Immigration often described as economic threat but it’s not that simple

October 30, 2010 § 3 Comments

NYT:  A new study notes that when companies move offshore, they pull away not only low-wage jobs but also many related jobs, which can include high-skilled managers, tech repairmen and others. But hiring immigrants even for low-wage jobs helps keep many jobs in the US. In fact, when immigration is rising as a share of employment in an economic sector, offshoring tends to be falling, and vice versa.  Immigrants may be competing more with offshored workers than with other laborers in America.  US economic sectors with much exposure to immigration fared better in employment growth than more insulated sectors, even for low-skilled labor, the authors found. It’s hard to prove cause and effect, or to measure all relevant variables precisely, but the study doesn’t offer much support for the popular bias against immigration.  We see the job-creating benefits of trade and immigration every day, even if we don’t always recognize them. Low-skilled immigrants usually fill gaps in US labor markets and generally enhance domestic business prospects rather than destroy jobs; this occurs because of an important phenomenon, the presence of what are known as “complementary” workers, namely those who add value to the work of others. An immigrant will often take a job as a construction worker, a drywall installer or a taxi driver while a native-born worker may end up being promoted to supervisor. And as immigrants succeed here, they help the US develop business and social networks, making it easier for us to do business with India, Brazil and other countries, again creating more jobs.  For all the talk of dangers of offshoring, there is a related trend that we might call in-shoring. Computers may be assembled overseas, for example, but those products aid many American businesses at home and allow them to expand here. A cheap call center in India can encourage a company to open up more branches to sell its products in the US.  Those are further examples of how some laborers can complement others; it’s not all about one group of people taking jobs from another. Job creation and destruction are so intertwined that, over all, the authors find no statistically verifiable connection between offshoring and net creation of American jobs.  We’re all worried about unemployment, but the problem is usually rooted in macroeconomic conditions, not in immigration or offshoring. Remember, too, that each immigrant consumes products sold here, therefore also helping to create jobs.  When it comes to immigration, positive-sum thinking is too often absent in public discourse these days. Debates on immigration and labor markets reflect some common human cognitive failings — namely, that we are quicker to vilify groups of different “others” than we are to blame impersonal forces.  Consider the fears that foreign competition, offshoring and immigration have destroyed large numbers of American jobs. In reality, more workers have probably been displaced by machines. Yet we know that machines and computers do the economy far more good than harm.  Nonetheless, we find it hard to transfer this attitude to our dealings with immigrants, no matter how logically similar “cost-saving machines” and “cost-saving foreign labor” may be in their economic effects. Similarly, tariffs or other protectionist measures aimed at foreign nations have a certain populist appeal, even though their economic effects may be roughly the same as those caused by a natural disaster that closes shipping lanes or chokes off a domestic harbor.  We spend far too much time and energy worrying about foreigners. Allowing in more immigrants, skilled and unskilled, wouldn’t just create jobs. It could increase tax revenue, help finance Social Security, bring new home buyers and improve the business environment.  The world economy will most likely grow more open. We should be prepared to compete. That means recognizing the benefits — including employment benefits — that immigrants bring to the US.

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