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December 27, 1993
"Newcomers Don't Strain the Job Market"
San Jose Mercury News
By Timothy Taylor
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ONE COMMON fallacy in popular discourse about employment is the "lump of labor" argument, which holds that the economy only needs a fixed amount of labor. This fallacy is the basis behind the claim that any illegal immigrant who gets a job must be taking a job away from a current worker.

However, the image of illegal immigrants jousting with American citizens over a fixed number of jobs is readily disproved, by economic studies and by everyday observation.

Consider the big picture first. In the last 20 years, the number of jobs in the United States has increased from 84 million to 120 million, a rise of 1.8 million per year. The U.S. economy has absorbed an influx of women, baby boomers, and legal and illegal immigrants -- and those first three categories have been far larger than the last.

On the state level, the arrival of illegal immigrants in California didn't make unemployment higher in this state during the 1970s or 1980s. According to a collection of studies published by the RAND Corp., it seems likely that illegal immigration has diminished in the last few years, as the wobbly U.S. economy has seemed a less attractive destination and the Immigration Reform and Control Act of 1986 has increased enforcement.

California's unemployment problems these past few years have not been caused by a surge of illegal aliens, but by more prosaic causes like the falling defense budget.

Studies of the effect of immigration on wages and employment focus on the areas that have received most of the immigrants: California, Texas, Florida, New York City, Chicago, and so on. These studies either make comparisons across time, or to other areas which have less immigration. Reviews of this evidence reach a common conclusion: Illegal immigration doesn't affect wages or unemployment by much, if at all.

One survey by three researchers at the University of Texas, Frank Bean, Edward Telles, and B. Lindsay Towell, put it this way: "Studies of labor market impact have found that the effects of immigrants (both legal and undocumented) on the wages and earnings of other labor force groups are either nonexistent or small (and sometimes positive)." The federal Bureau of International Labor Affairs reached a similar conclusion in its comprehensive review of the available evidence in 1989.

Immigration specialist George Borjas, an economist at the University of California, San Diego, summarized the consensus of the economic evidence this way: a 10 percent rise in the number of immigrants causes an average 0.2 percent decline in earnings for native workers, but no perceptible change in the unemployment rate. These effects seem much the same whether the immigrants are legal or illegal.

One particularly intriguing study of the economic effect of immigration focused on the Mariel boatlift, when 125,000 Cubans arrived in Miami during five months in 1980. As a result, the Miami labor force increased by 7 percent within a few months, and most of the additions were unskilled labor. However, David Card of Princeton University found that the new arrivals found jobs, and that the influx had virtually no effect on unemployment or wages of other unskilled workers in Miami.

The evidence overwhelmingly supports the proposition that the number of jobs in an economy is not fixed in stone, and that it adjusts and adapts to additional workers. However, it may still be that illegal immigrants create a pattern of winners and losers, even if their overall effect on wages and employment is minimal.

Some studies have focused on low-skill occupations where illegal workers are especially prevalent in some cities, like janitorial, restaurant and hotel workers. A review of this work by the General Accounting Office came to a mixed conclusion: "Illegal workers and international migrant workers (who are both illegal and legal) have exercised downward pressure on wages in some labor markets. However, in other labor markets, the wage depressive effect of illegal aliens also was shown to expand employment possibilities for complementary legal or native workers."

In other words, an illegal immigrant who works for a cleaning service may push down wages for others in that line of work. But if the existence of that cleaning service allows a number of U.S. women to focus their time on paying jobs outside the home, overall wages and employment may rise.

Something like this seems to be happening in George Borjas' review of the studies, which found that a 10 percent rise in the number of immigrants actually increased wages for women by 0.2 to 0.5 percent, while decreasing earnings of white men by 0.1 to 0.2 percent. Borjas doesn't offer an estimate of how immigrants affect the wages of unskilled workers. The effect is presumably negative, although probably still measured in tenths of a percent.

Illegal immigrants, like all economic actors, play a variety of roles. They are workers, consumers, taxpayers, public assistance recipients and more. It is simpleminded to assume that if, say, 2 million illegal workers could be located and deported, then jobs would open up for 2 million Americans.

Some jobs would open up, to be sure, especially for very low-skilled U.S. workers who are the only ones likely to accept anything close to the working conditions and wages of illegal immigrants.

But if the buying power of illegal immigrants was removed from the economy, some jobs would disappear. If deporting all illegal immigrants raised the price of housecleaning, meals and child care, some parents and two-earner couples would choose to work less. Without access to low-paid illegal workers, some companies would be forced to lay off higher-paid U.S. workers as well.

By and large, wages in this market economy are determined by the productivity of workers, and unemployment rates are determined by whether the economy is in a boom or a recession. In both cases, illegal immigrants are not particularly important.

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