The Cause Has Changed

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The New York Sun

The issue of immigration has prompted great soul-searching and re-evaluation among economists across the political spectrum. For years, mainstream thought in the field held that benefits outweighed problems. But over the last 30 years, as the nature of immigration has shifted to include more low-wage, low-skilled workers, opinion within the field has slowly changed, too, based on mounting evidence that the benefits of such immigration are small, while the costs are growing.

It was the weight of this evidence and the shift in thinking that I chronicled in a piece that appeared in the summer issue of City Journal magazine (“How Unskilled Immigrants Hurt Our Economy“). Needless to say, I was surprised to read at the end of The New York Sun’s critique of that piece (“The Case for Immigration,” September 22) that the author, Diana Furchtgott-Roth, placed me within the line of a group of “small but influential thinkers” whose ideas on immigration have, over the years, spawned such disreputable movements in American society as the Know-Nothing party. In my nearly 20 years of engaging in public policy debates, I’ve always felt a great satisfaction when my opponents resorted to implying that my arguments help underpin racism or nativism or some other despicable “ism.” It’s generally a sign that they are unconvinced of the weight of their own arguments.

The irony is that it is Ms. Furchtgott-Roth, not I, who stands in the midst of a small (and shrinking) but influential circle of thinkers — that is, open-borders advocates who have clung tenaciously to the notion that all immigration is ultimately good for our economy, despite growing evidence to the contrary, and despite a significant shift of opinion within academic circles. After being presented with a series of studies on modern immigration by the most authoritative economists in the field, a congressional bipartisan commission on immigration reform wrote in the mid-1990s, “It is not in the national interest to admit unskilled workers.”

In my piece, I recounted a series of studies which explained that the first great immigration, from 1880 to the mid-1920s, brought economic benefits to the country largely because the immigrants of that era carried skills with them that weren’t in great supply.

Today’s immigration, the so-called second great wave, began roughly 50 years ago and has come increasingly to feature low-skilled, uneducated workers and their families at a time when succeeding in our economy demands ever-more education and skills. Throughout the 1980s and the 1990s, illegal immigrants alone — consisting almost entirely of unskilled workers — have crossed our borders at the rate of between 225,000 and 300,000 a year. At the same time, legal immigration has also turned sharply toward low-skilled workers, thanks to 1965 legislation that changed our national quota system in such a way that today the vast majority of legal immigration hails from poorer countries.

Not surprisingly, as low-skilled workers have arrived in ever-greater numbers, their fortunes have fallen: Today, for instance, Mexican immigrants, who increasingly dominate the ranks of our low-skilled migrants, typically begin work here in America with a 40% wage gap compared to native-born workers, and rather than disappearing over time, that wage gap persists and may even be growing larger, according to work by the Harvard economist George Borjas. Equally unsurprisingly, the impact of such low-wage immigration on America’s broader economy is limited. An authoritative study by the National Academy of Sciences in 1997 found that immigration contributed a mere $10 billion to our (at the time) $8 trillion economy, an inconsequential amount at a time when the cost of immigration was increasing.

Ms. Furchtgott-Roth begins responding to my piece with a singularly inappropriate anecdote about the supposed benefits of low-wage immigration, that is, the example of immigrant entrepreneurs plying the streets of Washington, D.C., during a rainstorm to sell umbrellas to stranded pedestrians. She fails to note that such “entrepreneurs” rarely pay taxes and business fees, and that legitimate retailers often have complained that these street-corner merchants undercut their prices precisely because they don’t play by the rules.

From this anecdote Ms. Furchtgott-Roth proceeds to the old saw that immigrants are here to work (though the percentage of nonworking women, children, and the elderly among immigrants is much higher than in previous waves of immigration) and that they do jobs that Americans don’t want. To buttress this claim, she cites unemployment rates among high-school dropouts, noting approvingly that among immigrants, the rate is only 5.7%, while among the native born, it is 9.1% (or double the nation’s overall unemployment rate). But rather than a cause to celebrate the work ethic of immigrants, the gap in the unemployment rate among high-school dropouts is more likely evidence that native-born workers are being crowded out of labor markets by immigrants taking jobs for lower pay and fewer benefits, one reason why wages at the low end of the economic spectrum are declining in real terms.

Indeed, the most important study of immigration’s effect on native-born workers, published in April 2005 by the National Bureau of Economic Research, is that of Mr. Borjas and his colleague Lawrence Katz, who found that immigrants depress the wages of low-skilled native workers by 5%, even when we adjust for the additional investment that businesses make when they have access to a large pool of cheap labor. Moreover, two new papers, one by Mr. Borjas and two colleagues, published this month by the National Bureau of Economic Research, and another by researchers from Northeastern University, published this month by the Center for Immigration Studies, show that the impact of low-wage immigration falls especially heavily on native-born blacks and Hispanics, not merely depressing wages but adding to unemployment levels.

In contrast, Ms. Furchtgott-Roth cites the work of economist Giovanni Peri, who argues that low-wage immigrants bring a net benefit to higher income Americans (a fact that is accepted by most economists) and depress the wages of all low-skilled Americans by just 1%. But an important component of Mr. Peri’s work and of others who follow him is their claim that the impact of immigration on native-born Americans is muted because immigrants are largely competing with each other and holding down each other’s wages. In Ms. Furchtgott-Roth’s world, this wage impact on immigrants is unimportant because she notes that we don’t see immigrants calling for less immigration. If they don’t care about the competition from other immigrants, why should the rest of us?

The first answer to this question is that immigrants don’t protest our current policy because many of them have relatives on the list of those awaiting visas; indeed, the principal source of legal immigration in America today is family reunification, and nearly two-thirds of everyone who comes here legally does so because a family member is already here.

What’s especially troubling about the wage effect of immigrants on unskilled workers — whomever it falls on — is that it is in danger of slowing economic mobility at the bottom rungs of our society. In my City Journal piece, I devote much attention to the growing research on how continued low-wage immigration is making it increasingly tougher on migrants themselves. This is not an inconsequential point, but in some ways the point. Americans have welcomed immigrants when we believed they could pull their own weight in our economy. Now we see signs that the economic success of immigrants is slowing. Even more disturbingly, their children are also finding it more difficult to make it in America.

The danger is that we are creating a permanent group of working poor. These poor will slow overall economic performance, having deep consequences in a society that now offers substantial transfers of income through government social programs. The National Academy of Sciences in 1998 studied the trade-off between taxes paid and government services received for both the native-born and immigrants in California and found that the average native-born household paid nearly $1,200 more in taxes to support services to immigrants. Ms. Furchtgott-Roth dismisses this substantial burden by quoting a section of the report that attributes the additional local government cost to the education of immigrant children in public schools.This ignores the dollars the report notes that the state and federal government spend on immigrants for social programs. According to the study, immigrants in California received in total an average of $5,067 in benefits per household, compared with $1,983 for native-born households for social programs. Behind those costs, the study notes, was substantially greater immigrant participation in many programs, like Medicaid, where one-third of Hispanic immigrants and 27% of Asian immigrants were enrolled, compared to just 14% of native-born households.

The discomfiting evidence about much of today’s immigration has prompted an enormous amount of soul-searching, as I’ve said, everywhere except among open-borders advocates on the left and the right. On the left, their advocacy for open borders is not about what’s good for our economy, but about immigration as an extension of the civil-rights battles of the 1960s. But on the right, it’s difficult to understand exactly what’s behind this increasingly strident advocacy of a cause that has changed.

Mr. Malanga is a contributing editor of City Journal and a senior fellow at the Manhattan Institute.

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