Egregiously One-Sided White House Report on Obama Executive Action

When I first started reading the White House report on the projected economic impact of President Obama’s executive action on immigration, I was pleased to see it cite my UC Davis colleague, economics professor Giovanni Peri.  While I tend to disagree with Professor Peri, it was nice to see someone from UCD involved in White House policymaking. However, that institutional pride quickly faded when I saw that Giovanni and his coauthors were basically the ONLY ones cited. The report does make one token reference to Harvard’s George Borjas, who is generally on the other side of the immigration issue, but the report quickly dismisses that work.  The few remaining non-Peri citations are all of the pro-immigration genre, such as Berkeley professor David Card’s famous work on the Mariel boatlift. (Card found that the 1980 influx of Cuban refugees to Miami had no adverse impact on, for instance, jobs for low-skilled blacks.)

It turns out that Cardiff Garcia at the prestigious British business newspaper Financial Times had a similar reaction:

…the CEA report does cherry pick from within the existing literature on immigration economics. For instance there are thirty-three mentions of Giovanni Peri, all of them favourable. Peri is the pro-immigration economist’s pro-immigration economist. (Disclosure: FT Alphaville very much likes Peri’s work and we have been happy to feature it.) The report only mentions George Borjas, who is well known for his scepticism about the employment and wage effects of immigration, three times — and does so to contradict his findings.

Whether you like Obama’s executive action or not, such obvious bias in selling the policy to the American people is unconscionable.  This is especially true in light of the fact that the report says it is based partly on the earlier CBO report — which acknowledged feedback from both Giovanni and George.  (Harvard’s Lawrence Katz and pro-H-1B professor Gordon Hansen of UCSD were thanked as well.)

Most researchers on immigration issues are known to be either pro or con on the topic.  Giovanni is pro, George is con, and so on.  In the H-1B issue, I’m of course known to be critical of the program.  Some are more impartial than others, but in the end, almost everyone has a clear point of view.

Giovanni absolutely has a lot to contribute, and Obama’s Council of Economic Advisers (CEA) did well to make use of his work.  But it’s outrageous that CEA basically looked ONLY at his work.  This is particular true in light of the fact that some of his work has been sponsored by business interests.  Consider for instance his report for the lobbying group PNAE, which by the way shows the same lack of balance — it has essentially no citations to research critical of H-1B, and the companion working paper uses overly strong language such as claiming to have found “causal” effects.

In discussing the substance of the CEA report, I will of course focus my comments here on what the report has to say about high-skilled immigration, i.e. H-1B and related issues.   In that area, CEA relies on a single Peri paper, ignoring a mountain of negative research.  Two items of particular significance that CEA ignored were congressionally-commissioned reports, one by the NRC and the other from the GAO.  Both found that underpayment of H-1Bs is commonplace, and the NRC report warned that the sheer size of the H-1B IT workforce forces wages down.  And given all the research showing lack of a STEM labor shortage, that latter finding is especially significant.

An aspect of H-1B that especially concerns me is quality.  I’ve mentioned occasionally that I’ve always driven Japanese cars, as I believe they are made better, and I’ve always strongly supported bringing in “the best and the brightest” engineers from around the world.  However, the overall average quality of the H-1Bs is lower than that of their American peers.  My EPI report, for instance shows this in the case of workers who first came to the U.S. as foreign students studying computer science.  Among other things, my work confirmed an NBER report that found that foreign students in the sciences tend to study at less-selective universities; and work by Jennifer Hunt of Rutgers that found that the foreign students have a lower patenting rate than comparable Americans.  (See a qualifier in my EPI article.  Also, CEA cited earlier work by Hunt, but  that research did not make this comparison; in essence, it found that immigrant STEM workers file more patents than American non-STEM people, not surprising.)  When combined with the displacement issue (to be discussed below), this means a net loss for the U.S. economy, something that should alarm the CEA.

The paper by Giovanni that CEA relied upon for its projections regarding high-skilled immigration takes a city-by-city comparison approach.  As I explained recently, regional-comparison analyses are notorious for producing conflicting results, often due to lack of data on key covariates, and there are numerous other problems with this paper, in my opinion.  One issue in particular is that the paper does not take into account displacement of U.S. citizen/permanent resident workers.

Ironically, Giovanni concedes that U.S. STEM workers are displaced by immigration:

…we assess whether native-born workers with graduate degrees
respond to an increased presence of highly-educated foreign-born
workers by choosing new occupations with different skill content.

…we add to evidence from past studies by showing that [U.S.]
native occupational adjustment in response to immigration occurs
among highly-educated workers and occurs for those already employed.

As the foreign-born share of highly-educated employment rises,
native-born employees respond by moving to jobs with less
quantitative and more interactive content.

The wage consequences of immigration were not estimated in this
paper…If the evidence from the labor market for less-educated
workers is an indication, the occupational skill response among
highly-educated natives is likely to mitigate their potential wage
loss from highly-educated immigration.

Giovanni also agrees that immigrant (from context, he seems to mean legal) labor is cheap, and indeeds lauds it as a boon to employers:

One common empirical finding in the literature is that immigrants
are paid less than natives with similar characteristics and skills.
This is in part due to the fact that many immigrants, because of
less attractive outside options (such as having to go back to
their home country), have lower bargaining power with the firm. In
this case firms pay immigrants less than their marginal productivity,
increasing the firms’ profits.

Interesting that a Democratic CEA would rely on such a Republican-sounding researcher, celebrating cheap labor.  Of course, the “lower bargaining power with the firm” is something I’ve emphasized repeatedly in my writings.

Once again, I have no problem with CEA using Giovanni’s work.  He’s a major figure in the field, and also a great guy, who by the way graciously agreed to give a guest lecture in the freshman seminar I taught on immigration a few years ago.  And as seen above, he and I do agree on the issues of displacement and cheap labor. 🙂  But the CEA one-sided report to the American people is an outrage.

Advertisements

11 thoughts on “Egregiously One-Sided White House Report on Obama Executive Action

  1. >…we assess whether native-born workers with graduate degrees
    > respond to an increased presence of highly-educated foreign-born
    > workers by choosing new occupations with different skill content.

    That is very biased and misleading wording (no matter whether he tries to explain it away later), it sounds like the holders of degrees have something against the highly-educated foreign-born workers. How about the native-born workers with graduate degrees respond to a DECREASED compensation level in the field by choosing new occupations.

    In fact this is late selection, early selection will have them choose DIFFERENT DEGREES.

    Like

    • problem is, software is our highest paying career field, and my research on the LCA and EEO-1 report shows me that if we lose the battle for our highest paying jobs, the next highest will be the next battlefield for American jobs, and it will continue to all levels

      Occupation code Occupation title (click on the occupation title to view its profile) Level Employment Employment RSE Employment per 1,000 jobs Median hourly wage Mean hourly wage Annual mean wage Mean wage RSE
      11-0000 Management Occupations major 6,542,950 0.2% 49.348 $45.96 $53.15 $110,550 0.1%
      23-0000 Legal Occupations major 1,041,700 0.5% 7.857 $36.59 $47.89 $99,620 0.5%
      15-0000 Computer and Mathematical Occupations major 3,696,180 0.5% 27.877 $37.43 $39.43 $82,010 0.5%
      17-0000 Architecture and Engineering Occupations major 2,380,840 0.5% 17.957 $35.83 $38.51 $80,100 0.2%
      29-0000 Healthcare Practitioners and Technical Occupations major 7,755,810 0.3% 58.495 $29.38 $35.93 $74,740 0.2%
      13-0000 Business and Financial Operations Occupations major 6,658,090 0.3% 50.216 $30.67 $34.14 $71,020 0.2%
      19-0000 Life, Physical, and Social Science Occupations major 1,135,030 0.8% 8.561 $29.26 $33.37 $69,400 0.4%
      27-0000 Arts, Design, Entertainment, Sports, and Media Occupations major 1,758,310 0.5% 13.261 $21.45 $26.72 $55,580 0.8%
      25-0000 Education, Training, and Library Occupations major 8,400,640 0.3% 63.359 $22.19 $24.76 $51,500 0.5%
      00-0000 All Occupations total 132,588,810 0.1% 1000.000 $16.87 $22.33 $46,440 0.1%
      47-0000 Construction and Extraction Occupations major 5,088,030 0.3% 38.374 $19.55 $21.94 $45,630 0.2%
      21-0000 Community and Social Service Occupations major 1,901,730 0.4% 14.343 $19.62 $21.50 $44,710 0.3%
      49-0000 Installation, Maintenance, and Repair Occupations major 5,138,130 0.3% 38.752 $19.92 $21.35 $44,420 0.1%
      33-0000 Protective Service Occupations major 3,257,690 0.4% 24.570 $17.68 $20.92 $43,510 0.7%
      41-0000 Sales and Related Occupations major 14,068,190 0.2% 106.104 $12.10 $18.37 $38,200 0.2%
      51-0000 Production Occupations major 8,765,180 0.3% 66.108 $15.03 $16.79 $34,930 0.2%
      43-0000 Office and Administrative Support Occupations major 21,442,800 0.1% 161.724 $15.39 $16.78 $34,900 0.1%
      53-0000 Transportation and Material Moving Occupations major 9,005,120 0.3% 67.918 $13.99 $16.28 $33,860 0.3%
      31-0000 Healthcare Support Occupations major 3,924,390 0.4% 29.598 $12.54 $13.61 $28,300 0.2%
      37-0000 Building and Grounds Cleaning and Maintenance Occupations major 4,291,410 0.3% 32.366 $11.04 $12.51 $26,010 0.2%
      39-0000 Personal Care and Service Occupations major 3,986,740 0.4% 30.068 $10.10 $11.88 $24,710 0.2%
      45-0000 Farming, Fishing, and Forestry Occupations major 435,250 1.0% 3.283 $9.32 $11.70 $24,330 0.5%
      35-0000 Food Preparation and Serving Related Occupations major 11,914,590 0.1% 89.861 $9.15 $10.38 $21,580 0.2%

      Like

  2. The CEA docs are not there to convince the public. They are not there to convince academics.

    They’re there for the main-stream media and congress-critters to fall back on and feel comfortable as they roll out the propaganda campaign.

    Like

  3. > But the CEA one-sided report to the American people is an outrage.

    Agreed. I was similarly surprised by another paper on the White House website that I ran across when looking for references to Zavodny’s study, “Immigration and American Jobs”. It’s posted at http://www.whitehouse.gov/sites/default/files/docs/report.pdf and states the following on page 7:

    “Moreover, studies indicate that every foreign-born student with an advanced degree from a U.S. university who stays to work in a STEM field is associated
    with, on average, 2.6 jobs for American workers.

    They seem to have gotten a bit sloppy in their writing since they say “STUDIES indicate” but reference only Zavodny’s study which I strongly suspect is the only study claiming the 2.6 jobs figure. They did also mention Peri 4 times in that paper, far less than the 30 references in the CEA report.

    Regarding the Peri study “Foreign STEM Workers and Native Wages and Employment in U.S. Cities” on which CEA report based its H-1B policies, I see that it’s an NBER working paper. It’s a bit irritating that non-members need to pay $5 for it though I see that the appendix is available at http://www.nber.org/data-appendix/w20093 . What’s more disturbing is that, if I understand it correctly, NBER working papers have not yet received any peer review. Of course, as others have pointed out, peer-review can often be a pretty minimal review. I’ve become more convinced that any study that is to be taken seriously, especially one on which government policies are based, should release all of its data along with all of its calculations. Perhaps even a minimal environment on which the data can be recrunched after modifying its parameters would be required. I’ve seen far too many studies where the time period and methods of measurement seem to be carefully chosen to best make the author’s

    Like

  4. Amen.
    There are 4 corners to society if you look closely enough.
    They are labor, capital, government, and media

    The only way to balance labor and capital is for government to realize that it must be that balance.
    And when government sides with capital over labor, we have the destruction of everything that our ancestors built, and we are seeing that in the displacement of americans by cheap imported labor brought in specifically to displace American labor.

    Normally it would be up to media to bring this to the attention of labor, but when media also sides with capital, well, here we are.

    Like

  5. Obama’s actions will benefit the immigration attorneys in a big way. Every illegal is going to need professional help to navigate the complex immigration system. There are 5 million illegals who qualify for legalization. Say each applicant has to pay a lawyer $1000… that’s $5,000,000,000 up for grabs!!

    Like

  6. Open reply to Professor Matloff;

    It would be very useful, if it’s not perhaps ethically obligatory, for you to post a statement about moderation: what types of replies will be displayed, and especially what won’t, both to guide readers who want to reply, and so that those who read the replies know what kind of cutting has been applied to what they are permitted to read.

    I had had some substantive things to say about Peri, Shih, and Sparber, and also a remark about NBER working papers and other sources of Peri’s writings.

    I’ve been a reader of your e-newsletter for about 15 years, but am probably not going to feel like reading this blog much longer, in a condition of being gagged and muzzled.

    Regards

    Like

    • I agree that it would be very useful, and I had thought that I had made such a statement last week. I asked that people not use this forum to discuss their favorite political topics that are not related to the discussion here. True, in some almost anything is “related,” but I see plenty of blogs in which heated discussions arise that are really on a different topic.

      For the record: I also decline to approve any comment in which the writer makes personal attacks, resorts to ethnic slurs and so on. One person wrote something like that just a couple of days ago about Professor Peri, and I trashed it.

      Can you please post your comments about the papers by Peri et al without going into side issues? I’d certainly like to share them with my readers. Thanks in advance.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s