Lowenstein
NYT article, continued
Borjas
has been making this case — which is based on the familiar concept
of supply and demand — for more than a decade. But the more
elegantly he has made it, it seems, the less his colleagues concur.
‘‘I think I have proved it,’’ he eventually
told me, admitting his frustration. ‘‘What I don’t
understand is why people don't agree with me.''
It turns
out that Borjas's seemingly self-evident premise — that more
job seekers from abroad mean fewer opportunities, or lower wages,
for native workers — is one of the most controversial ideas
in labor economics. It lies at the heart of a national debate, which
has been encapsulated (if not articulated) by two very different immigration
bills: one, passed by the House of Representatives, which would toughen
laws against undocumented workers and probably force many of them
to leave the country; and one in the Senate, a measure that would
let most of them stay.
You
can find economists to substantiate the position of either chamber,
but the consensus of most is that, on balance, immigration is good
for the country. Immigrants provide scarce labor, which lowers prices
in much the same way global trade does. And overall, the newcomers
modestly raise Americans' per capita income. But the impact is unevenly
distributed; people with means pay less for taxi rides and household
help while the less-affluent command lower wages and probably pay
more for rent.
The
debate among economists is whether low-income workers are hurt a lot
or just a little — and over what the answer implies for U.S.
policy. If you believe Borjas, the answer is troubling. A policy designed
with only Americans' economic well-being in mind would admit far fewer
Mexicans, who now account for about 3 in 10 immigrants. Borjas, who
emigrated from Cuba in 1962, when he was 12 (and not long after soldiers
burst into his family's home and ordered them at gunpoint to stand
against a wall), has asserted that the issue, indeed, is "Whom
should the United States let in?"
Such
a bald approach carries an overtone of the ethnic selectivity that
was a staple of the immigration debates a century ago. It makes many
of Borjas's colleagues uncomfortable, and it is one reason that the
debate is so charged. Another reason is that many of the scholars
who disagree with Borjas also hail from someplace else — like
gardeners and seamstresses, a surprising number of Ph.D. economists
in the U.S. are foreign-born.
Easily
the most influential of Borjas's critics is David Card, a Canadian
who teaches at Berkeley. He has said repeatedly that, from an economic
standpoint, immigration is no big deal and that a lot of the opposition
to it is most likely social or cultural. "If Mexicans were taller
and whiter, it would probably be a lot easier to deal with,"
he says pointedly.
Economists
in Card's camp tend to frame the issue as a puzzle — a great
economic mystery because of its very success. The puzzle is this:
how is the U.S. able to absorb its immigrants so easily?
After
all, 21 million immigrants, about 15 percent of the labor force, hold
jobs in the U.S., but the country has nothing close to that many unemployed.
(The actual number is only seven million.) So the majority of immigrants
can't literally have "taken" jobs; they must be doing jobs
that wouldn't have existed had the immigrants not been here.
The
economists who agree with Card also make an intuitive point, inevitably
colored by their own experience. To the Israeli-born economist whose
father lived through the Holocaust or the Italian who marvels at America's
ability to integrate workers from around the world, America's diversity
— its knack for synthesizing newly arrived parts into a more
vibrant whole — is a secret of its strength. To which Borjas,
who sees a different synthesis at work, replies that, unlike his colleagues,
the people arriving from Oaxaca, Mexico, are unlikely to ascend to
a university faculty. Most of them did not finish high school. "The
trouble with the stories that American journalists write about immigration,"
he told me, "is they all start with a story about a poor mother
whose son grows up to become. . . . " and his voice trailed off
as if to suggest that whatever the particular story — that of
a C.E.O., a ballplayer or even a story like his own — it would
not prove anything about immigration. What economists aim for is to
get beneath the anecdotes. Is immigration still the engine of prosperity
that the history textbooks describe? Or is it a boon to business that
is destroying the livelihoods of the poorest workers — people
already disadvantaged by such postmodern trends as globalization,
the decline of unions and the computer?
The
Lopsided-Skill-Mix Problem
This
spring, while militias on the prowl for illegal immigrants were converging
on the Arizona border and, on the other side of the political fence,
immigrant protesters were taking to the streets, I sampled the academic
literature and spent some time with Borjas and Card and various of
their colleagues. I did not expect concurrence, but I hoped to isolate
what we know about the economic effects of immigration from what is
mere conjecture. The first gleaning from the Ivory Tower came as a
surprise. All things being equal, more foreigners and indeed more
people of any stripe do not mean either lower wages or higher unemployment.
If they did, every time a baby was born, every time a newly minted
graduate entered the work force, it would be bad news for the labor
market. But it isn't. Those babies eat baby food; those graduates
drive automobiles.
As Card
likes to say, "The demand curve also shifts out." It's jargon,
but it's profound. New workers add to the supply of labor, but since
they consume products and services, they add to the demand for it
as well. "Just because Los Angeles is bigger than Bakersfield
doesn't mean L.A. has more unemployed than Bakersfield," Card
observes.
In theory,
if you added 10 percent to the population — or even doubled
it — nothing about the labor market would change. Of course,
it would take a little while for the economy to adjust. People would
have to invest money and start some new businesses to hire all those
newcomers. The point is, they would do it. Somebody would realize
that the immigrants needed to eat and would open a restaurant; someone
else would think to build them housing. Pretty soon there would be
new jobs available in kitchens and on construction sites. And that
has been going on since the first boat docked at Ellis Island.
But
there's a catch. Individual native workers are less likely to be affected
if the immigrants resemble the society they are joining — not
physically but in the same mix of skills and educational backgrounds.
For instance, if every immigrant were a doctor, the theory is, it
would be bad for doctors already here. Or as Borjas asked pointedly
of me, what if the U.S. created a special visa just for magazine writers?
All those foreign-born writers would eat more meals, sure, but (once
they mastered English, anyway), they would be supplying only one type
of service — my type. Bye-bye fancy assignments.
During
the previous immigrant wave, roughly from 1880 to 1921 (it ended when
the U.S. established restrictive quotas based on country of origin),
the immigrants looked pretty much like the America into which they
were assimilating. At the beginning of the 20th century, 9 of 10 American
adults did not have high-school diplomas, nor did the vast majority
of immigrants. Those Poles and Greeks and Italians made the country
more populous, but they did not much change the makeup of the labor
market.
This
time it's different. The proportion of foreign-born, at 12 percent,
remains below the peak of 15 percent recorded in 1890. But compared
with the work force of today, however, the skill mix of immigrants
is lopsided. About the same proportion have college degrees (though
a higher proportion of immigrants are post-graduates). But many more
— including most of the those who have furtively slipped across
the Mexican border — don't have high-school diplomas.
The
latest estimate is that the United States has 11.5 million undocumented
foreigners, and it's those immigrants — the illegal ones —
who have galvanized Congress. The sponsor of the House legislation,
Representative James Sensenbrenner, a Republican from Wisconsin, says
bluntly that illegals are bad for the U.S. economy. His bill would
require employers to verify the status of their workers from a national
database and levy significant penalties on violators. But H.R. 4437
isn't primarily an economics bill — it's an expression of outrage
over the porousness of America's borders. Among many other enforcement
measures, the bill forces the U.S. to build hundreds of miles of fencing
on its Southern border.
The
Senate bill is irreducibly complex (more than 800 pages), but basically,
it seeks to cure the problem of illegals by bringing them in from
the shadows. Those already here would be able to continue working
and get on track toward a more normalized status. In the future, employers
could bring in guest workers — what Senate draftsmen refer to
hopefully as temporary workers — as long as they paid them the
going wage.
This
latter bill, the product of an alliance between John McCain and Edward
Kennedy, isn't really an economics bill, either, at least not the
way economists see it. Its premise is that if you legalize undocumented
people and reinforce the borders, then whatever negative impact immigrants
have on the labor market will go away. The theory is that newly minted
green-card holders, no longer having deportation to fear, will stick
up for their rights and for higher wages too. Interestingly, some
big labor unions, like the Service Employees International Union,
are supporters. But economists are skeptical. For one thing, after
the U.S. gave amnesty to the nearly three million undocumented workers
who were in the country in 1986, their wages didn't budge. Second,
economists, as you might expect, say market forces like supply and
demand, not legal status, are what determine wages.
It baffles
some economists that Congress pays so little heed to their research,
but then immigration policy has never been based on economics. Economic
fears played a part in the passage of the exclusionary acts against
Chinese in the late 19th and early 20th centuries, and in the 1920's
of quotas (aimed in particular at people from southern and eastern
Europe), but they were mostly fueled by xenophobia. They were supplanted
in the Civil Rights era by the Immigration and Nationality Act of
1965, which ended quotas and established a new priority based on family
reunification. That law, also sponsored by Kennedy, had nothing to
do with economics, either. It made the chief criterion for getting
in having a relative who was already here.
If economists
ran the country, they would certainly take in more immigrants who,
like them, have advanced degrees. (The U.S., which is hugely dependent
on foreigners to fill certain skilled occupations like scientific
research and nursing, does admit a relative handful of immigrants
each year on work visas.) Canada and Australia admit immigrants primarily
on the basis of skills, and one thing the economists agree on is that
high earners raise the national income by more than low earners. They
are also less of a burden on the tax rolls.
With
the exception of a few border states, however, the effect of immigration
on public-sector budgets is small, and the notion that undocumented
workers in particular abuse the system is a canard. Since many illegals
pay into Social Security (using false ID numbers), they are actually
subsidizing the U.S. Treasury. And fewer than 3 percent of immigrants
of any stripe receive food stamps. Also, and contrary to popular wisdom,
undocumented people do support local school districts, since, indirectly
as renters or directly as homeowners, they pay property taxes. Since
they tend to be poor, however, they contribute less than the average.
One estimate is that immigrants raise state and local taxes for everyone
else in the U.S. by a trivial amount in most states, but by as much
as $1,100 per household per year in California. They are certainly
a burden on hospitals and jails but, it should be noted, poor legal
workers, including those who are native born, are also a burden on
the health care system.
Parsing
the Wage Gap
Economists
focus on Mexicans not because many are undocumented but because, relative
to the rest of the labor force, Mexicans have far fewer skills. And
Mexicans and other Central Americans (who tend to have a similar economic
background) are arriving and staying in this country at a rate of
more than 500,000 a year. Their average incomes are vastly lower than
those both of native-born men and of other immigrants.
Native-born
workers: $45,400
All immigrants: $37,000
Mexican immigrants: $22,300
The
reason Mexicans earn much less than most Americans is their daunting
educational deficit. More than 60 percent of Mexican immigrants are
dropouts; fewer than 10 percent of today's native workers are.
That
stark contrast conveys, to economists, two important facts. One is
that Mexicans are supplying a skill level that is much in demand.
It doesn't just seem that Americans don't want to be hotel chambermaids,
pick lettuce or repair roofs; it's true. Most gringos are too educated
for that kind of work. The added diversity, the complementariness
of skills, that Mexicans bring is good for the economy as a whole.
They perform services that would otherwise be more expensive and in
some cases simply unavailable.
The
Americans who are unskilled, however, must compete with a disproportionate
number of immigrants. One of every four high-school dropouts in the
U.S. was born in Mexico, an astonishing ratio given that the proportion
of Mexicans in the overall labor force is only 1 in 25. So it's not
magazine writers who see their numbers expanding; it's Americans who
are, or would be, working in construction, restaurants, household
jobs, unskilled manufacturing and so forth.
That's
the theory. But economists have had a hard time finding evidence of
actual harm. For starters, they noticed that societies with lots of
immigrants tend, if anything, to be more prosperous, not less. In
the U.S., wages in cities where immigrants have clustered, like New
York, have tended to be higher, not lower. Mississippi, on the other
hand, which has the lowest per-capita income of any state, has had
very few immigrants.
That
doesn't necessarily mean that immigrants caused or even contributed
to high wages; it could be they simply go where the demand is greatest
— that their presence is an effect of high wages. As statisticians
are wont to remind us, "Correlation does not imply causation."
(The fact that hospitals are filled with sick people doesn't mean
hospitals make you sick.) Maybe without immigrants, wages in New York
would be even higher.
And
certainly, wages of the unskilled have been a source of worry for
years. From 1970 to 1995, wages for high-school dropouts, the group
that has been the most affected by immigrants, plummeted by more than
30 percent, after adjusting for inflation. Look at the following averages
(all for male workers):
College
graduates: $73,000
People with some college: $41,000
High-school grads: $32,000
Dropouts: $24,800
These
figures demonstrate a serious problem, at least if you care about
wage inequality, and a quick glance at this list and the previous
one shows that native-born dropouts are earning only a shade more
than Mexicans working in this country. But that hardly proves that
cheap Mexican labor is to blame. For one thing, economists believe
that other factors, like the failure of Congress to raise the minimum
wage, globalization (cheap Chinese labor, that is) and the decline
of unions are equally or even more responsible. Another popular theory
is that computer technology has made skilled labor more valuable and
unskilled labor less so.
Also,
when economists look closely at wage dispersion, the picture isn't
wholly consistent with the immigrants-as-culprits thesis. Look again
at the numbers: people at the top (college grads) make a lot more
than average but from the middle on down incomes are pretty compressed.
Since only dropouts are being crowded by illegal immigrants, you would
expect them to be falling further behind every other group. But they
aren't; since the mid-90's, dropouts have been keeping pace with the
middle; it's the corporate executives and their ilk at the top who
are pulling away from the pack, a story that would seem to have little
to do with immigration.
This
isn't conclusive either, Borjas notes. After all, maybe without immigrants,
dropouts would have done much better than high-school grads. Economists
look for the "counterfactual," or what would have happened
had immigrants not come. It's difficult to tell, because in the real
world, there is always a lot more going on — an oil shock, say,
or a budget deficit — than the thing whose effect you are studying.
To isolate the effect of immigrants alone would require a sort of
lab experiment. The trouble with macroeconomics is you can't squeeze
your subjects into a test tube.
Marielitos
in Miami, Doctors in Israel and Other Natural Experiments
The
academic study of immigration's economic effects earned little attention
before the subject started to get political traction in the 1980's.
Then, in 1990, Borjas, who was on the faculty at the University of
California at Santa Barbara, published a book, "Friends or Strangers,"
which was mildly critical of immigration's effects.
That
same year, David Card realized that a test tube did exist. Card decided
to study the 1980 Mariel boat lift, in which 125,000 Cubans were suddenly
permitted to emigrate. They arrived in South Florida with virtually
no advance notice, and approximately half remained in the Miami area,
joining an already-sizable Cuban community and swelling the city's
labor force by 7 percent.
To Card,
this produced a "natural experiment," one in which cause
and effect were clearly delineated. Nothing about conditions in the
Miami labor market had induced the Marielitos to emigrate; the Cubans
simply left when they could and settled in the city that was closest
and most familiar. So Card compared the aftershocks in Miami with
the labor markets in four cities — Tampa, Atlanta, Houston and
Los Angeles — that hadn't suddenly been injected with immigrants.
That
the Marielitos, a small fraction of whom were career criminals, caused
an upsurge in crime, as well as a more generalized anxiety among natives,
is indisputable. It was also commonly assumed that the Marielitos
were taking jobs from blacks.
But
Card documented that blacks, and also other workers, in Miami actually
did better than in the control cities. In 1981, the year after the
boat lift, wages for Miami blacks were fractionally higher than in
1979; in the control cities, wages for blacks were down. The only
negative was that unemployment rose among Cubans (a group that now
included the Marielitos).
Unemployment
in all of the cities rose the following year, as the country entered
a recession. But by 1985, the last year of Card's study, black unemployment
in Miami had retreated to below its level of 1979, while in the control
cities it remained much higher. Even among Miami's Cubans, unemployment
returned to pre-Mariel levels, confirming what seemed visible to the
naked eye: the Marielitos were working. Card concluded, "The
Mariel influx appears to have had virtually no effect on the wages
or unemployment rates of less-skilled workers."
Although
Card offered some hypotheses, he couldn't fully explain his results.
The city's absorption of a 7 percent influx, he wrote, was "remarkably
rapid" and — even if he did not quite say it — an
utter surprise. Card's Mariel study hit the cloistered world of labor
economists like a thunderbolt. All of 13 pages, it was an aesthetic
as well as an academic masterpiece that prompted Card's peers to look
for other "natural" immigration experiments. Soon after,
Jennifer Hunt, an Australian-born Ph.D. candidate at Harvard, published
a study on the effects of the return migration of ethnic French from
Algeria to France in 1962, the year of Algerian independence. Similar
in spirit though slightly more negative than the Mariel study, Hunt
found that the French retour had a very mild upward effect on unemployment
and no significant effect on wages.
Rachel
Friedberg, an economist at Brown, added an interesting twist to the
approach. Rather than compare the effect of immigration across cities,
she compared it across various occupations. Friedberg's curiosity
had been piqued in childhood; born in Israel, she moved to the U.S.
as an infant and grew up amid refugee grandparents who were a constant
reminder of the immigrant experience.
She
focused on an another natural experiment — the exodus of 600,000
Russian Jews to Israel, which increased the population by 14 percent
in the early 1990's. She wanted to see if Israelis who worked in occupations
in which the Russians were heavily represented had lost ground relative
to other Israelis. And in fact, they had. But that didn't settle the
issue. What if, Friedberg wondered, the Russians had entered less-attractive
fields precisely because, as immigrants, they were at the bottom of
the pecking order and hadn't been able to find better work? And in
fact, she concluded that the Russians hadn't caused wage growth to
slacken; they had merely gravitated to positions that were less attractive.
Indeed, Friedberg's conclusion was counterintuitive: the Russians
had, if anything, improved wages of native Israelis. She hypothesized
that the immigrants competed more with one another than with natives.
The Russians became garage mechanics; Israelis ran the garages.
Measuring
the Hit to Wages
By the
mid-90's, illegal immigration was heating up as an issue in the United
States, prompting a reaction in California, where schools and other
public services were beginning to feel a strain. But academics were
coalescing around the view that immigration was essentially benign
— that it depressed unskilled native wages by a little and raised
the average native income by a little. In 1997, a panel of the National
Academy of Sciences, which reviewed all of the literature, estimated
that immigration during the previous decade had, at most, lowered
unskilled-native wages by 1 percent to 2 percent.
Borjas
didn't buy it. In 1999 he published a second, more strident book,
"Heaven's Door." It espoused a "revisionist" view
— that immigration caused real harm to lower-income Americans.
Borjas argued that localized studies like Mariel were flawed, for
the simple reason that labor markets in the U.S. are linked together.
Therefore, the effects of immigration could not be gauged by comparing
one city with another.
Borjas
pointed out, as did others, that more native-born Americans started
migrating out of California in the 1970's, just as Mexicans began
arriving in big numbers. Previously California was a destination for
Americans. Borjas reckoned that immigrants were pushing out native-born
Americans, and that the effect of all the new foreigners was dispersed
around the country.
The
evidence of a labor surplus seemed everywhere. "If you wanted
a maid," he recalled of California during the 90's, "all
you had to do was tell your gardener, and you had one tomorrow."
He felt certain that Mexicans were depressing unskilled wages but
didn't know how to prove it.
After
Borjas moved East, he had an inspiration. It was easy to show that
high-school dropouts had experienced both lower wage growth and more
competition from immigrants, but that didn't settle the point, because
so many other factors could have explained why dropouts did poorly.
The inspiration was that people compete not only against those with
a like education, but also against workers of roughly the same experience.
Someone looking for a first job at a McDonald's competes against other
unskilled entry-level job seekers. A reporter with 15 years' experience
who is vying for a promotion will compete against other veterans but
not against candidates fresh out of journalism school.
This
insight enabled Borjas to break down the Census data in a way that
put his thesis to a more rigorous test. He could represent skill groups
within each age as a point on a graph. There was one point for dropouts
who were 10 years out of school, another for those who were 20 years
and 30 years out. Each of these points was repeated for each decade
from 1960 to 2000. And there was a similar set of points for high-school
graduates, college graduates and so forth. The points were situated
on the graph according to two variables: the horizontal axis measured
the change in the share of immigrants within each "point,"
the vertical axis measured wage growth.
A result
was a smattering of dots that on casual inspection might have resembled
a work of abstract art. But looking closer, the dots had a direction:
they pointed downward. Using a computer, Borjas measured the slope:
it suggested that wages fell by 3 to 4 percent for each 10 percent
increase in the share of immigrants.
With
this graph, Borjas could calculate that, during the 80's and 90's,
for instance, immigrants caused dropouts to suffer a 5 percent decline
relative to college graduates. In a paper published in 2003, "The
Labor Demand Curve Is Downward Sloping," Borjas termed the results
"negative and significant."
But
what about the absolute effect? Assuming businesses did not hire any
of the new immigrants, Borjas's finding would translate to a hefty
9 percent wage loss for the unskilled over those two decades, and
lesser declines for other groups (which also received some immigrants).
As we know, however, as the population grows, demand rises and business
do hire more workers. When Borjas adjusted for this hiring, high-school
dropouts were still left with a wage loss of 5 percent over those
two decades, some $1,200 a year. Other groups, however, showed a very
slight gain. To many economists as well as lay folk, Borjas's findings
confirmed what seemed intuitive all along: add to the supply of labor,
and the price goes down.
To Card,
however, what seems "intuitive" is often suspect. He became
a labor economist because the field is full of anomalies. "The
simple-minded theories that they teach you in economics don't work"
for the labor market, he told me. In the 90's, Card won the prestigious
Clark Medal for several studies, including Mariel and another showing
that, contrary to theory, raising the minimum wage in New Jersey (another
natural experiment) did not cause fast-food outlets to cut back on
employment.
In a
recent paper, "Is the New Immigration Really So Bad?" Card
took indirect aim at Borjas and, once again, plumbed a labor-market
surprise. Despite the recent onslaught of immigrants, he pointed out,
U.S. cities still have fewer unskilled workers than they had in 1980.
Immigrants may be depriving native dropouts of the scarcity value
they might have enjoyed, but at least in a historical sense, unskilled
labor is not in surplus. America has become so educated that immigrants
merely mitigate some of the decline in the homegrown unskilled population.
Thus, in 1980, 24 percent of the work force in metropolitan areas
were dropouts; in 2000, only 18 percent were.
Card
also observed that cities with more immigrants, like those in the
Sun Belt close to the Mexican border, have a far higher proportion
of dropouts. This has led to a weird unbalancing of local labor markets.
For example, 10 percent of the work force in Pittsburgh and 15 percent
in Cleveland are high-school dropouts; in Houston the figure is 25
percent, in Los Angeles, 30 percent. The immigrants aren't dispersing,
or not very quickly.
So where
do all the dropouts work? Los Angeles does have a lot of apparel manufacturers
but not enough of such immigrant-intensive businesses to account for
all of its unskilled workers. Studies also suggest that immigration
is correlated with a slight increase in unemployment. But again, the
effect is small. So the mystery is how cities absorb so many unskilled.
Card's theory is that the same businesses operate differently when
immigrants are present; they spend less on machines and more on labor.
Still, he admitted, "We are left with the puzzle of explaining
the remarkable flexibility of employment demand."
Card
started thinking about this when he moved from Princeton in the mid-90's.
He noticed that everyone in Berkeley seemed to have a gardener, "even
though professors are not rich." In the U.S., which has more
unskilled labor than Europe, more people employ housecleaners. The
African-American women who held those jobs before the war, like the
Salvadorans and Guatemalans of today, weren't taking jobs; they were
creating them. { The Personal Is Economic } Though Card works on immigration
only some of the time, he and Borjas clearly have become rivals. In
a recent paper, Card made a point of referring to the "revisionist"
view as "overly pessimistic." Borjas told Business Week
that Card's ideas were "insane." ("Obviously I didn't
mean he is insane; he is a very bright guy," Borjas clarified
when we talked. "The idea that you can add 15 or 20 million people
and not have any effect seems crazy.") Alan B. Krueger, an economist
who is friendly with each, says, "I fear it might become acrimonious."
Card told me twice that Borjas's calculations were "disingenuous."
"Borjas has a strong view on this topic," Card said, "almost
an emotional position."
Card
is more comfortable with anecdote than many scholars, and he tells
a story about his wife, who teaches English to Mexicans. In one class,
she tapped on a wall, asking a student to identify it, and the guy
said, "That's drywall." To Card, it signifies that construction
is one of those fields that soak up a disproportionate number of Mexicans;
it's a little piece of the puzzle. "Even when I was a kid in
Ontario 45 years ago," he notes, "the tobacco pickers were
Jamaicans. They were terrible jobs — backbreaking." Card
is a political liberal with thinning auburn air and a controlled,
smirky smile. His prejudices, if not his emotions, favor immigrants.
Raised by dairy farmers in Guelph, Ontario, he remembers that Canadian
cities were mostly boring while he was growing up. The ones that attracted
immigrants, like Toronto and Vancouver, boomed and became more cosmopolitan.
"
Everyone
knows in trade there are winners and losers," Card says. "For
some reason it doesn't stop people from advocating free trade."
He could have said the same of Wal-Mart, which has put plenty of Mom-and-Pop
retailers out of business. In fact, any time a firm offers better
or more efficient service, somebody will suffer. But the economy grows
as a result. "
I honestly
think the economic arguments are second order," Card told me
when we discussed immigration. "They are almost irrelevant."
Card's
implication is that darker forces — ethnic prejudice, maybe,
or fear of social disruption — is what's really motivating a
lot of anti-immigrant sentiment. Borjas, a Hispanic who has written
in blunt terms about the skill deficits of Mexicans, in particular
arouses resentment. "Mexicans aren't as good as Cubans like him,"
Douglas S. Massey, a demographer at Princeton, said in a pointed swipe.
Borjas
lives an assimilated life. He has a wife who speaks no Spanish, three
kids, two of whom study his mother tongue as a foreign language, and
a home in Lexington, a tony Boston suburb. Yet his mind-set often
struck me as that of an outsider — an immigrant, if you will,
to his own profession.
When
I asked the inevitable question — did his exile experience influence
his choice of career? — he said, "Clearly it predisposed
me." The seeds of the maverick scholar were planted the year
before he left Cuba, a searing time when the revolution was swinging
decisively toward Soviet-style communism. His family had owned a small
factory that manufactured men's pants. The factory was shut down,
and the family made ready to leave the island, but their departure
was delayed by the death of Borjas's father. The son had to attend
a revolutionary school, where the precepts of Marxism-Leninism were
drilled into the future economist with notable lack of success. One
day he marched in the band and drummed the "Internationale"
in front of Fidel Castro and the visiting Yuri Gagarin, the Soviet
cosmonaut. "Since that year I have been incredibly resistant
to any kind of indoctrination," he told me — an attitude
that surfaces in wry references to the liberal Harvard environs as
the "People's Republic of Cambridge" and to American political
correctness in general.
Borjas's
family arrived with virtually no money; they got some clothing from
Catholic Charities and a one-time stipend of, as he recollects, $100.
His mother got a factory job in Miami, where they stayed several years.
Then the family moved to New Jersey. He at tended Saint Peter's College
in Jersey City and got his Ph.D. at Columbia.
I asked
him whether the fact that he was Cuban, the most successful Latin
subgroup, had affected his views of other Hispanics. "Look, I've
never been psychoanalyzed," he said with an air of resignation,
as if he were accustomed to hearing such loaded questions. One thing
Borjas shares with Card is a view that others treat immigration emotionally.
But Borjas takes comfort not in anecdote but in empiricism. As he
said to me often, "The data is the data."
Immigrants
Can Be Complementary
Economists
on Card's side of the debate recognize that they at least have to
deal with Borjas's data — to reconcile why the local studies
and national studies produce different results. Card shrugs it off;
even 5 percent for a dropout, he observes, is only 50 to 60 cents
an hour. Giovanni Peri, an Italian working at the University of California,
Davis, had a more intriguing response. Peri replicated Borjas's scatter
diagram, and also his finding that unskilled natives suffer a loss
relative to, say, graduates. He made different assumptions, however,
about how businesses adjust to the influx of new workers, and as a
result, he found that the absolute harm was less, or the gain was
greater, for all native-born groups. By his reckoning, native dropouts
lost only 1 percent of their income during the 1990's.
Peri's
theory is that most of the wage losses are sustained by previous immigrants,
because immigrants compete most directly with one another. It's a
principle of economics that a surplus in one part of the production
scheme raises the demand for every other one. For instance, if you
have a big influx of chefs, you can use more waiters, pushing up their
wages; if you have a lot of chefs and waiters, you need more Sub-Zeros,
so investment will also rise. The only ones hurt, in this example,
are the homegrown chefs — the people who are "like"
the immigrants.
Indeed,
workers who are unlike immigrants see a net gain; more foreign doctors
increases the demand for native hospital administrators. Borjas assumes
that a native dropout (or a native anything) is interchangeable with
an immigrant of the same skill level. Peri doesn't. If enough Mexicans
go into construction, some native workers may be hurt, but a few will
get promotions, because with more crews working there will be a greater
demand for foremen, who most likely will be natives.
Natives
have a different mix of skills — English, for instance, or knowledge
of the landscape. In economists' lingo, foreigners are not "perfect
substitutes." (Friedberg also observed this in Israel.) In some
cases, they will complement rather than compete with native workers.
Vietnamese manicurists in California cater to a lower-price, less-exclusive
market than native-run salons. The particular skills of an Italian
designer — or even an economist — are distinct from an
American's. "My work is autobiographical to a large extent,"
notes Peri, who got into the field when the Italian government commissioned
him to study why Italy was losing so many professionals. The foreigners
he sees in California are a boon to the U.S. It astonishes him how
people like Sensenbrenner want to restrict immigration and apply the
letter of the law against those working here.
This
is a very romantic view. The issue is not so much Italian designers
as Mexican dropouts. But many Mexicans work jobs that are unappealing
to most Americans; in this sense, they are not exactly like natives
of their skill level either. Mexicans have replenished some occupations
that would have become underpopulated; for instance, 40,000 people
who became meat processors immigrated to the U.S. during the 1990's,
shoring up the industry. Without them, some plants would have raised
wages, but others would have closed or, indeed, relocated to Mexico.
Are
All Dropouts the Same?
I talked
to half a dozen vintners and a like number of roofing-company owners,
both fields that rely on Mexican labor, and frequently heard that
Americans do not, in sufficient numbers, want the work. In the case
of the vineyards, if Mexicans weren't available, some of the grapes
would be harvested by machine. This is what economists mean by "capital
adjusting." If the human skills are there, capital will find
a way to employ them. Over the short term, people chase jobs, but
over the long term jobs chase people. (That is why software firms
locate in Silicon Valley.)
If you
talk to enough employers, you start to gather that they prefer immigrant
labor over unskilled Americans. The former have fewer problems with
tardiness, a better work ethic. Some of this may be prejudice. But
it's possible that Mexican dropouts may be better workers than our
dropouts. In Mexico, not finishing high school is the norm; it's not
associated with an unsuitability for work or even especially with
failure. In the U.S., where the great majority do graduate, those
who don't graduate have high rates of drug use and problems with the
law.
The
issue is charged because the group with by far the highest rate of
incarceration is African-American dropouts. Approximately 20 percent
of black males without high-school diplomas are in jail. Indeed, according
to Steven Raphael, a colleague of Card's at Berkeley, the correlation
between wages and immigration is a lot weaker if you control for the
fact that so many black men are in prison. But should you control
for it? Borjas says he thinks not. It's pretty well established that
as the reward for legal work diminishes, some people turn to crime.
This is why people sold crack; the payoff was tremendous. Borjas has
developed one of his graphs to show that the presence of immigrants
is correlated with doing time, especially among African-Americans.
Incarceration rates, he notes, rose sharply in the 70's, just as immigration
did. He doesn't pretend that this is the whole explanation —
only that there is a link. Card retorts: "The idea that the way
to help the lot of African-Americans is to restrict Mexicans is ridiculous."
Black leaders have themselves mostly switched sides. In the 20's,
A. Philip Randolph, who led the Pullman Porters, spoke in favor of
immigration quotas, but the civil rights establishment no longer treats
immigration as a big issue; instead it tends to look at immigrants
as potential constituents. (One person who takes issue with the prevailing
view is Anthony W. Williams, an African-American pastor in Chicago
who is running for Congress against Representative Jesse Jackson Jr.
Black leaders have forsaken their mission, he told me. "Immigration
will destroy the economic base of the African-American community.")
In the
spring, as the Senate Judiciary Committee was trying to parse these
issues into a piece of legislation, Borjas and Card were invited to
air their views. Each declined, in part because they don't think politicians
really listen. As if to prove the point, the effort to write a joint
bill has stalled, following Sensenbrenner's announcement that the
House intends to stage a series of public hearings on immigration
around the country over the summer. There will be a lot said about
border control, many heartfelt stories and probably very little about
natural experiments.
The
economists do have political opinions, of course. Borjas leans to
a system like Canada's, which would admit immigrants on the basis
of skills. He also says that, to make sure the problem of illegals
does not recur, the U.S. should secure its borders before it adjusts
the status of its present illegals.
Advocates
of a more open policy often cite the country's history. They argue
that the racists of bygone eras were not only discriminatory but also
wrong. Card, for instance, mentioned an article penned by a future
U.S. senator, Paul Douglas, titled "Is the New Immigration More
Unskilled Than the Old?" It was written in 1919, when many people
(though not Douglas) held that Jews, Slavs and Italians were incompatible
with the country's Anglo and Teutonic stock. Nativism has always been
part of the American scene, and it has tended to turn ugly in periods
when the country was tired of or suspicious of foreigners. In 1952,
quotas were maintained in a law sponsored by Senator Pat McCarran,
a prominent McCarthyite. There remains today a palpable strain of
xenophobia in the anti-immigrant movement. Dan Stein, president of
the Federation for American Immigration Reform, remarked to me, rather
meanly, "If someone comes here from China and they go swimming
in a dangerous river, a sign in English is enough, but the Mexicans
want it in Spanish." Ninety years ago, some signs were in German,
as were 500 newspapers on American soil.
But
U.S. history, as Borjas observes, can be read in two ways. For sure,
earlier waves of immigrants assimilated, but America essentially closed
the gate for 40 years. Antipathy toward Germans during World War I
forced German-Americans to hide all traces of their origins. The quotas
of the 1920's were reinforced by the Depression and then by World
War II. The country had time to let assimilation occur.
A reverse
process seems to be occurring with Mexican-Americans. Very few Mexicans
came north in the decades after 1920, even though they were relatively
free to do so. As recently as 1970, the U.S. had fewer than one million
Mexicans, almost all of them in Texas and California. The U.S. did
bring Mexican braceros to work on farms during the 1940's, 50's and
60's. The program was terminated in 1964, and immigration officials
immediately noticed a sharp rise in illicit border crossings. The
collapse of the Mexican economy in the 70's gave migrants a further
push. Finally, Mexicans who obtained legal status were (thanks to
the 1965 reform) able to bring in family members.
The
important point is that, ultimately, there was a catalytic effect
— so many Mexicans settled here that it became easier for more
Mexicans to follow. One story has it that in a village in central
Mexico people knew the price of mushrooms in Pennsylvania sooner than
people in the next county over. Even if apocryphal, it illustrates
what economists call a network effect: with 12 million people born
in Mexico now dispersed around the U.S., information about job-market
conditions filters back to Mexico with remarkable speed.
Now
that the network is established, the exodus feels rather permanent;
it is not a wave but a continuous flow. This has led to understandable
anxiety, even among economists, about whether Mexicans will assimilate
as rapidly as previous groups. Although second-generation Mexicans
do (overwhelmingly) speak English, and also graduate from high school
at far higher rates than their parents, Borjas has documented what
he calls an ethnic "half-life" of immigrant groups: with
each generation, members of the group retain half of the income and
educational deficit (or advantage) of their parents. In other words,
each group tends toward the mean, but the process is slow. Last year
he wrote that Mexicans in America are burdened if not doomed by their
"ethnic capital," and will be for several generations. In
"Heaven's Door," Borjas even wrote forgivingly of the quota
system enacted in the 20's, observing that it "was not born out
of thin air; it was the political consensus . . . reached after 30
years of debate." These are distasteful words to many people.
But Borjas does not advocate a return to quotas. His point is that
Americans shouldn't kid themselves: "National origin and immigrant
skills are so intimately related, any attempt to change one will inevitably
change the other."
The
Limits of Economics
Economists
more in the mainstream generally agree that the U.S. should take in
more skilled immigrants; it's the issue of the unskilled that is tricky.
Many say that unskilled labor is needed and that the U.S. could better
help its native unskilled by other means (like raising the minimum
wage or expanding job training) than by building a wall. None believe,
however, that the U.S. can get by with no limits. Richard B. Freeman
of Harvard floated the idea that the U.S. simply sell visas at a reasonable
price. The fee could be adjusted according to indicators like the
unemployment rate. It is unlikely that Congress will go for anything
so cute, and the economists' specific prescriptions may be beside
the point. As they acknowledge, immigration policy responds to a host
of factors — cultural, political and social as well as economic.
Migrant workers, sometimes just by crowding an uncustomary allotment
of people into a single dwelling, bring a bit of disorder to our civic
life; such concerns, though beyond the economists' range, are properly
part of the debate.
What
the economists can do is frame a subset of the important issues. They
remind us, first, that the legislated goal of U.S. policy is curiously
disconnected from economics. Indeed, the flow of illegals is the market's
signal that the current legal limits are too low. Immigrants do help
the economy; they are fuel for growth cities like Las Vegas and a
salve to older cities that have suffered native flight. Borjas's research
strongly suggests that native unskilled workers pay a price: in wages,
in their ability to find inviting areas to migrate to and perhaps
in employment. But the price is probably a small one.
The
disconnect between Borjas's results and Card's hints that there is
an alchemy that occurs when immigrants land ashore; the economy's
potential for absorbing and also adapting is mysterious but powerful.
Like any form of economic change, immigration causes distress and
disruption to some. But America has always thrived on dynamic transformations
that produce winners as well as losers. Such transformations stimulate
growth. Other societies (like those in Europe) have opted for more
controls, on immigration and on labor markets generally. They have
more stability and more equality, but less growth and fewer jobs.
Economists have highlighted these issues, but they cannot decide them.
Their resolution depends on a question that Card posed but that the
public has not yet come to terms with: "What is it that immigration
policy is supposed to achieve?"
