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  • Precarious Prosperity

    Part: 1, 2, 3, 4


    A trailer park catering to illegal immigrant workers in Thermal, Calif. in the southeastern Coachella Valley, an hour and 30 minute drive from the Mexican border.
    Photo by Robyn Beck/AFP/Getty Images

    Immigration is much like the global trade in goods and services. Economic evidence and economic history both support the view that open borders over time invigorate economic growth by encouraging the spread of new commercial ideas, new technologies, and new ways of organizing everyday life. Yet as everyone who took Econ 101 knows, the gains from trade are dispersed throughout the economy while the costs are highly concentrated. The same holds with immigration. The overall economy benefits on net, while some school systems and local communities bear the brunt of upfront costs.

    There are troubling signs on the immigration front, however. Many illegal immigrants and their children barely survive on society's margins. Firings, unpaid wages, and other abuses at the workplace are all too common. The federal and state government crackdown on illegal immigrants means the risk of deportation is real--and growing. "They're living under the threat of continuous detection and expulsion," says Jagdish Bhagwati, economist at Columbia University.

    Indeed, thanks to a combination of the crackdown and the recession the backlash over illegal immigration could taper off, at least for awhile. The reason is that there should be fewer illegals in the United States over the next several years. For one thing, the crackdown is having an effect. The Department of Homeland Security reports that apprehensions of illegal aliens along the Mexican border dropped 20 percent in fiscal 2007, a sign that "there are fewer attempts to cross the border illegally." Border arrests are down three years running and over the same period deportations rose 15 percent.

    For another, illegal immigrants are sensitive to the rhythms of the business cycle. When the economy is strong and employers are hiring, illegal immigrants come to the United States for work. But as activity subsides and employers hand out pink slips, illegals tend to go home and border crossings drop. The unemployment rate among Hispanics, according to the U.S. Bureau of Labor Statistics, reached 6.5 percent in the first three months of the year, and jumped to an average of 7.2 percent over the next three months. The Hispanic unemployment rate reached 7.4 percent in July. That figure is not only well ahead of the 5.7 percent national unemployment rate, it's much higher than the 4.9 percent low for Latino unemployment reached in the fourth quarter of 2006.

    Worst hit are Mexican immigrants. Their unemployment rate jumped from 5.5 percent to 8.4 percent over the past year, according to the Pew Hispanic Center. Remittances - money sent home by relatives in the United States - are also down as jobs vanish and incomes are squeezed. Taken altogether, the Center for Immigration Studies estimates that the illegal immigrant population declined by 11 percent through May 2008 after reaching a peak in August 2007. Put somewhat differently, the Center calculates that the illegal population has dropped by 1.3 million to 11.2 million today.

    Mark Twain supposedly quipped that history may not repeat itself, but it rhymes. There are strong echoes in current debates to the early 20th century struggles over mass immigration. And, despite moving from an economy dominated by railroads and steel to one defined by computers and biotechnology, the economic story of immigration has a familiar feel: It's a net boon, not a net bust.


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