Economic thought of the day

This is in response to an article my sister emailed me about the economic side of the immigration debate. The article is more than a year old, but most of the issues it raises are still very present in people's minds.

The basic question is: Do immigrants reduce employment and wages for other Americans?

For legal immigrants, the answer is pretty clear. Large amounts of legal immigrants
don't reduce wages or employment any more than people having more kids.

You hear a lot of news commentators and media types lamenting the low fertility rate among native-born Americans (which is actually higher than most other rich countries, but whatever). Basically, we bring in immigrants to plug the hole that's created because Americans don't like to have large families. This results in our country's population growing at about 1% a year - a pretty moderate rate.

Now suppose there was zero immigration, but that Americans had more kids, so that the population grew at a 1% rate. Jobs and wages would be almost exactly the same as in the current situation. The only small differences would be due to the fact that native-born Americans probably have different skill sets than immigrants - but this difference would probably be small, since we currently let in a bunch of smart tech-worker immigrants as well as a bunch of manual laborers.

The key concept here is that only the size of the labor force, not where that labor force came from, should affect jobs and wages. We have immigration so you don't have to take care of a bunch of annoying kids. The immigrants are only taking jobs from the kids you never had.

Illegal immigrants, of course, are a different story, since companies can get away with paying them sub-minimum wages and the illegals can't go to the police. That lowers wages and takes jobs away from Americans in the short run, although no one really knows how big either effect is. Note that, since the illegals are working at below minimum wage, only the lowest-earning native-born Americans will be affected (that could be good or bad, depending on your perspective). And in the long run, the presence of a bunch of illegals might actually speed up our economic growth, providing more jobs in the long run. If you want to know about that debate, read the article.

But let's stop kidding ourselves. The hordes of anti-immigration voters in the Red States aren't any more worried about their jobs than the even bigger hordes of pro-immigration voters in the blue states. What worries the anti-immigration folks is the dilution of American culture by outside cultures - a process that's always happened, but usually much more in the North and West Coast than in the South and Midwest and Mountain West. Our traditionally most intolerant regions are getting a lesson in diversity.

But the Red Staters shouldn't get their panties in a bunch. America is great at assimilating immigrants - we always have been. Pretty soon, Mr. Redneck will be praying at church right next to a third-generation Mexican-American, drinking with a couple more at the NASCAR race, and his daughter will be marrying one. Then let's see how worried he is about immigrants taking his job.