The Center for American Progress has a post up today titled “Top 5 Economic Benefits from the President’s Immigration Announcement.”
Number two on the list is “It will raise wages for native-born workers.” This is counter-intuitive, to say the least. Bringing in more immigrants, regardless of their status, is generally associated with depressing wages. It means more people vying for the available jobs and immigrants are often more willing to work for lower wages.
Not so, claims the center’s Sarah Jane Glynn:
A Federal Reserve Bank of San Francisco study found that areas with higher levels of immigration had higher wages for native-born workers. This is because when undocumented immigrants are granted work authorization, it raises the “wage floor” for all workers by preventing employers from deleveraging native workers’ wages with undocumented and therefore exploitable wages.
The positive effect of immigrant workers also accrues over time, meaning the benefits of allowing DREAMers to enhance their education and be legally employed will continue to be felt for decades to come. In the words of the late Paul Wellstone, “We all do better when we all do better.”
I was curious about this so I clicked on the first two links and, well, Sarah appears to have left some nuance out. Yes there are long run benefits but they are many years in the coming. In the short run, not so much.
The Federal Reserve Bank study states:
In the short run, small insignificant effects are observed. Over the long run, however, a net inflow of immigrants equal to 1% of employment increases income per worker by 0.6% to 0.9%. This implies that total immigration to the United States from 1990 to 2007 was associated with a 6.6% to 9.9% increase in real income per worker.
The long run benefit of 7 to 10 cents on the dollar in this case comes after 17 years. That’s a boost but not much benefit to people struggling in the current economy. And the study ends at 2007 – just before the recession hit. Is this data even comparable to today’s economy?
The Migration Policy Institute study said there were definite losses in the short term:
In the short run, immigration may slightly reduce native employment and average income at first, because the economic adjustment process is not immediate. The long-run gains to productivity and income become significant after seven to ten years. Moreover, the short-run impact of immigration depends on the state of the economy … During downturns, however, the economy does not appear to respond as quickly. New immigrants are found to have a small negative impact on native employment in the short run.
Not surprisingly, this was left out of the CAP article, as was contrary evidence that, yes, immigration does depress wages.