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ISAAC Updates – February 2011

February 28th, 2011 at 8:48 pm

Isaac Updates

THE IMPACT OF IMMIGRATION ON LOW-SKILLED AMERICAN WORKERS

In an effort to provide accurate, non-biased information on immigrants and immigration in the United States, the ISAAC Project presents a summary of a noteworthy study published by the Migration Policy Institute in January of this year. The study, Immigration Policy and Less-Skilled Workers in the United States: Reflections on Future Directions for Reform, tries to gauge the impact of immigration on the wages and prospects of employment of less-skilled Americans. It also offers practical suggestions for policy makers.

The author of this study claims that the impact of immigration on high-school dropouts and other less-educated groups is not as big as people might expect. In fact, “even the most negative estimates of the impact on similar US workers suggest that in the long run, immigration accounts for only a small share of the deterioration observed in less-skilled Americans’ labor market employment and earnings”.1

There are a few factors that explain such a small impact:  In the first place, immigrants are also consumers of American goods and services.  Their consumption creates a demand for labor in the United States.  A second factor is that immigrants tend to work in jobs that require limited verbal skills (such as agriculture, landscaping and restaurants).  This makes them compete more with earlier groups of immigrants than with American-born workers.  A third factor relates to employers, who are less likely to substitute capital and/or technology when there is a large pool of less-skilled workers available due to immigration.

Whereas the costs of low-skilled migration on the native-born, less-educated population are modest, the benefits go directly to the employers of these immigrants due to the lower wages they are paid.  But there is another benefit to the economy as a whole derived from the lower prices of goods and services that result from those lower wages.

The economic picture is very complex and too many uncertainties remain, the study says.  This makes it almost impossible to define an optimal level of less-skilled immigration.  Economics, however, points to significant improvements that could be made to our immigration system.  Much of the currently illegal immigration could be channeled through legal routes if low-skilled workers are granted employment-based visas that allow them to switch employers and gain a path to citizenship.  There should also be more flexibility in the numbers of low-skilled workers allowed so that they respond more realistically to macroeconomic conditions and employer demand.

Immigration is a federal concern, but states and local communities feel the brunt of costs involved in it.  This makes it necessary for policies to allow for state-level variability so that, for instance, guest worker flows may be determined by state need rather than by federal unemployment rates.  Policies that will facilitate immigrant integration may also vary across states.  National immigration policies must be re-designed so that benefits and costs of immigration may be better distributed between the federal, state and local levels.

These findings are most welcome, especially at a time in our country when immigrants, and especially undocumented immigrants, continue to be used as scapegoats of our economic downturn.  Most of the immigration policies becoming law in more than a decade are harsh, punitive, and focus exclusively on increased border security and dealing out harsher penalties for employers who hire undocumented workers.  The data contained in this study help put the plight of immigrants in a proper macroeconomic perspective.  The complexities and many uncertainties of the economic map of our dynamic country should give us pause as we try to assess the repercussions of documented and undocumented immigration in a fair and honest way.

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1 Holzer, Harry J.  Immigration Policy and Less-Skilled Workers in the United States at page 1. January 2011.  Found at http://www.migrationpolicy.org/pubs/Holzer-January2011.pdf.

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