because people don't just see how enlightened and true your cause is without you having to stand up for them in any way whatsoever.
Posted by: soullite | Nov 6, 2007 5:31:22 PM
The continued conflation of legal and illegal immigrants muddies the water badly.
Yeah, because your giant-headed prophet Lou Dobbs never does that at all, does he?
Posted by: pseudonymous in nc | Nov 6, 2007 6:42:19 PM
I recall a few years back the Economist looking at the question: Does immigration benefit California's economy, or harm it?
One year they declared it a benefit, the next a harm. True story.
The moral: Some questions just can't be answered definitively, no matter who is doing the asking.
Posted by: Kit Stolz | Nov 6, 2007 8:45:34 PM
Reagan's amnesty was in part a method to continue propping up the governments of his right wing tyrant allies throughout Central America -- a large portion of El Salvador's economy at the time came from remittances of those who fled Reagan's slaughters by proxy to the U.S., and it was unlikely that Congress would have provided a significant enough expansion of US aid to El Salvador's tyrants to make up for the lost third of the economy.
Posted by: El Cid | Nov 6, 2007 8:55:56 PM
Let me put it this way: is the average American family cleaning up due to massive illegal activity? For instance, are they making a hundred or two hundred dollars per month because of that massive illegal activity?
The reason I ask is because a Latino columnist for the MiamiHerald is now informing us that we face the prospect of a "LatinoIntifada" if we don't give foreign citizens who are here illegally what they want.
Articles like the one at the link, and posts by Ezra like this, never recognize all the costs - including non-monetary - of that massive illegal activity, and if they did they'd see that it costs far more than most people make. Of course, that would require them to be intellectually honest, and I'm not going to hold out much hope of that.
Posted by: TLB | Nov 6, 2007 9:04:03 PM
Posted by: TLB | Nov 6, 2007 9:04:03 PM
The reason I ask is because a Latino columnist for the MiamiHerald is now informing us that we face the prospect of a "LatinoIntifada" if we don't give foreign citizens who are here illegally what they want.... on the other hand, a lot of the discussion that recognizes the magnitude of the illegal activity overlooks that fact that if illegal employers didn't, illegal entrants wouldn't ... preventing a big percentage of the illegal entry would, in the end, just change the identities of a chunk of the same illegally employed workforce, while preventing a big percentage of illegal employment would reduce the total amount of illegal entry.Articles like the one at the link, and posts by Ezra like this, never recognize all the costs - including non-monetary - of that massive illegal activity
Posted by: BruceMcF | Nov 7, 2007 2:44:03 AM
Soullite:Errr...no.
Actually, I support an even higher minimum wage and linking it to the average wage, as well as things such as card check laws for easier unionization. Laugh at the poor? Hardly.
Actually what I'm saying is more akin to a mugging, to be honest. "GIVE ME LOWER WAGES OR I'LL BLOW YOUR HEAD OFF", and we tend to give the man what he wants. I don't agree with it, I just recognize that it happens.
Posted by: Karmakin | Nov 7, 2007 7:14:48 AM
El viajero, the GOP didn't do anything about illegal immigration when it had control of all three branches of the government and the power to effect change. There was a deliberate policy of not enforcing employer sanctions for hiring illegals and the enforcement budgets for INS were cut-by the GOP.
You are exacty correct, zak822. What the left doesn't understand is that Conservatives are very upset with the GOP for this and other social issues. The pinnacle was when Bush partnered up with Ted Kennedy on the failed amnesty bill that they both tried to cram down the throats of the American people twice and then broke off a piece to see if that would work after that.
The difference between the parties can be seen in the primary race for the presidency. The Republicans all try to "out conservative" the other to win votes. The Democrats do not try to "out liberal" each other. They will do what it takes to win by hiding thier agenda and then they will implement a liberal agenda.....and they feel fully justified in doing so!! Health care and homosexual rights are just a couple of issues to demonstrate.
A bully will eventually get tired of abusing you. Someone that believes that what they are doing is in your long term best interest, will never, ever stop.
Posted by: El viajero | Nov 7, 2007 10:11:06 AM
Pseudo, Dobbs rails against illegal immigration. He seldom mentions legal immigration.
Except sometimes in the context of H1B visa recipients being unfair competition for American IT workers.
Nice little change of topic though. Do you support the "right" of people to enter the US illegally and in great numbers?
Posted by: zak822 | Nov 7, 2007 10:12:03 AM
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