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Home Publications Blogs Beat the Press Does the United States Benefit from Having an Immigrant Underclass?

Does the United States Benefit from Having an Immigrant Underclass?

Sunday, 26 September 2010 10:14

Yes, they work cheap, but is it a good thing to have a group of especially low-paid workers in the United States? That is the question that goes unaddressed in Ezra Klein's column hyping recent research suggesting that immigrants do not lower the wages of even less-educated workers.

While there are some issues about the research findings (rent, which is a large share of low-wage workers' budgets, is far higher in cities with large immigrant concentrations [e.g. Los Angeles and Miami] than in cities with relatively few immigrants [e.g. Buffalo and Toledo] which makes real wage comparisons difficult), the implications are a bit more complicated than suggested in the column.

Essentially the research implies that less-skilled immigrants have formed an underclass that is paid so poorly that its size does not affect the wages of even the least skilled native born workers. This would be consistent with the findings of other research that it is taking far longer now than in prior decades for immigrants' wages to catch up with the wages of native born workers. As would be expected, new immigrants primarily compete with other earlier immigrants, so a more rapid flow depresses their wages.

There are some statements (derived from the cited research) that are simply untrue. There are very few jobs done by less-skilled immigrants that would not be done by native-born workers. They would be done, just at much higher wages. For example, the jobs in construction and meat-packing that are now filled largely by immigrants used to be filled by native born workers, and in fact were often sought out. But, the pay in these sectors has fallen sharply and many fewer native born workers are now willing to fill the jobs. However, there is nothing intrinsic to the jobs that makes them unsuitable for native-born workers.

Klein is right about the enormous potential gains from allowing in more highly-skilled immigrants but does not carry the point far enough. If the United States adopted more transparent professional and licensing standards for doctors and lawyers and other highly paid professionals, and adopted an open door policy for foreigners who met these standards, we could send pay in these professions plummeting. There would be enormous gains to consumers and the economy, which would swamp the marginal benefit of getting lower cost construction workers and custodians. However, doctors and lawyers have enough power to prevent such policies from being adopted and generally from even being discussed. 


Comments (8)Add Comment
written by AndyfromTucson, September 26, 2010 10:55
You say: "There are very few jobs done by less-skilled immigrants that would not be done by native-born workers. They would be done, just at much higher wages."

But if this work was done at much higher wages then the goods and services produced by that work would cost more, which would reduce demand for the product of the work, which would reduce demand for the work, which would reduce the wages for that work. Until this feedback loop is factored into the analysis it is impossible to say just how much the net impact of low-wage immigrants is on native worker wages.
written by Terry, September 26, 2010 11:24
An excellent beginning to what I hope are more posts by you on immigration.

You have long impressed me as one of the more honest commentors on economic issues and I would be interested to hear you discuss immigration issures at much more length.

You've raise what is one of the key and little-discussed issues in the immigration non-debate ... do we want to create a new underclass? Would it be a permanent underclass? If immigrants are "taking the jobs Americans won't do," what happens when we make the immigrants Americans by giving them citizenship? Will they stop doing these jobs, or do we envision a permanent underclass of hispanic citizens? Does anybody really think this is moral or even feasible?

Do we really not have enough native low-education workers to fill these jobs? I keep hearing about how many high-school dropouts we have, why shouldn't they do these jobs? And if we raise the wages on these jobs, what would be wrong with them taking these jobs? What is so bad about being a meat-packer, construction worker, exterminator, or deliveryman?

Construction jobs, only a few decades ago were highly desirable and required reasonable skill and dilligence. Since when did construction jobs become beneath the dignity of Americans?

The best solution seems to be to raise the dignity/wages of these jobs so they are decent enough for Americans to take. A little honest observation shows that a large fraction of Americans are not cut out for work that requires a college education or even a high-school education (and all the No-Child-Left-Behind wishful thinking isn't going to change that). They won't get rich, but it could be a decent, modest, honorable life.
written by liberal, September 26, 2010 2:33
Terry wrote,
What is so bad about being a meat-packer, construction worker, exterminator, or deliveryman?

Well, for one thing, those jobs are actually involved in producing something useful. TPTB have decided that purely parasitic occupations in the FIRE sector are the ones we should be expanding.
written by purple, September 26, 2010 2:34
Most legal immigrants, at least from Asia, have higher than average education levels. Having lived in Asia, I know that is not the norm, so I assume it's because of the rarely discussed filtering process in our legal immigration system, for instance self-sufficiency requirements.

People have a tendency to conflate immigration from Mexico with immigration from other parts of the world when they are quite different, mainly due to proximity and all that comes with that. We are not seeing the peasants from China, they can't get here.
written by John Emerson, September 26, 2010 5:30
During a hard time of my life 40 years ago I got by with agricultural work, kitchen work, janitorial work, and warehouse work. The first three of these at least are now done mostly or almost entirely by immigrants.

When I finally got an OK-paying hospital job it was train-on-the job, and I worked in various areas of hospital work for the next 25 years. Those jobs now require a training program.

I'd expect low skilled immigration to show up more in unemployment and underemployment than in wages.
written by John Emerson, September 26, 2010 5:33
AndyfromTucson: Or fewer higher-paid workers would be hired than there had been low paid workers. A wage level and hiring level would be found.
written by moderadical, September 27, 2010 6:03
Dean, you are one of the few from the left or right to address the immigration issue honestly and logically. The tactic I see employed most often, by everybody from the far left to the corporatist right, is to conflate both legal and undocumented immigration and paint the immigration debate as a false dialectic: either you are "pro-immigration" or you are "anti-immigrant". It's as if they believe they are able to end all discussion on the matter by merely evoking the specter of racial bias, and to a large extent, they have been successful in doing so.

Of course, if these people were to be honest, they would admit the undocumented immigrants "do the jobs Americans won't do" only because they are willing to work at wages that force them to live in truly appalling conditions.

Unfortunately, there is very real damage being done to the working class by virtually uncontrolled immigration of unskilled workers. Here in California, the working class is rapidly disappearing, replaced by a permanent underclass occupied almost exclusively by recent undocumented immigrants from Latin America. This underclass contends with incredible abuses and all too often truly shocking living conditions too.

Of course, legalizing those currently here would alleviate some of the abuses they suffer but also incur new problems for them. Those gardeners, maids, maintenance workers, custodians, etc, are currently often employed expressly because they LACK the protections afforded by legal status. Were they to become citizens, many would find themselves out of work and replaced by the next generation of undocumented immigrants, who would no doubt be willing to work for less and with fewer legal constraints.

Great analysis, Dean.
written by Mike B), September 27, 2010 10:45
Labour power i.e. skills are commodities. The value of a commodity is determined by the amount of socially necessary labour time embodied within it. Thus, a surgeon's skills sell for a higher price than an unskilled high school graduate. The price of a commodity fluctuates around its value with supply and demand for said commodity.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.