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April 15, 2006

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Is it fair to blame inflation for keeping wages low when the minimum wage has not increased in almost a decade?

What does including health care coverage as part of a wage package do to overall wages?

Silicon Valley was built on startups by Asians. Where does the economic impact of that count?

Is scapegoating immigrants an attempt to deflect all discussion of low wages and the need to increase the minimum wage? Does it help the policy process by ONLY debating the merits of immigration and ignore the elephant in the room that one side in the debate is desperate to shift the debate to immigration and away from concentration of wealth and declining wages? Immigration is NOT the problem. Low wages are the problem. Minimum wage is a problem.

Henderson: "Meanwhile, increased immigration -- legal and illegal -- helps keep inflation low, boosts rents and housing values, and benefits the average U.S. taxpayer while burdening some state and local governments, other research finds."

Let's assume for a moment that all this is true, although I doubt it is. Take it one step at a time.

"Keep inflation low": A mixed blessing. While hyperinflation hurts almost everyone, modest inflation is good because it transfers wealth from (mostly rich) creditors to (mostly poor and middle class) debtors.

"Boosts rents and housing values": This helps homeowners, who tend disproportionately to be older, white, and in a higher socioeconomic stratum. It hurts new entrants into the housing markets, in addition to renters. The current housing market is great for people who got in before it took off, but it's horrible for young people trying to start families.

"Benefits the average U.S. taxpayer": I'd like to know how this was calculated. I suspect that some externalities of immigration are not being properly accounted for - or perhaps "average" is being used in the screwy sense where everyone in a bar is "on average" a billionaire when Bill Gates walks in.

Borjas has been cooking his books, I think, at least since his first book on the issue. It's hard to say why and whether this is just due to a weird methodological approach or something else. In that book, for example, he defined "less skilled immigrants" as ones who did poorly in the labor market and then estimated that we'd lost hundreds of millions of dollars in GNP by allowing in these "less skilled" workers on the assumption that we could have instead let in immigrants who were "skilled" (by which he meant "would have done well in the labor market". He noted in a foot-note that there wasn't any reason to think we could have had _these_ immaginary immigrants, but since huge parts of his analysis was based on this completely imaginary alternative the book's normative analysis was largely nonsense. I don't trust him. I think one must read him _very_ closely. This seems to be another example.

The illegals are coming. Stay in school.

NO AMNESTY FOR ILLEGALS!

Why does our country and the media acknowledge people that are not obeying U.S. laws? What good are laws without enforcement? This isn't a Latino issue, it is an ILLEGAL issue. There's a difference. And anyone that doesn't understand that doesn't need to be in this country. If a person is in this country illegally, then that person is a criminal!

We as U.S. citizens must stand up for our country and forbid anyone that doesn't enter our country legally from staying here. This is a national security issue. It is as simple as that.

What if I, as a single mom, ignored the needs of my own children and took care of someone else's? I would be arrested for child neglect and endangerment (and rightfully so!) The U.S. is our mother country, and the U.S. needs to take care of our own legal citizens before taking care of another country's people.

We do NOT need another culture's crimes, drugs, or child prostitution. The bottom line is either obey U.S. laws or get out. NO AMNESTY FOR ILLEGALS!

The main thing I see by the protests (the media seems to favorably broadcast) is that there are far too many illegal immigrants in the United States, and with all these people taking off their so-call "jobs no one else wants" in order to "protest", the country didn't shut down. Therefore, we do NOT need them!

The protests are just another excuse for the hispanics to take off work, stay out of school, and have a party to draw attention to themselves. Their efforts backfired. STUDENTS SHOULD NOT GET CREDIT FOR STAYING OUT OF SCHOOL, AND WORKERS SHOULD NOT BE PAID FOR TAKING OFF WORK TO PROTEST. THAT IS IRRESPONSIBLE, AND IT SHOULD NOT BE TOLERATED. Why should we allow such irresponsible, illegal people in our country and allow them to tell us what they are going to do? The hispanic tactics are equal to terrorist threats, i.e. do what we tell you to do or we will harm you. THE U.S.A. DOES NOT GIVE IN TO TERRORIST THREATS. DIDN'T ANYONE TELL THESE PEOPLE?

Illegals should never be allowed to vote; citizens can! MY VOTE WILL DEFINITELY BE INFLUENCED BY POLITICIANS' POLICIES ON THE ILLEGAL IMMIGRATION AND BORDER SECURITY ISSUE.

This is America. Our country's language is English; if you want to live here, learn it! We should not accommodate the demands of an arrogant culture that says "we don't have to learn your language; you learn ours!" WRONG AGAIN!

We as responsible law-abiding U.S. citizens don't gather in the streets disrupting schools and businesses and play party music while speaking in foreign languages. We are here legally. We refuse to let people from other countries come here, disobey our immigration laws, and tell us what they are going to do and how we will treat them.

THIS IS OUR FREE COUNTRY; NOT A FREE FOR ALL!

P.S. I called a representive from the april10.org website, and she compared being in the country illegally to simply getting a speeding ticket; i.e. illegal immigration is a misdemeanor and therefore anyone that gets a speeding ticket is a "criminal" too. If illegal immigrants think coming into our country without proper authorization is nothing more than than getting a speeding ticket, then we definitely need to increase the punishment for illegal entry - say like immediate deportation with no prospect of ever returning to the U.S. soil again.

It is imperative to our nation's well-being to increase our nation's border security as well as the laws protecting our citizens against those that enter our country illegally.

I have only anecdotal evidence and extensive observations, but it does appear illegals are hurting Americans, and somewhat widely in the construction business. Illegals are popular because they are cheap and will never call OSHA (employers acn not move operations to other cities, the work is site specific).

I think young African-Americans are being hurt as well.

As far as journalism, I doubt journalists can write each piece as if it were a master's thesis.

USPride- please, relax a bit. It's not healthy to get so worked up, especially over people who are not plausibly hurting you.

American workers are being squeezed from both ends. All of the high-skilled "knowledge" jobs are being offshored to India or China. All of the low-skilled factory jobs have already been sent to the Third World. And the semi-skilled and skilled trades are being taken over by illegals. That's why Arun Khanna's patronizing suggestion to "stay in school" won't work. These days, a college degree in a technical field like IT or engineering is just a ticket to the nearest soup kitchen. What jobs, exactly, are Americans supposed to do? Economists talk about "creative destruction" but it seems like all the destruction is happening here and all the creation is happening overseas. It's time to end globalization, end immigration, and bring back the American middle class like in the 1950s.

It would be nice to see the details of the analysis that says the impact on low skilled wages from immigration both legal and illegal is very small. I say this because it seems to defy common sense that an increase in supply would not lower wages. Here in northern Virginia (which I will gladly move from in a few weeks) the vast majority of the people I see in the retail service sector seem to be recent immigrants (with poor language skills) from Mexico and Central America. What happened to the Americans? Did they go on to better paying higher skilled jobs, move away, or just drop out of the labor force? Do the illegal immigrants pay FICA and income tax? If so how do they do this without a Social Security number? This makes me skeptical of the statement that the shadow costs associated with illegal immigrants don’t out weigh the benefits of cheaper labor.

Firebug,
Instead of "all" I would use "some" or "many". I know a guy who often says, "the middle class is gone." When I respond with "no, its not gone, but it is under duress" or some such thing, he acts like we are on the opposite side of some huge theological debate.

I think we do our own posistions a disservice when we use global statements for rhetorical effect.

That said, I do tend to agree with those who feel our personal observations are not in sync with the statistics. I see what were once good paying residential construction jobs being done by teams of immigrant labor. I don't stop and ask them how much they're making. But my instinct tells me its not proportional to what it was just a few years ago.

Just as in the general feeling that official unemployment figures don't seem to reflect life in the world, the studies that say immigration has little effect on unskilled labor just seems off. And it also seems to me that the definition of unskilled or low skilled labor is suffering inflation. Certain trades that were not once thought of as unskilled now seem to be so classed.

Sadly, I think some in the media are far more concerned in affecting the news than in reporting the news. The old addage "power corrupts..." has played out in the media world. What is scary is what is NOT being reported. For example, where are the condemnations of the Mexican government that doesn't develop its economy nor supply its residents with the basics of life, but instead counts on the safety valve of illegal immigration to stave off revolution. Why isn't anyone concerned that the money sent back to Mexico is floating that country's economy? Why isn't anyone reporting on cholera, typhoid and other serious and previously dormant diseases that are cropping up thanks to an unchecked immigration invasion? And last but not least, what about the terror threat? My uncle used to leave his Alpine Texas home unlocked and keys in his truck. Now he drives with a loaded shotgun to drill water wells. If coyotes can make $2000 a head for smuggling people, how much more can they make smuggling drugs, or something worse? It's not a small issue. And the erosion of the minimum wage is just the icing on a very nasty cake.

Firebug wrote, " 'Boosts rents and housing values': This helps homeowners, who tend disproportionately to be older, white, and in a higher socioeconomic stratum. It hurts new entrants into the housing markets, in addition to renters."

Exactly.

A lot of people are overlooking the fact that in addition to benefiting businesses that want to keep wages low, immigration is a boon to landowners and a bane to those who don't own land.

EllenK wrote, "For example, where are the condemnations of the Mexican government that doesn't develop its economy nor supply its residents with the basics of life, but instead counts on the safety valve of illegal immigration to stave off revolution."

I think this is a key point.

I hate to do this (because of the overall quality of the post), but this sentence seems a bit rich:
"First, surely many immigrants cluster not in cities with high wages but in cities they find comfortable and easy to get to."
Given what we hear about the risks illegals take to get here, "comfortable and easy" can only be written in Caucasia (Lafayette).

Sorry, couldn't resist...

If labor supply were tighter, the minimum wage would be a non-issue (not that it doesn't seem to be already). Having said that, it's worth noting that the minimum wage I earned while in high-school twenty-five years ago would today be equivalent to @ $12/hour. That's embarrassing. Why would anyone think cheap, imported, illegal labor has nothing to do with this state of affairs?

We need to stop illegal immigration for a whole host of reasons. (Does anyone actually disagree with this statement?) To those that say we can't, does anyone believe that if these illegals were carrying counterfeit $100 bills across the border that the US government would not stop it overnight?

We need to prosecute and bankrupt some big-name companies for using illegal labor. That should get everyone's attention.

We need to tie legal immigration with wage levels within the US. Rising wages could trigger higher immigration levels. Falling wages could slow immigration.

We need to tie executive compensation to some set percentage of the average wage. Any compensation above that amount should be taxed at exorbitant levels above 90%.

We need universal health care NOW! It's ridiculous that people suffer in this country for lack of health care that is readily available to those with fat wallets.

We need to provide a free college education to everyone that deserves it. Today's system of student loans is criminal in the manner it enslaves students while enriching lenders.

Next we should move Lenin's tomb to the Washington Monument... just kidding. And I even left off the part about nationalizing the oil companies and using their profits to pay down the debt.

brad

i don't think the henderson article belongs in your "why o why better press corps" heading.

it's asking a whole lot for a reporter to weigh in on one side of a an academic dispute that pits borjas/katz against card/krueger. i tend to agree with you on the relative merits, but, she does a pretty good at conveying the debate.

i think "he said, she said" reporting is terrible when there's a clearly agreed-upon number that could discredit one side (say, the incidence of bush admin tax cuts or something), but, i don't think that this article qualifies.

it seems to me that you like porter's article better because he comes down on your side. fair enough, but, henderson's stab isn't so bad, i don't think.

joshb

While economists debated the costs and benefits of immigration, 1.5 million native-born citizens (net) left the state during the 1990s.

And during the first five years of this decade, Los Angeles gained another 400,000+ highly-need immigrants. Citizenship statistics aren't available yet, but there are 65,000 fewer whites and 11,000 fewer blacks there. Source: http://www.frey-demographer.org/reports/Brook06.pdf

I suppose one could argue that we should increase immigration until this is at equilibrium.

Immigration, legal and/or illegal, is not monolithic and to analyze it that way is a fallacy which gives fallacious reasoning, as the comments of Henderson, all the cited Economists and Dr. Delong's comments above, etc., and so on, clearly show.

Do over with some sense this time.

A few disconnected points:

How far will the quality of life have to erode before we discover that we have too many people living in this country? Expect an additional 150,000,000 people in the US in 50 years (two generations). What will the impact be on natural resources, environmental pollution, agriculture, traffic congestion and urban sprawl?

What is the economic cost of immigrants sending their disposable income back home instead of spending it here in the US?

Immigration is also about suppressing wages for skilled jobs. Are not wages falling in computer science and engineering jobs, jobs which are being filled by immigrants here in the US willing to work for less. How many skilled workers have been forced to train their low wage replacements before being layed off?

Since capital is now capturing all the gains from productivity increases, and maybe a bit more, instead of sharing them with labor, it is natural to look for explanations. One plausible explanation is illegals.

Other plausible explanations strike at our notion of ourselves as a nation. For example, the steps taken by business to break the traditional power of labor have become accepted practice as business has come to dominate the government.

Religion conditions people to accept the things of this world as givens, to be remedied in the next life. Since vast parts of religion have crawled into bed with the Republicans, this translates into a passive acceptance of markets, regardless of the subtle and not-so-subtle manipulations of the playing field.

People want an explanation, and illegals are a common-sense explanation, for this change in our social relations against the wealthy and against the rich.

Academic disputes are irrelevant. Until there is an explanation of the slow-motion destruction of the American Dream that people can understand, accept, and use as a tool to improve things, we can expect people to blame illegals.

I haven't seen a better explanation on this site.

Whoops, and I was using preview, too:

I meant to say:

People want an explanation, and illegals are a common-sense explanation, for this change in our social relations in favor of the wealthy and against people who have to work for a living.

"If labor supply were tighter, the minimum wage would be a non-issue (not that it doesn't seem to be already). "

If the labor supply were tighter, the Fed would ratchet up interest rates to counter "wage inflation". No? Absent a change in Fed policy, labor supply in the US will never get "tight enough" to drive up wages at the bottom. This is precisely why there is a minimum wage. The minimum wage is a guarantee to workers for allowing the government to maintain unemployement at over 4%.

Don't overlook the "WalMart effect" on lowering wages. WalMart pays minimum wage and few benefits. This forces the competition to pay low wages, even if they would prefer a more stable workforce with benefits, etc.

These are the predominant downward pressure on wages in the US. Blaming immigration is worrying about the mice while ignoring the elephants.

Good point about the Fed and unemployment by design. But just imagine if there were 12-15 million less low-income workers in America tomorrow. Don't you think this would significantly alter wages for low-income groups? And that's a lot more people than Walmart employs.

“Don't overlook the "WalMart effect" on lowering wages. WalMart pays minimum wage and few benefits.”

There’s been but one peer reviewed article on WalMart which says when it establishes in rural community wages go up slightly because it pay more than the “mom and pop” retail outlets it displaces.

WalMart’s annual before-tax income is $10,000 per employee per year, which is about $5 per hour per employee per year. WalMart pays more than minimum wage, about $10 per hour. So they don’t have much wiggle room to raise pay. A mere $5 per hour wage increase would wipe out all their pre-tax income. How about medical benefits? Let’s look at the UC. It offers Blue Cross PPO at about $250 monthly premium for a family with a 20% co pay. The UC pays about $400. So that works out to almost $8,000 in premiums. So WalMart would use up 80% of it’s pre-tax income giving it’s employee the same medical benefit as DeLong’s employer, the UC. Of course WalMart could raise prices to raise wages and benefits, but then they would lose customers to Target.

Why is walmart always dumped on for paying low wages and thus pushing people to public assistance, when farmers pay *much* lower wages to unskilled immigrants?

The critics of WalMart are mainly urban professionals who generally have never set foot in a WalMart store. WarMart is much more popular among low wage earners in rural areas. One WalMart store got over 300 applications for every job they advertised.

How many European immigrants were sent back during the 19th and early 20th century? When we compare illegal immigrant populations in the immigration laws era versus past undocumented immigrant populations in the no immigration laws era, are we comparing apples to apples or apples to pineapples?


P J Goober said: Why is Wal-Mart always dumped on for paying low wages and thus pushing people to public assistance, when farmers pay *much* lower wages to unskilled immigrants?
Large corporations are ideal for such ideals. In other words, one can't look like a champion for the people Lenin-crusading against farmers,

Let's do this experiment.

Round up all illegals and send them home. Observe what happens to wages.

Borjas also did a study released in 2003 which ought to be discussed here (QJE Nov 2003). In this one he does a good job separating out different types of immigrants by education and work experience and evaluating a national rather than local labor market, and finds a 8.9% decrease in wages over the last 30 years for high school dropouts because of increased immigration since 1970.

Another note: I would like to side with Card on this dispute, but I think you give Borjas' response too little credit. Over the time periods being considered, labor and capital could be very mobile, especially between geographic units as small as metropolitan areas. Just about every study that utilizes this variation in the immigrant shocks to various cities estimates small effects, and to my knowledge each study which looks at a national labor market so far has come up with significantly larger effects.

Even an archived, year-old thread such as this is still fetching up comments like the one above. What is it about immigration that seems to bring out the worst in people? And the most absurd point of all this is the uselessness of it all. USPride4Ever and scott can continue ranting and doing their Pat Buchanan and Lou Dobbs imitations for the rest of their lives, and none of that is going to prevent desperate people from trying to come to this country to make a living. Nor will the failure to grant "amnesty" (as if immigrants were violent criminals) persuade them to go back south in their millions. The lack of _thinking_ about this problem by the average anti-immigration bigot is almost despair-inducing.

Now that Brad has purged the offending comment, just a reminder that I am referring to a deleted comment, not to Steven McMullen's comment above.

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