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The Honolulu Advertiser
Posted on: Sunday, May 21, 2006

All immigrants, not just ones with 'needed' skills, only make U.S. stronger why we need them

By Tyler Cowen and Daniel M. Rothschild

Activists rallied for immigration reform on Wednesday in San Francisco, bearing flags of Latin American nations. Many economists agree that immigration has not reduced wages for American workers.

MARCIO JOSE SANCHEZ | Associated Press

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oogle, Yahoo and Sun Microsystems all were founded by immigrants from Russia, Taiwan and India, respectively. There is near-universal agreement that skilled immigrants are an enormous boon to the U.S. economy.

But what about the millions of unskilled laborers who arrive in this country every year?

Recent public discourse would have us believe that they poach American jobs, reduce wages and sponge off welfare. Yet economic research suggests a different picture: Unskilled immigrants are good for the United States, and the United States is good for them.

Until the late 1990s, when a boom in native-born self-employment occurred, immigrants were more likely than natives to work for themselves. Immigrant small businesses, from the Korean corner market to the Mexican landscaping service, are, well, as American as apple pie. The labor market is not a zero-sum game with a finite number of jobs; immigrants create their own work.

A key question for economists has been whether the influx raises or lowers "native" American wages. David Card of the University of California-Berkeley, who studied patterns in various U.S. cities, concludes that immigration has not lowered wages for American workers. George Borjas of Harvard University counters that immigration reduced the wages of high-school dropouts by 7.4 percent from 1980 to 2000.

Most economists have sided with Card. For one thing, his studies better capture the notion that immigrant labor makes work easier for all of us and brings new skills to the table. Additionally, as Card points out, the percentage of native-born high-school dropouts has fallen sharply over the previous decades, creating a shortage of unskilled laborers that immigrants fill. In 1980, 1 in 3 American adults had less than a high-school education; by 2000, that figure had fallen to less than 1 in 5.

Gianmarco Ottaviano, of the University of Bologna, and Giovanni Peri, of the National Bureau of Economic Research in Cambridge, Mass., have shown that immigrants and low-skilled American workers fulfill very different roles in the economy. For instance, 54 percent of tailors in the United States are foreign-born, compared with less than 1 percent of crane operators. A similar discrepancy exists between plaster-stucco masons (44 percent immigrant) and sewer-pipe cleaners (less than 1 percent foreign-born). Immigrants come to the United States with different skills, inclinations and ideas; they are not looking to simply copy the behavior of American workers.

New arrivals, by producing more goods and services, also keep prices down across the economy. Even Borjas the favorite economist of immigration restrictionists admits that the net gain to the United States from immigration is about $7 billion annually.

Over the coming decades, the need for immigrant labor will increase, according to demographers. The baby-boom generation will need more healthcare and more nursing homes. The forthcoming Medicare fiscal crunch will require more and younger laborers to finance the program.

Some argue that we should employ a more restrictive policy that allows in only immigrants with "needed" skills. But this assumes that the government can read the economic tea leaves. Most bureaucrats in 1980 did not foresee the building or biomedical booms of the 1990s, or the decline of auto manufacturing.

We should not trust government to know what kind of laborers we will need 20 years from now. The ready presence of immigrant workers including the unskilled makes all businesses easier to start, and thus spurs American creativity.

We should not forget that immigration is good for the immigrants themselves. It often means the difference between extreme poverty and the good life.

Card finds that post-1965 immigrants, as recorded in U.S. census data, have a good record of assimilation. Second-generation children have, on average, higher education and wages than the children of natives. Of the 39 largest country-of-origin groups, the sons of 33 and the daughters of 32 of those groups have surpassed the educational levels of the children of natives.

It is fitting that both Card and Borjas are themselves immigrants. Borjas emigrated from Cuba when he was 12, and Card came from Canada to earn his doctorate at Princeton University. Their very debate shows how immigrants have become central to the American enterprise.

Yes, immigration brings some real costs. But most of these problems are concentrated in a few border and urban areas; federal policy can help correct the imbalances.

Americans have heard from politicians for more than 200 years that immigration will cause the sky to fall. Yet each time, it has only made us stronger.