What’s the Effect of Immigration on Unemployment?
Trigger warning for Saul: Labor is dehumanized and treated as a good that can be bought and sold. STEM sneering.
Vox Day asks a fair question.
It’s always fascinating how economists who like nothing better than to cite the Law of Supply and Demand turn around and claim that increasing the labor supply by nearly 20 percent neither reduces average wages nor native employment…
Since 20 percent of the US labor force is non-American, it should be no surprise that the number of Americans now outside the labor force has increased dramatically in line with the increase in immigration.
This shouldn’t be rocket science. Let’s use a reductio ad absurdum to explain. If 100 percent of the labor force is foreign-born, what percent of native-born Americans have jobs?
Yes, it isn’t rocket science. Rocket science would be much easier. Rocket scientists can actually tell you wear a rocket will go. Economists talk about widgets all the time because the real economic world is much too complex to model reliably.
But we can still work towards an answer to Day’s question.
Supply
Labor as not a single commodity with one supply curve and one demand curve sufficient to represent the whole thing. Labor is highly fragmented and highly differentiated. Each person has their own supply and demand curve that affects and is affected by other people’s supply and demand curves.
Sure, some people are might be perfect substitutes for others. This is more likely to happen if you don’t have any particular skills and live near other people with similar attributes to you.
But workers substituting for one another is not the only way in which workers can interact. If it were, we’d live in a pretty sad world (though that’s the world that a lot of people, including Day, mistakenly think we live in).
Certain workers are complements for other workers. I, for example, am at least superficially qualified to serve as a university professor at a business school. I am unlikely, however, to find such work unless teachers of other disciplines exist around me. In fact, I need a lot more than that. To have a chance at finding a job doing the thing I’ve been trained to do, I need English teachers and math teachers and Title-9 compliance people and groundskeepers and a provost and a few deans and lawyers and counselors and admissions people and disabilities testing people around.
Instead of all those workers depressing the demand for my labor by being part of my labor pool, they serve as a complementary good that actually increases the demand for my labor.
The presence of such complements in the labor market isn’t a theoretical idea, either. Empirical evidence for it exists. Adam Ozimek points us to a paper from Peri, Shih, and Sparber [pdf] that notes:
The estimated elasticities imply that foreign STEM growth can explain one fourth of the aggregate productivity growth in the 1990-2000 decades, and possibly 40% of it in the 1990’s. Our calculation attribute to foreign-STEM a yearly TFP growth by 0.30% per year in the 1990’s and by 0.10% in the 2000’s. Just to give an idea, such yearly growth implies that income per capita in 2010 is 4% larger in the US that it would have been without foreign STEM contribution. [emphasis added]
Demand
Workers, if paid, go on to buy stuff. If you have a job, it’s unlikely you would be able to keep working it if other people weren’t consuming your outputs either directly or indirectly.
I know it sometimes seems to require the careful application of a crowbar, but immigrants do spend money. The companies that produce the things that they buy have to hire and pay workers. So, even if you are a Java programmer and an immigrant Java programmer lives in your same area competing for work, that person is still helping keep the people at the local Walmart employed.
I anticipate that another objection might be that immigrants are likely to send at least some of their earnings to their home countries. This can be true. However, if their earnings are denominated in dollars and their home countries use something other than dollars, they still have to exchange their dollars with someone else first. And that party ostensibly has some plans that requires dollars. (And if they don’t, they will in turn trade it on to someone who does.)
Photo credit: Bazi
Deceptively devilish questions
In summary, I would suggest not investing too much confidence in various thought experiments. If you try to simplify things and ask what the world would look like if Mark Zuckerberg died in a horrible blogging accident tomorrow, you’d probably be correct in saying someone would simply take his place as CEO of Facebook. It might even boost employment as the company adjusts.
At the same time, there are a lot of people working today for a company that wouldn’t exist had Zuckerberg not founded Facebook.
On the third hand, many of those people would simply have been employed elsewhere doing other things. This is why it’s hard to make a confident judgment about what any one person’s contribution is, and the problem doesn’t get easier when you try to answer it with respect to large, diverse swaths of people like immigrants.
It also depends on what type of work an immigrant is doing. Undocumented immigrants tend to do a lot of the more labor intensive tasks in the United Ststes. Even if we totally stop immigration, I can’t really see a rush of American citizens to be gardeners, house cleaners, agricultural laborers, industrial slaughterhouse workers, nail salon workers, etc.
Legal immigrants tend on H1-B visas tend to hold jobs that more American citizens want. This might have a depressing effect on wages and salaries.Report
Even if we totally stop immigration, I can’t really see a rush of American citizens to be gardeners, house cleaners, agricultural laborers, industrial slaughterhouse workers, nail salon workers, etc.
That’s the first thing that happens. What’s the second?
I imagine that it’s people saying either “I’m not willing to pay a cent more for this service! I’ll go without!” *OR* (the ones on the margin) saying “Okay, I’ll kick in an additional $5.”
Which then has people saying either “I still won’t do that job for that price!” *OR* (the ones on the margin) saying “Okay, I’d do it for the additional $5.”
Where the margin falls and how many people are on this/that side of it is where the magic happens.Report
There is a large category of services provided by undocumented aliens that we can live without because they are luxury services like nail salons. There is another large category of work, agricultural labor, that is something we can’t do with out. Americans want their food cheap. That requires industrial agriculture staffed by low wage earners. One reason why sugar was produced with slaves until the 19th century was that the evils of slavery were the only way to make sugar production economical. People accepted the evils of slavery for centuries to get cheap sugar.Report
We may also be willing to get our nails done every month instead of every other week. We may be willing to do our lawns every other time. We may be willing to put up with more soap scum in our showers for longer.
We have so much that there’s wiggle room between where we are and doing without. A “margin”, if you will.Report
“There is another large category of work, agricultural labor, that is something we can’t do with out. ”
You’d be surprised how quickly machines can be designed to perform that work. I saw an example of a milk farm that was 100% automated. Even the removal of dead cows was handled by a computerized motion detector and an overhead crane.
I watch “How It’s Made” a lot, and it’s a cool show, but one of the things that surprises me is how many machines there are whose sole function is “rotate objects ninety degrees” or “cut two inches off of something”. And then I think, what happened to the guy who that was his function, and he got paid for it? I mean, “turn the pineapples so they face the same way” is a real armpit of a job and I’m sure he’s happy not to be doing it anymore, but is he getting paid to do something else or is he, as it were, on the dole?Report
Some things are easier to automate than others. Manual dexterity is still an issue with robots. (picking corn is easy, picking raspberries and peaches is hard).
Currently? Most of the people are working other jobs (as service workers, generally). In 20 years time, I expect that to change. 47% of current American Jobs being automated will not come without a significant cost.Report
Picking raspberries and peaches by machine is hard until you start breeding varieties specifically to be picked by machines. Maybe they don’t taste as good, but hey, neither did Coke Classic after they started using corn syrup instead of cane sugar.Report
People liked NewCoke when they took the corn syrup out… and added aspertame.
I’d pay (and do!) good money for better raspberries, and good American strawberries small as my pinkie nail.Report
“People liked NewCoke when they took the corn syrup out… and added aspertame.”
You’ve got that exactly backwards.Report
Do I really need to post how much money coke’s made on DietCoke?
People swear by the stuff — but it’s really just NewCoke, now with aspertame.Report
Diet Coke – Introduced 1982
New Coke – Introduced 1985Report
Read the wikipedia article:
“Diet Coke does not use a modified form of the Coca-Cola recipe, but instead an entirely different formula. The controversial New Coke, introduced in 1985, used a version of the Diet Coke recipe that contained high fructose corn syrup and had a slightly different balance of ingredients. In 2004, Coca-Cola introduced Coca-Cola C2, which it claims tastes much closer to Coca-Cola but contains half the carbohydrates. In 2005, the company introduced Coca-Cola Zero, a sugar-free variation of regular Coca-Cola.”Report
Exactly, New Coke is Diet Coke with aspartame replaced with corn syrup instead of the other way around.Report
C2 was actually pretty good. Coke Zero is way better than Diet Coke. That’s all I have to say about this.Report
I’m also a fan of coke zero. But it seems like nobody else around me likes it. You’re the first other person to tell me that he likes coke zero too.Report
I’m a third fan of Coke Zero. I also like Vanilla Coke. In Europe, they apparently have Vanilla Coke Zero but I only saw that once in the United States.Report
The thing I like about coke zero is its harsh acidity (and its 0 calories). Vanilla coke is too smooth. Tastes weird to me.Report
“Maybe they don’t taste as good, but hey, neither did Coke Classic after they started using corn syrup instead of cane sugar.”
And now Mexican Coke is a thing you can buy by the case at Costco. Red Delicious* is what you get when you select fruit for logistics rather than taste.
* The most blatant form of false advertising since The Neverending StoryReport
Delicious isn’t awesome even when you get the original.Report
There is some produce that is devilishly hard for machines to harvest because they are delicate or ripen at inconsistent time.
Not that we can’t build machines to do it, just that the cost benefit is still too low. How low is a bar that gets closer every year.Report
“turn the pineapples…” … “…on the dole?”
I see what you did there!Report
Thank god you did, because I worked hard on the setup for that one!Report
That and the problem that sugar grows in the same geographic range as various tropical diseases of African origin. The mortality rate for Europeans was so high that only very powerful incentives could induce them to go there. The British could in principle have shipped their convicts to the West Indies to work the fields, but they would die off as quickly as they arrived. Importing African slaves had the benefit that they came in with at least partial immunity, so the mortality rate was low enough for the system to work. The Europeans, in the meantime, built their houses on hilltops with good breezes to keep down the mosquito population, made money as fast as they could, and returned home to buy country estates.Report
Northern Europeans is the better term. Southern Europeans have decent malaria resistance…Report
…and since we’re on the topic of too many levered nobs to twist and pull to truly understand the interactions… why limit ourselves to useless lawns – what about rising food prices, which would hurt the poor, but then give the poor rising opportunities in food production, which would cause food prices to rise.
My controversial statement for the day is that food prices are artificially engineered for the benefit of the petite bourgeoisie and saying that we do this so that people don’t have to have jobs in agriculture (which has been and will be said here repeatedly) is a morality fable we tell ourselves to make us feel better about exploiting the people who still do the jobs in agriculture.Report
Comrade Wesson disagrees.
If you give him more money, he will remove all need for people to work in agriculture.Report
I am not sure if you are agreeing with me or disagreeing with me but sugar, coffee, cocoa, and tea are great examples of this. One of the things that separated the early bourgeoisie from other commoners was that the early bourgeoisie could afford at least some luxury goods. Sugar, coffee, cocoa, and tea were some of the first luxury goods to reach down to the masses. They were made cheaper than they normally would be by slave or very lowly paid labor. This was especially true for sugar and coffee, two plants that are notoriously difficult to grow and refine into their final product.Report
Ha! Rioy ain’t that hard at all!
Coffee isn’t /that/hard to grow, unlike Bananas in England!Report
@marchmaine
Who are the petite bourgeoisie in your theory? Is it Brooklynites or someone else?Report
Je suis.
Though your taxonomy intrigues me… are we now to the point where it is Brooklynite else other?Report
@marchmaine
I am using Brooklynite as a stand in for upper-middle class urban professional who is well off but not one percent.
My understanding is that petite bourgeoise traditionally meant the lower-middle class. Sarah Palin fans in modern linguistic lingo.Report
@marchmaine
But there are also certain agricultural policies (such as tariffs) that work in the other direction. I’m not sure your country’s agricultural policy is trying to achieve anything coherent.Report
The result is less of the service being provided. We don’t, without running the experiment, know how much less. What evidence we have suggests a lot less, at least in agriculture. (Perhaps luxuries like manicures would come out better than necessities like food. It wouldn’t be the first time.)Report
Yeah, the “okay, I’ll kick in an additional $5… but I’ll get it less often” is probably how the new equilibrium establishes itself.Report
we’ve run many experiments in agriculture, and the abuse of migrant workers has a long and sordid history; that link simply being the most recent I could find.Report
I think a lot of the examples of food going unharvested for lack of cheap labor isn’t because consumers are unwilling to pay a little bit more for the produce. I suspect it’s more that the market for the produce is highly competitive, so a shortage of labor in one place doesn’t affect the market price significantly, which means that the farms experiencing the shortage can’t raise the price to make up the difference. They just have to drop out of the market.
If there was a nation-wide shortage of cheap farm labor, I’d expect to see prices adjust instead of seeing farms go bust. If they didn’t, my first guess as to an explanation would be cheap imports. In that case, it may be best to just start importing raspberries instead of insisting that we grow them here.Report
I can totally get a rush of American citizens to be agricultural laborers.
I call it the “off year Travel Across America For Free” Plan.Report
@leeesq @jaybird
I’ve seen some evidence that American citizens are willing to move into certain fields normally associated with immigrants including undocumented immigrants. Cleaning houses and apartments does seem to be a popular thing for college and grad students to do for cash, at least in cities. There is also evidence of young, college educated women going into babysitting and nannying via sites like urbansitter.Report
Remember the whole “nanny problem” incidents in the late 90’s and early 2000’s? It felt like you couldn’t turn around without someone’s nomination being withdrawn for nanny problems.
Anyway, I don’t know how to best differentiate between “jobs that will be done for X months by college students” and “jobs that will be done for X years by unskilled (and by “unskilled” I mean “not an officially recognized trade” and not “this person has no skills!”) labor”.Report
I thought it was house cleaners but close enough. Lots of middle class and upper-middle class people use house-cleaners and these are often undocumented immigrants who are paid in cash. Now more and more people my age are using them as well.
A lot of female actors in NYC like to do nanny type jobs for children because they can go into auditions or rehearsals while the kids are in school and then work during the afternoons and evenings and maybe some weekends. Sometimes there is also room involved as part of the payment.
Being a personal assistant* is also a job that seems popular with female artists I’ve known but not male artists.
*I find the whole concept of a personal assistant to be kind of creepy and weird.Report
There isn’t a way to differentiate between jobs done for x months by college students and jobs done by x years by unskilled labor except that college students are less likely to go into agricultural labor, construction, or the other really physically demanding day labor jobs.Report
The current acting head of the philosophy department (Mike Pelczar) at NUS did construction between his undergrad and grad school.Report
Hmmm… do you know Neil Sinhababu?Report
Can you hum a few bars?Report
On the third hand
If you want nerd cred, here you say “On the gripping hand”.Report
Heh. And what establishes nerd cred more than going meta-nerd?Report
Sorry, I can’t get past “Vox Day”. That lovely don’t-link hyperlink system exists for folks like him.
That aside, I am always enthralled by the ability of people who have taken Economics 101 to assume that Economics stops right there.
You’d think that grasping that “Economics 1010” would deal with super simplistic models designed to convey broad ideas that shouldn’t actually be applied to real life, in much the same way you wouldn’t use Physics 101 to build rockets.
Basics of Mechanics is great, but real life occurs on surfaces with friction, wind-resistance, and heat problems that involve shapes other than perfect spheres. 🙂Report
Ironically, the “lump of labor fallacy” is taught in Economics 101.
Having a good grip on 101 would imply the ability to get around that particular pothole.Report
As Vikram points out, VD (how appropriate) isn’t even applying Econ 101 right.Report
Funnier still is his most recent post, in which he “proves” that Starbucks — the behemoth company that makes almost $4 billion in profit on over $16 billion in sales annually, and which has a bigger market share than all of it’s competitors combined — is a financial loser, because its CEO just doesn’t understand the way markets work the way Vox Day does.Report
Like I said below, every single post VD writes on economics is almost shockingly stupid.
And it’s been that way since I first encountered him in 2003.Report
Well, for one, Starbucks doesn’t make almost $4 billion annually. Their profits were $3 billion last year, $2 billion in 2012, and a loss of $325 million in 2013.
Also, reading the post to which you’re referring, he’s quoting the CEO of Starbucks explicitly saying that he made a decision for non-economic reasons and that shareholders who don’t like that.should sell the stock and invest elsewhere. He’s not second-guessing Schultz; he’s taking Schultz’s words at face value.Report
@brandon-berg I was referring the their current (lat year’s) EBITDA.
And your addition about the specifics of his argument doesn’t make it any less moronic of a comment.Report
Way, way, way off topic, but…
“That lovely don’t-link hyperlink”
… might well be the most unintentionally ironically thing used on the inter tubes these days.Report
I can’t recall it. “Donotlink”? Anyways, it’s a way to link to something through an intermediary that doesn’t tie your websites together and doesn’t generate links for purposes of stuff like PageRank and other search engines.
Basically it’s a way to generate a link for people to follow, without promoting it (in the sense of ‘Google search results’ promoting it).
I’ve always found it kind of pointless, and then I ran into Vox Day and saw the light.
I still think it’s highly overused, and generally as a petty insult, but….yeah, I can see the point.Report
@morat20 What I meant is that I think of donotlink as being a way to have your cake it and eat it too.
As in, “I’m a blogger and I’ve just found this really offensive thing someone said just to get page hits, and I don’t want him to get page hits for it. However, *I* would really like some of those yummy page hits you get for posting really over the top offensive things, so I’m going to quote the offensive bit, write a post around it and tweet out a link to my post, but I’ll link to the source material with a donotlink.”Report
Oh yeah, that really annoys me. But once in awhile VD there is relevant to ongoing issues (the Hugos, for instance) and it actually has value.Report
Imagine a rocket as a perfect sphere…Report
what are you, a mad rocket scientist or something?Report
*evil grin*Report
SPHERES you mean? 🙂Report
Oooh, point to Morat20!Report
A.) Why is the graph in Czech?
B.) Why are we linking Vox Day now? I’m sure someone else has made his argument (though perhaps without the awful thought experiment). Someone who’s less of a despicable human being with whom I assume we’d rather not be associated.Report
By the way, if VD is chosen because he said something stupid about economics, but stupid in such a way that detailing why it is stupid is instructive, then we might as well turn over the blog to such posts, because that’s pretty much everything VD has ever written about economics (or, for that matter, anything any other fan of Mises has ever written about economics).Report
A reminder to always czech your math (before you wrech your math).Report
At this point, I think “puns” should be included in the OT description: “On Culture and Politics, With Puns.”
What happens if a Czech doesn’t look where he’s going when he walks north? He runs into a Pole!Report
It’s a sickness.Report
We should send a delegation to the O.Henry Pun-Off World Championships.Report
Czechs run; their neighbors take Slovaks. Their other neighbors fly, because they’re more avian.Report
Sticking to the region, you know why the Magyar people eat so much? Because they’re Hungary.Report
I’ve always thought that Turkey must have a good military, surviving so close to Hungary unless it’s wary of Greece?Report
Turks and Greeks have historic animosity.Report
And I totes missed the joke…Report
‘sok, you can just Slovak to the beginning of the thread and start over with a clean slate.Report
Release yerself from mental Slav’ry.Report
Though Czechs run with such a graceful, floating motion, it’s almost as if they’re bouncing.Report
I think we can all agree that Czechs, Poles, Turks, and Geeks are not German to the issues raised in the OP.Report
Sometimes the Krauts get a little sauer about that.
Then again, maybe I shouldn’t have braten that up…Report
Or sometimes they’ll hop like Pragues.Report
Back in the 20s, some of them were such fervent Creationists that after John Scopes was fined only $100 they tried to sue Dayton.Report
I don’t think labor is dehumanizing. It can be but it is not necessarily so. Any one would be demoralized if dealing with a horrible boss.
Otherwise I will handle the rest of this post later.Report
Note: I had two jobs that I would consider demoralizing. One had purposefully bad management. The other was running an election between two sides that hated each other.
Otherwise my jobs have been good except for the contract/freelance nature but the grass is always greener.Report
I believe he meant that labor itself is dehumanized in his analysis, that is, separated from its human element for the purpose of the analysis.Report
@chris
Look at the very small trigger warning at the top of the post. Vikram was taking the piss as they say in the UK.Report
Yeah, that’s what I mean.Report
“there are a lot of people working today for a company that wouldn’t exist had Zuckerberg not founded Facebook.”
Yes, but is it really useful to have the best minds of our generation figuring out how to get people to click on ads?Report
Having met a lot of the best minds of our generation, they don’t necessarily make the best workers in any particular problem space.Report
Meh. There are so many things we waste brilliant technical minds on that I can’t get too worked up over facebook.Report
I hear two general refrains on immigration:
1. Immigrants do the jobs no one else wants to do (this generally applies to very low-wage and back-crushing jobs.)
2. Companies put out absurd and impossible job requirements to say that there is no American citizen that can do the job.
The jobs in #1 tend to be agricultural or in food processing plants like slaughterhouses. The urban equivalents are house-cleaning, nail salon work, day contracting/construction, and night-time janitorial. Most of the mailmen in San Francisco also seem to be immigrants of a relatively recent arrival date as well interestingly.
#1 seems absolutely true when it comes to agriculture and day contracting. This is very hard work and there did not seem to be Americans willing to take the work during the Great Depression. Americans are willing to do back-breaking work but when it is well-paid like working in Oil Fields or union-protected construction.
There is also the question that a lot of employers (like nail salons) might prefer immigrants (especially undocumented ones) because said immigrants are less likely to complain about work-related abuses. The New Yorker ran an interesting article on cooks at Chinese restaurants last year. The NY Times just ran their story on nail salon workers and bad conditions.
This brings up some interesting and potentially disturbing questions. Is it possible for a country to get too wealthy and powerful and does this make it hard to get native citizens to do certain jobs because said jobs have never paid well? Does this mean we should allow for low-skilled immigrants to come in and take these jobs or should we design policies that make people desperate for work and willing to take any work? I.e. does the government need to have a deliberately created and maintained underclass? I hope the answer is no.
The claims for the second group seem absolutely true. Maybe we need to cut back on HB-1 Visas for computer programmers? My girlfriend went to business school in the US and is currently here on a HB-1 Visa. She is very well paid but her status is linked to her employer until she gets a greencard or finds someone else willing to sponsor her. This makes her less likely to negotiate hard perhaps because she can’t walk as easily as I can.Report
This does not sound like an argument for cutting back on H-1B visas. It sounds like an argument for granting more and making the process less onerous. Or better yet, just grant people visas and let them enter and compete in the labor market. Even better, open borders.Report
It’s an argument for not tying H1Bs to a sponsoring company.Report
This is a reform I would support. I’d increase H1-Bs but not have them be tied to employment with the sponsoring company.Report
I keep saying that if we want to limit work visas, create an open market for them. Let employers or employees buy and sell them at will. It would eliminate any systematic underpayment of immigrants, provide all sorts of useful data to economists, and it would ensure that we get the most valuable guest labor instead of the luckiest.Report
And combine it with rigid enforcement. If anyone on your job site can’t whip out a green card at a moment’s notice, then everyone goes home and you get a fine for fifty thousand dollars right on the spot. “But he left it at home this morning” is no excuse.Report
Umm… I can’t whip out a green card, even given several moment’s notice. In fact I don’t have one at all, what with having been born in California and all. So what do I whip out when challenged on my job site? My driver’s license is the closest thing I have, but it does not prove my legal status. This is before we even ask whether it is consistent with a free nation to require everyone to carry their papers ready to produce to the authorities on demand.Report
Is it possible for a country to get too wealthy and powerful and does this make it hard to get native citizens to do certain jobs because said jobs have never paid well?
Not entirely. Prices adjust until the market clears. There is some price at which Americans will do agricultural work. But because we have a large supply of immigrants willing to do that work, wages don’t rise to that level. If those immigrants weren’t there, the market would probably clear with some combination of higher wages, more automation, greater imports, and reduced production. But we certainly wouldn’t all starve to death.
Of course, all of this means higher prices for consumers. Agricultural workers would end up better off, and that would have some spillover effects at the low end of the labor market (probably more in areas with farmland, and less in urban areas?), but most other consumers would be worse off.
I think that’s very roughly what would happen. It’s complicated, and there are feedback loops, and it’s hard to say for sure without actually doing it, and even then we couldn’t say for sure because we didn’t have a control economy.
Companies put out absurd and impossible job requirements to say that there is no American citizen that can do the job.
I would give more credence to this theory if the bulk of H1-B visas didn’t go to an industry with very low unemployment.
Edit: Oh, wait. I mean, that’s totally true. We shouldn’t allow any more immigration for computer programmers. FYIGM.Report
Not necessarily. There is a reserve wage – a wage under which a person simply will not take a job. The reserve wage for many Americans is relatively high and that has not much to do with immigration. This is also why I find most debates about the minimum wage to be almost entirely about signalling.
The domestic market for low-skilled, low-wage labor is a peculiar beast, in large part, because lots of the folks who would normally be in that market are simply not part of the labor force.Report
“The reserve wage for many Americans is relatively high and that has not much to do with immigration. This is also why I find most debates about the minimum wage to be almost entirely about signalling.”
Yes.Report
“This is also why I find most debates about [insert political issue here] to be almost entirely about signalling.” -Every libertarian everywhere since they learned the word “signalling.”
More seriously, there is a sense in which this is trivially true (culture, society, that sort of thing, are all about “signalling”), a narrower sense in which it is partially, but importantly true (most of us, regardless of the sincerity and depth of our convictions, don’t do shit about them but huff and puff or argue on blogs), and a sense in which it’s not true at all (“entirely” renders it false for most of us on most issues, except in the trivial sense).
I suspect that most people who agree with me on minimum wage don’t even think about undocumented workers much, not just on this issue but any. Undocumented workers don’t enter their moral or political calculus at all, except on the issues where they are unavoidably salient, like say immigration. This is not a sign that their views on the minimum wage are “entirely” about signalling, just that their views aren’t fully reasoned, which is to say, they’re like almost everyone’s views on almost everything.Report
We could talk about things of a more practical nature.Report
@chris
You missed the “also.” I’m not saying that immigration makes the minimum wage issue moot. These are two separate issues linked by the matter of the reserve wage.
In other words, the reason that low-skilled immigrants are not likely to have a large impact on wages and employment opportunities for the native-born is that the native-born have relatively high reserve wages, regardless of how much competition there is from immigrants.
And, separately, the reason that marginal changes in the minimum wage are unlikely to have a large impact on the unemployment rate is because the reserve wage tends to be pretty close to the minimum wage anyway. Sure, you can dramatically increase the minimum wage, but then you’re going to start seeing more and more dis-employment effects, so it’s a tradeoff.
ps – I made the signalling point primarily as a counter to those on the conservative/libertarian side of the minimum wage debate, who argue that getting rid of the minimum wage would increase employment by letting the chronically unemployed find their place on the demand curve. The supply of native-born workers willing to move for something less than the minimum wage is probably pretty small.Report
j r,
+1 to the PS. I’ve always thought that too, and have garble-argued it with lots of the ismatists you mention, without being able to use all those cool concepts to make the point. So thanks!Report
@j-r To your mind, does the minimum wage just happen to be near the reserve wage? Is it near the reserve wage because political opposition is higher to increasing it significantly beyond the reserve wage, or is it near the reserve wage because the existence of the minimum wage affects the perceptions of workers and moves the reserve wage to be near the minimum wage? (this is a non-rhetorical question; I could see the truth being any combination of these three or some other relationship that I didn’t guess)Report
How is that inconsistent with what I said?Report
You’re confusing the causality. Americans’ reserve wage isn’t high because of an abundance of immigrants. Rather, America attracts so many immigrants, because the reserve wage is so high.
You could magically deport every undocumented immigrant in the country tomorrow and you’re unlikely to see many more Americans picking fruit, busing tables or mowing lawns, unless it is their own fruit, their own tables or their own lawns.Report
Bingo. If you can’t hire 200 Mexicans to pick fruit, you won’t see 200 Americans doing it; you’ll see maybe a dozen guys servicing a giant machine that does the job. If you can’t hire a crew of Guys From Home Depot to put up your drywall, you won’t see a crew of Americans; you’ll see Craftsman invent some kind of pneumatic device that puts in the screw, squirts on spackle, and smooths it automatically.Report
Americans’ reserve wage isn’t high because of an abundance of immigrants.
I didn’t say it was. I said wages don’t rise to meet the reserve wage because there are people willing to do it for less.
You could magically deport every undocumented immigrant in the country tomorrow and you’re unlikely to see many more Americans picking fruit, busing tables or mowing lawns, unless it is their own fruit, their own tables or their own lawns.
So…what? That work just doesn’t get done? If people are willing to pay enough for it, it will get done by, as I said, some combination of higher wages, automation, less production (because demand curves slope downwards), and, in the case of agriculture, imports. Although note that the potential for imports to replace domestic production is limited by the fact that there’s only so much arable land.Report
@saul-degraw
“#1 seems absolutely true when it comes to agriculture and day contracting. This is very hard work and there did not seem to be Americans willing to take the work during the Great Depression.”
One can only assume you have never heard the term Okie? Nor read that obscure little novel by a forgotten Californian named Steinbeck? The Grapes of Wrath?Report
@aaron-david
Yes I know what an Okie is but that was 80 plus years ago. Why didn’t the Great Recession create a new generation of Okies who were willing to pick crops as migrant labor?
Interestingly I know a couple from SF that moved to upstate New York to purchase and run a small farm. They even have interns! So there is a small part of the hipster crowd that is sincerely interested in farming and agriculture.Report
because you don’t live in pennsylvania. trust me, there’s plenty of people who work farms around here.Report
Well, I would assume that it is a combination of reserve wage and lengthened UI benefits. Also, I don’t think many people would have any idea on how to get one of those jobs right now, not to mention that many/most of the jobs are in area’s that have low Anglo populations, such as the Salinas valley and southern Central valley.
Many of the crops that are picked are seasonal, and the laborers move from area to area. From talking to farmers over the years, most of the farms that use this type of labor contract with hiring firms, which is both how one gets a job, and where most of the issues that have come up originate.
As for Upstate NY, I know nothing about the farming there, but my guess is that it doesn’t lend itself to the same practices that CA farming entails, and is possible more suited for same farms that sell to the farmers market crowds. This also happens around CA, and is the source of many farm stand produce also. Hobby farms out here, back to the land types. Similar things have been going on since the ’60’s. People are weird.Report
I think they would have liked to stay in CA especially northern CA but the land was too expensive.
You are probably right that most people would not know how to get those jobs. I heard a story about spanish-speaking labor on upstate NY diary farms. NY has lots of diary farms and they apparently operate 24/7. Many of the laborers live in a few RVs and switch spots. I suspect that most Americans would not want to do this except in the most desperate of situations.Report
You said “Great Depression.” I did a double-take but decided that, given your educational background and track record when it comes to typos, you must have meant Great Recession. But Aaron’s response to your comment was reasonable if he took it at face value.Report
A few mostly random thoughts:
People who are pissed off at immigration must really hate people who had kids about 18-20 years ago. Look at all those fresh-faced low-priced little monsters entering the work force every year.
or alternatively,
Why does the total adult population of the US matter? Doesn’t the presence of people with buying power just mean that many more clients / consumers?
Here in SoCal, what matters is immigration status. Certain kinds of farm workers, maids, certain housing trades (roofers, iirc), meat packers and garment workers are almost entirely undocumented. This makes them terribly vulnerable to sub-minimum wages. And that in turn makes it impossible for lawful employers to compete.Report
Look at all those fresh-faced low-priced little monsters entering the work force every year.
You say that as if it weren’t 100% true.Report
“Gentlemen, I suggest that we give them degrees in useless topics and saddle them with six-figures’ worth of debt.”
“Will that be enough to slow them down? I mean, we got *OUR* degrees in useless topics…”
“Good point. We should also legalize pot.”Report
“But pot being illegal didn’t bother us…”
“And give them all handheld devices that ensure they’ll never spend one moment in thought.”Report
The effect of unemployment on immigration is far more troublesome.
You see, when the housing bubble burst, all the Mexican construction workers lost their jobs and headed home.
And then, HOW are we supposed to know what’s going on in Arizona??Report
That’s not really a valid reducto. It assumes its conclusion that American workers are necessarily being replaced by foreign workers. If you drop that assumption, it’s at least arithmetically possible to add a steady stream of foreign workers to the pool and cause the percentage of native-born workers approach zero while still maintaining 100% employment among native-born workers.Report
I rarely do this, but this is a brilliant idea. And one I can almost see passing in the current Senate/House if the right spin and the right co-sponsors were put on it.Report
This idea gets floated on a regular basis in DC. I think the last major push was in the Clinton admin (that long ago? can’t remember.) It gets always killed off on a bi-partisan vote of big-business republicans (getting lobbied by the industries I listed above) and pro-immigrant rights democrats (because to get the votes to fine the businessman you have to agree to deport the undocumented workers).Report
Here’s how I’ve always looked at this issue, and I invite you to tell me where I’m wrong.
Suppose a population of 100 and a GDP of 100 at T1. At T2 add 10 to the population and 5 to GDP. We have GDP growth (which is as close to a canonical good as you get in economics, yeah?) but per capita GDP went down. And not only that, but if the wage base of those 5 additional people is significantly below the median, and assuming something like our current distributions of income per quintile, then all those 5 people have done is increase whatever income inequality (not that that’s a bad thing!) already existed.
This quotation from your post sorta gets to my point (or worry, anyway): :
income per capita in 2010 is 4% larger in the US that it would have been without foreign STEM contribution.
Per capita income is sorta irrelevant except as a measure of GDP growth relative to a population. It tells you nothing about how that income is distributed, or how increasing population effects income distributions (say, on a per quintile basis).Report
I don’t know if these are “you’re wrong” questions as much as “here’s another take”: Where did those 5 people come from? What was their piece of per capita GDP prior to being here?
I’m guessing that they’re somewhat pleased with their new lot, sending remittances back home, and writing letters that say something to the effect of “dude, you gotta move here too, I can totally get you a job” but I’m basing that on anecdata.Report
@stillwater
This is one of the dangers of aggregate statistics. You can have scenarios where income per capita falls, but everyone is better off.Report
Well said Vikram.Report