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  • Precarious Prosperity

    Part: 1, 2, 3, 4


    Day laborers wait near a Home Depot home improvement store in hope of finding work for the day.
    Photo by David McNew/Getty Images

    Yet while economists and employers celebrate immigrants of all kinds, critics charge that illegal immigrants take jobs away from natives and drive down wages, especially for native-born high school dropouts. It canít be a coincidence that the supply of poorly educated illegal immigrant workers soared since 1980 while the inflation-adjusted wages of high school dropouts fell at an average annual rate of -1.6 percent from 1979 to 1989, -0.6 percent from 1989 to 2000, and increased by 0.5 percent from 2000 to 2007, after adjusting for inflation, according to the Economic Policy Institute, a Washington D.C. think tank. To put those numbers in context, the wages of college graduates rose during the same time periods at an 0.4 percent, 1.3 percent and 0.4 percent real average annual rate.

    "Itís a simple supply and demand story," says Jeffrey Grogger, professor of urban policy at the University of Chicagoís Harris School of Public Policy. "If youíve got more of the good, in order to sell it, you have to lower the price. So the good in question here is labor, and when we expand the supply of labor, by immigration or whatever means, we would expect the price of the labor, which we refer to as wages, to fall."

    The economic logic of an illegal and legal immigrant "supply shock" on the wages of poorly-educated American-born workers is compelling. Problem is, the data donít seem to support any such dramatic conclusion. To take just one research example, since 1980 average wages have risen 16 percent, and the wages of high school dropouts have underperformed that benchmark by a quarter. Yet the migration into the U.S. of less- educated workers explains at most 1 percent to 4 percent of that wage gap, calculates Giovanni Peri, economist at the University of California, Davis. Of course, not all economists agree with that conclusion. Nevertheless itís striking after going through several studies how small the overall impact of immigrants on the wages of American workers seems to be.

    How can that be? The main reason is that the economic pie over time is expanding. Immigrants are a dynamic part of the economy that creates new jobs, new businesses, new consumers and new opportunities. The effect is visible in neighborhoods like Lake Street and all across the country. Companies may realize that they have the workforce to expand, so they invest in new equipment and facilities. Middle class families can pay for landscaping services, child care, home health care and other services once only the very wealthy could afford. That frees them up to focus more on career and family.

    The wage effect is probably muted by the limited nature of competition between many low-skill immigrants and poorly-educated native-born Americans. Many illegal immigrants donít speak English, so they donít go after the same jobs as native-born American workers. Unskilled labor is relatively scarce in America, too, with the share of native-born workers without a high school diploma declining from 50 percent in 1960 to 12 percent recently, says Gordon Hanson, economist at the University of California, San Diego.

    Wages and jobs are only one aspect of the backlash. The belief is strong that the current wave of immigrants isnít assimilating into society like previous generations. Instead of a melting pot, itís alleged, the United States is turning into a society of balkanized ethnic enclaves. "Ending mass immigration does not guarantee the restoration of a common civic culture, but continuing it does guarantee that any attempt at such restoration will fail," writes Mark Krikorian in The New Case Against Immigration: Both Legal and Illegal. (Sentinel, 2008)

    The fear of ethnic balkanization seems exaggerated. Yes, Spanish is the common language in Mexican neighborhoods. Everyday conversation in a number of Chinese communities is Chinese. Yet every generation has charged that the newcomersóthe Irish and Italians, the Germans and Poles--arenít assimilating.

    "If you want a good history lesson, read what was written about immigrants in the 1880s to 1930s," says economist David Card. "They said, 'We used to have immigrants that spoke English, now weíre getting Germans and even worse people from central Europe.' These were code words for Jewish immigrants and Catholics. 'Theyíll never assimilate.' Of course, they all did. They were talking about todayís grandparents."


    Continue to part 3