Sunday, February 24, 2013

Immigration Discussion and Position

The Evil Black Economist publication is for limited immigration reform. We believe that immigration of certain groups hurts the wages of existing black, poor and foreign born US citizens. Current US immigration flows has been shown to hurt the wages of men with high school or less education levels. It has also been shown to reduce the wages of other recent immigrants.

When countries decided to accept immigrants they must decide who can immigrate, how many immigrants to let in the country and who will pay the cost and receive the benefits of immigration.

The United States believes that overall immigration is a slightly beneficial activity. Immigrants improve the general economic environment by contributing to growth. They buy stuff, eat and pay taxes. In roughly the same amount that they receive in government benefits including school. Finally, immigration pressure on wages helps keeps inflation low.

However, immigration disproportionally affects poor people: blacks, Hispanics and poor whites more than other groups.  In low growth, non-full employment labor markets immigrants additional immigrants create a labor surplus which reduce wages and benefits. In addition, the traditional, word-of-mouth networks used to fill immigrant jobs supports discrimination.

The immigration proposals we are discussing are:

1) changing the legal status of 11 million illegal immigrants to allow them to work legally in the United States.
2) increasing the H1-B Visa program from 50K to 300K and scrapping country limits
3) giving green cards to anyone with a master degree in technical field.

Immigration is a difficult topic to research since there are few good studies about the impact of immigration on wages. A quick review of articles shows an effective 5% decrease wages for people who did not graduate high-school. And a 10% decrease for existing immigrants.

The benefits of high skilled immigration are captured by large corporations like Microsoft, IBM, HP and Cognizant. The benefits of low skilled immigration are seen in cheap food, housing and restaurant prices.

Here are some important articles and studies on immigration's impact on the wages of US citizens.

The best summary is by Neil Henderson in the Washington Post: "Effect of immigration on jobs, wages is difficult for economists to nail down."

The defining study in the area is by George Borjas at Harvard. He finds that immigration has hurt wages for some groups by 10% in his report:  "Increasing the supply of Labor Through Immigration: Measuring the impact on Native Born Workers."

The Economic Policy Institute has a study called "Immigration and Wages" that finds no effect on native born workers.

Geovanni Peri argues immigration is beneficial at the San Francisco Fed in an article called "The Effect of Immigrants on U.S. Employment and Productivity". However, his models seems to assume US citizens have moved to high-skill (high communication) work and low-skill immigration is complementary not competitive.

Albert Saiz in the Philadelphia Fed Newsletter also says immigration's total effects on the economy are mild.

The reason immigration effect are so hard to document is because of government and business policies that make collecting statistics impossible. Business that employ illegal immigrants refuse to report the information.  Therefore we have few good detailed studies that document the effects of immigration on different population groups over a long period..  Several studies use national averages to infer weak effects from immigration.

In addition, the studies may understate illegal employment since undocumented workers operate in the cash or "black" economy.  You have to assume that someone who is here illegally and cannot receive benefits (other than an education for their kids) has some way of surviving(i.e., performing work).

I don't think all 12 million will instantly become legal workers and if verification happens before legalization, some could lose jobs. When you read the literature the economic benefit of immigration is very slightly positive from lower costs (lower wage pressure) and population effects.  Specific groups such as high school drop outs and technical workers can take a 5-10% hit.

Here is what we stand for.

The Evil Black Economist blog is for using market based limits tied to the national unemployment rate and unemployment rate in different sectors of the economy.

 We are for giving a limited number of illegal immigrants (2-3 million) a route to legal work status and citizenship over a 10 year period.

We are against any increase in the H-1B Visa program.  We are against removing country limits.  We are against eliminating diversity visas. The H-1B visa program has been abused by corporations and reduced wages for technical employees. Corporations are ducking their responsbility to re-training and develop existing employees for new jobs.

We are for giving a limited number of technical master degree visas to foreign students who want to stay.


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