Make Unskilled Immigrants Customers as Well as Workers

The New York Times ran an excellent article on immigrant assimilation last weekend. They framed the article as a debate between Harvard’s Cuban born Economist George Borjas and Berkeley’s Canadian-born David Card.

Pretty much all economists support skilled worker immigration — although few argue that unskilled immigration helps the earnings of unskilled native workers. The question is does the immigration of low skilled workers hurt the wages of native unskilled workers and if so, by how much?

Borjas argues that unskilled immigrants hurt the economic prospects of unskilled Americans, especially African-American men. From the Times:

“Borjas has been making this case based on 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.

Borjas’ leading critic is David Card, a talented economist who received the coveted Marshall prize awarded each year to the nation’s most promising young economist. Card 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?

The article, by Roger Lowenstein, presents both perspectives fairly. I come down solidly with Card, but then he is my Berkeley neighbor. Either way, the article is well worth a read.