Thread: The Myth of Low-Wage Warfare

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The Myth of Low-Wage Warfare
Analysis by Peter Costantini*

SEATTLE, Washington, Jun 7 (IPS) - How could it be that an influx of less-educated workers from poor countries would not significantly harm low-income U.S. workers?

If the labour market were a zero-sum game, there might be fierce competition between them. But experts say other factors compensate for increases in the supply of low-wage labour and soften its effects.

"American labour markets appear to be rather segmented," according to Douglas Massey, co-director of the Mexican Migration Project at Princeton University. "There are certain sectors where foreigners enter and they complement Americans in production and don't really have any displacement or wage effects."

Massey pointed to agriculture as the clearest example of this segmentation. There have been few white farmworkers since the 1930s, he said. To attract them, employers would have to raise wages considerably. But if they did this, the produce would end up being imported from abroad because that would be cheaper, or farmers would find it economical to mechanise more jobs.

Although competition may exist in some areas between immigrants and native workers, its main impact falls on a declining number of U.S. workers. Among all immigrants, the proportion who did not finish high school is about 38 percent, according to the 2000 U.S. Census. For illegal immigrants, the figure is closer to two-thirds. Of the U.S.-born workforce, the proportion of high-school dropouts is much smaller, under 15 percent, and in urban areas it has fallen by more than a quarter over the past two decades.

Low-wage immigrant workers may foster economic growth in the areas and industries where they work.

When firms profit from the cheap labour of immigrants, they sometimes respond by reinvesting that money in expanding their production. When they do, this increased capital investment can create new jobs.

Angelo Amador, director of Immigration Policy at the U.S. Chamber of Commerce, pointed to the example of meat-packing in Nebraska. "The factories were closing and people were moving, there was more unemployment and the wages were going down," he said in an interview.

"Once they had this influx of immigrants to work at these factories, some of the closed plants reopened and the economy around the area actually picked up. And they found that the wages even went up."

There is a potential multiplier effect, too: when an industry like meat-packing expands, it can create jobs in firms that provide equipment, supplies and services to the industry.

In areas with booming economies, when workers are needed to fill jobs, immigrant workers can fill gaps. Still, Amador said, there should be some guarantees that U.S. citizens will be able to compete for these newly created jobs.

Certain kinds of jobs would likely have been moved out of the country had immigrants not taken them at lower wages here. This is particularly true in agriculture and manufacturing, where U.S. businesses are competing with Mexico and other developing countries.

By contrast, firms that employ immigrants may become more competitive in global markets. This can enable them to expand rather than shipping the jobs overseas. "People focus on immigration," said Massey, "but it's a globalised economy within which all factors of production except land are moving."

In the U.S., wages for less-educated, lower-income workers have been mostly stagnant over the past three decades. If immigration is not a major cause of lower wages and job losses, what are the more significant pressures?

A ubiquitous factor has been the automation and reorganisation of work, which has relentlessly reduced the demand for low-skilled workers in many U.S. industries.

In manufacturing, runaway shops, outsourcing and sub-contracting of some functions have eliminated many manual jobs with relatively good pay and benefits over the past few decades.

But very little of this job loss can be attributed to competition from immigrants, who work mostly in other sectors. The loss of such jobs has mainly been caused by the inability of U.S. manufacturing firms to compete with foreign ones and by movement of their operations offshore.

New York Times columnist Nicholas Kristof describes a neighbour he knew in his childhood who earned 26 dollars an hour in a union job in 1971. For the last decade, he says, the neighbour has had to work as a janitor for not much more than the minimum wage..

The long-term decline of labour unions in the U.S., often accelerated by union-busting, has also helped depress wages on the lower end of the scale. U.S. labour laws that favour business and an anti-union political environment have increased the difficulty of union organising among unskilled workers, native and immigrant.

At the same time, the long-term decline in the inflation-adjusted value of the minimum wage has moved the floor of the labour market downward.

Ruth Milkman, a sociologist at the University of California at Los Angeles, has found a distinctive pattern in some industries, including construction and building services, now dominated by immigrants in Los Angeles. These jobs had once been unionised, offered relatively good wages and benefits, and were held overwhelmingly by U.S.-born workers.

Starting in the late 1970s, she told IPS, there was "a very direct employer effort to downgrade them, mainly through destroying unionism". As the jobs became less desirable, native-born workers often left voluntarily for the greener pastures offered by other sectors of a robust local economy. Only after that process did employers turn to immigrants.

"So there really isn't any kind of story of competition there, it's an ethnic succession story," Milkman asserts. "Wages do go down, but I don't think it has much to do with immigration. Immigration is a result rather than a cause."

For African-Americans, some particular factors do far more damage to their economic prospects than competition from immigrants, argues labour economist David Card. A criminal justice system that incarcerates large numbers of young black men, many for minor drug offences, leaves them with bleak job prospects when they are released. Poverty-related medical issues such as diabetes and congestive heart failure are exacerbated by lack of access to medical care because many have no health insurance.

Many forces have conspired to reduce wages and job opportunities for those at the bottom of the labour force. At the same time, many immigrants, legal and illegal, have entered the U.S. economy over the past 15 years.

Not surprisingly, a study by Stephen Camarota of the Washington-based Centre for Immigration Studies found that employment of low-wage immigrants rose while that of low-wage native workers fell by more than twice as much from 2000 to 2005.

But according to Harry J. Holzer, former chief economist at the U.S. Department of Labour, these findings "do not prove that the former development caused the latter." Rather than competition from immigrants, Holzer attributes the employment situation of native-born U.S. citizens primarily to "the underlying weakness of the U.S. labour market".

As Holzer testified before Congress, "Of course, some less-educated Americans have been hurt by immigration, and more importantly by many other forces in the U.S. labour market -- such as new technologies, foreign trade, the diminishing presence of unions, and the decline in the statutory levels of the minimum wage."

Rather than trying to curb immigration, Holzer suggested, low-wage workers would benefit more from improving education and training, increasing the minimum wage, making it easier to organise unions, and providing more widespread child care, parental leave and health insurance.

The U.S. could also take a lesson from the integration of Spain, Portugal and other poorer countries into the European Union, suggests Carlos Gil, emeritus professor of history at the University of Washington.

"The Europeans created a social fund for worker-retraining programmes after they opened their national borders and created one single market. Why can't we look for similar approaches?"

*This article is the second of a two-part series on the impact of migration on the U.S. labour market. (END/2006)

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Is Illegal Immigration a Manufactured Crisis?
Analysis by Peter Costantini

SEATTLE, Washington, May 25 (IPS) - Driving Pres. George W. Bush's plan to send 6,000 National Guard troops to the border with Mexico and Congressional plans to build hundreds of miles of fences along it is a sense that the exodus of immigrants from Mexico has reached a critical level.

A recent CBS News poll found that six in 10 respondents see illegal immigration as a very serious problem. In another poll by USA Today/Gallup, 81 percent agreed that illegal immigration is "out of control".

But some analysts of immigration disagree. They see a crisis manufactured primarily for political ends. And they point to medium- to long-term trends that may reduce pressure to emigrate from Mexico.

In a recent opinion piece, Douglas Massey a sociologist at Princeton University, wrote; "The Mexican-American border is not now and never has been out of control...What has changed are the locations and visibility of border crossings."

According to Massey, beefed-up enforcement has backfired. It has not deterred immigrants or reduced their inflow. But it has driven undocumented migrants away from the cities of San Diego, California, and El Paso, Texas, where the great majority of unauthorised immigrants entered before the 1990s. Both metropolitan areas have big Hispanic populations, making new arrivals less noticeable.

Now the concentration of undocumented entries has shifted east from San Diego to an area where a major U.S. highway enters Mexico. According to Massey, the border patrol has filmed immigrants running in groups across the highway and used the footage in a documentary portraying a border being overrun.

>From El Paso, enforcement has pushed crossings out into the Sonora Desert in Arizona. Because this area is much more isolated and dangerous for migrants, the death rate during border crossings has tripled. From the 1980s to 2000, while the number of Border Patrol agents has more than quadrupled and its budget has increased eight-fold, the rate of apprehension of migrants while crossing has dropped from 33 percent to 10 percent.

Increased restrictions at the border, Massey said, had tripled the cost of crossing illegally. But ironically, making it harder and more dangerous to cross over has had the unintended effect of reducing return migration. So once undocumented immigrants get in to the U.S., they tend to stay longer and are less likely to travel back home.

A study by Massey found that in the early 1980s, about half of undocumented Mexican immigrants returned to Mexico within 12 months. By 2000, the ratio had dropped to 25 percent.

David Card, a labour economist at the University of California at Berkeley, sees the perception of out-of-control immigration as partially fueled by a growth in nativist prejudice against immigrants, which he says rises and falls periodically in the U.S.



"There is no crisis that has anything to do with immigration," he told IPS. But nativism, he said, has been enflamed by fear of terrorism and by wars in the Middle East. For those on the right whose vision of the country harkens back to an idealised verison of the 1950s, welcoming an influx of mainly dark-skinned people who speak Spanish would require what he called a "cultural stretch".

Anti-immigrant sentiment is not new in the U.S. -- it coalesced as early as the 1850s. In that decade, a movement called the Know-Nothings opposed a wave of Irish Catholic immigration. Subsequent groups of newcomers, including Chinese labourers in the late 19th century and southern Europeans in the first decades of the 20th century, often met with bias, repression and calls to send them back home.

In those areas of the country that have experienced a sudden influx of immigrants in recent years, such as parts of North Carolina and Iowa, the growth of new communities with an unfamiliar culture and language have unsettled some residents. Local labour markets, especially for low-wage workers, and public services have been stressed by new job-seekers.

Nationally, however, total immigration into the United States peaked in 2000 at the end of the Internet bubble, and declined by 24 percent by 2004, according to studies by the Washington-based Pew Hispanic Centre. Immigration from Mexico, which accounts for about one-third of the total flow, followed a very similar pattern of rise and decline. During this period, however, the share of illegal immigration relative to legal increased.

The total foreign-born population of 35.7 million in 2004 represented 12.2 percent of the U.S. population. Of the foreign-born, 10.4 million -- 29 percent of all immigrants -- were "unauthorised migrants". The unauthorised, though, constituted only 3.5 percent of the total population.

The majority of unauthorised migrants, 57 percent, were from Mexico, and another 24 percent were from the rest of Latin America. Among recent Mexican immigrants to the U.S., 80 to 85 percent are estimated to have entered the country illegally.

Commonly articulated fears that immigrants take advantage of social benefits but don't pay taxes are challenged by a study of 6,000 migrants by the Mexican Migration Project, a joint effort of U.S. and Mexican universities.

The study found that nearly two-thirds of migrants reported paying income tax and Social Security taxes. Yet few used any public service in the United States. Roughly 10 percent said they had ever sent a child to U.S. public schools and just five percent said they had ever received food stamps, welfare or unemployment compensation.

This project found that most Mexican immigrants do not intend to settle permanently in the U.S. Eighty percent of those surveyed made three trips to the U.S. or fewer and 75 percent stayed less than two years. Of the minority who spent 10 or more years in the U.S., 63 percent bought homes in Mexico with the money they earned.

The net effect of immigration on the U.S. economy appears to be neutral or slightly positive, according to several studies. Consumers gain from lower prices in sectors such as agriculture, construction and services, where many immigrants work.

Some studies have found a small downward pressure on the wages of the roughly 15 percent of U.S.-born workers who have not finished high school. But others dispute that effect and say that other factors play a much larger role in depressing the incomes of low-wage workers.

As long as gross domestic product per person in the U.S. remains some four times as high as in Mexico (with a greater differential in hourly wages), legal and undocumented immigrants will be drawn to answer the siren song and cross over the 1,951-mile border in search of a better living. Meanwhile, economic forces unleashed by the North American Free Trade Agreement have driven small Mexican farmers off their land and, in many cases, northward.

But countervailing forces are at work in Mexico as well. According to the World Bank, Mexicans living in poverty declined from 24.2 percent to 17.6 percent from 2000 to 2004. As Mexican incomes rise, Mexican population growth and birth rates are declining..

At 1.3 percent, Mexico's population growth rate is now barely higher than Canada's, whereas in 1980 it was more than twice that of Canada. Mexico's fertility rate, the average number of children per women, has declined sharply from 7.3 in 1960 to 2.4 in 2000.

Partly as a result of these trends, estimates of migration from Mexico by the United Nations, the U.S. and Mexico all show a peak around 2000 and a steep decline to anywhere from two-thirds to one-half of the peak by the end of the decade.

As Matthew Dowd, senior adviser to the Republican National Committee, wrote recently: "The aging of the population in Mexico coupled with Mexico's economic expansion mean that jobs in Mexico will be more plentiful, thereby prompting fewer young people to come to the United States in search of work." (END/2006)

A recent CBS News poll found that six in 10 respondents see illegal immigration as a very serious problem. In another poll by USA Today/Gallup, 81 percent agreed that illegal immigration is "out of control.

But some analysts of immigration disagree.

And when pressed to reveal the identity of the said analysts, Peter Costantini conceeded that perhaps the group, which consisted of Frank Purdue Jr., Bob Toll, President Bush, and himself, may have been somewhat biased.