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Sunday, September 10, 2017

"Lumping Labor" and Blaming Immigrants for Taking American-born Jobs


 

Proponents of limiting immigration contend immigrants take jobs from U.S. natives. The truth, as it usually is found to be, is far more complicated than this generalization. Immigration may seem to be displacing more expensive American-born workers while undercutting their wages, but in actuality, most Americans benefit from immigration. The evidence suggests U.S. labor markets are sufficiently flexible to absorb immigrants without greatly depressing low-skilled Americans' earnings.

Who Are the Mexican Immigrants?

According to the 2016 Current Population Survey (CPS), immigrants and their U.S.-born children now number approximately 84.3 million people, or 27 percent of the overall U.S. population.

In 2014, more than 11.7 million Mexican immigrants resided in the United States, accounting for 28 percent of the 42.4 million foreign-born population – by far the largest immigrant origin group in the country. However, Mexico is also no longer the top origin country among the most recent immigrants to the United States. In 2013, China and India overtook Mexico as the most common countries of origin of immigrants who have resided in the United States for one year or less.

Furthermore, more Mexican immigrants have returned to Mexico than have migrated to the United States since the end of the 2007-2009 Great Recession, according to a recent report from Pew Research Center. The decline in Mexican inflows results from a mix of factors including weakened job opportunities in the United States, tougher border enforcement, the long-term decline in Mexico’s birth rates, and the improving Mexican economy.

Mexican immigrants are primarily concentrated in the West and Southwest, and more than half live in California or Texas. In 2015, the top five states of residence for Mexican immigrants were California (37 percent of all Mexican immigrants), Texas (22 percent), Illinois (6 percent), Arizona (4 percent), and Florida (2 percent).

About 69 percent of the 11.2 million immigrants from Mexico ages 16 and older were in the civilian labor force in 2015. This represents a slightly higher labor force participation than for the overall foreign-born population ages 16 and older (66 percent of 41.4 million) and the native-born population ages 16 and older (62 percent of 214.8 million).

Undocumented immigrants hold more white-collar jobs and fewer blue-collar jobs today than they did before the national recession of 2007-2009, but most remain concentrated in lower-skilled, low-paying jobs, “much more so than U.S.-born workers,” according to a report by the Pew Research Center.

Among the 4.9 million Mexican-born male workers age 16 and older employed in the civilian labor force in 2008, 38.8 percent reported working in construction, extraction, and transportation, and 22.8 percent reported working in services. By contrast, 25.9 percent of all foreign born reported working in construction, extraction, and transportation and 17.4 percent reported working in services.

Among the 2.2 million Mexican-born female workers age 16 and older employed in the civilian labor force in 2008, 38.6 percent reported working in service occupations and 14.9 percent in manufacturing, installation, and repair occupations. By contrast, 25.7 percent of all civilian employed immigrant women age 16 and older worked in services and 8.5 percent worked in manufacturing, installation, and repair occupations.

The Undocumented

It is reported that undocumented immigrants hold more white-collar jobs and fewer blue-collar jobs today than they did before the national recession of 2007-2009, but most remain concentrated in lower-skilled, low-paying jobs, “much more so than U.S.-born workers,” according to a 2015 report by the Pew Research Center. They remained hampered by language barriers, poor education and legal status.

The report, based on a five-year study from 2007 to 2012, found that the size of the illegal immigrant workforce has remained at 5.1 percent of all workers, even though the total number of illegal immigrants has fallen from a peak of 12.2 million in 2007 to about 11.2 million in 2012.

The Pew report found that far higher percentages of illegal immigrants than U.S.-born workers now hold jobs with the least desirable conditions, such as crop picking and animal slaughter. In 39 states and the District of Columbia, the largest number of illegal immigrants work in service jobs, but in 34 states, they hold the largest share of all farming, fishing and forestry jobs (26 percent of the workforce).

A particular contrast between undocumented and U.S.-born immigrants is especially dramatic. Only 0.5 percent of U.S-born workers are employed in farming, fishing or forestry, while 4 percent of unauthorized aliens work in those fields.

Nationwide, unauthorized immigrants are clustered in a few other occupations (besides farming, fishing and forestry) – building and grounds (17 percent), and construction and mining (14 percent). They comprise 24 percent of all groundskeepers, 23 percent of domestic workers and 20 percent of those in clothing manufacture.

 


Effect on U.S.-Born Wages

A large body of academic economic research has found that immigration has a relatively small effect on U.S-born American wages and their employment prospects. For wages impact, the estimates are that immigrants either lower the wages of some American workers by about 2 percent or raise them by about 2 percent in a dynamic economy.

Most studies suggest that immigrants have had, at most, a small negative impact on the wages of Americans who compete with them most directly, those with a high school degree or less.

"Immigrant arrivals have hardly distorted the relative fraction of college-equivalent workers in the economy and have therefore had little impact on the college-high school wage gap," he writes. David Card National Bureau of Economic Research.

Alex Nowrasteh, an immigration expert at the Cato Institute minces no words. He says the idea that immigrants take the jobs of American-born citizens is “something that virtually no learned person believes.” He thinks this belief is, instead, a basis for class warfare.
Nowrasteh says ...
“If immigrants 'take' jobs from Americans, then so must any new entrant in the workforce also take a job from another American. If the number of jobs is fixed and adding new labor just increases unemployment—which would be the logical conclusion to this argument – unemployment should increase over time as the population grows. The reality is the precise opposite.

History supports the Nowrasteh's claim. From 1948 to 2012, the size of the U.S. labor force went from 60 million to 156 million—a two-and-a-half-fold increase. This 90 million net gain in jobs since 1948 is impossible to explain for people claiming that immigrants 'take jobs' from Americans.

Nowrasteh continues …

“The large increase in the size of the U.S. labor market has been due to two phenomena: the increased entry of women into the labor force, and immigration.

“During this time the proportion of the U.S. population that is employed has increased by 2 percentage points. Furthermore, the labor-force participation rate, the percentage of Americans employed or looking for a job any given month, is 5 percentage points greater in 2012 than it was in 1948—an astonishing increase considering our moribund economy.”

Immigrants, like native-born American women and men, create jobs by starting businesses and consuming and producing goods and services. According to the Kauffman Foundation, immigrants are more than twice as likely to start a business as native-born Americans.

Nowrasteh claims, “Immigrants’ skills often complement American ones, meaning that when immigrants and natives work together, both produce more and earn higher wages than if they were working in separate countries. Immigration does not divide a fixed pie of wealth; it increases wealth, incomes, and job opportunities for everybody.”
Many other experts agree. The Brookings Institution's Michael Greenstone and Adam Looney wrote “on average, immigrant workers increase the opportunities and incomes of Americans.” Foreign-born workers don’t affect the employment rate positively or negatively, according to a 2011 analysis from the conservative American Enterprise Institute. And a study released by the liberal Center for American Progress suggests that granting legal status to undocumented workers might even create jobs.
Giovanni Peri of the University of California at Davis explains how immigrant workers affect the domestic labor market …
“An extreme example of this would be if you have an engineer and you add a construction worker. With the engineer by himself you’re not going to do much. But with an engineer plus a construction worker, you can build a building. Therefore, the productivity of the engineer goes up a lot. And the wages for both workers increase.”
Peri's analogy is known as complementarity – a relationship or situation in which two or more different things improve or emphasize each other's qualities. The labor of the engineer and the labor of the construction worker each complement the other. Immigration economists argue that immigrant labor likewise complements native-born labor. Peri says, "Immigrants expand the U.S. economy’s productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity. Consistent with previous research, there is no evidence that these effects take place at the expense of jobs for workers born in the United States.”
And, consider this – wage decline and job displacement drive natives to shift to higher-paid sectors. No wage cuts, no job displacement. No jobs displaced, no benefit to natives. Economists don't deny that immigration pushes wages down in the jobs that immigrants take. Instead, they join their celebration of immigration’s wage-cutting effects with a prediction about the way that the natives will respond.

Peri says, "Large inflows of less educated immigrants may reduce wages paid to comparably-educated, native-born workers. However, if less educated foreign- and native-born workers specialize in different production tasks, because of different abilities, immigration will cause natives to reallocate their task supply, thereby reducing downward wage pressure.”

Shifting is a natural occurrence. Consider how such things as language and specialization affect needs. For example, when a contractor expands into roofing, he will not just need a bunch of cheap immigrant roofers. The contractor will also need an American supervisor and maybe an extra clerk. The skilled native is able to focus on the most valuable tasks, while the immigrants help bring the price down for the overall project (it costs a lot to pay a highly trained carpenter to sweep up a work site).

Immigration can actually produce domestic jobs. Consider immigrants who work in restaurants and allow the restaurants to exist. Native waiters and hosts owe their jobs to the underpaid illegal immigrants in the kitchen. The reality is that many small operations could not exist without the cheap labor.

Other studies find that immigrants increase labor supply and demand for goods (and labor). The vast agricultural industry in the Central Valley of California might not exist without cheap immigrant farm workers who make it profitable. Those who insist fields should be harvested by well-paid Americans ignore the fact that without the cheap foreign labor, there might be far fewer American fields. Chances are, it would be cheaper to import the same fruits and vegetables.

The National Agricultural Workers Survey of U.S. Farmworkers, 2000-2002, showed that roughly half of all workers and three quarters of new hires in agriculture were undocumented Mexican immigrants. In California, the numbers are even starker: 93% of new hires were undocumented Mexican immigrants.

Lastly, statistics show the nation's immigrants also collectively pay more in taxes than they consume in public services and benefits, according to a National Research Council study. A high proportion of them work and pay federal, state and local taxes. Many return to their home countries before retirement and never claim Social Security payments or Medicare coverage.

Current estimates show immigrants illegally in the U.S. collectively contribute nearly $12 billion each year to state and local tax coffers. The study from the Institute on Taxation & Economic Policy found that immigrants in the U.S. without legal permission kick in their billions in the form of income, property, sales or excise taxes.

The institute's report estimates the average tax rate for immigrants in the country illegally is higher than the rate paid by America's top earners.

"Undocumented immigrants' nationwide average effective tax rate is an estimated 8 percent," the report said. "To put this in perspective, the top 1 percent of taxpayers pay an average nationwide effective tax rate of just 5.4 percent."

Research into this subject reveals a consensus: over time, immigrants and their descendants collectively provide more to the federal government in taxes than they receive in benefits. For example, a report by the National Academy of Sciences in 1997 found that a typical immigrant and his or her descendants will pay an estimated $80,000 (in 1996 dollars) more in taxes than they will receive in combined local, state, and federal benefits over their lifetimes.

 

Conclusion

Immigration actually fuels the economy and creates jobs. Expanded work forces increase business flexibility, allowing companies to quickly respond to changing demands. Larger labor forces also encourage specialization. Labor productivity rises as companies adjust to larger work forces and invest in employees.

Immigration also makes the United States less globally isolated by increasing the understanding and respect for diverse cultural backgrounds. The melting pot of the country insures strength and unity.

Understanding the tremendous contributions of immigrants is paramount before building walls and exporting Dreamers. Instead of blindly accepting the “they're taking American jobs” philosophy, U.S. citizens must look at all sides of this broad issue. Leading economists agree that immigrants bring long-term benefits at no measurable short-term cost. A recent University of Chicago poll of leading economists could not find a single one who rejected the proposition.

The chief logical mistake is called the Lump of Labor Fallacy: the erroneous notion that there is a fixed amount of work to be done and that no one can get a job without taking one from someone else. The belief in the Lump of Labor feeds protectionism and lower levels of immigration. When the public believes the economy cannot create new jobs, they will demand that the country protects old jobs from new competitors.

However, skilled immigrating workers can bring capabilities that are not available in the native workforce, for example in academic research or information technology. Additionally, immigrating workforces also create new jobs by expanding the economy and creating further jobs either directly by setting up businesses (therefore requiring local services or workforces), or indirectly by an increased population. As an example, a greater population that needs to buy more groceries will increase demand on shops and therefore require additional shop staff.


Sources

David Card. “Immigration and Inequality.” NBER Working Paper No. 14683. Issued in January 2009.

Pamela Constable. “Majority of undocumented immigrants work in low-skill jobs, report finds.” The Washington Post. March 26, 2015.

Adam Davidson. “Debunking the Myth of the Job-Stealing Immigrant. The New York Times Magazine. March 24, 2015.

David Frum. “Does Immigration Harm Working Americans?” Atlantic. January 05, 2015.

Timonthy Kane. “The Economic Effect Of Immigration” Hoover Institute. February 17, 2015.
Dora Mekouar. “Most Common Jobs Held by Immigrants in each US State. Voice of America News. August 24, 2015.

Ethan Lewis. “The Impact of Immigration on American Workers and Businesses.” Choices First Quarterly. 2007.

Alex Nowrasteh. “Immigrants Did Not Take Your Job.” National Journal. Cato Institute. March 4, 2013.

Alex Nowrastch. “Immigration’s Real Impact on Wages and Employment.” CATO Institute. September 15, 2014. 
 
James P. Smith and Barry Edmonston, ed. National Research Council,The New Americans: Economic, Demographic, and Fiscal Effects of Immigration. 1997.

Andrew Soergel. “Undocumented' Immigrants Pay Billions in Taxes.” U.S. News. March 01, 2016.

Jie Zong and Jeanne Batalova. “Mexican Immigrants in the United States.” Migration Policy Institute Spotlight. March 17, 2016.


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