Monday, September 6, 2010

Labor Day: Immigrants Build the U.S. Economy

Labor Day: Immigrants Build the U.S. Economy


Mark Engler - September 3, 2010


Undocumented immigrants streaming into this country

from south of the border drive down wages and steal

jobs that could otherwise go to out-of-work Americans.



Wrong. As it turns out, immigrant workers play an

important role in building our economy and bolstering

institutions such as social security. In other words,

they’re raising your wages and paying for your

retirement. So this Labor Day might be a good

opportunity to show a little gratitude.


Just in time for the holiday weekend, the Federal

Reserve Bank of San Francisco released a research

summary entitled, "The Effect of Immigrants on U.S.

Employment and Productivity." Its conclusion was not

what most people (or at least most people who attend

Glenn Beck rallies) expect.


The author, Giovanni Peri, writes:


     Statistical analysis of state-level data shows

     that immigrants expand the economy’s productive

     capacity by stimulating investment and promoting

     specialization. This produces efficiency gains and

     boosts income per worker. At the same time,

     evidence is scant that immigrants diminish the

     employment opportunities of U.S.-born workers.


The paper compares states in the United States with

high immigration to those with lower rates of

immigration. It then controls for other factors such as

spending on research and technology adoption. In the

end, the paper concludes, "there is no evidence that

immigrants crowd out U.S.-born workers in either the

short or long run."


What’s more, the effect of immigration on wages has

been markedly positive--equivalent to a $5,100 annual

raise for workers on average between 1990 and 2007 (as

measured in constant 2005 dollars).


A $5K-per-year salary bump sounds pretty good to me.

But I did have some skepticism. Even coming from a pro-

immigrant rights perspective, I was wary of an argument

saying that a large influx of low-skilled labor into a

given area wouldn’t drive down wages for the people at

the lower end of the pay scale there. Wouldn’t such a

pool of unorganized labor undermine union standards,

for example?


I chatted with an economist friend about it. He noted

that the paper did not address distribution--meaning

that the well off are likely to be collecting a lot

more than their $5,100 share of wage benefits, while

selected groups of workers might feel a more negative

impact. But overall, he was not surprised by the

paper’s conclusion, particularly about immigration

creating more demand and more employment in the

economy. That broadly benefits working people.


Here’s the paper’s explanation of how it works:


     As young immigrants with low schooling levels take

     manually intensive construction jobs, the

     construction companies that employ them have

     opportunities to expand. This increases the demand

     for construction supervisors, coordinators,

     designers, and so on. Those are occupations with

     greater communication intensity and are typically

     staffed by U.S.-born workers who have moved away

     from manual construction jobs. This complementary

     task specialization typically pushes U.S.-born

     workers toward better-paying jobs, enhances the

     efficiency of production, and creates jobs.


On a somewhat similar theme, the United Farm Workers

(UFW) ran a "Take Our Jobs!" campaign this summer. At

the Web site, they invited U.S.

citizens in need of work to take over for them in the fields:


     Farm workers are ready to welcome citizens and

     legal residents who wish to replace them in the

     field. We will use our knowledge and staff to help

     connect the unemployed with farm employers.


Of course, the union notes in the fine print:


     Job may include using hand tools such as knives,

     hoes, shovels, etc. Duties may include tilling the

     soil, transplanting, weeding, thinning, picking,

     cutting, sorting & packing of harvested produce.

     May set up & operate irrigation equip. Work is

     performed outside in all weather conditions

     (Summertime 90+ degree weather) & is physically

     demanding requiring workers to bend, stoop, lift &

     carry up to 50 lbs on a regular basis.


They didn’t expect a huge wave of applicants, and they

Didn’t get one. The basic idea: immigrants are doing

work that others will not, and are helping the economy

as a whole in the process.


Obviously, these sort of conclusions present big

problems for Minutemen and other anti-immigration folks

who want to believe that unless we seal off the border,

our economy is headed for ruin. A lot of these people

are also deficit hawks who believe that liberal

spenders are destroying social security. But once

again, looking at the facts presents serious risk of

cognitive dissonance.


A few years back, the New York Times ran a story

detailing how "Illegal Immigrants Are Bolstering Social

Security With Billions." Basically, workers using fake

social security numbers to get jobs here are paying

into the system, yet they are never collecting the

benefits. As a result,


     ...the estimated seven million or so illegal

     immigrant workers in the United States are now

     providing the system with a subsidy of as much as

     $7 billion a year....Illegal immigration, Marcelo

     Suarez-Orozco, co-director of immigration studies

     at New York University, noted sardonically, could

     provide ˜the fastest way to shore up the long-term

     finances of Social Security.™


In tough economic times, undocumented immigrants are

convenient scapegoats for stagnation and unemployment.

But the economic reality doesn’t match up. And there’s

no better time than Labor Day to set the record straight.


-- Mark Engler is a senior analyst with Foreign Policy

In Focus and author of How to Rule the World: The

Coming Battle Over the Global Economy (Nation Books,

2008). He can be reached via the Web site


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