I saw the labor demand thing in action during the 1990s. I was posted overseas for much of that decade and probably spent only one week a year in/around my old American suburb (to check on the house I was renting out). The nearest town center to my old place was reasonably prosperous (due to suburban shoppers), the urban residents were largely African-American, but outside the main retail core there were a lot of vacant and decaying buildings in the early 1990s.
By the late 1990s, all those commercial buildings were occupied - there was a Salvadoran pupusa place, a Colombian restaurant, Honduran tamales, grocery stores, clothing stores, etc. There was a construction boom in the 90’s (low interest rates) that attracted a lot of immigrant workers. Those workers spent money.
However, the influx of willing, hard working people loathe to jump from job to job (which was the norm for low wage Americans did in the 1970s and 80s, and many were not particularly reliable or hardworking) most certainly drove marginal Americans out of the workforce.
Moreover, immigrants don’t just go to boom towns- they go to industries looking for that type of reliable low wage labor. Forlorn Midwestern grain elevator towns have lots of migrants. Midwest Cattle slaughterhouses are entirely staffed by migrants. Chicken processing across the rural southeast is all staffed by migrants.
That ready and willing workforce supplanted any hope of locals getting hired, and quickly the situation became one where non-Spanish speakers would not be hired. However, let’s be honest, the firms would have had to invest in training locals (from high school onward)- but why invest in training when hard workers can be found cheaply?
Effectively, the illusion of cost less government deficit spending has made it easier for low end American workers to leave the workforce and be replaced by more reliable immigrant labor.
There is a different scenario - one in which companies invested in training, internships and apprentices and people were given government incentives (or requirements) to work rather than being paid not to work.
This is especially important because a good portion of the second generation of these hard working immigrants become marginally employable low status workers themselves, adopting the worst habit of Americans.
I am pro-immigration (coming from illiterate, immigrant stock myself- none of my grandparents went to college, only half attended high school), but the idea of an immigration policy that allows uneducated people to stream over the border on the basis of walking proximity to the border is insanity and is driven by politics, not policy, logic or common sense.
The US is very attractive - immigrants from Africa, Asia, Europe and South America want to come here (in addition to the Mexicans and Central Americans that can walk here). There should be a lottery and only provisional permission for uneducated migrants around the world (meaning more people from Africa and Asia than Latam, and more from Brazil or Argentina than Mexico or Honduras) as well as educated migrants on more permanent permits. Having a diverse set of migrants will also prevent the continued expansion of the Spanish-speaking monoculture prevalent in low wage industries (where non Spanish speakers are discriminated against in hiring) and perhaps result in greater use of English as lingua Franca in these workplaces.
I think of we had a global lottery, e-verify, deported illegals, etc a lot more people would be pro-immigration. The craven politics of immigration and the uncontrolled nature of it is what has many people opposing it.
"However, the influx of willing, hard working people loathe to jump from job to job (which was the norm for low wage Americans did in the 1970s and 80s, and many were not particularly reliable or hardworking) most certainly drove marginal Americans out of the workforce."
There's just no evidence that this is true, I'm sorry. Prime-age labor force participation is around 80%, which is close to it's all-time highs. The idea that immigration has driven ANY Americans out of the workforce -- any at all! -- is at this point simply imagination. It's a thing people imaging MUST be happening, but when we look at the data, we simply cannot find any evidence that it IS happening.
I say we need to stick to the data, remain grounded in empirical reality. If immigration has really driven ANY Americans out of the workforce, then we should be able to prove it.
If your lingua franca is labor force participation rate, you are on very shaky ground indeed.
LFPR peaked in 2000 and has been in a steady decline ever since in the same rhythm by which illegal immigration has increased.
It is actually much more significant than it seems at first glance as the labor force -- those who could seek employment -- is increasing due to the elder population working later into life.
In my 50 years in the labor force in the construction/real estate development industries, I have seen the tide of illegal workers rise further north than ever before.
This is also true of green card holders.
When Dell was building a plant in Winston-Salem, NC, the contractor could not get concrete finishers and remedied the situation by hiring some Mexican workers who put out a call to their family members. In less than a week, the contractor had more than enough workers.
One has to look at manual labor to see the trends.
The problem with this particular data set is its definition -- ages 25-54. It is absolutely legit, but it doesn't cover the territory fully as it relates to the problem today.
The vast majority of the impact on muscle trades is created by the flood of very young illegal immigrants -- younger than 25.
The next time you're around a construction site, take a look at the workers and see how many are younger than 25.
This is also an indictment of the lack of meaningful vocational training in the US. With every kid in front of a computer, we have lost our ability to wield a hammer.
The Dell plant in Winston-Salem was started in 2003, opened in 2005, shuttered in 2009, and sold in 2012 to HerbaLife. The correlation with LFPR does not really thread.
Dell selected a "construction manager" type of approach to the $100MM project in which the Baltimore-based CM contracted with local subs for each element of the work.
Part of the deal for $280MM in incentives for Dell was the use of local companies and that is from whence the problem came. The local W-S contractors had never built such projects -- 500,000 SF of flat slab concrete.
Had Dell selected a general contractor with appropriate experience, they would have been able to solicit bids from larger subs and the concrete work would not have been a problem.
There were plenty of good east coast GCs who could have handled that job.
A lot of stuff in life happens by accident so it is useful to know what really happened to understand.
I agree with your sentiment about statistical proof (not the hyperbole about “ANY” American losing job opportunities being imagination ) but would not be so quick to rely on top line stats to declare the empirical observations of people from hundreds of towns in flyover country (that the job market for American hs graduates is broken, whilst immigrants find employment) to be a mass delusion. Not least because my local observations line up more with their narrative than the top line stats.
Noah, consider that in the same period was the buildup of the carceral state due to tough-on-crime and war on drugs policies. Jails and prisons took a lot of labor out of circulation.
But that was just in the U.S. What about in European countries or other countries where there was a big surge of immigration, which didn't have a boom in imprisonment?? Their labor force participation is actually *higher* than what it used to be.
Actually better to compare to Germany, Canada, Australia 1995-2015 when the US had a much bigger surge than they did.
Immigrants to US have a higher labor force participation rate than natives and they are a very material fraction of the 18-55 no college education workforce. Take out those 10 million plus workers and their high participation rates and what does the domestic unskilled workforce look like? How does that compare to the native unskilled workforces of other developed countries that didn’t see such huge immigration flows?
Also consider the pct and trend of 18-55 no college workers not in the labor force at all, or on disability.
Also look at stats by race and gender. There has been an influx of females into workforce (and college) as out of wedlock births trend lower, and more competition for male workers from immigration.
Those are, of course, LEGAL immigration rates. We have more ILLEGAL immigrants currently than LEGAL immigrants.
Therein lies the problem.
The US does a pretty good job of admitting LEGAL immigrants -- I favor 2-3X more LEGAL immigrants including every foreign student who gets a STEM degree from a US college or university.
We are talking about low wage workers, starting in 1990s.
As an example, American vineyards hire low wage workers (because they were readily available) to harvest grapes while Australian vineyards invested in automation because there were not masses of low wage, low skilled immigrants.
Germany is a better example now as most of the immigrant wave was unskilled and illiterate (in German), but that only started in 2015 so it will be years before we will have good data.
Data from the US from a 20 year period of high immigration (1995-2015, though not during financial crisis) is readily available
The tendency for ethnic groups to cluster in particular sectors is an old, old story. And that presents issues. There are whole areas of the economy which are basically closed to non-Spanish speakers for the simple reason that you need to speak Spanish (well) to communicate with your co-workers and do the job effectively. And that's leaving aside the selection effects (you're more likely to get a job, especially a working-class job, if you know somebody who already works that job). It's a ratchet: I observe, in my city (New York) that union construction jobs (which have a lot of white workers), also have a lot of Latino workers, but non-union jobs have no white workers at all. Poor Americans have no chance at all, none. This has to have consequences. To slide by this with a lot of wonky economic arguments is simply missing the point.
There are plenty of Latinos in those union jobs, including foremen, and I'm sure they speak English and are likely citizens. The point is that there are Americans who would take the non-union jobs (construction jobs are a known pathway for the unskilled), but can't, first, because employers prefer to hire people who are forced to be compliant, later because of the language lock-out. The Spanish speakers have a platform to get above the low-wage jobs they (or their parents) have been working, with the experience and advantage they've gained in less desirable jobs. The usual immigrant story, which is a good one. But you can't fault American citizens for being pissed off at this, and any immigration policy or position has to take account of this.
Your post starts out ok, but then winds up in a pretty ridiculous place. Life's too short for me to fully unpack the ridiculousness, but I have a few questions about your statement that "the idea of an immigration policy that allows uneducated people to stream over the border on the basis of walking proximity to the border is insanity and is driven by politics, not policy, logic or common sense."
(1). Would it be more to your liking if all those "uneducated people" arrived by boat rather than on foot? That's how my illiterate, unskilled, dirt-poor great-grandparents arrived from Eastern Europe back in the day. I would note that the Atlantic Ocean did not present much of an obstacle to the 11 million mostly illiterate, unskilled, dirt-poor Europeans who immigrated to the US between 1870 and 1920.
(2). What is the "politics" that you believe is driving the current immigration "insanity"? I agree that the current situation is pretty crazy, but I would attribute most of the craziness to the unwillingness of the racist xenophobes in the Republican Party to stop profiting politically from the racist xenophobia that animates their constituencies. I'm guessing you don't see it that way. How do you see it?
I don’t see either “side” using a scoring system like they use in most of the world which would make it easier for young, highly skilled immigrants to come here and harder for those less likely to be productive members of society.
The "politics" are that liberals refuse to enforce immigration laws because doing so would have a disparate impact on brown people. It's no more complicated than that.
Look at the stats of deportations under Clinton, Obama and Biden.
Fact: The Biden immigration policy is similar to the Trump immigration policy, which is similar to the Obama immigration policy, which is similar to the Bush immigration policy ...
Democratic and GOP presidents alike aren't eager to tamper with the immigration administration and enforcement apparatus that influences most immigrants' choices and behaviors. (Immigrants really, really want to live here and want to play by the rules.) Congress can't or won't take any substantive policy action other than through annual appropriations. The process leaves everyone frustrated, especially immigrants left in this political limbo.
1. Remain in Mexico wherein "refugees" waited in Mexico for their cases to be heard rather than being released into the US and told come back to court in 2 yers.
2. The bloody wall which would have an enormous impact on drugs.
3. The cartels taking over all illegal immigration as a new profit center -- huge profits.
The bottom line is this -- we have laws and they are not being enforced to an extent never seen in the history of the US and this admin is the instigator of that.
1. Remain in Mexico and ... do what? If their economic and family lives are here, they can't just replicate their lives in Mexican cities near the border. Economies are a lot better in San Diego and El Paso than Tijuana and Juarez, and relatively speaking in the U.S. side of the border than the Mexican side.
2. The bloody wall will just onshore drug production and distribution to the U.S. side to be closer to its market of addicts. Or the cartels will tunnel, build a ladder 1 foot taller than the wall, or send drugs via ship. Let's also not forget that border officers are corruptible.
3. Already done. If not directly, then there are smugglers who are adjacent to the drug/human/sex trafficking trade. By the way, much of the coordination is done within the U.S. prison system.
We are talking "asylum seekers" who must pass a Credible Fear Interview and then a court hearing.
BTW, everybody is an asylum seeker these days because otherwise they would be subject to Title 42 and jammed back from whence they came.
Less than 3% of asylum seekers pass the CFI and the court hearing to be declared refugees and to thereby gain admittance to the US.
Under RIM, those asylum seekers underwent their CFI (most failed) and were assigned a court date whereafter they "remained in Mexico."
Under Biden, those asylum seekers underwent their CFI (most failed) and were assigned a court date whereafter they were released wholesale into the United States.
Fewer than 2% of asylum seekers released into the US ever show up for their court date.
This is why RIM was critical to a fair and legal application of US law.
One more wrinkle: to seek asylum, an immigrant must be on US soil, so the porosity of the border also creates a flood of asylum seekers.
The prior admin sought to allow asylum seekers to apply for asylum at a US consulate in their native country and to have their CFI and court appearance in their native land, but Congress shot it down. Why?
"Remain in Mexico and do what?" Go home, that's what. Harsh, but in a narrow sense, it worked. If this bothers you, I think you need to answer the question: what should we be doing differently to managing the flood of economic and climate refugees at the border now?
Congress can't take action because there is no national consensus on anything workable in this area. In retrospect the 2013 bill that the House Republicans torpedoed would have given them more of what they wanted than the current, uncontrolled situation.
No argument from me. Except that the refusal to enforce is both parties. The Republicans talk a good game but when it comes to enforcing the laws on employers, well, crickets.
(1) Follow the same legal means that those 11 million mostly illiterate, unskilled, dirt-poor Europeans who immigrated to the US between 1870 and 1920 did vice enter the country be coming across the border wherever and whenever they want.
(2) The politics are that neither side wants to fix the problem preferring instead to use it as campaign fodder. I present for example the fact the D’s controlled both houses and the executive branch for two years. What immigration reform bill they bring to the floor?
It is pandering, offensive, simplistic, and unsophisticated to suggest that people are "anti-immigration."
I am wildly enthusiastic about LEGAL immigration--we should allow any person who is educated in teh US in a STEM degree program to stay in the US forever -- not so much about illegal immigration and what it implies: a broken border, gross inflows of deadly fentanyl, criminal activity, and gargantuan funding for the cartels/coyotes.
Unfortunately, these other serious societal impacts have become hopelessly interwoven with the issue of immigration because of their geographical location. Had the prior administration's wall been completed, and had DHS appropriately staffed the wall, all of these problems would have been favorably impacted whilst still providing ample flexibility for Joe Biden to impose whatever unlawful policy he desired.
All I want as to illegal immigration is to enforce the God damn existing laws. What is wrong with that? A POTUS swears an oath to do just that.
What we learned during the Pandemic is that the EXPERTS got it entirely wrong. The studies you cite are either of such narrow focus -- case in point the Mariel Boatlift from Cuba -- or over such a short period of time as to be inconclusive.
What I do know from living in Texas and being in the real estate development/construction business is this -- craft and labor wages are depressed by massive amounts of illegal labor being used by legitimate contractors in every trade. I built high rise buildings in ATX and that is the voice of actual experience on the ground.
I lost a considerable amount of money in another business because I hired legal workers and provided health insurance whilst my competitor worked illegal labor hard.
From a micro perspective:
1. In Austin by God Texas, 25 years ago I paid a very capable stone mason $25/hour to build a small stone wall along the edge of my property in Pemberton Heights. He did a superb job.
2. A few years later, I paid $25/hour to a crew of masons who built an 8' wall around my backyard and pool, pool equipment. Bloody work of art.
3. A year ago, I paid $20/hour to a very capable stone mason to build a matching wall to the one that I built 25 years ago. Fabulous job.
In 25 years, wages for stone masons went from $25 to $20/hour. Why?
Because every illegal coming across the border knows how to set rock.
You cannot inject 5,000,000 low skill, low wage expectation workers into an economy and expect there to be no impact on wages when they are competing for jobs.
The fiction that these low wage earners are stimulating the economy is nonsense. The largest source of revenue in Mexico is illegals sending money home. They are not spending it in the US and they have limited funds with which to do it.
Know what is true? The incredible burden placed on property owners to pay property taxes to build schools and educate these illegal children.
Then, again, if we all stand 6' away from each other and wear a paper mask we can defeat Covid.
Expert opinion must be taken with a grain of salt as big as a Cybertruck.
We all believe Lee Harvey Oswald shot JFK, but we have no actual evidence, do we?
Direct observation for long periods of time is far more useful than a couple of eggheads in Boston looking at data they have no idea whether it is true or not.
Maybe in personal conversation anecdotal experience has a place. But in public policy discussion your anecdotal experience should not be used to determine the path moving forward.
Would it be too obvious to suggest that NO single input should determine the policy of the US and that that policy should be flexible enough to change if required?
On the other hand, would it be offensive to suggest that all the stakeholders -- particularly border states -- have input into immigration policy?
Right now, we have no policy other than a grossly porous border that is hemorrhaging illegals, drugs, contraband, and crime?
There is nothing being done on legal immigration. One would hope that the emergence of a credible policy on legal immigration would subsume the challenge of illegal immigration.
You can actually measure how cold it is via something called "temperature." I'm not saying we should totally denounce one's lived experience but it should also be considered within the context of the data at large. Personally, I find the argument "You cannot inject 5,000,000 low skill, low wage expectation workers into an economy and expect there to be no impact on wages when they are competing for jobs", which is apparently based off of dealing with a handful of stonemasons over the years entirely unconvincing when Noah literally cites to 20 studies that show the opposite. But this is just indicative of where our politics are at large when "vibes" are more compelling than actual data.
None of Noah's "studies" contemplate what is really happening at the border today -- the largest wave of illegal immigration in the history of the US.
We are on the top of the mountain and those studies -- every single one of them -- do not absorb what is happening.
To intertwine immigration with reality -- the US does not have a border with Mexico, but rather with the sovereign cartels who now control access and charge for passage.
The cartels are using the border to drive revenue with human trafficking, drugs, contraband, and crime.
This is not our grandma's border situation.
Never in the history of the US has the administration opened its kimono and welcomed the entire bloody world.
To make any study relevant to today, it has to be based on current data.
I would also note that many of those studies are promulgated at "institutions" that harbor a particular political viewpoint and bias. What we have learned from the whole Twitter saga is that even those institutions we thought were pure -- talking to you FBI -- are not only not pure, they are the worst transgressors.
I'm going to say this about these studies: immigration is a politically loaded topic. The politics of people in academia veer strongly a certain way. There are incentives, both conviction based and career-serving, to unearth certain findings and not others. That doesn't mean all these people are lying (most probably not actually), but i would be equally very surprised that _some_ of these studies at least, if not a decent portion, have their results biased by what authors want to believe. Yes it's based on numbers, but we all know about em lies and damn lies. If statistics were everything I could make a solid argument there is almost no covid in China at moment.
I don't think that the pandemic taught us that experts are wrong.
It taught us that institutions, such as de CDC and FDA, can sometimes be sclerotic, dogmatic, and slow to react.
But it taught us the opposite from experts: They can be wrong at the beginning, but with new evidence, they change.
In the case of masks, masks work. American experts were AGAINST masks at the beginning, but with new data they switched so much that now people don't remember when experts were anti masks.
In the case of vaccines, experts developed miraculous vaccines in record time, without which the Western world would be like Chins right now.
Now, back to your example of immigrations:
The studies that Noah cite are good and authoritative:
They specify that immigration pull wages in two opposite directions:
On the one hand, it decreses them by increasing labor supply,
On the other hand, it increases them by increasing demand of local services.
This has an effecg both on the wages of the economic sector where most of the immigrants work, AND on the general level of wages.
Those studies also prove that on the cases where it has been examined, the positive effect of increasing wages has dominated.
They don't say that this is guaranteed to always be the case.
Now, what happens with construction in Texas?
It might be the case that, as you say, migrants are decreasing wages in the construction sector in Texas, or perhaps more accurately, in the construction sector of a specific city in Texas.
Even then, this effect might be restricted only to the border States where migrants are more likely to stay. Perhaps in other States such as those of New England migrants aren't so present and American construction workers can enjoy the previous, non-depressed wage.
If anything, these lower wage immigrant workers make Texas more competitive in construction and manufacturing than other States, and than other countries.
But what is almost certain is that in Texas, those migrants are spending money in the local economy, contributing to an overall higher wage level in other economic sectors, and contributing taxes (through sales tax) to their communities and Social Security.
You yourself said that the education of the children of these immigrants are "putting a strain" on the local taxpayers. Well, THAT MEANS HIGHER DEMAND AND WAGES for teachers, educators, nurses, etc...
And finally, there might be a little confusion avout remittances:
Remittances are like 20% of the GDP of some Central American countries (Guatemala and El Salvador). But that's only because THE GDP OF THOSE COUNTRIES IS VERY LOW (26 billion for El Salvador, less than Musk's purchase of Twitter).
Most of the wages of the migrants is being spent in America. It has to be! Rent is expensive, food is expensive, everything is expensive.
You can verify this yourself:
$300-400 a month is the usual wage for those workers in Central America. Anything that you pay above that, is likely to be spent in the USA
It seems unassailable to me that the first wave of expertise was just flat wrong.
We didn't know where the virus came from. We didn't know how to treat it. We blew it on returning infected patients to at risk populations. We overlooked useful therapeutic drugs. We put faith in masking and distancing and hand washing that did not bear fruit.
The experts said it would take 5 years to develop a vaccine and the Trump admin rammed it through in 9 months.
NY thought it needed the Jacob Javits Center converted into beds and the US Mercy to add more beds - never used.
But that is not the only area in which experts failed us.
1. When inflation began to climb (Inauguration Day), experts ensured us it would be "transitory."
2. Experts assured us the 900,000 man Afghan National Army would handle the 35,000 man Taliban because we had given the ANA years of training and gobs of guns.
3. The experts were sure the Russians were not really going to attack Ukraine. When they did, our Pentagon said the Ukrainians would not last a week (twice as long as Putin thought).
> I am wildly enthusiastic about LEGAL immigration--we should allow any person who is educated in teh US in a STEM degree program to stay in the US forever
What you describe right here is not consistent with the current definition of legal immigration. My Congressman, Dr. Bill Foster, has repeatedly introduced a bill in Congress to change this, but has been repeatedly stymied by Republicans who spout this same rhetoric but really just want to restrict all immigration.
I wasn't attempting to provide a "current definition of legal immigration." Sorry. That was just my opinion as to how one aspect of legal immigration should run.
As to the Republicans, they can legitimately say they are not the party in power, but they are no better on immigration than the Dems, the left, and the media.
McConnell has held his position far beyond his shelf life as has Biden. We do not need 80 year old guys running the country.
The article you cite from Cato is a little disingenuous -- nope, a lot disingenuous -- as it pretends that Trump's policy was fashioned during "normal" times when for the last two years of his presidency, his policies on immigration were shaped by Covid.
If you ban all movement to the US because of a pandemic, then sure immigration will be down. Duh.
The population of Mexican immigrants to the US had been steadily declining. Perhaps you mean other immigrants.
“In 2021, there were about 10.7 million Mexican-born individuals living in the United States. Despite the continued popularity of the United States as a destination, the Mexican immigrant population decreased by about 1 million people (or 9 percent) between 2010 and 2021.”
Lovely so it's no longer Mexicans but Salvadorans, Guatemalams, Bolivians etc. And anyone else with the wherewithal to fly to Mexico and go to US border with a phony asylum claim. All this is hiding the ball
Noah does a poor job distinguishing between legal and illegal immigration. I suspect that's because, as an economist, he tends to see national borders as arbitrary barriers which just cause market inefficiencies.
It's not entirely his fault; academic economics trains this sort of thinking. I spent years gradually expanding my own thought process beyond efficiency. When you're a hammer, everything looks like a nail.
So the legal CA roofers who are routinely underbid by firms that hire (and are often run by) illegal immigrants are just part of that "a very small slice of less-educated minority workers" who are hurt by illegal immigration. No big deal. And the fact that you can't work in the non-customer-facing part of the hospitality industry without speaking Spanish... that must be another part. Again, no big deal.
Noah complains that immigration opponents won't listen to evidence. I think the same could be said of libertarian economists.
And as for "how reliable economics research is"... I've heard to many professors spouting MMT nonsense to believe that.
There is a severe shortage of people in the building and construction trades in California, exacerbating the housing shortage.
I am not saying you are wrong: I know that I can get work done much more cheaply by hiring immigrant labor. It’s no doubt driving down wages. But they wouldn’t be here in the first place if it weren’t for the demand.
One of the key problems in this debate is delineating illegal (uncontrolled) vs legal (limited and regulated) immigration. Noah (and most other more libertarian economists) does not make this distinction in this piece, I suspect because he personally doesn't believe it to be a valid distinction, but I might be wrong about that.
It isn't the hiring of immigrants that's the problem. It's the hiring of illegals under the table that's the problem. Caesar Chavez loved legal immigrants and hated illegal ones for exactly this reason.
Immigrants can and do work cheaper, but what are the examples of native construction workers who were rendered unemployable by the arrival of immigrants?
Were the native-born workers on the margins of unskilled, low value construction work? Alternatively, were the natives able to add a higher-value skill to their talent set and command a higher wage (e.g., operate an earth-mover or crane, learn to weld, manage a project, etc.)?
I suspect the native-born workers can't get through the door, because they're locked out by immigrant workers who speak a different language and who hire their own.
If you're talking about the fellas who linger about the Home Depot parking lot and jump into a pickup truck for work ... are native-borns really that hard up for construction work?
Native-borns can't compete with the day laborers. They exist somewhere. If they are still in construction, they probably moved up the value chain (learned new specialties or high value tools, became contractors or project managers) or went into different fields altogether.
How many native-borns were actually declassed as a result of immigration? How many were not able to find work of any kind, or joined the lumpenproletariat -- a term from Marx and Engels to describe people forced to live adjacent to but outside of the class system? The modern lumpen is part of the criminally productive underclass -- prostitute, pimp, drug dealer, gang member, smuggler, thief, fence, etc.
The problem isn't so much day laborers at Home Depot. The problem is immigrants working "on the books" with stolen SSNs. This provides a fig leaf so everyone can claim ignorance of what is patently obvious. It's a solvable issue, but neither party has had the political interest to enforce the law for the last 3-4 decades.
Orwell was right about intellectuals. In my experience, anyone who believes neither national deficits nor running the printing press matters has not the slightest familiarity with either basic economics or common sense. Funny how the MMT crowd has gone awfully quiet in the last year.
Promotion of MMT, in a comment under a Noah Smith column? This is the same caliber as, say, submitting a letter to the New Yorker in response to a Bill McKibben piece asking if they have considered whether carbon dioxide emissions might be a positive good because ~more plant food~
Sure, you can find a couple kooky professors that believe it. They’ve even written a handful of papers. That does not prevent the theory from being relegated to the laughingstock bucket marked “Geocentrism, &etc.”
MMT is taking the core precepts of monetary theory under new neoclassical econ and pretending they just work in the opposite direction.
I have to confess I was enthusiastic about MMT before I started studying for an Econ degree – but, like most people, I was enthusiastic because I liked the conclusion, and I worked backward to convince myself the chain of reasoning was correct from there. That’s not how theory should work, and indeed if you critically challenged any of MMT’s core intellectual precepts they would fall apart like so much dry kindling.
I love this. So obvious and clear. That's evidence for you!
One thing to considee Noah. The time constant of fungiblity. Unlike commodities of say gasoline, bread, corn flakes, labor wages have an intrinsic viscosity. Commodities work like a spring. Push and react. Pull and react.
Labor is a dashpot...your shocks. Together this viscoelasticity shows labor as not reacting quickly on labor under or over supply. Businesses will "take the hit" and not raise wages until desperate for employees. We saw this in the pandemic which has created great and significant changes resulting in under supply. Evidence.
But, lowering wages? Businesses resist to the n'ťh degree. Wages have an intrinsic antislip rachet. I'd be surprised to find much evidence of wages going down significantly. Like 10 to 30%. Maybe the 30s depression but even then, I don't know.
Very good summary of evidence! I’m wondering how an increase in immigration now would effect service industry labor shortages (is that still happening? I feel like I still see a lot of help wanted signs). Also, would like to hear more about immigration effects on inflation.
Also, I wonder, if labor shortages lead to companies hiring more (service sector) candidates that they wouldn’t otherwise hire, would more immigrants lead to improvements in job overall performance/ service quality? I realize this would be highly subjective, but it is something I have thought about while being served by sullen teens in various contexts. I know that there are lot of factors here, and also customer service is not an easy gig at all, but still I wonder.
Imagine a company about to hire 10000 workers at medium wages. A passing of an act of Congress allows unlimited immigration so they hire 10000 workers at low wages. There’s some extra demand there because 10000 new people are in the economy but while that increases GDP slightly or missed the point that the demand from the 10,000 new workers is less than would have been, and they are - to begin with - unemployed.
We know from history that the Black Death increased farm wages in England by 100% at a time of no productivity increase, so labour clearly benefited from being scarce.
You and I agree: Economics is a dynamic discipline, right?
If you had a single firm announce employment of 10,000 people, you are pretty much going to attract immigrants -- which is to say anyone who lives beyond that job site's labor/commute shed. If the firm were opening in Phoenix or Orlando, places with a large labor force and population growth of >10%, everyone not already living there would be an immigrant, whether they're coming from Asia, Ukraine, Latin America ... or the Rust Belt.
The single firm will probably hire a maximum of 10,000 people, but those 10,000 workers are going to create work for other people. There's going to be around 2,000 new jobs that will be created in the public sector alone (police, fire, teachers, regulators, bus drivers, etc.). These 10,000 workers are also going to make retail busier, they're going to need real estate, banks, cars and people to service them, restaurants, babysitting and adult day care, health care. Residents are also going to take vacations, and people arriving are going to need airports, hotels, etc.
Those 10,000 jobs aren't the only game in town. If the firm has more than 1 applicant for each position, then it can set down wages. Yet it won't be the only employer, and you could see circumstances like now when there will be many jobs that go unfilled.
There is an arrow of urbanism just like there is an arrow of time. This is a fact of history and anthropology.
Density is what makes a fixed lump of land a fallacy. A fixed area of land, hectare or acre, could be anything above it or beneath it. A hectare/acre of land could be used for food cultivation or resource extraction ... or it could be used for something that can add value to resources.
What would you say is more valuable? A two-acre rice field or a two-acre industrial campus that can store, mill and process the rice? The latter enables other land to be transformed into something more valuable. Housing would also be more valuable. Offices would be more valuable. Most land for rice growing would eventually be urbanized (and this includes suburbs; you can't have a suburb without an urb) but this urbanized community would be able to afford to import rice.
Historians such as James Belich are discovering how the Black Death helped create Europe’s later Promethean economic growth, by processes our host presumably finds utterly incomprehensible.
The conquests of Genghis Khan in the 13th century killed lots of people, and also led to widespread destruction of agriculture, infrastructure, buildings and just about everything else. The Black Death in the 14th century cut Europe’s population in half, but left everything else intact. The result was that, post-plague, there was essentially twice as much land and capital per worker as there had been previously. Not only did wages rise a lot, but labour productivity rose a lot too. People rationally chose to farm the most productive land, and allow the least productive to re-wild. They also had a strong new incentive to adopt labour-saving machinery, to get more out of the labour available; hence Gutenberg’s invention of the printing press in the 1430s, and its rapid adoption across the continent.
We can see similar principles at work today. The countries with the highest number of industrial robots per 10,000 manufacturing workers are South Korea, Singapore, Germany, Japan and Taiwan. Aside from Germany, these are all countries with static or declining populations where adopting US or UK levels of mass immigration is felt to be politically unfeasible. This constraint forces them to become more productive with what human labour they have.
There are a pair of YouTubers, Manky and Pro ZD, who do a playthrough of the Phoenix Wright games and provide voices to the characters. They're quite funny.
Well you can watch this in real time as Canada is planning on massively ramping up immigration - many think it will be a negative due to a lack of infrastructure - housing - healthcare - transit etc. main issue is the bulk of the people end up in either southern Ontario or Lower BC.
Over the long term we should see an increase in wages from clustering effects (increased investment because the U.S. has a big market which draws increased corporate investment), but I didn't go into that in this post...
Immigration effect that Noah brings forth, is that Immigration increases both supply and demand. They buy things with their wages and arguably cancels the wage increase.
“Immigrants’ Effect on Native Workers: New Analysis on Longitudinal Data” by Mette Foged and Giovanni Peri
The analysis for effects on only local born require a lot of specific data so the other studies often can't check for it.
This is focused on wages and "real" wages are difficult to assess because many jobs simply don't exist without immigrants. What is the value of specific fresh fruit in 1970s USA? Hard to know because we didn't have it widely available due to missing workers.
Leah Boustan "Streets of Gold" gives a great overall treatment across more margins than wages, all of which should be included in adjustment for real wages.
Agree it's hard. But even if immigration is productive in aggregate (data is fuzzy) then shouldn't we be eager to segment this by types, origins, etc of immigration? Then do more of what's most productive and less of the rest (with perhaps some exceptions for true humanitarian causes etc.)?
I don't see much appetite for deep thought on the topic unfortunately.
The data is not fuzzy. It is fundamentally impossible to measure perfectly something with so many endogeneities. It seems you are asking for a detailed layout of the winners and losers for every pair wise immigration (sending country, immigrant SES, receiving country, receiving country sliced demographic). That is impossible with all the relevant combinations.
There are exceptionally detailed descriptions of the improvements for very finely segmented groups in both destination and sending countries. Read "Streets of Gold" then read the referenced papers. You will see voluminous research as that is a fraction of papers.
Note, you are also asking for subgroup analysis of productivity, that is easy to answer. If people are receiving jobs then the market thinks they are allocated to their most productive use and removing constraints simply gets to higher productivity. Empirics can't measure per person productivity versus a counterfactual.
According to growth theory, all of the immigration will be productive with agglomeration effects. We will have more ideas, faster and those are non-rivalrous.
According to empirics, it is nearly measured as increasing productivity for both sending and receiving countries in aggregate.
Do you mean that labor wage expectations are set by the origins of labor? If so I would think that would dissipate as labor would also need higher than origin wages to just live here.?
If the US gains 1000 people and Somalia loses 1000 people while average wages in each country remain the same, world-level aggregate real wages have increased substantially. This is true even if you just focus on the US side. Growing the population of rich countries with stagnant or increasing real wages leads to higher aggregate real wages very easily and consistently.
I'm generally pretty pro-immigration, but I don't think the article addresses certain key concerns that anti-immigration folks have. Or, at least the ones that have resonated with me..
In particular, the USA is characterized by high pre-tax income inequality and relatively high levels of redistribution. We tend to think of the US as *not* being as redistributive as other developed nations, but that view stems from ignoring both pretax income inequality and low middle/lower-class taxes.
This state of affairs lends itself to the viewpoint that *most* Americans are essentially subsidized by the higher-earning Americans. For arguments' sake, suppose that only the top 20% of Americans are net financial assets to the nation. Then, immigrants must reach that income threshold eventually, or else may represent a public charge.
It is hard to get people into that high-earning top 20% in the USA, whether native- or foreign-born. Maybe it was different at some time in the past, but we are not able to run our country today in a way that the majority of people contribute more than they take out. All this suggests that immigration must be selective in order to advance comprehensive national success.
Turning our attention to the Southern border... amid all the accusations of racism and xenophobia, there is a very real underlying phenomenon of adverse selection. We make it quite hard to legally immigrate, and quite dangerous to cross illegally, but not impossible. That is going to tend to attract those with "nothing to lose", i.e. low levels of education and job skills.
American progressives tend to have a belief in the infinite malleability of people. If government provides quality schooling, healthcare, etc. then everyone ought to succeed similarly over time. Conservatives tend to think there are key ingredients to success (community, family, religion, culture, etc.) that the government can't provide.
The reality on the ground is that there are very distinct/visible groups in the US, namely African Americans and Latinos, that experience large and persistent income and wealth disparities relative to the rest of the country. Whether you want to blame the victims or the conservatives, it seems imprudent to just assume that the next wave of immigrants from the South will completely buck the trend.
It's impossible to be sure how productive new immigrant families will be, particularly after a generation or two stateside. Given the large number of would-be immigrants though, it behooves us to be selective. Why not?
Part of the issue, of course, at the Southern border is that we are already trying to be selective, but the incentive to cross over is so high that we have a huge number of undocumented. There isn't a great way to deal with this short of opening fire on migrants. The rhetoric from the left is that we are already doing very inhumane things at the border and the rhetoric from the right is that borders are porous and we're exploited. The reality is a very messy fraught balancing act.
With respect to the research you summarized, it was unclear from my surface reading whether these studies adequately accounted for automatic deficit spending triggered by the migrations. In many places, government will automatically spend more as population grows, e.g. via increased enrollments in schools, healthcare, housing services, etc.
To summarize all these thoughts into one concise question---
If immigrants tend to be low-skilled / low-wage, and the disparity seems to persist for generations, then isn't there a deficit-busting affect over time?
The US has a high Gini coefficient both before and after income transfers. I am curious what your source is that it does not. Here is an OECD publication with the info:
"I am curious what your source is that it does not."
I said the US has high pre-tax income inequality, which you agreed with. I also said high levels of redistribution. You seem to think that contradicts the US having a high post-tax Gini, but you are mistaken. Having high pre-tax income equality means it's possible to have both high levels of redistribution *and* high post-tax Gini. It's the mathematical concept of "subtraction starting with a big number".
[Do note that comparisons to Europe or OECD or whatever aren't material to the argument in my post. The US has high pre-tax inequality and a lot of redistribution, objectively speaking, regardless of whether OECD countries tend to be a bit more or less. Massive low-skill immigration could be troublesome in other places for similar reasons.]
I don't think you can "objectively" determine if the US has a high level of redistribution, only compare it to other countries. The second graph indicates that the US is third lowest in percentage of national income being redistributed to the bottom half.
I do see that the United States *does* tax the top decile the highest, which makes one wonder where that money is going. The defense budget perhaps?
"I don't think you can "objectively" determine if the US has a high level of redistribution, only compare it to other countries."
Nonsense. You can measure the quantity of redistribution directly in many ways without making comparisons. That's the exact quantity you would then use in cross-country comparisons. If we want to analyze the economic impact of migration, the amount of redistribution is potentially very relevant, which is the point of my post. Cross-country comparisons are not relevant to such an analysis.
"The second graph indicates that the US is third lowest in percentage of national income being redistributed to the bottom half."
It's the only one with US at third lowest, so you must mean this.
Anyways, you are simply not understanding what this graph shows. It shows the total amount of transfers received by the bottom 50%, as a percentage of gdp. That is not redistribution. The amount of redistribution is the transfers received *LESS* taxes paid.
The previous graph shows that the bottom 50 percent in the US pay the lowest taxes (relative to the top 10%). We know US high earners aren't paying the highest taxes among these nations, so the clear implication is that bottom 50 percent taxes in the US are extremely low. That's why redistribution is high in the USA. They don't give a ton to the bottom, but they take away even less.
"the United States *does* tax the top decile the highest"
Again, no. That is not what that graph indicates. It's the ratio of top decile to bottom half. As I mentioned above, top tax rates relatively low in the US and bottom half tax rates are just then much lower than that.
Anyways.. you sound like the typical self-righteous internet lefty, especially when you start armchair pontificating about the defense budget. You seem locked into the mindset that American is evil imperial capitalist. Where is that leading you?
Maybe your understanding can be improved a little just from our discussion.. Namely, you seem to think the USA just doesn't care about people as much as weapons, or some other nonsense. The reality is just that the USA offers a different sort of bargain than a lot of other places. It's more individualistic. The typical American doesn't have a full-blown European-style social safety net to lean on, but they also get to keep much more of what they earn and use that money as they please.
There's no deep moral superiority to taking people's money then giving it back to them in the form of various benefits and services. The democratic process in the US has lead to a different outcome than a lot of other places. I don't see a lot of people, at any income level, trying to leave the USA. People like the deal. There's never a shortage of self-righteous grandstanding by socialists though, especially online.
I think economists need to focus a lot more on trying to understand why some countries are able to have a low Gini coefficient BEFORE income transfers. If you’re a country which has a high pre-transfer Gini, and you can only get your post-transfer Gini down to an acceptable level by drastic government action, your politics is going to be far more precarious.
To take an extreme example, tiny Iceland (population 360,000) has a super-low pre-transfer Gini (0.25 according to the World Bank, 2021). Within reason, Iceland could adopt almost any set of economic policies it wants, from Ronald Reagan policies to Bernie Sanders policies, and it would still wind up with a post-transfer Gini lower than, say, France.
There’s a whole set of Central European countries (Czechia, Slovakia, Slovenia) which manage to have very low pre-transfer Gini scores. Why?
The numbers make me immediately think as follows. In the USA there are a few 100 billionaires. If one of those hundos moves to Iceland, the wealth of an average Icelandic increases by ~USD278k. The median is unchanged. One super wealthy immigrant blows up the whole egalitarian structure.
...but they wouldn't go to Iceland. Taxes are too high. Go to Singapore. People will complain about the Gini, but the Prime Minister will write in the Straits Times that he could deport five billionaires, and it wouldn't do anyone any good.
Some policies that have historically improved Gini a lot absolutely focused on ejecting the rich.
Thanks for that. “Predistribution” is a wonderful moniker. I like your theory that it’s connected to billionaire distortion effects, but I’m not sure it’s right.
1) First, a general point. I’m not a professional economist, I’m just someone on the internet. But I think we need better figures. Gini scores collected by different bodies vary by quite a high margin. While I feel confident that Iceland really is a much more equal society than the USA, I come across some figures which don’t feel right to me, to the point where I’m not really sure that Country A really is more equal than Country B as the figures suggest. That’s just my subjective inference; make of it what you will.
2) The theory that low pre-transfer Gini countries are more equal simply because they’re less rich overall might work for the ex-Communist central European countries I mentioned. But there are low pre-transfer Gini countries like Iceland which are close to the top in terms of GDP per capita (PPP or not). They’re not obviously leaving dollar bills on the sidewalk.
3) An obvious country to mention is Ireland, which officially has the kind of virtuous low pre-transfer Gini we’re talking about, and is also very pro-billionaire. It has the second lowest corporate tax level in the EU, and has lots of US corporations like Apple registering their patents in Dublin purely for tax avoidance reasons. Government spending in Ireland is significantly lower as a proportion of GDP than in the neighbouring UK, partially because Ireland does not have an NHS. But, as point 1) suggests, maybe the Gini figures for Ireland are just wrong.
4) I have a kind of reverse version of your billionaire theory. Here goes. It’s generally agreed that all western countries had their lowest Gini figures during the postwar recovery and boom, from 1945 until the 1973 oil price shock. My crazy idea is that, during that period, the main way governments could boost GDP and increase their tax revenue (and therefore their domestic “empire building”) was by directly increasing the earning capacity of the median worker (and usually, median voter). A lot of government projects tended to raise demand for these people’s labour directly, raising their wages, union bargaining power, and so on. Now, they’re actually far more dependent on billionaire wealth, and this dependency makes them far less willing to take strong antitrust measures against billionaire monopolies. With taxes, he who pays the piper…
I'm very skeptical of inequality oriented policy. If you can make a good investment that makes the general public better off, great. Why is inequality relevant? I tend to agree with the Singaporean PM that sacking rich people benefits no one.
Imagine for a second that, in the USA, the pre-transfer Gini came way down, while national income remained steady. Under current tax law, that would absolutely bankrupt the nation. That's because much more income would fall on the lower tax brackets. How popular would policies to reduce pre-transfer Gini be if they necessarily came with higher taxes on not-rich Americans?
I'm skeptical that there is any easy way forward here.
Note: I wasn’t against immigration, just thought it would negatively impact wages somewhat because it increases labor supply, but already supported immigration for other reasons.
People at the bottom of the wage scale don't consume nearly as much extrafamilial labor as they provide. So while your explanation is true generally, there are some important exceptions. If you're talking specifically about the kind of immigration that people want to build a wall to stop - low-wage immigration - the impact on wage levels is very real and we've been seeing a lot of it in the lower-level jobs in e.g. food service, farming, construction, meatpacking.
However there's a huge difference between theatrically mimicking a crack-down on immigration and actually cracking down. What "build the wall" really means is, "we hate those people, we want some theatrical cruelty to be inflicted upon them." What really determines low-wage immigration is the availability of jobs and conditions in home countries. One can see this especially in estimates of the US population of unauthorized immigrants: there was a massive drop during the peak of the Covid pandemic, as lockdowns reduced available low-wage jobs, followed by a massive rebound as the pandemic subsided, demand for low-wage workers suddenly outstripped supply and inflation surged. Trumpism didn't have much real impact, because Trumpists don't want to crack down on industries that employ illegals, because that would increase wages in those industries and drive inflation. On the contrary, when the pandemic raged among immigrants in the meatpacking sector, Trump resorted to the Defense Production Act to keep them working.
Real wages were stagnant from 1979 to 2014. Something happened around that time and since then real wages have gone up about 10%. Household income shows a similar trend from 1989 to 2013. For the life of me I cannot figure out how income started going up in 2014.
That would explain wage growth at the bottom decline but it doesn't mean anything to median wages. I don't think that The Fed has changed the metric several times, in fact their statistics are considered the gold standard in economics. But there are plenty of other sources saying the same thing.
Here in the UK, since we left the EU we have severe shortages of labour at the lower end of the income scale but these shortages are now spreading to other parts of the economy.
At the same time, we have migrates washing up in beaches who are making their way across the treacherous English Channel in small boats.
The ruing Conservative Party are arguing for lower immigration because that’s what it thinks voters in the poorer northern regions want.
We are a small island but we are no where close to being over run. We need people, we need skills and we need to be more open so that our economy can grow.
In 2021 the UK government issued 1.1 million visas for people to come and live in the UK. It’s the highest figure since records began, and a rise of more than half a million over the previous year’s figure. Most Conservative MPs don’t want to reduce immigration. Liz Truss actually argued for increasing immigration levels, not cutting them.
Immigration went up a lot under Tony Blair and Gordon Brown; but, aside from a slight lull in 2012, it went even higher under Cameron, May and Johnson.
One big problem we have is that the people emigrating from the UK are mostly highly skilled, with most of their taxable working life ahead of them. They’re typically married graduates around 30, typically moving to Perth in Australia because they think it’s a nicer place to raise a family. If we could persuade more of them to stay, that would be fantastic. We can’t change the pull factors attracting them to Oz. But we need to try and shift the push factors driving them away from the UK.
I was an immigrant to the UK from 1995 to 2008. Moved back to the Netherlands for family reasons. I would love to move back; I am high skilled, still have a house in England and can easily get a high paying job but look at the rules:
- I must pay an extra surcharge to the NHS, above the normal taxes I pay.
- I must pay for and take some stupid exam to see if I understand British culture.
- If I get unemployed the first few years I can get kicked out of the country.
- I cannot temporarily move back to the Netherlands to care for my parents
- After 5 years I have to pay thousands of pounds for an indefinite leave to remain, which I can lose if I am out of the country for a few months.
So no, I am not moving back until the UK strikes a deal with the EU to rejoin the Common Market which will give me back the right to move to the UK.
well, most of the blame is to be put at the feet of the falling pound, which makes it much less attractive for poles to come to work. Of course brexit didn't help the national currency, but it's not the only reason either.
well the cable has been on a downward lurch since 2008 really, first leg down was post GFC when financialization driven economy imploded, second big leg down was brexit in 2016, third was energy crisis this year (although now entirely retraced!), none of these helped with attracting cheap foreign labor from eastern european countries where local economies generally got stronger throughout that time and offered progressively more and more local opportunities. Yes government could've made up the numbers by letting in a couple million syrian refugees, but a) the political climate wouldn't have allowed it and b) am on the fence whether that would've been a good idea anyways. Muslim communities in Britain are already poorly integrated today, we could've easily have imported not just fresh labor but future racial/sectarian problems for decades if not centuries.
I think driving up aggregate domestic demand is the main economic reason for a country to have very high levels of net immigration. The other arguments for it seem to me to be marginal, and do have some down sides. Plus, O1 Visa type highly skilled immigration is only a small part of mass immigration.
The Acemoglu/Restrepo paper “Demographics and Automation” from 2018 looked at the low immigration OECD countries of East Asia: Japan and South Korea. They’ve mostly avoided labour shortages by investing heavily in robots, giving them good productivity gains. They’re even making pretty good use of their senior citizens. But the one thing they can’t do without immigrants is really ramp up domestic consumer demand. If you double a Japanese person’s wages, they’re not going to buy twice as much food, cleaning products, mobile phones, cars or whatever. But if you double Japan’s population, that would do it (It would also inflate land values and house prices, which will benefit some people.)
Can all countries have permanently rising domestic consumer demand fuelled by permanently rising population for ever and ever? It feels unsustainable.
It’s worth pointing out that, for rich countries, high population density seems to depress the birth rate. Hong Kong, Singapore and Taiwan all have highest high population density and lowest low fertility, for instance. I could imagine some countries getting caught in a vicious circle: the immigrants arrive, the population density goes up, the fertility rate goes down, leading to calls for more immigrants to counteract the declining demand caused by the fertility drop.
I wonder if the first country to figure out how to healthily grow per capita living standards with a static or declining population will own the future.
"….in my experience, anti-immigration people are completely set in their belief that immigration should be restricted."
This is my experience with open borders people too. IOW, it is a feature of political rationalizing on both sides. This post would have been even better if you tried to acknowledge that people tend to be set in their beliefs, but that one argument that does not hold up very well is that immigration tends to lower general wages. The other arguments — for or against some or all immigration — are still open to honest debate among reputable people.
For all intents and purposes, "open borders" people do not exist.
There's a big difference between a sentiment of open borders and implementing an actual policy of open borders, which has zero support among Democrats or GOP.
Wishing for open borders doesn't open them. When you have actual barriers and checkpoints along the U.S.-Mexico border, an immigration court system, a law enforcement agency, a military branch, passports and visas, those are literally the evidence of absence of open borders.
Even if the U.S. were to implement less restrictive immigration policies, the immigration apparatus will still exist so borders will never truly be open.
There's no such thing as open borders. People and goods can't come and go freely to and from the United States. Less restrictive immigration and trade mean that there will be some restrictions still in place and borders are never truly open.
Open borders is also a term used by people who think dichotomously. That is to say, there are only two possibilities, and they are at odds. If anyone outside of the U.S. gets in, we have open borders. It's a term loaded in bad faith and should be dismissed out of hand.
Good piece.
I saw the labor demand thing in action during the 1990s. I was posted overseas for much of that decade and probably spent only one week a year in/around my old American suburb (to check on the house I was renting out). The nearest town center to my old place was reasonably prosperous (due to suburban shoppers), the urban residents were largely African-American, but outside the main retail core there were a lot of vacant and decaying buildings in the early 1990s.
By the late 1990s, all those commercial buildings were occupied - there was a Salvadoran pupusa place, a Colombian restaurant, Honduran tamales, grocery stores, clothing stores, etc. There was a construction boom in the 90’s (low interest rates) that attracted a lot of immigrant workers. Those workers spent money.
However, the influx of willing, hard working people loathe to jump from job to job (which was the norm for low wage Americans did in the 1970s and 80s, and many were not particularly reliable or hardworking) most certainly drove marginal Americans out of the workforce.
Moreover, immigrants don’t just go to boom towns- they go to industries looking for that type of reliable low wage labor. Forlorn Midwestern grain elevator towns have lots of migrants. Midwest Cattle slaughterhouses are entirely staffed by migrants. Chicken processing across the rural southeast is all staffed by migrants.
That ready and willing workforce supplanted any hope of locals getting hired, and quickly the situation became one where non-Spanish speakers would not be hired. However, let’s be honest, the firms would have had to invest in training locals (from high school onward)- but why invest in training when hard workers can be found cheaply?
Effectively, the illusion of cost less government deficit spending has made it easier for low end American workers to leave the workforce and be replaced by more reliable immigrant labor.
There is a different scenario - one in which companies invested in training, internships and apprentices and people were given government incentives (or requirements) to work rather than being paid not to work.
This is especially important because a good portion of the second generation of these hard working immigrants become marginally employable low status workers themselves, adopting the worst habit of Americans.
I am pro-immigration (coming from illiterate, immigrant stock myself- none of my grandparents went to college, only half attended high school), but the idea of an immigration policy that allows uneducated people to stream over the border on the basis of walking proximity to the border is insanity and is driven by politics, not policy, logic or common sense.
The US is very attractive - immigrants from Africa, Asia, Europe and South America want to come here (in addition to the Mexicans and Central Americans that can walk here). There should be a lottery and only provisional permission for uneducated migrants around the world (meaning more people from Africa and Asia than Latam, and more from Brazil or Argentina than Mexico or Honduras) as well as educated migrants on more permanent permits. Having a diverse set of migrants will also prevent the continued expansion of the Spanish-speaking monoculture prevalent in low wage industries (where non Spanish speakers are discriminated against in hiring) and perhaps result in greater use of English as lingua Franca in these workplaces.
I think of we had a global lottery, e-verify, deported illegals, etc a lot more people would be pro-immigration. The craven politics of immigration and the uncontrolled nature of it is what has many people opposing it.
"However, the influx of willing, hard working people loathe to jump from job to job (which was the norm for low wage Americans did in the 1970s and 80s, and many were not particularly reliable or hardworking) most certainly drove marginal Americans out of the workforce."
There's just no evidence that this is true, I'm sorry. Prime-age labor force participation is around 80%, which is close to it's all-time highs. The idea that immigration has driven ANY Americans out of the workforce -- any at all! -- is at this point simply imagination. It's a thing people imaging MUST be happening, but when we look at the data, we simply cannot find any evidence that it IS happening.
I say we need to stick to the data, remain grounded in empirical reality. If immigration has really driven ANY Americans out of the workforce, then we should be able to prove it.
If your lingua franca is labor force participation rate, you are on very shaky ground indeed.
LFPR peaked in 2000 and has been in a steady decline ever since in the same rhythm by which illegal immigration has increased.
It is actually much more significant than it seems at first glance as the labor force -- those who could seek employment -- is increasing due to the elder population working later into life.
In my 50 years in the labor force in the construction/real estate development industries, I have seen the tide of illegal workers rise further north than ever before.
This is also true of green card holders.
When Dell was building a plant in Winston-Salem, NC, the contractor could not get concrete finishers and remedied the situation by hiring some Mexican workers who put out a call to their family members. In less than a week, the contractor had more than enough workers.
One has to look at manual labor to see the trends.
JLM
www.themusingsofthebigredcar.com
You should look at the prime-age employment-to-population ratio:
https://fred.stlouisfed.org/series/LNS12300060
This number is not affected by aging or college attendance rates.
The problem with this particular data set is its definition -- ages 25-54. It is absolutely legit, but it doesn't cover the territory fully as it relates to the problem today.
The vast majority of the impact on muscle trades is created by the flood of very young illegal immigrants -- younger than 25.
The next time you're around a construction site, take a look at the workers and see how many are younger than 25.
This is also an indictment of the lack of meaningful vocational training in the US. With every kid in front of a computer, we have lost our ability to wield a hammer.
Happy New Year
JLM
www.themusingsofthebigredcar.com
The Dell plant in Winston-Salem was started in 2003, opened in 2005, shuttered in 2009, and sold in 2012 to HerbaLife. The correlation with LFPR does not really thread.
Dell selected a "construction manager" type of approach to the $100MM project in which the Baltimore-based CM contracted with local subs for each element of the work.
Part of the deal for $280MM in incentives for Dell was the use of local companies and that is from whence the problem came. The local W-S contractors had never built such projects -- 500,000 SF of flat slab concrete.
Had Dell selected a general contractor with appropriate experience, they would have been able to solicit bids from larger subs and the concrete work would not have been a problem.
There were plenty of good east coast GCs who could have handled that job.
A lot of stuff in life happens by accident so it is useful to know what really happened to understand.
Happy New Year!
JLM
www.themusingsofthebigredcar.com
I agree with your sentiment about statistical proof (not the hyperbole about “ANY” American losing job opportunities being imagination ) but would not be so quick to rely on top line stats to declare the empirical observations of people from hundreds of towns in flyover country (that the job market for American hs graduates is broken, whilst immigrants find employment) to be a mass delusion. Not least because my local observations line up more with their narrative than the top line stats.
Noah, consider that in the same period was the buildup of the carceral state due to tough-on-crime and war on drugs policies. Jails and prisons took a lot of labor out of circulation.
But that was just in the U.S. What about in European countries or other countries where there was a big surge of immigration, which didn't have a boom in imprisonment?? Their labor force participation is actually *higher* than what it used to be.
Actually better to compare to Germany, Canada, Australia 1995-2015 when the US had a much bigger surge than they did.
Immigrants to US have a higher labor force participation rate than natives and they are a very material fraction of the 18-55 no college education workforce. Take out those 10 million plus workers and their high participation rates and what does the domestic unskilled workforce look like? How does that compare to the native unskilled workforces of other developed countries that didn’t see such huge immigration flows?
Also consider the pct and trend of 18-55 no college workers not in the labor force at all, or on disability.
Also look at stats by race and gender. There has been an influx of females into workforce (and college) as out of wedlock births trend lower, and more competition for male workers from immigration.
Those are, of course, LEGAL immigration rates. We have more ILLEGAL immigrants currently than LEGAL immigrants.
Therein lies the problem.
The US does a pretty good job of admitting LEGAL immigrants -- I favor 2-3X more LEGAL immigrants including every foreign student who gets a STEM degree from a US college or university.
Happy New Year!
JLM
www.themusingsofthebigredcar.com
We are talking about low wage workers, starting in 1990s.
As an example, American vineyards hire low wage workers (because they were readily available) to harvest grapes while Australian vineyards invested in automation because there were not masses of low wage, low skilled immigrants.
Germany is a better example now as most of the immigrant wave was unskilled and illiterate (in German), but that only started in 2015 so it will be years before we will have good data.
Data from the US from a 20 year period of high immigration (1995-2015, though not during financial crisis) is readily available
Thank you
The tendency for ethnic groups to cluster in particular sectors is an old, old story. And that presents issues. There are whole areas of the economy which are basically closed to non-Spanish speakers for the simple reason that you need to speak Spanish (well) to communicate with your co-workers and do the job effectively. And that's leaving aside the selection effects (you're more likely to get a job, especially a working-class job, if you know somebody who already works that job). It's a ratchet: I observe, in my city (New York) that union construction jobs (which have a lot of white workers), also have a lot of Latino workers, but non-union jobs have no white workers at all. Poor Americans have no chance at all, none. This has to have consequences. To slide by this with a lot of wonky economic arguments is simply missing the point.
There are plenty of Latinos in those union jobs, including foremen, and I'm sure they speak English and are likely citizens. The point is that there are Americans who would take the non-union jobs (construction jobs are a known pathway for the unskilled), but can't, first, because employers prefer to hire people who are forced to be compliant, later because of the language lock-out. The Spanish speakers have a platform to get above the low-wage jobs they (or their parents) have been working, with the experience and advantage they've gained in less desirable jobs. The usual immigrant story, which is a good one. But you can't fault American citizens for being pissed off at this, and any immigration policy or position has to take account of this.
Your post starts out ok, but then winds up in a pretty ridiculous place. Life's too short for me to fully unpack the ridiculousness, but I have a few questions about your statement that "the idea of an immigration policy that allows uneducated people to stream over the border on the basis of walking proximity to the border is insanity and is driven by politics, not policy, logic or common sense."
(1). Would it be more to your liking if all those "uneducated people" arrived by boat rather than on foot? That's how my illiterate, unskilled, dirt-poor great-grandparents arrived from Eastern Europe back in the day. I would note that the Atlantic Ocean did not present much of an obstacle to the 11 million mostly illiterate, unskilled, dirt-poor Europeans who immigrated to the US between 1870 and 1920.
(2). What is the "politics" that you believe is driving the current immigration "insanity"? I agree that the current situation is pretty crazy, but I would attribute most of the craziness to the unwillingness of the racist xenophobes in the Republican Party to stop profiting politically from the racist xenophobia that animates their constituencies. I'm guessing you don't see it that way. How do you see it?
Stop focusing on the “other” and try to see the whole system. It took me many years. Hint - no “side” is “right”
One side is invested in devising rational solutions to the problem. The other isn't, because racism and xenophobia win elections.
https://news.bloomberglaw.com/immigration/us-immigration-policy-dictated-by-gop-as-biden-thwarted-in-court
I don’t see either “side” using a scoring system like they use in most of the world which would make it easier for young, highly skilled immigrants to come here and harder for those less likely to be productive members of society.
your post starts from a pretty ridiculous place ("vegan commie atheist") but then winds up mostly ok actually xD
The "politics" are that liberals refuse to enforce immigration laws because doing so would have a disparate impact on brown people. It's no more complicated than that.
This is Not Even Wrong.
Look at the stats of deportations under Clinton, Obama and Biden.
Fact: The Biden immigration policy is similar to the Trump immigration policy, which is similar to the Obama immigration policy, which is similar to the Bush immigration policy ...
Democratic and GOP presidents alike aren't eager to tamper with the immigration administration and enforcement apparatus that influences most immigrants' choices and behaviors. (Immigrants really, really want to live here and want to play by the rules.) Congress can't or won't take any substantive policy action other than through annual appropriations. The process leaves everyone frustrated, especially immigrants left in this political limbo.
With three glaring exceptions -
1. Remain in Mexico wherein "refugees" waited in Mexico for their cases to be heard rather than being released into the US and told come back to court in 2 yers.
2. The bloody wall which would have an enormous impact on drugs.
3. The cartels taking over all illegal immigration as a new profit center -- huge profits.
The bottom line is this -- we have laws and they are not being enforced to an extent never seen in the history of the US and this admin is the instigator of that.
JLM
www.themusingsofthebigredcar.com
1. Remain in Mexico and ... do what? If their economic and family lives are here, they can't just replicate their lives in Mexican cities near the border. Economies are a lot better in San Diego and El Paso than Tijuana and Juarez, and relatively speaking in the U.S. side of the border than the Mexican side.
2. The bloody wall will just onshore drug production and distribution to the U.S. side to be closer to its market of addicts. Or the cartels will tunnel, build a ladder 1 foot taller than the wall, or send drugs via ship. Let's also not forget that border officers are corruptible.
3. Already done. If not directly, then there are smugglers who are adjacent to the drug/human/sex trafficking trade. By the way, much of the coordination is done within the U.S. prison system.
We are talking "asylum seekers" who must pass a Credible Fear Interview and then a court hearing.
BTW, everybody is an asylum seeker these days because otherwise they would be subject to Title 42 and jammed back from whence they came.
Less than 3% of asylum seekers pass the CFI and the court hearing to be declared refugees and to thereby gain admittance to the US.
Under RIM, those asylum seekers underwent their CFI (most failed) and were assigned a court date whereafter they "remained in Mexico."
Under Biden, those asylum seekers underwent their CFI (most failed) and were assigned a court date whereafter they were released wholesale into the United States.
Fewer than 2% of asylum seekers released into the US ever show up for their court date.
This is why RIM was critical to a fair and legal application of US law.
One more wrinkle: to seek asylum, an immigrant must be on US soil, so the porosity of the border also creates a flood of asylum seekers.
The prior admin sought to allow asylum seekers to apply for asylum at a US consulate in their native country and to have their CFI and court appearance in their native land, but Congress shot it down. Why?
JLM
www.themusingsofthebigredcar.com
"Remain in Mexico and do what?" Go home, that's what. Harsh, but in a narrow sense, it worked. If this bothers you, I think you need to answer the question: what should we be doing differently to managing the flood of economic and climate refugees at the border now?
Congress can't take action because there is no national consensus on anything workable in this area. In retrospect the 2013 bill that the House Republicans torpedoed would have given them more of what they wanted than the current, uncontrolled situation.
Why pass laws when you know Presidents, governors and mayors of a certain party will refuse to enforce them?
No argument from me. Except that the refusal to enforce is both parties. The Republicans talk a good game but when it comes to enforcing the laws on employers, well, crickets.
(1) Follow the same legal means that those 11 million mostly illiterate, unskilled, dirt-poor Europeans who immigrated to the US between 1870 and 1920 did vice enter the country be coming across the border wherever and whenever they want.
(2) The politics are that neither side wants to fix the problem preferring instead to use it as campaign fodder. I present for example the fact the D’s controlled both houses and the executive branch for two years. What immigration reform bill they bring to the floor?
It is pandering, offensive, simplistic, and unsophisticated to suggest that people are "anti-immigration."
I am wildly enthusiastic about LEGAL immigration--we should allow any person who is educated in teh US in a STEM degree program to stay in the US forever -- not so much about illegal immigration and what it implies: a broken border, gross inflows of deadly fentanyl, criminal activity, and gargantuan funding for the cartels/coyotes.
Unfortunately, these other serious societal impacts have become hopelessly interwoven with the issue of immigration because of their geographical location. Had the prior administration's wall been completed, and had DHS appropriately staffed the wall, all of these problems would have been favorably impacted whilst still providing ample flexibility for Joe Biden to impose whatever unlawful policy he desired.
All I want as to illegal immigration is to enforce the God damn existing laws. What is wrong with that? A POTUS swears an oath to do just that.
What we learned during the Pandemic is that the EXPERTS got it entirely wrong. The studies you cite are either of such narrow focus -- case in point the Mariel Boatlift from Cuba -- or over such a short period of time as to be inconclusive.
What I do know from living in Texas and being in the real estate development/construction business is this -- craft and labor wages are depressed by massive amounts of illegal labor being used by legitimate contractors in every trade. I built high rise buildings in ATX and that is the voice of actual experience on the ground.
I lost a considerable amount of money in another business because I hired legal workers and provided health insurance whilst my competitor worked illegal labor hard.
From a micro perspective:
1. In Austin by God Texas, 25 years ago I paid a very capable stone mason $25/hour to build a small stone wall along the edge of my property in Pemberton Heights. He did a superb job.
2. A few years later, I paid $25/hour to a crew of masons who built an 8' wall around my backyard and pool, pool equipment. Bloody work of art.
3. A year ago, I paid $20/hour to a very capable stone mason to build a matching wall to the one that I built 25 years ago. Fabulous job.
In 25 years, wages for stone masons went from $25 to $20/hour. Why?
Because every illegal coming across the border knows how to set rock.
You cannot inject 5,000,000 low skill, low wage expectation workers into an economy and expect there to be no impact on wages when they are competing for jobs.
The fiction that these low wage earners are stimulating the economy is nonsense. The largest source of revenue in Mexico is illegals sending money home. They are not spending it in the US and they have limited funds with which to do it.
Know what is true? The incredible burden placed on property owners to pay property taxes to build schools and educate these illegal children.
Then, again, if we all stand 6' away from each other and wear a paper mask we can defeat Covid.
Expert opinion must be taken with a grain of salt as big as a Cybertruck.
Happy New Year
JLM
www.themusingsofthebigredcar.com
Care to cite actual data and statistics or just anecdotal evidence?
We all believe Lee Harvey Oswald shot JFK, but we have no actual evidence, do we?
Direct observation for long periods of time is far more useful than a couple of eggheads in Boston looking at data they have no idea whether it is true or not.
JLM
www.themusingsofthebigredcar.com
Valid data comes from observation, and this is observation.
Maybe in personal conversation anecdotal experience has a place. But in public policy discussion your anecdotal experience should not be used to determine the path moving forward.
Would it be too obvious to suggest that NO single input should determine the policy of the US and that that policy should be flexible enough to change if required?
On the other hand, would it be offensive to suggest that all the stakeholders -- particularly border states -- have input into immigration policy?
Right now, we have no policy other than a grossly porous border that is hemorrhaging illegals, drugs, contraband, and crime?
There is nothing being done on legal immigration. One would hope that the emergence of a credible policy on legal immigration would subsume the challenge of illegal immigration.
JLM
www.themusingsofthebigredcar.com
We are a country of immigrants -- LEGAL immigrants.
Illegal immigrants should have as much impact on US immigration policy as we have on Russian war policy in Ukraine where we are also a stakeholder.
JLM
www.themusingsofthebigredcar.com
You can actually measure how cold it is via something called "temperature." I'm not saying we should totally denounce one's lived experience but it should also be considered within the context of the data at large. Personally, I find the argument "You cannot inject 5,000,000 low skill, low wage expectation workers into an economy and expect there to be no impact on wages when they are competing for jobs", which is apparently based off of dealing with a handful of stonemasons over the years entirely unconvincing when Noah literally cites to 20 studies that show the opposite. But this is just indicative of where our politics are at large when "vibes" are more compelling than actual data.
None of Noah's "studies" contemplate what is really happening at the border today -- the largest wave of illegal immigration in the history of the US.
We are on the top of the mountain and those studies -- every single one of them -- do not absorb what is happening.
To intertwine immigration with reality -- the US does not have a border with Mexico, but rather with the sovereign cartels who now control access and charge for passage.
The cartels are using the border to drive revenue with human trafficking, drugs, contraband, and crime.
This is not our grandma's border situation.
Never in the history of the US has the administration opened its kimono and welcomed the entire bloody world.
To make any study relevant to today, it has to be based on current data.
I would also note that many of those studies are promulgated at "institutions" that harbor a particular political viewpoint and bias. What we have learned from the whole Twitter saga is that even those institutions we thought were pure -- talking to you FBI -- are not only not pure, they are the worst transgressors.
JLM
www.themusingsofthebigredcar.com
I'm going to say this about these studies: immigration is a politically loaded topic. The politics of people in academia veer strongly a certain way. There are incentives, both conviction based and career-serving, to unearth certain findings and not others. That doesn't mean all these people are lying (most probably not actually), but i would be equally very surprised that _some_ of these studies at least, if not a decent portion, have their results biased by what authors want to believe. Yes it's based on numbers, but we all know about em lies and damn lies. If statistics were everything I could make a solid argument there is almost no covid in China at moment.
I don't think that the pandemic taught us that experts are wrong.
It taught us that institutions, such as de CDC and FDA, can sometimes be sclerotic, dogmatic, and slow to react.
But it taught us the opposite from experts: They can be wrong at the beginning, but with new evidence, they change.
In the case of masks, masks work. American experts were AGAINST masks at the beginning, but with new data they switched so much that now people don't remember when experts were anti masks.
In the case of vaccines, experts developed miraculous vaccines in record time, without which the Western world would be like Chins right now.
Now, back to your example of immigrations:
The studies that Noah cite are good and authoritative:
They specify that immigration pull wages in two opposite directions:
On the one hand, it decreses them by increasing labor supply,
On the other hand, it increases them by increasing demand of local services.
This has an effecg both on the wages of the economic sector where most of the immigrants work, AND on the general level of wages.
Those studies also prove that on the cases where it has been examined, the positive effect of increasing wages has dominated.
They don't say that this is guaranteed to always be the case.
Now, what happens with construction in Texas?
It might be the case that, as you say, migrants are decreasing wages in the construction sector in Texas, or perhaps more accurately, in the construction sector of a specific city in Texas.
Even then, this effect might be restricted only to the border States where migrants are more likely to stay. Perhaps in other States such as those of New England migrants aren't so present and American construction workers can enjoy the previous, non-depressed wage.
If anything, these lower wage immigrant workers make Texas more competitive in construction and manufacturing than other States, and than other countries.
But what is almost certain is that in Texas, those migrants are spending money in the local economy, contributing to an overall higher wage level in other economic sectors, and contributing taxes (through sales tax) to their communities and Social Security.
You yourself said that the education of the children of these immigrants are "putting a strain" on the local taxpayers. Well, THAT MEANS HIGHER DEMAND AND WAGES for teachers, educators, nurses, etc...
And finally, there might be a little confusion avout remittances:
Remittances are like 20% of the GDP of some Central American countries (Guatemala and El Salvador). But that's only because THE GDP OF THOSE COUNTRIES IS VERY LOW (26 billion for El Salvador, less than Musk's purchase of Twitter).
Most of the wages of the migrants is being spent in America. It has to be! Rent is expensive, food is expensive, everything is expensive.
You can verify this yourself:
$300-400 a month is the usual wage for those workers in Central America. Anything that you pay above that, is likely to be spent in the USA
As to experts
It seems unassailable to me that the first wave of expertise was just flat wrong.
We didn't know where the virus came from. We didn't know how to treat it. We blew it on returning infected patients to at risk populations. We overlooked useful therapeutic drugs. We put faith in masking and distancing and hand washing that did not bear fruit.
The experts said it would take 5 years to develop a vaccine and the Trump admin rammed it through in 9 months.
NY thought it needed the Jacob Javits Center converted into beds and the US Mercy to add more beds - never used.
But that is not the only area in which experts failed us.
1. When inflation began to climb (Inauguration Day), experts ensured us it would be "transitory."
2. Experts assured us the 900,000 man Afghan National Army would handle the 35,000 man Taliban because we had given the ANA years of training and gobs of guns.
3. The experts were sure the Russians were not really going to attack Ukraine. When they did, our Pentagon said the Ukrainians would not last a week (twice as long as Putin thought).
So, experts? Screw them. Think for yourself.
JLM
www.themusingsofthebigredcar.com
> I am wildly enthusiastic about LEGAL immigration--we should allow any person who is educated in teh US in a STEM degree program to stay in the US forever
What you describe right here is not consistent with the current definition of legal immigration. My Congressman, Dr. Bill Foster, has repeatedly introduced a bill in Congress to change this, but has been repeatedly stymied by Republicans who spout this same rhetoric but really just want to restrict all immigration.
Case in point: https://www.cato.org/blog/president-trump-reduced-legal-immigration-he-did-not-reduce-illegal-immigration
I wasn't attempting to provide a "current definition of legal immigration." Sorry. That was just my opinion as to how one aspect of legal immigration should run.
As to the Republicans, they can legitimately say they are not the party in power, but they are no better on immigration than the Dems, the left, and the media.
McConnell has held his position far beyond his shelf life as has Biden. We do not need 80 year old guys running the country.
The article you cite from Cato is a little disingenuous -- nope, a lot disingenuous -- as it pretends that Trump's policy was fashioned during "normal" times when for the last two years of his presidency, his policies on immigration were shaped by Covid.
If you ban all movement to the US because of a pandemic, then sure immigration will be down. Duh.
JLM
www.themusingsofthebigredcar.com
The population of Mexican immigrants to the US had been steadily declining. Perhaps you mean other immigrants.
“In 2021, there were about 10.7 million Mexican-born individuals living in the United States. Despite the continued popularity of the United States as a destination, the Mexican immigrant population decreased by about 1 million people (or 9 percent) between 2010 and 2021.”
Lovely so it's no longer Mexicans but Salvadorans, Guatemalams, Bolivians etc. And anyone else with the wherewithal to fly to Mexico and go to US border with a phony asylum claim. All this is hiding the ball
Fair play. Sure the nationality of illegal immigrants is diverse. They are all coming through the Mexican border.
I don't think anyone has any inkling how many illegal immigrants (Mexican or otherwise) are in the US. There is no way to capture that statistic.
JLM
www.themusingsofthebigredcar.com
Lots of people claim to know but I am not sure how they do their research.
Most immigrants these days are Asian. This was a surprise to me. I am not sure how they get here.
Aircraft.
Noah does a poor job distinguishing between legal and illegal immigration. I suspect that's because, as an economist, he tends to see national borders as arbitrary barriers which just cause market inefficiencies.
It's not entirely his fault; academic economics trains this sort of thinking. I spent years gradually expanding my own thought process beyond efficiency. When you're a hammer, everything looks like a nail.
So the legal CA roofers who are routinely underbid by firms that hire (and are often run by) illegal immigrants are just part of that "a very small slice of less-educated minority workers" who are hurt by illegal immigration. No big deal. And the fact that you can't work in the non-customer-facing part of the hospitality industry without speaking Spanish... that must be another part. Again, no big deal.
Noah complains that immigration opponents won't listen to evidence. I think the same could be said of libertarian economists.
And as for "how reliable economics research is"... I've heard to many professors spouting MMT nonsense to believe that.
There is a severe shortage of people in the building and construction trades in California, exacerbating the housing shortage.
I am not saying you are wrong: I know that I can get work done much more cheaply by hiring immigrant labor. It’s no doubt driving down wages. But they wouldn’t be here in the first place if it weren’t for the demand.
One of the key problems in this debate is delineating illegal (uncontrolled) vs legal (limited and regulated) immigration. Noah (and most other more libertarian economists) does not make this distinction in this piece, I suspect because he personally doesn't believe it to be a valid distinction, but I might be wrong about that.
It isn't the hiring of immigrants that's the problem. It's the hiring of illegals under the table that's the problem. Caesar Chavez loved legal immigrants and hated illegal ones for exactly this reason.
Immigrants can and do work cheaper, but what are the examples of native construction workers who were rendered unemployable by the arrival of immigrants?
Were the native-born workers on the margins of unskilled, low value construction work? Alternatively, were the natives able to add a higher-value skill to their talent set and command a higher wage (e.g., operate an earth-mover or crane, learn to weld, manage a project, etc.)?
I suspect the native-born workers can't get through the door, because they're locked out by immigrant workers who speak a different language and who hire their own.
If you're talking about the fellas who linger about the Home Depot parking lot and jump into a pickup truck for work ... are native-borns really that hard up for construction work?
Native-borns can't compete with the day laborers. They exist somewhere. If they are still in construction, they probably moved up the value chain (learned new specialties or high value tools, became contractors or project managers) or went into different fields altogether.
How many native-borns were actually declassed as a result of immigration? How many were not able to find work of any kind, or joined the lumpenproletariat -- a term from Marx and Engels to describe people forced to live adjacent to but outside of the class system? The modern lumpen is part of the criminally productive underclass -- prostitute, pimp, drug dealer, gang member, smuggler, thief, fence, etc.
The problem isn't so much day laborers at Home Depot. The problem is immigrants working "on the books" with stolen SSNs. This provides a fig leaf so everyone can claim ignorance of what is patently obvious. It's a solvable issue, but neither party has had the political interest to enforce the law for the last 3-4 decades.
In principle, there should be *no* demand for illegal immigrants because they don't have the right to work in this country.
Orwell was right about intellectuals. In my experience, anyone who believes neither national deficits nor running the printing press matters has not the slightest familiarity with either basic economics or common sense. Funny how the MMT crowd has gone awfully quiet in the last year.
and anyone who promotes MMT reliably hasn't the slightest familiarity with the real economy
Promotion of MMT, in a comment under a Noah Smith column? This is the same caliber as, say, submitting a letter to the New Yorker in response to a Bill McKibben piece asking if they have considered whether carbon dioxide emissions might be a positive good because ~more plant food~
Sure, you can find a couple kooky professors that believe it. They’ve even written a handful of papers. That does not prevent the theory from being relegated to the laughingstock bucket marked “Geocentrism, &etc.”
MMT is taking the core precepts of monetary theory under new neoclassical econ and pretending they just work in the opposite direction.
I have to confess I was enthusiastic about MMT before I started studying for an Econ degree – but, like most people, I was enthusiastic because I liked the conclusion, and I worked backward to convince myself the chain of reasoning was correct from there. That’s not how theory should work, and indeed if you critically challenged any of MMT’s core intellectual precepts they would fall apart like so much dry kindling.
Look at the policies promoted by MMT advocates. MMT's "conclusion" is that deficits don't matter.
I love this. So obvious and clear. That's evidence for you!
One thing to considee Noah. The time constant of fungiblity. Unlike commodities of say gasoline, bread, corn flakes, labor wages have an intrinsic viscosity. Commodities work like a spring. Push and react. Pull and react.
Labor is a dashpot...your shocks. Together this viscoelasticity shows labor as not reacting quickly on labor under or over supply. Businesses will "take the hit" and not raise wages until desperate for employees. We saw this in the pandemic which has created great and significant changes resulting in under supply. Evidence.
But, lowering wages? Businesses resist to the n'ťh degree. Wages have an intrinsic antislip rachet. I'd be surprised to find much evidence of wages going down significantly. Like 10 to 30%. Maybe the 30s depression but even then, I don't know.
Very good summary of evidence! I’m wondering how an increase in immigration now would effect service industry labor shortages (is that still happening? I feel like I still see a lot of help wanted signs). Also, would like to hear more about immigration effects on inflation.
Also, I wonder, if labor shortages lead to companies hiring more (service sector) candidates that they wouldn’t otherwise hire, would more immigrants lead to improvements in job overall performance/ service quality? I realize this would be highly subjective, but it is something I have thought about while being served by sullen teens in various contexts. I know that there are lot of factors here, and also customer service is not an easy gig at all, but still I wonder.
Imagine a company about to hire 10000 workers at medium wages. A passing of an act of Congress allows unlimited immigration so they hire 10000 workers at low wages. There’s some extra demand there because 10000 new people are in the economy but while that increases GDP slightly or missed the point that the demand from the 10,000 new workers is less than would have been, and they are - to begin with - unemployed.
We know from history that the Black Death increased farm wages in England by 100% at a time of no productivity increase, so labour clearly benefited from being scarce.
[Lump of labor fallacy has entered the chat].
Standard economic cant has entered the chat.
My example would reduce wages, of course - because that’s the way I wrote it , there may be other forms of immigration that don’t.
Lump of labor fallacy > standard economic cant.
You and I agree: Economics is a dynamic discipline, right?
If you had a single firm announce employment of 10,000 people, you are pretty much going to attract immigrants -- which is to say anyone who lives beyond that job site's labor/commute shed. If the firm were opening in Phoenix or Orlando, places with a large labor force and population growth of >10%, everyone not already living there would be an immigrant, whether they're coming from Asia, Ukraine, Latin America ... or the Rust Belt.
The single firm will probably hire a maximum of 10,000 people, but those 10,000 workers are going to create work for other people. There's going to be around 2,000 new jobs that will be created in the public sector alone (police, fire, teachers, regulators, bus drivers, etc.). These 10,000 workers are also going to make retail busier, they're going to need real estate, banks, cars and people to service them, restaurants, babysitting and adult day care, health care. Residents are also going to take vacations, and people arriving are going to need airports, hotels, etc.
Those 10,000 jobs aren't the only game in town. If the firm has more than 1 applicant for each position, then it can set down wages. Yet it won't be the only employer, and you could see circumstances like now when there will be many jobs that go unfilled.
Is the idea there's a fixed lump of land a fallacy? Are there no costs involved in increased population density?
No, but moving the goalposts is a fallacy. :)
There is an arrow of urbanism just like there is an arrow of time. This is a fact of history and anthropology.
Density is what makes a fixed lump of land a fallacy. A fixed area of land, hectare or acre, could be anything above it or beneath it. A hectare/acre of land could be used for food cultivation or resource extraction ... or it could be used for something that can add value to resources.
What would you say is more valuable? A two-acre rice field or a two-acre industrial campus that can store, mill and process the rice? The latter enables other land to be transformed into something more valuable. Housing would also be more valuable. Offices would be more valuable. Most land for rice growing would eventually be urbanized (and this includes suburbs; you can't have a suburb without an urb) but this urbanized community would be able to afford to import rice.
Historians such as James Belich are discovering how the Black Death helped create Europe’s later Promethean economic growth, by processes our host presumably finds utterly incomprehensible.
The conquests of Genghis Khan in the 13th century killed lots of people, and also led to widespread destruction of agriculture, infrastructure, buildings and just about everything else. The Black Death in the 14th century cut Europe’s population in half, but left everything else intact. The result was that, post-plague, there was essentially twice as much land and capital per worker as there had been previously. Not only did wages rise a lot, but labour productivity rose a lot too. People rationally chose to farm the most productive land, and allow the least productive to re-wild. They also had a strong new incentive to adopt labour-saving machinery, to get more out of the labour available; hence Gutenberg’s invention of the printing press in the 1430s, and its rapid adoption across the continent.
We can see similar principles at work today. The countries with the highest number of industrial robots per 10,000 manufacturing workers are South Korea, Singapore, Germany, Japan and Taiwan. Aside from Germany, these are all countries with static or declining populations where adopting US or UK levels of mass immigration is felt to be politically unfeasible. This constraint forces them to become more productive with what human labour they have.
Hey Noah. Good piece, but:
1. We don’t have “20 years to wait”
2. I agree that one can’t convince hard liners, but how do we move the needle regardless? State and Regional programs for example ?
The US doesn’t keep its global advantages without MUCH higher levels of immigration. So … what can be done … now?
We're working on it!
I hope so. It's going to take a village.
Isn't this the post that somebody turned into a hilarious video using the engine of some Japanese lawyer video game?
https://web.archive.org/web/20220107193614/https://twitter.com/egirlmonetarism/status/1376683452662185985
Located.
Yeah that was epic.
There are a pair of YouTubers, Manky and Pro ZD, who do a playthrough of the Phoenix Wright games and provide voices to the characters. They're quite funny.
Well you can watch this in real time as Canada is planning on massively ramping up immigration - many think it will be a negative due to a lack of infrastructure - housing - healthcare - transit etc. main issue is the bulk of the people end up in either southern Ontario or Lower BC.
Quebec as well. It's a draw for Francophone Middle Eastern and African immigrants.
Alberta has its share of immigrants, depending on the fortunes of the oil and gas sector.
If immigration is productive shouldn't we see an increase in real wages?
Over the long term we should see an increase in wages from clustering effects (increased investment because the U.S. has a big market which draws increased corporate investment), but I didn't go into that in this post...
Looking forward to it. Poland is an awesome country. Looks like you are in Warsaw. Lovely !
The food in Poland was amazing. We sampled several excellent restaurants.
In Krakow. This Restaurant opened in 1364. Overlooks the central square.
Restauracja Wierzynek
+48 728 871 071
https://maps.app.goo.gl/pihYQGbPP8JsiUuE6
https://restaurant.wierzynek.pl/index.php/en/home/
In addition to the theory we have some hint of empirical backing. High skilled immigrants have demonstrably increased innovation.
https://www.nber.org/papers/w30797
I didn't see that discussed?
Immigration effect that Noah brings forth, is that Immigration increases both supply and demand. They buy things with their wages and arguably cancels the wage increase.
That is exactly shown in
“Immigrants’ Effect on Native Workers: New Analysis on Longitudinal Data” by Mette Foged and Giovanni Peri
The analysis for effects on only local born require a lot of specific data so the other studies often can't check for it.
This is focused on wages and "real" wages are difficult to assess because many jobs simply don't exist without immigrants. What is the value of specific fresh fruit in 1970s USA? Hard to know because we didn't have it widely available due to missing workers.
Leah Boustan "Streets of Gold" gives a great overall treatment across more margins than wages, all of which should be included in adjustment for real wages.
Agree it's hard. But even if immigration is productive in aggregate (data is fuzzy) then shouldn't we be eager to segment this by types, origins, etc of immigration? Then do more of what's most productive and less of the rest (with perhaps some exceptions for true humanitarian causes etc.)?
I don't see much appetite for deep thought on the topic unfortunately.
The data is not fuzzy. It is fundamentally impossible to measure perfectly something with so many endogeneities. It seems you are asking for a detailed layout of the winners and losers for every pair wise immigration (sending country, immigrant SES, receiving country, receiving country sliced demographic). That is impossible with all the relevant combinations.
There are exceptionally detailed descriptions of the improvements for very finely segmented groups in both destination and sending countries. Read "Streets of Gold" then read the referenced papers. You will see voluminous research as that is a fraction of papers.
Note, you are also asking for subgroup analysis of productivity, that is easy to answer. If people are receiving jobs then the market thinks they are allocated to their most productive use and removing constraints simply gets to higher productivity. Empirics can't measure per person productivity versus a counterfactual.
According to growth theory, all of the immigration will be productive with agglomeration effects. We will have more ideas, faster and those are non-rivalrous.
According to empirics, it is nearly measured as increasing productivity for both sending and receiving countries in aggregate.
We do in aggregate wages, since immigration is overwhelmingly from low income places to high income places.
Can you elaborate please?
Do you mean that labor wage expectations are set by the origins of labor? If so I would think that would dissipate as labor would also need higher than origin wages to just live here.?
If the US gains 1000 people and Somalia loses 1000 people while average wages in each country remain the same, world-level aggregate real wages have increased substantially. This is true even if you just focus on the US side. Growing the population of rich countries with stagnant or increasing real wages leads to higher aggregate real wages very easily and consistently.
I'm generally pretty pro-immigration, but I don't think the article addresses certain key concerns that anti-immigration folks have. Or, at least the ones that have resonated with me..
In particular, the USA is characterized by high pre-tax income inequality and relatively high levels of redistribution. We tend to think of the US as *not* being as redistributive as other developed nations, but that view stems from ignoring both pretax income inequality and low middle/lower-class taxes.
This state of affairs lends itself to the viewpoint that *most* Americans are essentially subsidized by the higher-earning Americans. For arguments' sake, suppose that only the top 20% of Americans are net financial assets to the nation. Then, immigrants must reach that income threshold eventually, or else may represent a public charge.
It is hard to get people into that high-earning top 20% in the USA, whether native- or foreign-born. Maybe it was different at some time in the past, but we are not able to run our country today in a way that the majority of people contribute more than they take out. All this suggests that immigration must be selective in order to advance comprehensive national success.
Turning our attention to the Southern border... amid all the accusations of racism and xenophobia, there is a very real underlying phenomenon of adverse selection. We make it quite hard to legally immigrate, and quite dangerous to cross illegally, but not impossible. That is going to tend to attract those with "nothing to lose", i.e. low levels of education and job skills.
American progressives tend to have a belief in the infinite malleability of people. If government provides quality schooling, healthcare, etc. then everyone ought to succeed similarly over time. Conservatives tend to think there are key ingredients to success (community, family, religion, culture, etc.) that the government can't provide.
The reality on the ground is that there are very distinct/visible groups in the US, namely African Americans and Latinos, that experience large and persistent income and wealth disparities relative to the rest of the country. Whether you want to blame the victims or the conservatives, it seems imprudent to just assume that the next wave of immigrants from the South will completely buck the trend.
It's impossible to be sure how productive new immigrant families will be, particularly after a generation or two stateside. Given the large number of would-be immigrants though, it behooves us to be selective. Why not?
Part of the issue, of course, at the Southern border is that we are already trying to be selective, but the incentive to cross over is so high that we have a huge number of undocumented. There isn't a great way to deal with this short of opening fire on migrants. The rhetoric from the left is that we are already doing very inhumane things at the border and the rhetoric from the right is that borders are porous and we're exploited. The reality is a very messy fraught balancing act.
With respect to the research you summarized, it was unclear from my surface reading whether these studies adequately accounted for automatic deficit spending triggered by the migrations. In many places, government will automatically spend more as population grows, e.g. via increased enrollments in schools, healthcare, housing services, etc.
To summarize all these thoughts into one concise question---
If immigrants tend to be low-skilled / low-wage, and the disparity seems to persist for generations, then isn't there a deficit-busting affect over time?
The US has a high Gini coefficient both before and after income transfers. I am curious what your source is that it does not. Here is an OECD publication with the info:
https://www.oecd-ilibrary.org/docserver/637b3a40-en.pdf
The US around 0.5 before government transfers and 0.4 afterwards. Most of Europe is between 0.4 and 0.5 before transfers and 0.3 afterwards.
"I am curious what your source is that it does not."
I said the US has high pre-tax income inequality, which you agreed with. I also said high levels of redistribution. You seem to think that contradicts the US having a high post-tax Gini, but you are mistaken. Having high pre-tax income equality means it's possible to have both high levels of redistribution *and* high post-tax Gini. It's the mathematical concept of "subtraction starting with a big number".
See this blog post (with references therein):
https://conversableeconomist.com/2022/12/08/predistribution-vs-redistribution/
[Do note that comparisons to Europe or OECD or whatever aren't material to the argument in my post. The US has high pre-tax inequality and a lot of redistribution, objectively speaking, regardless of whether OECD countries tend to be a bit more or less. Massive low-skill immigration could be troublesome in other places for similar reasons.]
I don't think you can "objectively" determine if the US has a high level of redistribution, only compare it to other countries. The second graph indicates that the US is third lowest in percentage of national income being redistributed to the bottom half.
I do see that the United States *does* tax the top decile the highest, which makes one wonder where that money is going. The defense budget perhaps?
"I don't think you can "objectively" determine if the US has a high level of redistribution, only compare it to other countries."
Nonsense. You can measure the quantity of redistribution directly in many ways without making comparisons. That's the exact quantity you would then use in cross-country comparisons. If we want to analyze the economic impact of migration, the amount of redistribution is potentially very relevant, which is the point of my post. Cross-country comparisons are not relevant to such an analysis.
"The second graph indicates that the US is third lowest in percentage of national income being redistributed to the bottom half."
I think you must mean the *third* graph
https://i0.wp.com/conversableeconomist.com/wp-content/uploads/2022/12/image-9.png?w=1109&ssl=1
It's the only one with US at third lowest, so you must mean this.
Anyways, you are simply not understanding what this graph shows. It shows the total amount of transfers received by the bottom 50%, as a percentage of gdp. That is not redistribution. The amount of redistribution is the transfers received *LESS* taxes paid.
The previous graph shows that the bottom 50 percent in the US pay the lowest taxes (relative to the top 10%). We know US high earners aren't paying the highest taxes among these nations, so the clear implication is that bottom 50 percent taxes in the US are extremely low. That's why redistribution is high in the USA. They don't give a ton to the bottom, but they take away even less.
"the United States *does* tax the top decile the highest"
Again, no. That is not what that graph indicates. It's the ratio of top decile to bottom half. As I mentioned above, top tax rates relatively low in the US and bottom half tax rates are just then much lower than that.
Anyways.. you sound like the typical self-righteous internet lefty, especially when you start armchair pontificating about the defense budget. You seem locked into the mindset that American is evil imperial capitalist. Where is that leading you?
Maybe your understanding can be improved a little just from our discussion.. Namely, you seem to think the USA just doesn't care about people as much as weapons, or some other nonsense. The reality is just that the USA offers a different sort of bargain than a lot of other places. It's more individualistic. The typical American doesn't have a full-blown European-style social safety net to lean on, but they also get to keep much more of what they earn and use that money as they please.
There's no deep moral superiority to taking people's money then giving it back to them in the form of various benefits and services. The democratic process in the US has lead to a different outcome than a lot of other places. I don't see a lot of people, at any income level, trying to leave the USA. People like the deal. There's never a shortage of self-righteous grandstanding by socialists though, especially online.
Interesting analysis thanks.
I think economists need to focus a lot more on trying to understand why some countries are able to have a low Gini coefficient BEFORE income transfers. If you’re a country which has a high pre-transfer Gini, and you can only get your post-transfer Gini down to an acceptable level by drastic government action, your politics is going to be far more precarious.
To take an extreme example, tiny Iceland (population 360,000) has a super-low pre-transfer Gini (0.25 according to the World Bank, 2021). Within reason, Iceland could adopt almost any set of economic policies it wants, from Ronald Reagan policies to Bernie Sanders policies, and it would still wind up with a post-transfer Gini lower than, say, France.
There’s a whole set of Central European countries (Czechia, Slovakia, Slovenia) which manage to have very low pre-transfer Gini scores. Why?
Awesome question. I'll re-share a link I shared above, to a blog post discussing a study on this very issue-- Predistribution vs Redistribution.
https://conversableeconomist.com/2022/12/08/predistribution-vs-redistribution/
RE: Iceland..
The numbers make me immediately think as follows. In the USA there are a few 100 billionaires. If one of those hundos moves to Iceland, the wealth of an average Icelandic increases by ~USD278k. The median is unchanged. One super wealthy immigrant blows up the whole egalitarian structure.
...but they wouldn't go to Iceland. Taxes are too high. Go to Singapore. People will complain about the Gini, but the Prime Minister will write in the Straits Times that he could deport five billionaires, and it wouldn't do anyone any good.
Some policies that have historically improved Gini a lot absolutely focused on ejecting the rich.
Thanks for that. “Predistribution” is a wonderful moniker. I like your theory that it’s connected to billionaire distortion effects, but I’m not sure it’s right.
1) First, a general point. I’m not a professional economist, I’m just someone on the internet. But I think we need better figures. Gini scores collected by different bodies vary by quite a high margin. While I feel confident that Iceland really is a much more equal society than the USA, I come across some figures which don’t feel right to me, to the point where I’m not really sure that Country A really is more equal than Country B as the figures suggest. That’s just my subjective inference; make of it what you will.
2) The theory that low pre-transfer Gini countries are more equal simply because they’re less rich overall might work for the ex-Communist central European countries I mentioned. But there are low pre-transfer Gini countries like Iceland which are close to the top in terms of GDP per capita (PPP or not). They’re not obviously leaving dollar bills on the sidewalk.
3) An obvious country to mention is Ireland, which officially has the kind of virtuous low pre-transfer Gini we’re talking about, and is also very pro-billionaire. It has the second lowest corporate tax level in the EU, and has lots of US corporations like Apple registering their patents in Dublin purely for tax avoidance reasons. Government spending in Ireland is significantly lower as a proportion of GDP than in the neighbouring UK, partially because Ireland does not have an NHS. But, as point 1) suggests, maybe the Gini figures for Ireland are just wrong.
4) I have a kind of reverse version of your billionaire theory. Here goes. It’s generally agreed that all western countries had their lowest Gini figures during the postwar recovery and boom, from 1945 until the 1973 oil price shock. My crazy idea is that, during that period, the main way governments could boost GDP and increase their tax revenue (and therefore their domestic “empire building”) was by directly increasing the earning capacity of the median worker (and usually, median voter). A lot of government projects tended to raise demand for these people’s labour directly, raising their wages, union bargaining power, and so on. Now, they’re actually far more dependent on billionaire wealth, and this dependency makes them far less willing to take strong antitrust measures against billionaire monopolies. With taxes, he who pays the piper…
You're welcome!
Iceland is too small to draw inferences from. It's the size of a mid-sized US city. They are one Elon Musk away from being a wildly unequal place.
Ireland... I think your suspicion was correct.. I find that pretax Gini is very high. Higher than the US.
https://ourworldindata.org/income-inequality
I'm very skeptical of inequality oriented policy. If you can make a good investment that makes the general public better off, great. Why is inequality relevant? I tend to agree with the Singaporean PM that sacking rich people benefits no one.
Imagine for a second that, in the USA, the pre-transfer Gini came way down, while national income remained steady. Under current tax law, that would absolutely bankrupt the nation. That's because much more income would fall on the lower tax brackets. How popular would policies to reduce pre-transfer Gini be if they necessarily came with higher taxes on not-rich Americans?
I'm skeptical that there is any easy way forward here.
I changed my mind!
Note: I wasn’t against immigration, just thought it would negatively impact wages somewhat because it increases labor supply, but already supported immigration for other reasons.
People at the bottom of the wage scale don't consume nearly as much extrafamilial labor as they provide. So while your explanation is true generally, there are some important exceptions. If you're talking specifically about the kind of immigration that people want to build a wall to stop - low-wage immigration - the impact on wage levels is very real and we've been seeing a lot of it in the lower-level jobs in e.g. food service, farming, construction, meatpacking.
However there's a huge difference between theatrically mimicking a crack-down on immigration and actually cracking down. What "build the wall" really means is, "we hate those people, we want some theatrical cruelty to be inflicted upon them." What really determines low-wage immigration is the availability of jobs and conditions in home countries. One can see this especially in estimates of the US population of unauthorized immigrants: there was a massive drop during the peak of the Covid pandemic, as lockdowns reduced available low-wage jobs, followed by a massive rebound as the pandemic subsided, demand for low-wage workers suddenly outstripped supply and inflation surged. Trumpism didn't have much real impact, because Trumpists don't want to crack down on industries that employ illegals, because that would increase wages in those industries and drive inflation. On the contrary, when the pandemic raged among immigrants in the meatpacking sector, Trump resorted to the Defense Production Act to keep them working.
https://cis.org/Report/Estimating-Illegal-Immigrant-Population-Using-Current-Population-Survey
Real wages were stagnant from 1979 to 2014. Something happened around that time and since then real wages have gone up about 10%. Household income shows a similar trend from 1989 to 2013. For the life of me I cannot figure out how income started going up in 2014.
https://fred.stlouisfed.org/series/LES1252881600Q
That would explain wage growth at the bottom decline but it doesn't mean anything to median wages. I don't think that The Fed has changed the metric several times, in fact their statistics are considered the gold standard in economics. But there are plenty of other sources saying the same thing.
It might be fracking.
https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php
This isn’t only a US topic of debate.
Here in the UK, since we left the EU we have severe shortages of labour at the lower end of the income scale but these shortages are now spreading to other parts of the economy.
At the same time, we have migrates washing up in beaches who are making their way across the treacherous English Channel in small boats.
The ruing Conservative Party are arguing for lower immigration because that’s what it thinks voters in the poorer northern regions want.
We are a small island but we are no where close to being over run. We need people, we need skills and we need to be more open so that our economy can grow.
In 2021 the UK government issued 1.1 million visas for people to come and live in the UK. It’s the highest figure since records began, and a rise of more than half a million over the previous year’s figure. Most Conservative MPs don’t want to reduce immigration. Liz Truss actually argued for increasing immigration levels, not cutting them.
Immigration went up a lot under Tony Blair and Gordon Brown; but, aside from a slight lull in 2012, it went even higher under Cameron, May and Johnson.
One big problem we have is that the people emigrating from the UK are mostly highly skilled, with most of their taxable working life ahead of them. They’re typically married graduates around 30, typically moving to Perth in Australia because they think it’s a nicer place to raise a family. If we could persuade more of them to stay, that would be fantastic. We can’t change the pull factors attracting them to Oz. But we need to try and shift the push factors driving them away from the UK.
I was an immigrant to the UK from 1995 to 2008. Moved back to the Netherlands for family reasons. I would love to move back; I am high skilled, still have a house in England and can easily get a high paying job but look at the rules:
- I must pay an extra surcharge to the NHS, above the normal taxes I pay.
- I must pay for and take some stupid exam to see if I understand British culture.
- If I get unemployed the first few years I can get kicked out of the country.
- I cannot temporarily move back to the Netherlands to care for my parents
- After 5 years I have to pay thousands of pounds for an indefinite leave to remain, which I can lose if I am out of the country for a few months.
So no, I am not moving back until the UK strikes a deal with the EU to rejoin the Common Market which will give me back the right to move to the UK.
well, most of the blame is to be put at the feet of the falling pound, which makes it much less attractive for poles to come to work. Of course brexit didn't help the national currency, but it's not the only reason either.
well the cable has been on a downward lurch since 2008 really, first leg down was post GFC when financialization driven economy imploded, second big leg down was brexit in 2016, third was energy crisis this year (although now entirely retraced!), none of these helped with attracting cheap foreign labor from eastern european countries where local economies generally got stronger throughout that time and offered progressively more and more local opportunities. Yes government could've made up the numbers by letting in a couple million syrian refugees, but a) the political climate wouldn't have allowed it and b) am on the fence whether that would've been a good idea anyways. Muslim communities in Britain are already poorly integrated today, we could've easily have imported not just fresh labor but future racial/sectarian problems for decades if not centuries.
Yes, it looks like the same thing happening here.
I think driving up aggregate domestic demand is the main economic reason for a country to have very high levels of net immigration. The other arguments for it seem to me to be marginal, and do have some down sides. Plus, O1 Visa type highly skilled immigration is only a small part of mass immigration.
The Acemoglu/Restrepo paper “Demographics and Automation” from 2018 looked at the low immigration OECD countries of East Asia: Japan and South Korea. They’ve mostly avoided labour shortages by investing heavily in robots, giving them good productivity gains. They’re even making pretty good use of their senior citizens. But the one thing they can’t do without immigrants is really ramp up domestic consumer demand. If you double a Japanese person’s wages, they’re not going to buy twice as much food, cleaning products, mobile phones, cars or whatever. But if you double Japan’s population, that would do it (It would also inflate land values and house prices, which will benefit some people.)
Can all countries have permanently rising domestic consumer demand fuelled by permanently rising population for ever and ever? It feels unsustainable.
It’s worth pointing out that, for rich countries, high population density seems to depress the birth rate. Hong Kong, Singapore and Taiwan all have highest high population density and lowest low fertility, for instance. I could imagine some countries getting caught in a vicious circle: the immigrants arrive, the population density goes up, the fertility rate goes down, leading to calls for more immigrants to counteract the declining demand caused by the fertility drop.
I wonder if the first country to figure out how to healthily grow per capita living standards with a static or declining population will own the future.
"….in my experience, anti-immigration people are completely set in their belief that immigration should be restricted."
This is my experience with open borders people too. IOW, it is a feature of political rationalizing on both sides. This post would have been even better if you tried to acknowledge that people tend to be set in their beliefs, but that one argument that does not hold up very well is that immigration tends to lower general wages. The other arguments — for or against some or all immigration — are still open to honest debate among reputable people.
Open borders don't exist.
But people who believe our borders should be open do.
For all intents and purposes, "open borders" people do not exist.
There's a big difference between a sentiment of open borders and implementing an actual policy of open borders, which has zero support among Democrats or GOP.
Wishing for open borders doesn't open them. When you have actual barriers and checkpoints along the U.S.-Mexico border, an immigration court system, a law enforcement agency, a military branch, passports and visas, those are literally the evidence of absence of open borders.
Even if the U.S. were to implement less restrictive immigration policies, the immigration apparatus will still exist so borders will never truly be open.
Not sure what your point is.
Two points: Strawman and false dichotomy.
There's no such thing as open borders. People and goods can't come and go freely to and from the United States. Less restrictive immigration and trade mean that there will be some restrictions still in place and borders are never truly open.
Open borders is also a term used by people who think dichotomously. That is to say, there are only two possibilities, and they are at odds. If anyone outside of the U.S. gets in, we have open borders. It's a term loaded in bad faith and should be dismissed out of hand.
Thanks!