Immigration: It's never as simple as you think

The Immigration Equation - New York Times

The article compares a conservative and liberal commentator on immigration. The conclusion of both is that immigration hurts low income Americans, while benefiting middle and upper income Americans. But along the way, the liberal commentator asks why immigration seems generally to have contributed to prosperity. Some extracts:

Is immigration still the engine of prosperity that the history textbooks describe? Or is it a boon to business that is destroying the livelihoods of the poorest workers — people already disadvantaged by such postmodern trends as globalization, the decline of unions and the computer?
...

The first gleaning from the Ivory Tower came as a surprise. All things being equal, more foreigners and indeed more people of any stripe do not mean either lower wages or higher unemployment. If they did, every time a baby was born, every time a newly minted graduate entered the work force, it would be bad news for the labor market. But it isn't. Those babies eat baby food; those graduates drive automobiles.

As Card [the liberal commentator] likes to say, "The demand curve also shifts out." It's jargon, but it's profound. New workers add to the supply of labor, but since they consume products and services, they add to the demand for it as well. "Just because Los Angeles is bigger than Bakersfield doesn't mean L.A. has more unemployed than Bakersfield," Card observes.

In theory, if you added 10 percent to the population — or even doubled it — nothing about the labor market would change. Of course, it would take a little while for the economy to adjust. People would have to invest money and start some new businesses to hire all those newcomers. The point is, they would do it. Somebody would realize that the immigrants needed to eat and would open a restaurant; someone else would think to build them housing. Pretty soon there would be new jobs available in kitchens and on construction sites. And that has been going on since the first boat docked at Ellis Island.

In other words, immigrants don't just take jobs; their presence creates jobs, just as native-born people do.

Are illegal immigrants a drain on public taxes?

With the exception of a few border states, however, the effect of immigration on public-sector budgets is small, and the notion that undocumented workers in particular abuse the system is a canard.Since many illegals pay into Social Security (using false ID numbers), they are actually subsidizing the U.S. Treasury. And fewer than 3 percent of immigrants of any stripe receive food stamps. Also, and contrary to popular wisdom, undocumented people do support local school districts, since, indirectly as renters or directly as homeowners, they pay property taxes. Since they tend to be poor, however, they contribute less than the average. One estimate is that immigrants raise state and local taxes for everyone else in the U.S. by a trivial amount in most states, but by as much as $1,100 per household per year in California. They are certainly a burden on hospitals and jails but, it should be noted, poor legal workers, including those who are native born, are also a burden on the health care system.

In other words, poor people are a greater tax burden than rich people, regardless of where they come from. However, another study finds, among other things, that immigrant children from the same socioeconomic level as nativeborn children complete more years of education and become less of a tax burden than their native-born peers (I had to copy and paste the story in its entirety because the NY Times, in its infinite wisdom, decided you had to pay $3.75 for the link to the story):

Immigration Math: It's a Long Story

By DANIEL ALTMAN
New York Times
Published: June 18, 2006

MUCH of today's debate about immigration revolves around the same old questions: How much do immigrants contribute to production? Do they take jobs away from people born in the United States? And what kinds of social services do they use? Yet every immigrant represents much more than just one worker or one potential citizen. To understand fully how immigration will shape the economy, you can't just look at one generation — you have to look into the future.

Sociologists and economists are just beginning to study the performance of second- and third-generation members of immigrant families. Because of the variety of experiences of people from different countries and cultures, it's not easy to generalize. But recent research has already uncovered some pertinent facts.

Education is a good place to start, because it's strongly correlated with future earnings. Children of immigrants complete more years of education than their native-born counterparts of similar socioeconomic backgrounds. "You can expect a child of immigrants whose parents have 10 years of education to do a lot better than a child of natives whose parents have 10 years of education," said David Card, a professor of economics at the University of California, Berkeley. Being a child of immigrants, he said, "sort of boosts your drive."

As a whole, though, the second generation also tends to move toward the American average, Professor Card said. Some graduate from high school even though their parents didn't, but some whose parents have doctorates will earn only bachelor's degrees.

Still, it can take several generations for poor immigrant families to catch up to American norms. "For the largest immigrant group — that is Mexicans and Mexican-Americans — the picture is progress, but still lagging behind other Americans," said Hans P. Johnson, a research fellow at the Public Policy Institute of California. "They're doing much better than their parents, graduating from high school, but they still have very low graduation rates from college."

But despite the lag in education, Mr. Johnson said, Mexican immigrants and their families don't have much trouble finding jobs. "One of the paradoxes of Mexican immigration is that you have these workers with low skills but incredibly high employment rates," he said. "The second generation isn't able to maintain employment levels that are quite so high, but they're basically in the same ballpark."

Second generations of immigrant families are managing to climb the skills ladder, too. A recent survey by the Census Bureau reveals that 40 percent of the female workers and 37 percent of the male workers in the second generation took professional or management positions, up from 30 and 24 percent, respectively, in the first generation. The survey, taken in 2004, included many adults whose parents came to the United States decades ago, noted William H. Frey, a visiting fellow at the Brookings Institution in Washington who compiled data from the survey. With more recent immigrants, he said, it's possible that lower education rates may eventually lead to worse outcomes.

Other factors could also make success more difficult for today's children of immigrants, compared with those of the past.

One is increased competition. The children of Italians and Poles who came to the United States around the turn of the 20th century didn't face much of it, because the government imposed quotas on immigration after their parents arrived, said Roger Waldinger, a professor of sociology at the University of California, Los Angeles. By contrast, the children of recent arrivals face competition from successive waves of immigrants from numerous regions.

Inequality of income and wealth is another factor that could affect opportunities. "The second generation of Italians and Poles came of age in an era of historically low inequality," Professor Waldinger said. "The second generation of Mexican immigrants is coming of age in an era of historically high inequality, and that has to work to the disadvantage of those with low levels of schooling."

But there are also forces working in the opposite direction. For one thing, the children of today's immigrants will have much better access to education and the labor market than those of a century ago. "It almost certainly will be the case that tomorrow's third generation will have better outcomes than today's third generation," Mr. Johnson said. "The conditions today are better in terms of educational opportunities."

Adding to that, members of several immigrant groups have often risen quickly to — or even started at — the top of the wage scale. Professor Waldinger said that "the median for Indian immigrants is 16 years of schooling" and that, on balance, "the Indians, the Koreans, the Chinese — they're already successful." One reason, he added, is that society is "much more open to outsiders" in top jobs and at elite colleges than it ever was before.

EVEN if successive generations of immigrants manage to become as economically successful as native-born Americans, a big question will remain: How many people do we really want in the United States? From the standpoint of government fiscal policy, Professor Card said, you could argue that the only immigrants you'd want in the United States were those "whose children are going to get Ph.D.'s" and would therefore be economically productive.

Some people might argue that a larger population raises housing prices and causes more pollution, he said. But there can be advantages to size, too. "If you have population growth, you can finance intergenerational transfer systems" like Social Security and Medicare, he said. And lest we forget, he said, "big countries have more power."

Mr. Frey agreed that waves of immigration could help to solidify a country's position in the world. In that respect, he said, Europe and Japan have a problem. "They have a very aging society because they don't like immigrants," he said. "They're going to end up on the back burner of the global economy."