The Effects of Immigration on the Labor Market Outcomes of Less-Skilled Natives - Essay Example

Immigrants: A Critical Analysis and Review Immigrants: A Critical Analysis and Review The issue of immigrants and whether their position is taking away jobs and reducing the wage of native workers has been one of great spectacle and controversy over the years. President Bush's proposal in January 2004 to reform the U.S. immigration system reignited an already strained debate that had been dormant in the aftermath of the September 11 terrorist attacks. While virtually everyone agrees that today's system - which has allowed an estimated 10 million foreigners to remain in the United States illegally - is deeply flawed, there is further debate raging even beyond that. Today, as in the past, much of the debate over immigration reform is steeped in competing and consistent claims in regards to the economic impact of legal and illegal immigrants. The extent that immigrants are taking jobs away from native workers, as well as the impacts they are having on the wages of natives are of great concern and significance, and advocates on opposing sides of the immigration debate are well armed with statistics responding to such issues. The extensive research which has been conducted about the economic impact of immigrants is incredibly complex and much of it has shortcomings. In order to come to a clearer and more knowledgeable understanding on this subject matter, the following questions must be addressed: 1. Do immigrants reduce the wages of native workers 2. Do immigrants take jobs away from native workers By thoroughly discussing these two questions, we can come to a critically more intellectual viewpoint on this subject of interest. The aim of this paper is to discuss all of this, as well as any and all key elements in relation to this issue. This is what will be dissertated in the following. Do Immigrants Reduce the Wages of Native Workers Academic studies have been done for years in an attempt to assess the extent to which immigration affects the earnings of U.S. workers. Over the past decade, empirical research has found that immigrant earnings growth is remarkably rapid, and surprisingly enough, the cross-section studies find that the relative earnings of immigrants grow so rapidly that after ten to fifteen years immigrants earnings actually do overtake the earnings of native workers. It has been found "The result that, in the long run, immigrants earn more than natives was explained by assuming that immigrants earn more than natives was explained by assuming that immigrants are a relatively select group of individuals whose average 'quality' exceeds that of the typical native worker." (Borjas, 1989). Recent work (Borjas, 1985) raises serious doubts about the validity of the inferences drawn from the cross-section empirical results, considering that cross-section estimates of immigration assimilation are biased if emigration (i.e., return migration) is not randomly distributed across the immigrant population or if the quality of successive immigrant cohorts changed over the sample period. The most extensive study of this subject released to date, in fact, is an August 2003 report by Pia M. Orrenius and Madeline Zavodny, researchers at the Federal Reserve Banks of Dallas and Atlanta, respectively. Their conclusions were as follows: For service-related and professional workers, immigration has had little impact on wages. If anything, increases in the number of newly arriving immigrants actually have slightly positive effects. For manual laborers, increases in the share of newly arrived immigrants have no statistically significant negative impact on wages; but increases in the share of immigrants who adjust their immigration status after they have been in the United States - for example, from student or tourist visas (which do not permit employment) to green cards - have a small negative effect. The annual wages of low-skilled native workers are about 2.4 percent below where they would be otherwise as a result of the presence of immigrant workers. There are certainly extremely opposing views on whether or not immigrants reduce the wages of native workers; while some argue strongly that they do, still others believe that this is completely untrue, and that if anything, immigrants could possibly even boost wages for native workers. Virtually, all of the studies done in this area have concluded that the greatest harm is to those American workers who are already the most vulnerable: those without high school degrees, those with lower intrinsic intelligence, and those with fewer skills overall. The harm also is disproportionately felt by native-born minorities, such as Hispanics and Blacks, and by recent immigrants. A study by Harvard professor Dr. George J. Borjas finds that, by increasing the supply of labor, immigration between 1980 and 2000 cost native-born American men an average $1700 in annual wages by the year 2000. However, the effects of immigration on wages were most profoundly felt by native-born black and Hispanic Americans who suffered 4.5-5% wage reductions as compared with the 3.5% wage loss felt by native-born white Americans. "Since 1970, immigration has increased the number of unskilled job applicants faster than the number of skilled job applicants. First-year economics predicts that increasing the relative number of unskilled workers will depress their wages, because employers will not need to raise wages to attract applicants for unskilled jobs. Nonetheless, those who favor an expansive immigration policy often deny that the increase in the number of unskilled job applicants depresses wages for unskilled work, arguing that unskilled immigrants take jobs that natives do not want. This is sometimes true. But we still have to ask why natives do not want these jobs. The reason is not that natives reject demeaning or dangerous work. Almost every job that immigrants do in Los Angeles or New York is done by natives in Detroit and Philadelphia. When natives turn down such jobs in New York or Los Angeles, the reason is that by local standards the wages are abysmal. Far from proving that immigrants have no impact on natives, the fact that American-born workers sometimes reject jobs that immigrants accept reinforces the claim that immigration has depressed wages for unskilled work." (Christopher Jencks, Who Should Get In) Also, native employment is falling in states with high immigrant influxes. Not only is native unemployment highest in occupations which saw the largest immigration influx, the available evidence also shows that the employment picture for natives looks worst in those parts of the country that saw the largest increase in immigrants. "For example, in states where immigrants increased their share of workers by 5 percentage points or more, the number of native workers actually fell by about 3 percent on average. But in states where the immigrant share of workers increased by less than one percentage point, the number of natives holding a job actually went up by 1.4 percent. This is exactly the kind of pattern we would expect to see if immigration was adversely impacting native employment." (Parker, 2005). Do Immigrants Take Jobs Away From Native Workers The issue of whether immigrants - regardless of legal or illegal - take jobs away from native workers has been an issue of great controversy over the years, and continues to be so. Some believe strongly that immigrants impact the economy only by draining the social system and destroying the middle class, while others believe that it is the immigrants whom are actually the backbone of the American economy, working in jobs that other Americans don't want, while subsidizing the Social Security system and paying millions in taxes. There seems to be no easy answers on this matter, and as well, seemingly no middle ground. Both opposing sides have strong and determined viewpoints, of which seem to contain no agreement or means of civility. Therefore, the only logical way to interpret the arguments is by thoroughly investigating the facts. Undocumented immigrants are shoring up the American Social Security system, providing it with a subsidy of as much as $7 billion a year - benefits which they will never reap upon retirement mind you. All across America, illegal immigrants are doing jobs which were once held by Americans. What is not so well-known however is that as long as the job market has an inexhaustible supply of cheap labor, wages will remain stagnant; therefore, the low-skilled native workers who are replaced by immigrants with equally limited skills have few places to turn. As Bush's amnesty plan moves relentlessly forward, newspaper stories will be chock full of sentences like this one: "An unprecedented coalition of labor and business has joined the rising chorus of voices across America who wants to regularize millions of undocumented workers. These workers, who do jobs Americans refuse to do, are a vital cog in our economic machine." (Guzzardi, 2001). What this means in other terms, is that although many speculate that it is an entirely negative and in more simple terms unfair that immigrants have been and continue to come to America and 'take away jobs from native workers', there is also the significant and yet surprisingly unrecognized fact that most of the jobs the immigrants are taking and/or replacing are those that native American workers are simply unwilling to do. Therefore, in certain terms, this is an incredibly positive thing, and as well it explains why perhaps the issue isn't more brought out on in particular ways. As Givoanni Perri in a study for the Immigration Policy Center said, "Foreign-born workers do not substitute perfectly for, and therefore do not compete with, most foreign-born workers. Rather, the complimentary nature of the skills, occupations and abilities of foreign-born workers increases the productivity of natives, stimulates investment, and enhances the choices available to consumers." (Hernandez, 2006). The large and growing waves of immigrants entering the United States - especially in the past few decades - have spurred an enormous amount of research assessing the economic contribution made by these new Americans. "Extensive research has been conducted on many aspects of the labor market performance of immigrants, including earnings, employment, labor force participation, and occupational attainment. These studies can be interpreted as an attempt to measure the 'benefits' provided by immigrant man-power to the U.S. economy." (Borjas & Trejo, 1991). Whereas some believe there are only negative effects, such as less available occupations and lower wages for native workers, there is also the positive element of the situation, which must be addressed and acknowledged just as much - if not more - as the negative ones. Businesses will of course continue to say that immigrants only take jobs Americans don't want but what they really mean is that given what they would like to pay, and how they would like to treat their workers, they cannot find enough Americans. Therefore, employers want the government to continually increase the supply of labor by non-enforcement of immigration laws. Either way, both the positive and negative sides of this issue must be taken fully and thoroughly into consideration, and in order to come to any sort of satisfactory resolution, there must be a compromise on both sides as well as an intricate understanding of one another's views. Only then will the issue of immigrants and their place in the American workforce be able to be understood and delegated properly. References Altonji, J., & Card, D. (1991). The Effects of Immigration on the Labor Market Outcomes of Less-Skilled Natives. In John Abowd and Richard Freeman, eds., Immigration, Trade, and the Labor Market. Chicago: University of Chicago Press, pp. 201-34. Borjas, G. J. (1989). Immigrant and Emigrant Earnings: A Longitudinal Study. Western Economic Association International, 1, pp. 21-37. Borjas, G. J., & Trejo, S. J. (1991). Immigration Participation in the Welfare System. Industrial and Labor Relations Review, 44, pp. 195-211. Borjas, G. J., Freeman, R. B., & Katz, L. F. (1996). Searching for the Effect of Immigration on the Labor Market. American Economic Review, 86, pp. 246-251. Filer, R. (1992). The Effect of Immigration Arrivals on Migratory Patterns of Native Workers. In George Borjas and Richard Freeman, eds., Immigration and the Work Force. Chicago: University of Chicago Press, pp. 245-69. Furchtgott-Roth, D. (2006). Immigrants Don't Depress Wages. Retrieved May 23, 2006, from http://www.nysun.com/article/30852 Guzzardi, J. (2001). View From Lodi, CA: Illegals Only Take Jobs That Unemployed Americans Used to Have. Retrieved May 23, 2006, from http://www.vdare.com/guzzardi/afl_cio.htm Hernandez, R. E. (2006). Does it Matter Immigrants Fill Jobs in American Society Retrieved May 23, 2006, from http://www.thnt.com/apps/pbcs.dll/articleAID=/20060501/COLUMNISTS/605010333/1081/COLUMNISTS Parker, R. (2005). Native Worker Employment Drops Greatest in High Immigrant States. Retrieved May 23, 2006, from http://www.parapundit.com/archives/002780.html Read More