On Immigration and Wages

Kim Moody

MICHAEL FRIEDMAN’S LETTER (ATC 130) challenges the statement in my article on immigrant workers (ATC 127) to the effect that immigration has not been the cause of declining U.S. real wages. His challenge consists of citing two “reports” — one by the Federation for American Immigration Reform (FAIR — not the media critics) and another from the National Bureau of Economic Research (NBER).

FAIR is an anti-immigration organization that advocates greatly restricted legal immigration and increased domestic enforcement “led by strong employee penalties” against undocumented workers. It opposes amnesty and multiculturalism. Its sole “liberal” figurehead is Eugene McCarthy, whose FAIR publication purports to show that the United States is “turning into a colony of the rest of the world.”

The “report” Friedman cites is a three-page “fact” sheet with some anecdotes and a couple of misrepresented trends.(1) Their anecdotes may be true, but these are anecdotes — not real analysis. One statement worth looking at in more depth and cited by Friedman is that “In the last 20 years, the meatpacking industry reorganized around the use of immigrant rather than native labor.”

The restructuring of the meatpacking industry began in the 1950s, not the 1980s. It involved two major geographic shifts; the massive closing of old plants employing “native” workers and a fall of one third in the workforce beginning in the late 1960s; the decline of the old “Big Four” (unionized) packers and the rise of new firms using new production methods in the 1960s and 1970s with the rise of IBP, Conagra and Cargill.

This last change produced a significant increase in employment in the industry in the 1980s. When the immigrant workers arrived in the 1980s, they mostly filled the new plants run by the new firms.(2) So, while it is certainly the case that immigrants came to dominate the workforce they did not literally “displace” white or African-American workers, who were by that time gone or hanging on in remaining older plants.

As one study concluded about the process in one Kansas meatpacking center, “Jobs in the packinghouses were readily available, and therefore the newcomers did not take jobs away from established residents.”(3) It is typical of anti-immigrant groups to misrepresent this kind of transition in meatpacking, hotels, building service, and other occupations as cases where immigrant drove out or took jobs from “native” whites or Blacks.

The NBER study is more serious, though deeply flawed. Following the neoclassical style of the day, it employs supply and demand curve, coefficients and other mathematical tools in an effort to show that increased immigration underlies declining wages, falling workforce participation, and rising incarceration rates among African Americans and whites at different skill levels. What it actually shows is a correlation between rising immigration figures and falling real wages. Correlation, however, is not causation.

Furthermore, some of their methods are dubious. “Skill” levels are represented by proxy figures on education and length of employment, called “length of experience” to give a skills-like sound. Hence it eventually follows in their analysis that the higher school drop-out rates among Blacks also correlate with increased immigration. Are we really supposed to believe these dropout rates are the result of immigration?

There is also the ridiculous implication that immigration has an accelerating impact on incarceration rates for Black males. Savor this piece of neo-classical logic: “A positive immigrant supply shift puts downward pressure on the wage in the market sector, causing native workers to substitute out of market and into either crime or leisure.”(4) Leisure?

Well, of course, in neoclassical theory there is no such thing as involuntary unemployment. They postulate that Blacks seem to have a higher “propensity” for crime, measured by incarceration, while whites prefer leisure. After all, there’s a correlation!

To put it politely, such studies require a highly critical reading. In any case, plenty of other studies demonstrate what I am arguing.(5)

The neoclassical arguments get causation backwards. Although as I acknowledge in the article competition among workers does occur, immigrants seldom flood overcrowded labor markets, in turn bringing down wages. Wages have tended to fall previously or low-wage jobs get created into which immigrant workers then move.

Furthermore, the direction of migration is characterized by very specific geographic and occupational patterns, not by random entry into national or state labor markets, such as those examined in the NBER study. Lines of information along migrant routes inform people of job opportunities.

The jobs are there because “natural” population growth is insufficient to fill these jobs — and because racism blocks “native” Blacks, particularly young Black men, from some of them. Or because many “native” whites and Blacks are no longer willing or can’t afford to take such low wages or perform work that has historically been defined as demeaning.

Immigrants accounted for over half the growth in U.S. employment in the 1990s and 86% from 2000 to 2005.(6) Indeed, the developed capitalist countries are able to fill the lowest paid and worst jobs created by various forms of restructuring only or primarily with those for whom the pay represents a step up — Third World immigrants.

This is not to deny that immigrant workers are part of an internationalized “reserve army of labor,” or that this does have a restraining effect on wage levels over the long term. This, however, is not same as saying their entry reduces the earning of current “native” workers — an argument designed to produce anti-immigrant hysteria.

Finally, there is actually a good reason for making the argument I have aside from the fact I think it’s right. The battle for immigrant rights, like all political battles, is in part ideological. Those who frame the discussion and define its terms and language have an enormous advantage. Anti-immigrant and neo-classical arguments need to be confronted and defeated with research and analysis. “Hammering away” is not enough.

Notes

1. FAIR, “Seven Principles of True Comprehensive Immigration Reform” for FAIR’s viewpoint and “Immigration and Job Displacement” for impact on wages; Publications for a description of the McCarthy book. www.fairus.org/site.
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2. Roger Horowitz, “Negro and White, Unite and Fight” A Social History of Industrial Unionism in Meatpacking 1930-90, Urbana, University of Illinois Press, 1997, 247-279.
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3. Michael Broadway, “Beef Stew,” in Lamphere, Stepick, and Grenier, (eds.) Newcomers in the Workplace: Immigrants and the Resturcturing of the U.S. Economy, Philadelphia, Temple University Press, 1994, 26-41.
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4. Borjas, Grogger, and Hanson, “Immigration and African American Employment Opportunities: The Response of Wage, Employment, and Incarceration to Labor Supply Shocks,” NBER, Working Paper 12518, Sept. 2006, 5-13.
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5. Roger Waldinger, Still the Promised City: African-Americans and New Immigrants in Postindustrial New York, Harvard University Press, 1996 for a detailed study; Patrick McGovern, “Immigration, Labour Markets and employment Relations” British Journal of Industrial Relations: 45(2), June 2007 for a good refutation of the neo-classical approach and a review of the literature to name two.
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6. Ray Marshall, “Getting Immigration Reform Right,” Economic Policy Institute, EPI Briefing Paper #186, March 2007, 1.
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from ATC 131 (November/December 2007)