Real Numbers & Common Sense on Immigrant Labor
Trump/Vance lies about immigration and wages are easily demolished and that's what I do...
In Tuesday’s debate of vice president candidates Tim Walz and JD Vance, Vance’s utterings on economics came down to three lies. The first and most overarching regards Vance’s loyalty to supply side/trickle-down economics carnyism, still a Republican staple even though history, data, and experience shows that when wealth accumulates at the top – as it did with Trump’s tax cuts (and 40 years of supply side) – it doesn’t “tickle down.” Contrary to Vance’s claims, the Trump tax cuts did not create higher incomes across class lines. It gave wealthy people and corporations extra money to use for things like stock buy-backs, which further increased the wealthy’s wealth, which statistically shows up in an overall rise of income for all Americans, a conclusion which is destroyed when one dives into the numbers.
Vance’s second lie is that offshoring jobs – the sanitized way of saying “American corporations eliminating American jobs by manufacturing overseas” – did not lead to cheaper goods and lower prices for consumers – a whopper so divorced from reality that I yelled at the TV when Vance told it.
Fact is that is that the GOP-supported, corporate offshoring scheme would never work – especially not for 40 years – if cheap goods weren’t the trade-off for the low and stagnant American wages that resulted from offshoring. Doubt that? Where did all the Walmarts and Dollar Stores come from? Their growth and success – ongoing or temp – could not have happened if they didn’t serve as a low-cost lifeline for underpaid American workers and as shill-sellers for cheap imported product. Had offshoring led to higher prices – as Vance claims – the whole con would have crashed decades ago, simply because low-wage workers cannot afford to buy high-priced goods. My lord.
Immigration is the basis of Vance’s third big lie, and while Vance mostly scare-mongered on immigration, I am going to focus on Vance and Trump’s immigration-related economic claims, the central claim being jobs.
For as long as I can remember, Republicans have claimed immigration hurts American workers. If immigrants aren’t “taking American jobs,” they are, as Vance claims, helping suppress wages. Other than academic studies, mostly by one expert(!), and rhetoric repeated ad nauseum, immigration foes have little to back up their claims. The studies much cited by Vance and others were done by expert George Borjas. Expert Borjas claims that immigration negatively impacts native-born high school dropouts, specifically their job prospects and wages.
Borjas’s argument is very simple. It centers on labor supply and demand, but it is a theory that has massive holes in it, holes revealed in many subsequent studies, including by the right-leaning libertarian Cato Institute. In a Fall 2017 study, Cato states:
A decrease in the supply of immigrants can only increase native wages if immigrants and natives are substitutes for one another; in other words, if they compete for the same jobs. According to the types of his policies, President Trump appears to believe that natives and immigrants compete for both low-skilled and high-skilled jobs. Low-skilled native workers would be helped by the wall as they would face less competition from illegal immigrants. High-skilled workers would face less competition from immigrants who arrive on H‑1B visas and who work in high technology jobs.
An alternative view supported by much of the academic literature is that natives and immigrants largely take different types of jobs, potentially because they have different comparative advantages, even among less educated workers. If so, then the native wage response to a reduced supply of immigrant workers would not be large if it existed at all. It is not difficult to find examples of occupations that native workers do not enter, such as seasonal farm labor.
So, from the get-go, Expert Borjas and expert-hating Republican claims that immigrants hurt native-born working-class Americans is wrong, simply because immigrants and the native-born are mostly not in competition for the same jobs. Few native-born Americans are hustling for labor-intensive farm jobs or are hankering to work in meat processing plants. We know from experience that when immigration numbers crashed during the pandemic, there were worker shortages at the aforementioned food processing plants and among farm worker, and also in food service, retail, and small-scale manufacturing. And even when business owners offered higher wages for jobs like dishwasher, busser, and prep cook, they were unable to fulfill positions, for one reason: Native born Americans did not want to wash dishes, bus tables, pick strawberries, or clean out chicken plucking machines.
Note that none of the jobs I mentioned are “under the table” jobs. While food processors, agribusiness, restaurants, and others do hire undocumented workers, they hire them for over-the-table jobs at minimum wage or more (which means that these undocumented workers pay taxes for services that they can’t use). Where these employers break the law is in accepting bunk immigration documents, documents easily forged and cheaply obtained. They do this because whatever penalties they might get hit with are treated as a business expense, that is if they aren’t able avoid penalty by shifting the blame on the worker, a very easy out.
About twenty-years ago, I picked up some extra money doing side jobs for a few contractors. It was under-the-table work that paid me a competing wage, though not obviously so. At the time, California minimum wage was $6/hour. I was getting paid $8.50/hour for a job that over-the-table paid $10/hour – the same pay as my fellow workers, immigrants and native born. That $8.50 was the minimum that these contractors could pay to get good, reliable help.
Yes, working under-the-table got me $1.50 less than if I was on-the-books, which seems like someone is getting undercut; however, I wasn’t paying any taxes on my pay. Nor did I pay into Social Security or Medicare, or get hit with state and city cash-grabs. So, my take-home pay – what I got to keep for myself – was exactly the same as what it would have been if I was a “legit” worker. My employers benefited because not only were they able to save a few bucks on wages, they also didn’t have to pay into Social Security and Medicare, as well as for workman’s comp insurance. For me and my bosses (and the other workers, regardless of citizenship) it was a win-win.
What post-Borjas studies show is that native-born high school dropouts do not competie with immigrant workers. The dropout’s main job competition is with native born workers with high school diplomas. Thus, Joe American is not fighting Jose Migrant over a job on the cannery floor or even hauling equipment at a construction site. Joe American is competing with Joe American over AutoZone and Walmart uniforms and for union carpentry jobs.
In picking apart Borjas, Cato expands the timeline Borjas used to include the native-born American female workers who flooded the labor market in the 1970s and 1980s, an increase that was far bigger than the bumps in immigration we’ve seen since 1980, legal or not. If an increase in labor supply, by itself, drove wages down, the huge number of new, than more female labor participation would have had a significant impact on wages. It didn’t. What Cato’s Alan de Brauw found is that despite more workers flooding the labor market, wages for men pretty much stayed the same, even as women were making anywhere from 20% to 40% less than their male counterparts.
The wage discrepancy between men and women was/is not a “natural” thing. It is not something that the “free market” would tolerate if we were all on a “level playing field.” And, if the classic economic “law” of supply and demand was immutable, there would be no discrepancy and wages overall would have dropped. But the world is more than economics. It’s social mores, laws, tradition, and politics. Economics doesn’t happen in a vacuum. It exists in a patriarchal world, one in which men’s contributions are valued more than women’s, and White people’s ideas are treated more seriously than those of Person of Color, and native-born citizens’ rights far surpass those of immigrants. Economic theory does not trump real life prejudices or real life. What is happening with wage discrepancy isn’t due to an economic law; it is thanks to choices made by those in power, people who benefit from wealth gaps.
If immigrant labor isn’t suppressing the wages of native-born high school dropouts and graduates who didn’t go to college, what about the middle class and higher-wage workers? As far as the middle class goes, as with the dropout and grad, the competition among middle class workers is largely among themselves. Where immigrants have a greater impact is in higher paying jobs in tech, science, and medicine and that impact is not what Vance and others claim.
In tech, science, and medicine, nearly every immigrant worker is here legally. They are also highly-qualified, well-schooled (mostly in the US), and sought after, thus they have leverage that a peasant migrant digging a ditch does not. A doctor is going to get paid like a doctor, regardless if they are from Columbia or Columbus, Ohio. A geneticist from Mumbai is going to make as much money as one from Morristown. A computer scientist working in Palo Alto is going to see the same number in their paycheck regardless of where they are born. Certainly, there are individual discrepancies, but, as a whole, there is little difference in compensation in the upper levels of our job scene, among the native-born and immigrants.
Also, in every single one of these higher-wage fields – tech, science, medicine – overall wages have increased and, in some cases, soared. Why? Partially because, an increase in immigrant labor has led to increases in production, which has let to increases in revenue and profit, mostly for those at the top. In fact, if anything has negatively impacted the American working class it is the rapid and extreme increase in wealth among not just the wealthy but the upper middle and upper classes. Again, this is not a secret. Nor is it controversial among anyone other than venture capitalists like JD Vance and inheritance princes like Trump.
As Vance would say, it makes “common sense” that wealth discrepancy hurts most of us. If there’s a finite number of resources and if one class of people hordes those resources, the lesser classes will suffer. That is greed at work. And to keep the greed going, Vance, Trump, and their cohorts must find someone to demonize, to have us obsess on while they continue to take more and more. They also must make us believe that it is The Other – immigrants, Blacks, Jews, women, queers, etc. – who stands between us and universal superyachts. That is the scam they are selling us.
Next up in this series: Why we need immigrants and their labor.