Rising immigration, falling salaries

Russell Roberts, author of The Invisible Heart: An Economic Romance, posts some disturbing figures about immigration in his Cafe Hayek blog.

“The proportion of the workforce that is foreign born” remained stable at about 6% between 1960 and 1980, but has since been soaring and was 13.2% in 2000. Pro-immigration people have argued that immigration is nothing new and that the United States has always had immigration. However, Roberts’ statistics show that the percent of immigrant workers more than doubled over a twenty year period.

Roberts also explains that the average immigrant has a lower wage than the average American. The obvious conclusion is that immigrants are lowering salaries in the U.S. for people who were born here because employers can turn to a substitute good, a foreign born employee willing to work for less money.

Comments

[Michael H.]

Hi Half Sigma
My wife is an immigrant.
She makes a very good wage.
All of the studies I have seen have consistently shown that the children of immigrants are overachievers. I've seen this results in many papers including Borjas who is sited above.
Obviously there is more value added to the U.S. economy from having a PhD from India than a sub-minimum wage earner from Mexico. However, I would say that immigration is good for a country because it allows a country to find skills that the U.S. domestically lacks.

[Half Sigma]

Immigrants add value to the economy, but who BENEFITS from the value? The employer who gets a worker at below market prices. But other employees don't get any value out of this at all; just the opposite, they see their salaries reduced.

[Michael H.]

Hi Half Sigma
I think the economy benefits from having high quality immigrant labor. Obviously the immigrants benefit from this and other workers who have complementary but not supplementary skills benefit. The real beneficiaries are consumers and stock holders because these new employees allow the economy to expand.

I might point out that the fact that the children of immigrants are overachivers is a real boost to the economy in the next generation.

[Reader]

Does the addditional pool of labor lower the wages overall. The obvious answer is yes, it does. But it fails to accont for the fact that more people living here contribute to the creation of jobs thus increasing the wages overall. So, it is possible (but not likely) that the two offsets each other.

As halfsigma pointed out already, employers usual hold the upper hand in labor relations. When big companies like Microsoft complains that they can't find qualified workers, what they really mean is that they can't find qualified workers at a particular price level (usually below US standard). If congress refuses to increase the quota, these company can always move their operations abroad. Sooner or later, the american people will start to doubt the benefit of free trade and start putting up serious barriers against it. The consequence of this barrier will have serious consequences across the world, specially on those country that uses the export growth model to boost their standard of living.