Monday, April 20, 2009

Immigration associated with low unemployment? Not when recession hits

++Addition++In the comments, Agnostic gives a brief but informative overview of unemployment in the US and its association with immigration from the 1920s to the current decade.


On today's WSJ op/ed page, Jason Riley, author of Let Them In: The Case for Open Borders, comments in passing:
Historically, higher levels of immigration to the US are associated with lower levels of unemployment. Immigrants are catalysts for economic growth, not job-stealers.
Using the phrase "associated with" is a way to circumvent the question of causation. Potential immigrants head to places undergoing rapid economic expansion, not depressed areas without a market for excess menial labor.

This is akin to the strategy Richard Nadler used in his attempt to sell the political right on open borders in his paper entitled Immigration and the Wealth of States--the states immigrants are heading to are the states where economic growth is occurring, so just guarantee a steady stream of eighth grade graduates from Latin America and watch as the good times roll. After these immigrants stopped buying the houses they were paying for by building houses for other immigrants, and the sand states (also top destinations for illegal immigrants) led the rest of the country in mortgage defaults, Nadler stopped (at least temporarily) pushing this argument.

Granting that economic prosperity tends to attract relatively improsperous immigrants, what happens when that economic prosperity dissipates? Are large numbers of unskilled and uneducated immigrant laborers "associated with" higher or lower levels of unemployment? A snapshot of our current situation suggests that what Riley and Nadler insinuate in observing their associations is incorrect. In a recently released report, the Pew Hispanic Center provides estimates (p40) for the percentage of each state's workforce that is comprised of illegal immigrants. This correlates with the state unemployment rates at .29 (p=.04). The relationship is modest but statistically significant--and it runs in the opposite direction of what Riley and Nadler would hope for. To the extent that the two are related, the more illegal immigrants there are working in a state, the more natives there are out of work.

Nothing to contemplate here, though. It's best to have an excessive labor supply so that those who work for peanuts will have little choice but to be thankful that they work at all. Lower labor costs mean higher business profits right now. Government subsidy is there to cover the net liability that each member of this expanding underclass represents. Well, who creates the wealth in this country, after all? Not government! Better, then, for it, rather than industry, to pay. Let restrictionist nations like Japan go the mechanizing route--America's competitive advantage has always been in providing ever-cheaper labor. Low-wage countries are the ones with the highest standards of living, after all, aren't they?


agnostic said...

If someone claims that two things are associated and doesn't show a graph, plot, etc., they're lying.

It took me 5 minutes to find a graph of the US unemployment rate from 1920 - 2003 (probably could find a graph with more years if I took longer):

See slide 8 hereAfter the high rate during the 1920-21 recession, unemployment remains incredibly low during the '20s, until the Great Depression hit. Of course, the 1920s were the most immigration-restrictionist decade in recent history.

Unemployment soars and falls during the Great Depression and recovery -- nothing to do with immigration.

Then there's an upward trend from about WWII to the peak during the early '80s recession. During this time, immigration was pretty minimal, but then got a big boost in the mid-1960s, so no strong relationship.

Most Mexicans didn't bother immigrating in the mid-70s to early-80s because Mexico was enjoying an Oil Boom -- well, until they found out there wasn't much there. Then they started flooding in during the mid-80s and after.

During that time, unemployment shows a downward trend.

So, "historically" there is no clear relationship between immigration and unemployment. It would pop out of the graph. Only by looking at the mid-80s and later is there an apparent strong relationship.

Aside from economic historians, economists don't know jack shit about history -- having to figure out how people really do behave, or really have behaved in the past, is like so beneath them. They can just figure it out through that powerful social intuition that autistic nerds are known for.

But remember -- words come later. First, plots!

agnostic said...

fucking blogger links.

OK, google: unemployment rate 1920. Page 3 of results. Click on the PowerPoint called "Chapter 11 - Introduction to Macroeconomics." And go to slide 8.

Ben said...

Then there's the question of whether or not we want to see our social cohesion, culture and way of life further diminished by millions more new economic refugees arriving every year. Anyways, assuming this Riley digweed is correct, I'd take an economically average and ethnoculturally traditional America over a new, multiethnic, post-America with 0.5% higher annual economic growth any day. F him. What kind of dick would sell his own country and people out like that?

Anonymous said...

These assholes are at it again? Liars, all of them... They should be hanging from a lamppost. God willing, they soon will be.

Audacious Epigone said...

The quickest way to Agnostic's link is click here, and then on the third item returned.


Right, the economic argument for open borders is usually portrayed as the strongest (or only) one from the perspective of those on the right, yet even it is wholly unconvincing.

Anonymous said...

Hey AE,

Not only hasn't Nadler stopped peddling that tripe he has proffered a simple wager to the economically illiterate in the illustrious virtual pages of last weeks NRO!

See here...

I want to take his bet, any other takers? Any thoughts on what the bet should be? I'm in Chicago so I'm thinking some sort of deep dish pizza or delicious pork product may be apropos?

Oh, and Google has managed to F up my identity, again, sigh. This is Jake of Freedom Folks and Blogs 4 Borders.

eb5 green card said...

Of course there are many different groups of immigrants. Accredited foreign investors, who obtained their eb5 investor visa by creating 10 new American jobs may be the reason that American construction workers, managers, or even doctors found employment in tough economic times. No one knows for certain whether immigrants hurt or help an economy, but our government's efforts to create regional centers and the efforts of the USCIS reveal what a serious issue immigration is for our nation's leaders.