Wages and Immigrants: ‘Cheap Labor’ Might Give You a Raise

By Michelle Chen Feb 06, 2010

If you were one of the legions of pissed-off jobless folks out in force at the National Tea Party Convention this week, demonstrating against the “illegals” taking “your job,” you’re entitled to your opinion. But you should know that the guy supposedly stealing your livelihood probably gave you a raise this week. Countering the popular meme about the harm immigrants pose to the “legal” workforce, the Economic Policy Institute has issued a report that undercuts the fears that faceless hordes of migrants are sending the country to hell. In fact, immigrant workers indirectly subsidize the wages of U.S.-born workers, boosting weekly wages by about $3.68 above what immigrant workers make. That’s right, the economic benefits of the flow of immigrant labor is skewed toward the “native born.” And in fact, the immigrants toiling away in American communities (including those with legal and non-legal status) may see their wages indirectly depressed by the inflow of newer arrivals. The analysis reveals that immigration’s impact is neither an unequivocal panacea for economic woes, nor a threat to economic stability. Immigrant workers participate in the labor market in nuanced ways. The internal dynamics within the immigrant labor force is inextricably linked to structural discrimination, because, according to EPI’s analysis, “immigration among workers with less than a high school degree served to lower the relative wages of other immigrant workers with less than a high school degree, not native workers with less than a high school degree.” At the same time, in contrast to the canard of cheap immigrant labor displacing "real Americans," the EPI found that “native workers who have simi­lar levels of education and experience to new immigrants may even reap modest benefits from immigration.” The net effect also varies by location in surprising ways. In the four states with the highest immigration rates–California, Florida, New York, and Texas–U.S.-born workers saw a larger wage benefit from immigration compared to the national average. On balance:

Immigration modestly increased the wages of U.S.-born men with education beyond high school, and either modestly increased or left unaffected the wages of U.S.-born women at all education levels, relative to foreign-born workers with the same levels of education. Wages for U.S.-born men with no education beyond high school declined slightly – by 0.2% – relative to foreign-born workers…. Foreign-born workers already in the U.S. saw significant relative wage declines regardless of gender or education levels, ranging from a 2.5% decline for women with no high school diploma to a 7.1% decline for women with a college degree. The effects of immigration on average relative wages did not vary significantly for U.S.-born workers by race, although methodological limitations prevented an analysis of race by education level, where differences could be pronounced. The youngest U.S.-born workers – those with one to 10 years of labor market experience – saw modest wage gains due to immigration (up 0.8%) relative to foreign-born workers, while wages among U.S.-born workers with the most labor experience declined slightly (down 0.3%) relative to foreign-born workers.

The findings are important precisely because they do not paint a cut-and-dry picture of the macroeconomic impact of immigration. They do show that immigration itself can’t be simplified as an assault on the American jobs. Rather, migration is a complementary and fluid presence in the dynamics of the labor market (despite attempts by policymakers and nativists to siphon the immigrant community into static categories of legitimacy and criminality.) A more pessimistic reading of the data might fixate on the slight negative impact on U.S.-born men without a high-school degree, or point to anecdotal examples of local employers passing over white workers for, say, Latino day laborers. But the EPI study points to a positive overall trend resulting from a churning of the labor force with immigrant workers. Eroding wages and dismal job markets are real challenges for working-class Americans, but the researchers attribute these to structural problems that destabilize immigrants and non-immigrants alike:

Declining job quality for the least-educated American workers is due to a host of factors aside from immigration, including declining unionization rates, the eroding real value of the minimum wage, and trade practices that expose U.S. workers with low levels of edu­cation to competition from much lower wage workers around the globe. While it remains crucial to reform our broken immigration system, a larger economic agenda that will spur growth, reduce economic insecurity, and provide broadly shared prosperity is more central to improving their economic status.

In other words, it’s still the economy stupid. The government may spend billions of taxpayer dollars, blast apart families and terrorize communities, to combat an inevitable social phenomenon—and the difference it makes for a typical worker may be only the equivalent of a cup or two of coffee each week. Besides, one aspect of immigration that the data leaves out is the way immigration reshapes the social landscapes of our cities and towns. The economic vibrancy, fresh aspirations and cultural diversity that immigrants have been bringing to this country since its founding is something that remains priceless. The fact that our economic system can’t account for those values may explain why so many American workers have isolated themselves in self-defeating bigotry. Image: Day laborers at the Downtown Day Labor Center in Los Angeles (David Bacon)