Friday, April 07, 2006

WSJ gives some ground

The WSJ admits (finally) that unskilled immigration lowers the wages of our unskilled natives:
Yes, immigrants compete for these entry-level jobs most directly with Americans who lack a high-school diploma...
Hopefully the "Jobs Americans won't do" bromide is now moribund. The WSJ employs the usual smearing of immigration realists (calling them "leftist economists"!) and proclaiming a sealing of the border to be impossible, even though the same op/ed board cheers the success of the Israeli security fence. But there's a better way:
Our answer is that a closed economy ultimately would make America a less competitive and hence poorer country...
Control of the border and the institution of a merit immigration system and/or a reduction in the total number of immigrants permitted entry is not at all synonymous with a closed economy. What happened to the rudimentary economic idea of core competencies (including human capital)? What a strawman. Continues the WSJ:
We'd have less human capital, and because we'd be using the human resources we did have less efficiently.

No, we'd be using it much more efficiently. Having migrant fruitpickers depressing wages (and by extension, technological innovation), filling almost a third of our federal jail cells, and sending $17 billion a year back to Mexico each year is an incredibly inefficient use of human capital. Having the brightest provide services and otherwise take care of this growing underclass creates deadweight loss.

After downplaying the impact of immigration on wages at the bottom, the WSJ states:
Immigrants also increase the demand for labor, not just the supply. That is, they are also consumers who create jobs by buying goods and housing here.

Criminals increase the demand for prison guards. Cigarettes increase the demand for lung surgeons. If we annex Mexico tomorrow, US GDP and jobs will enjoy double-digit increases, but the more important measures of PPP and worker productivity will drop by 20%.

The real estate price explosion is
fueling an economy built on unjustified home equity loans. People are spending more than they make. If you're among the 100 million Americans who don't own a home, affording one is the toughest it's been in 15 years. Unskilled immigrants need places to live. So they push up the cost of housing. This is a boon for homeowners, but for natives who don't own a home--disproportionately those same people whose wages are being depressed--the chance at the American dream we use to defend irrational immigration policies is getting ever smaller.

After suggesting that open borders make the US more competitive globally,
we learn what the industries are:
The domestic carpet industry based in Georgia has managed to survive and thrive due to immigrant labor. The same holds true for meat-packing plants in the Midwest...

The agriculture industry certainly would attract more Americans if it paid $50,000 a year to pick lettuce in the noonday sun, but not without raising the cost of food and other things. It would be more expensive to eat out, for example, and fewer people would do so as a result, affecting the restaurant industry, among others.

Carpet-makers, meat packers, fruitpickers, and dishwashers. Taiwan, Bangalore, and Hong Kong better watch out!



Anonymous said...

"now moribund"

I really doubt it, because the reality is that some jobs have already effectively become 'jobs Americans won't do', and one can reasonably wonder if there is any going back. These jobs are (not surprisingly) characterized by two things: 1) low(ered) pay and degraded working conditions, and 2) they are primarily worked by poor unskilled foreigners, many of whom are non-white and functionally illiterate, certainly in English and often in their own native language as well. While just a generation and a half or so ago fast food was a sought after job among teens, nowadays not many would want to be seen working a shift alongside a bunch of Mexicans who as anyone can see really ought to be back in Mexico. I mean, how uncool is that?

One relatively recent counterexample: When airport security was federalized after 9/11, with vastly improved pay and benefits, these jobs became very attractive.

But I don't think this can be seen as a paradigm for the private sector.

crush41 said...

If the serf labor pool was deported or encouraged to leave voluntarily by heavy employer fines, the ending of sanctuary policies, and other measures, prices would rise.

You may be right that many adolescents do not want to sweat in a burger joint for $5.15 an hour, but employers do not want them either largely because of limited work schedules. Obsequious Amerinds can work anytime without benefits.

It will not become a paradigm for big service business unless the cheap flow is put to a halt. But big business gets subsidized labor unjustly, and the public knows it. This might change. There should be more emphasis on innovation as well. An endless search for slave labor is very short-sighted.