Let Them In_ The Case for Open Borders - Jason L. Riley [20]
THE CALIFORNIA EXPERIENCE
A 2007 study published by economist Giovanni Peri analyzed the effects of immigrant labor on California, a state that wasn’t chosen arbitrarily. The Golden State, the nation’s most populous, is home to nearly a third of all foreign-born U.S. workers. Los Angeles, the nation’s second-largest city after New York, is nearly half Hispanic. In the past decade, California’s population growth has been almost entirely due to immigration, much of it illegal. The term “Mexifornia” has entered the lexicon. If, as conventional wisdom holds, immigration does in fact have a negative impact on the job security of Americans, California is one of the more likely places that the phenomenon would be manifest.
Yet Peri, a professor of economics at the University of California at Davis, found “no evidence that the inflow of immigrants over the period 1960-2004 worsened the employment opportunities of natives with similar education and experience.” With respect to wages, he found that “during 1990-2004, immigration induced a 4 percent real wage increase for the average native worker. This effect ranged from near zero (+0.2 percent) for wages of native high school dropouts and between 3 and 7 percent for native workers with at least a high school diploma.” In other words, immigrants tended to expand the economic pie, not displace native workers. These foreign workers lifted all socioeconomic boats; it was just a matter of how much.
At first blush, Peri’s findings might seem counterintuitive. It’s assumed that because immigrants increase the supply of labor, they necessarily decrease both the wages and the employment opportunities of the native workers. If most immigrant workers were interchangeable with U.S. natives, that might indeed be the case. But the assumption is problematic because immigrants on average aren’t stand-ins for natives.
In 2003, the foreign-born share of Ph.D.s working in science and engineering nationwide was 30 percent. Among workers without a high school diploma, the foreign-born share was 23 percent. And among those with only a high school diploma, it was 8 percent. Among native-born U.S. workers, by contrast, some 60 percent had a high school diploma or some college but not a four-year degree.
Peri found that since workers with different levels of education perform different tasks, the majority of native-born workers—high school graduates with some college— experience benefits, more than competition, from the foreign-born workers who are concentrated in high and low educational groups. The result is a more efficient domestic labor market, which leads to more capital investment, higher overall economic growth, and, ultimately, more choices for consumers.
But it also leads to better jobs and higher pay for American workers, explains Peri. “In nontechnical terms,” he writes, “the wages of native workers could increase because the increased supply of migrants is likely to put native workers in jobs where they perform supervisory, managerial, training, and . . . coordinating tasks, which makes them more productive.” More workers also means more consumers, “so that immigration might simply increase total production and demand without depressing wages.”
Peri’s findings are hardly anomalous, by the way. Most mainstream economists dismiss this so-called “lump-of-labor” fallacy, which assumes the amount of available work is fixed. An Urban Institute study of immigration’s impact on Southern California in the 1970s—a period of high unemployment nationwide, remember—reached a similar conclusion. “To what extent did the influx of immigrants entering Southern California in