Interesting, provocative piece by David Frum of The Atlantic, titled “Does Immigration Harm Working Americans? Many economists say no—but they may be too glib.” That subtitle is quite a contrast to the blog today by Jennifer Rubin, the conservative columnist at the Washington Post, in which she says,
Virtually every credible economist has found that immigration increases growth, tax revenue and wages — with the exception of a modest decrease in wages for those without a high school education. In particular, immigrants are over-represented in high-tech start-ups and new patent filers. So for now, why not reform the immigration system for the brainiacs, the highly credentialed and the entrepreneurs only? No serious person can argue that we don’t have a shortage in some high-tech fields or argue against allowing foreign students with advanced degrees to remain in the country.
(Of course, I have made the very arguments Rubin thinks “no serious person” would make. I support facilitating the immigration of “the best and the brightest,” but otherwise do not feel we should make a surplus any worse than it already is.)
I’ll discuss the substance of Frum’s piece below, but first I want to emphasize how remarkable it is, “daring” in the phrasing of my blog title here.
I use the word dares in my title reluctantly, as I know some will take the word in the sense of, say, “putting his job, career and social life at risk,” which is not what I mean at all. Instead, I mean “‘dares’ as in, willing to think out of the box, questioning the conventional wisdom.”
In being interviewed by the press often in the last 20+ years, I have seen very few journalists, editors and so on who are truly biased, out to write polemics. (Rubin may be an exception.) However, many have unconscious assumptions, often formed in society at large by PR experts and so on. This forms a climate that profoundly effects our thinking.
When former NY Governor Mario Cuomo passed away last week, I thought of a statement Cuomo — the quintessential liberal — made in 1994 (quoted in To Be an American, by my former UC Davis colleague Bill Hing):
[Immigrants] are part of our strength. They will be a nourishment for our future…They are also expensive [in terms of use of government services],
No Democratic politician would even consider making such a statement today, nor would one see such a statement in the liberal press. Nor would the Democratic Leadership Council invite me to write an article on immigrant abuse of the SSI program, as they did in the 1990s for their magazine The New Democrat. I’m not saying this pejoratively, being a liberal myself, just pointing out how mind sets have changed.
This change became clear to me in a rather unsettling way a few weeks ago in a conversation with a journalist on a major prominent big-city newspaper. He said he didn’t think that the age discrimination I write about as the scourge of programmers and engineers applies to the foreign-born. He seemed to buy into the notion that immigrants are hardier than U.S. natives, and when they reach age 35 or 40, they’ll still find programming and engineering jobs. An outrageous statement — yes indeed, the immigrants suffer from age discrimination too — from an otherwise very thoughtful, reasonable guy, starkly illustrating today’s liberal (and in the case of Rubin et al, business conservative) climate.
Now, what about Frum’s remarks? He begins by citing CIS research, that shows that not only have most new jobs in recent years gone to immigrants, but also the natives have actually lost ground, i.e. fewer are employed now in absolute numbers. He then points out that this is in stark contrast to what the “experts” say. In my view, he falters a bit by citing as experts people who don’t actually do real research on immigration, e.g. Nowrasteh, but merely cite (very selectively cite, at that) research of others. But then he does cite a prominent researcher, another UC Davis colleague, Giovanni Peri.
Giovanni has become THE go-to guy for pro-immigration views these days. Notably he played that role for the Obama White House, as I recently reported, and here Frum has gone to him as well. Frum then presents Giovanni’s complementarity argument, and tries to deconstruct it.
Though Frum gets bonus points with me for noting the fragility of statistical regression models, I think he misses a couple of important points about Giovanni’s analysis.
First, Giovanni’s “engineer and construction worker” parable is reasonable if we have a shortage in either occupation. But we don’t. We have a surplus, which is eroding wages and job opportunities in both professions.
Second, in contrast to the rosy picture Giovanni painted for Frum, he himself has conceded that highly-educated Americans are indeed displaced by the immigrants, and that there is at least some concomitant wage loss (Giovanni Peri and Chad Sparber, Highly-Educated Immigrants and Native Occupational Choice, working paper, 2008):
…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.
(This last comment is similar to a Peri quote in Frum’s article, but that quote focuses on low-skilled workers, whereas the above quote is for the high end.)
And of course, this flies in the face of the claims that (a) only the low-skilled natives are harmed, not the high-skilled ones, and (b) upward mobility is the solution.
The article touches on the “immigrants as consumers” argument for a positive effect of immigration. I don’t necessarily disagree, but I’ve been saying for many years that it isn’t so simple. Just as weather forecasters need to “look out the window” once in a while instead of relying only on numbers, immigration economists need to take an up-close look at immigrant-enclave labor markets.
Take for instance the Ranch 99 chain of Chinese supermarkets, popular in the Bay Area and southern California. They don’t employ many non-Chinese, due to linguistic requirements, and their clientele are largely shopping at Ranch 99 rather than the mainstream stores. Just this one example alone makes it understandable that natives might be losing jobs while immigrants gain them. And the Ranch 99 stores typically anchor entire immigrant-oriented malls, where even the Starbucks is staffed by immigrants, serving immigrant customers. My wife and I shop in these malls frequently, and especially enjoy the one in Concord, CA, which is largely Latino but with a Ranch 99 too; we patronize businesses of both ethnicities. But the point is that there are a lot of factors that have the effect of shifting jobs from natives to immigrants (though of course this is a highly complex matter, with effects in both directions).
All in all, though, my hat is off to David Frum and The Atlantic.
Upon Closer inspection 