Tired & Poor: The bankrupt arguments for mass, unskilled immigration - Column

National Review, Sept 3, 2001 by Steven A. Camarota

Talks in August involving Secretary of State Powell, Attorney General Ashcroft, and their Mexican counterparts may have produced the broad outline of an immigration agreement. It would involve a two-step amnesty, first rechristening the approximately 4 million Mexicans illegally in the U.S. as "temporary" workers, then giving them permanent residence after a period of indenture of perhaps three to five years. Even more workers would then be imported from Mexico as "temporary" workers, and would eventually receive green cards.

Most critics of this amnesty have focused on the fact that it rewards lawbreakers and mocks the law-abiding; others have argued that there is no moral reason for singling out Mexicans at the expense of other nationalities. While these are reasonable objections, few commentators have asked the larger question: Is mass unskilled immigration from Mexico really good for the U.S.? In a new study, the Center for Immigration Studies uses the latest Census Bureau data to examine the prevalent assumptions surrounding this issue-and they turn out to be myths.

The ur-justification for unskilled immigration is, "Who else will clean my pool?" And it contains a kernel of truth, with regard to Mexican immigration. About two-thirds of all Mexican immigrants are high-school dropouts, and only 4 percent have a college degree. During the 1990s, Mexican immigration increased the number of dropouts in the U.S. workforce by 11 percent, while increasing the supply of all other workers by only half a percentage point. Thus, the effect of Mexican immigration on wages is confined to unskilled workers. Since the vast majority of natives have completed high school and are employed in higher-skilled occupations, most natives don't face significant job competition from Mexican immigrants.

But there's still a problem: More than 10 million adult native-born American workers lack a high-school education, and they are in direct competition with unskilled immigrants. The vast majority of Mexican immigrants work in such jobs: busboy, pool cleaner, and so on. These jobs are still overwhelmingly done by natives. The myth that immigrants only take jobs no one else wants persists primarily because middle- class Americans view most of these jobs as something they certainly would not want to do.

The increase in the supply of unskilled labor brought about by Mexican immigration reduced wages for high-school dropouts by about 5 percent in the 1990s-not so much because immigrants work for less and undercut natives (though that does happen), but rather because lower wages are an unavoidable byproduct of significantly increasing the supply of unskilled labor. It's basic economics: Increase the supply of something, and the price will fall.

The chief problem with lower wages for unskilled workers is that they are already the lowest paid; one need not be a liberal to acknowledge that beggaring the poor may contribute to social disharmony. It's true that these wage losses do not vanish into thin air: Lower wages for the poor should result in lower prices for consumers. But the savings are infinitesimal, precisely because unskilled workers earn such low wages to begin with. High-school dropouts account for less than 4 percent of total economic output. Thus, if Mexican immigration reduces wages for dropouts by 5 percent, prices for consumers are lowered by less than two-tenths of 1 percent. It is simply not possible for a high-tech economy like ours to derive large benefits from unskilled immigration.

Another myth has to do with welfare. While it is certainly true that the vast majority of Mexican immigrants come to work and not to use government services, there's also no question that very many end up using government services anyway. Even after welfare reform, 31 percent of all Mexican households in the U.S. use at least one major welfare program-double the 15 percent rate for natives. Clearly, one of the unintended consequences of an amnesty would almost certainly be to increase welfare costs still further.

Heavy use of welfare by Mexican immigrants stems not from moral defects or a lack of jobs, but rather from the very low incomes of Mexican immigrants. The modern American economy offers very limited opportunities for those with little education, and so poor workers or their children are often eligible for welfare programs, such as food stamps, public housing, or Medicaid.

Mexican immigrants also pay very little in taxes. By design, those with lower incomes pay much less in taxes than middle- and upper-class workers. This means that even if Mexican immigrants used welfare at the same rate as natives, they would still be a substantial drain on public coffers because their tax payments are dramatically lower.

While there is debate among researchers on the fiscal effects of immigrants overall, there is absolute consensus that immigrants with little education are a huge drain on the public budget. We at the Center for Immigration Studies estimate that the average Mexican immigrant will use $55,200 more in public services during his lifetime than he pays in taxes. In effect, Mexican immigration acts as a subsidy to businesses that employ unskilled workers, holding down labor costs while taxpayers pick up the tab for providing services to a much larger poor population. It's like any other subsidy: Businesses that receive it want it to continue, but for the nation as a whole, it's a bad deal.