Labor Day: Immigrants Build the U.S. Economy

Mark Engler - September 3, 2010
http://dissentmagazine.org/atw.php?id=255

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.
Right?

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 www.takeourjobs.org 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
     Suárez-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
http://www.DemocracyUprising.com.

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