Sunday Music: Sundays & Cybele
German Word of the Week: Tohuwabohu

Low-Skill Immigration is a Policy Disaster

A point I've made here a few times is that we can't really judge the effect of the huge migrant influx of 2015-2016 (which is still ongoing on a smaller scale) until all those migrants enter the workforce in Germany and begin competing against Germans.

Of course, they won't be competing against managers, engineers, or journalists. If they find jobs at all, they'll be dumped into the low-skill section of the German economy, to compete against the million of German workers who only have a low-level high school education or vocational training.

The results will be ugly. We know this because this has already been happening in the US for years now. Economists are generally right-wing libertarian open-borders types, and argue in favor of immigration based on what they claim are the positive overall effects on the economy. They rarely pay attention to the effects immigration has on working-class types, because, you know, who cares about those people? 

Harvard economist George Borjas, however, has studied this aspect of immigration -- mass immigration by low-skilled workers -- in the US for decades. He describes the results for American workers and the American economy: 

Over the past 30 years, a large fraction of immigrants, nearly a third, were high school dropouts, so the incumbent low-skill work force formed the core group of Americans who paid the price for the influx of millions of workers. Their wages fell as much as 6 percent. Those low-skill Americans included many native-born blacks and Hispanics, as well as earlier waves of immigrants.

But somebody’s lower wage is somebody else’s higher profit. The increase in the profitability of many employers enlarged the economic pie accruing to the entire native population by about $50 billion. So, as proponents of more immigration point out, immigration can increase the aggregate wealth of Americans. But they don’t point out the trade-off involved: Workers in jobs sought by immigrants lose out.

They also don’t point out that low-skill immigration has a side effect that reduces that $50 billion increase in wealth. The National Academy of Sciences recently estimated the impact of immigration on government budgets. On a year-to-year basis, immigrant families, mostly because of their relatively low incomes and higher frequency of participating in government programs like subsidized health care, are a fiscal burden. A comparison of taxes paid and government spending on these families showed that immigrants created an annual fiscal shortfall of $43 billion to $299 billion.

Even the most conservative estimate of the fiscal shortfall wipes out much of the $50 billion increase in native wealth. Remarkably, the size of the native economic pie did not change much after immigration increased the number of workers by more than 15 percent. But the split of the pie certainly changed, giving far less to workers and much more to employers.

The immigration debate will also have to address the long-term impact on American society, raising the freighted issue of immigrant assimilation. In recent decades, there has been a noticeable slowdown in the rate at which the economic status of immigrants improves over time. In the 1970s, the typical immigrant could expect a substantial improvement relative to natives over his or her lifetime. Today, the economic progress of the typical immigrant is much more stagnant.

Part of the slowdown is related to the growth of ethnic enclaves. New immigrants who find few ethnic compatriots get value from acquiring skills that allow more social and economic exchanges, such as becoming proficient in English. But new immigrants who find a large and welcoming community of their countrymen have less need to acquire those skills; they already have a large audience that values whatever they brought with them. Put bluntly, mass migration discourages assimilation.

The trade-offs become even more difficult when we think about the long-term integration of the children and grandchildren of today’s immigrants. Many look back at the melting pot in 20th-century America and assume that history will repeat itself. That’s probably wishful thinking. That melting pot operated in a particular economic, social and political context, and it is doubtful that those conditions can be reproduced today.

...

Europe is already confronting the difficulties produced by the presence of unassimilated populations. If nothing else, the European experience shows that there is no universal law that guarantees integration even after a few generations. We, too, will need to confront the trade-off between short-term economic gains and the long-term costs of a large, unassimilated minority.

Identifying the trade-offs is only a first step toward a more sensible immigration policy. We also need some general principles, combining common sense and compassion.

First and foremost, we must reduce illegal immigration. It has had a corrosive impact, paralyzing discussion on all aspects of immigration reform. A wall along the Mexican border may signal that we are getting serious, but many undocumented immigrants enter the country legally and then overstay their visas. A national electronic system (such as E-Verify) mandating that employers certify new hires, along with fines and criminal penalties for lawbreaking businesses, might go a long way toward stemming the flow.

But what about the 11-million-plus undocumented immigrants already here? A vast majority have led peaceful lives and established deep roots in our communities. Their sudden deportation would not represent the compassionate America that many of us envision.

Perhaps it’s time for some benign neglect. Many will eventually qualify for visas because they have married American citizens or have native-born children. Rather than fight over a politically impossible amnesty, we could accelerate the granting of family-preference visas to that population.

We will also need to decide how many immigrants to admit. Economists seldom confess their ignorance, but we truly have no clue about what that number should be. About one million legal immigrants a year entered the country in the past two decades. The political climate suggests that many Americans view that number as too high. History shows that when voters get fed up with immigration, there is no reluctance to cut off the flow altogether. Back in the 1990s, Barbara Jordan’s immigration commission recommended an annual target of about 550,000 immigrants. Such a cut would be significant, but it may be preferable to the alternative, which, in this political climate, could mean shutting off the flow.

Finally, we need to choose between highly skilled and less-skilled applicants. High-skill immigrants, who pay higher taxes and receive fewer services and can potentially expand the frontier of knowledge, are more profitable for us. But giving an opportunity to the huddled masses is part of what makes our country exceptional.

...

Many of my colleagues in the academic community — and many of the elite opinion-makers in the news media — recoil when they hear that immigration should serve the interests of Americans. Their reaction is to label such thinking as racist and xenophobic, and to marginalize anyone who agrees.

But those accusations of racism reflect their effort to avoid a serious discussion of the trade-offs. The coming debate would be far more honest and politically transparent if we demanded a simple answer from those who disagree with “America First” proposals: Who are you rooting for?

So, mass low-skilled immigration increases the welfare rolls, drives down the wages of the most vulnerable workers, increases the gap between rich and poor, and fuels social tension. Why does anyone think this is a progressive policy?

Comments