How immigrants create jobs

Here is my latest New York Times column, excerpt:

The study notes that when companies move production 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 kinds of jobs in the United States, the authors say. In fact, when immigration is rising as a share of employment in an economic sector, offshoring tends to be falling, and vice versa, the study found.

In other words, immigrants may be competing more with offshored workers than with other laborers in America.

American 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 in these studies, or to measure all relevant variables precisely, but at the very least, the evidence in this study doesn’t offer much support for the popular bias against immigration, and globalization more generally.

We see the job-creating benefits of trade and immigration every day, even if we don’t always recognize them. As other papers by Professor Peri have shown, low-skilled immigrants usually fill gaps in American 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, for example, while a native-born worker may end up being promoted to supervisor. And as immigrants succeed here, they help the United States develop strong business and social networks with the rest of the world, making it easier for us to do business with India, Brazil and most other countries, again creating more jobs.

Here is the paper.  Here is related work by Peri on European labor markets.

Comments

i am not going to say this, but by the same token should we not encourage the unemployed to emigrate?

I'm a "white native born worker" and I used to work for a law firm owned by a second generation Korean immigrant that specialized in representing first generation Korean immigrant small business owners. It was a great job and paid well.

Quite the strawman article. Typical for the NYT.

Try to remember that the issue of the day is illegal immigration, and stop pretending it is immigration in general.

If you can't acknowledge that this country is overrun with 'illegal aliens' you're living in a 'rational ignorance', ivory tower, dream world, along the lines of the Democratic Party's latest incarnation of Ellsworth Toohey: "There are no illegal aliens in Nevada", Harry Reid.

Completely out of touch and buffered from what's taken place in this country in the last twenty years.

papers by Professor Peri have shown, low-skilled immigrants usually fill gaps in American labor markets

No need to read the paper to know that this is a lie. There are whole industries where a wholesale job displacement has taken place. I live in the Midwest and for the past five years or so I haven't seen a single non-Latino roofer. That's out of probably several hundreds that I saw simply driving around the town. Please tell don't tell me that all these American roofers of the past are now tenured professors of economics at public universities so they can give no damn about jobs lost to illegal immigrants.

How much overlap is there between the types of jobs that employ immigrants here and the types of jobs being outsourced?

You mention construction workers, but construction jobs aren't going to be shipped overseas.

When I think of outsourcing, I think call centers, computer programming, data entry, IT, accounting, etc. When I think of immigrant jobs in the US, I think construction, agriculture, food services, etc.

There is truth to the idea that to compete globally US companies desire cheap labor. Their choice will be to send the jobs abroad to cheap labor, or import cheap labor to jobs here. But, even given that, I think this article is conflating labor markets that are somewhat distinct (the types of jobs outsourced and the types of jobs immigrants do here), although surely there are a few markets where the two overlap.

I live in the Midwest and for the past five years or so I haven't seen a single non-Latino roofer. That's out of probably several hundreds that I saw simply driving around the town.

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DK, so your own personal significance > statistical reasoning. Awesome! Forget about kneeling before Zod, we should all kneel before DK.

While the MSM has certainly indoctrinated the American public into believing that the mass displacement of computer programmers over the past decade has been due to offshore outsourcing, it was actually brought about by a massive flood of H-1Bs. If it looks like immigration, find something else to blame.

From the third page of the paper:

"The model focuses on employment effects. It assumes a manufacturing economy with many industries and one factor (unskilled workers}"

How accurate a description is this of the US economy in 2010?

Tyler's piece only discusses positive effects from immigration. He also gives no information of how many he thinks US should have and how they should be chosen. I guess he wants unlimited immigration. He must think the US economy is mainly factories employing unskilled workers with little government social spending. It is easier to justify high immigration of low skilled workers when you imagine the state of the economy and government spending is closer to 1910 then 2010.

Whole lot of xenophobia, ignorence and general "they took yer jerb" idiocy in this thread. Somebody give Neal a gold star for the day.

I don't doubt any of the benefits of immigration, but seldom do we see evidence of the costs, particularly of illegal immigration.

I recall a blog I read recently which talked about Salvadoran immigrants in the US who send a large proportion of their paychecks home. How is this not an import of labor? Sure, the capital remains on our shores, but what kind of labor do they do: services. So the capital wasn't going to be outsourced anyway.

How exactly do we outsource jobs for cooking Egg McMuffins, cleaning hotel rooms, mowing lawns, or painting houses?

The bottom line is that illegal immigrants take jobs Americans used to do before there were illegal immigrants. If there is a benefit to illegal labor by paying low wages for hard work in poor labor conditions with no benefits, we are stating with our labor laws that it's ok to exploit the subhuman immigrants. If we make employers abide by labor laws, then what is the benefit of having illegal workers?

I've worked in fast food, custodial services, and was a line cook. I consider those jobs an important part of forming my work ethic and they helped me become an independent adult. Why are we depriving millions of American youths (especially minorities) an opportnity to grow, especially with high unemployment rates?

I agree that this issue is political, not economic.

What part of the word "alien" don't you understand?

Why is this country overrun by self-declared libertarians who are actually old-fashioned racists?

Tyler,

Occasionally on this blog, you display hints that you are no longer as naive as you were in, say, 2006, that you've actually learned something from the catastrophes of the last few years. But most of this NYT column could have cut and pasted from 2006.

I'd like to read you on the incentives you face to tailor your public statements to fit the prevailing elite conventional wisdom, even though it has obviously gone off the rails.

It would be useful to compare as of October 2010, the economies of Germany (a high wage manufacturing-based economy with relatively low immigration) and California (a mostly post-manufacturing economy with high immigration and, consequently, low wages and high cost of living for less skilled workers). Which economy is doing better: Germany or California? And what does that say about Peri's theories?

DK, you really aren't making your case stronger. Even if 90% of peer-reviewed literature is BS (and I highly doubt it is), citing a peer-reviewed paper is still light-years ahead of citing your own personal experiences. (Never forget: "data" is not the plural of "anecdote".) Tyler, who happens to himself be a more credible authority on the topic of labor markets than you are (by virtue of, you know, having a PhD in economics -- unless you happen to also have a PhD in economics, which I doubt) has cited a series of papers in the peer-reviewed literature.

What did you cite? Of the roofers in your town that you recall seeing over the past several years, all have been Latino.

Real strong case, bud.

As far as your second point, I don't particularly care what you think is "undeniable" or "deniable," because the argument I was making sailed about two feet above your head. You can hardly call an illegal immigrant population of 4% "overrunning." That 4% figure is from credible sources, like the US Census Bureau and the Dept. of Homeland Security --- but wait! I forgot! Your personal experience is that 100% of roofers in your city are Latino! The Census Bureau's conclusions must be lies.

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By the way, I guess illegal immigrants must be overrunning Mexico now. They're totally here looking to plant in America and divide it, right? http://www.nytimes.com/2008/07/31/us/31immig.html...

Dirk, take a good look at who gets the vote caused by illegal immigration. Republicans for decades have given employers the nod and wink to hire illegals. This cheap labor strategy is not only killing off the Republican party in California, it's also killing off an honest center right.

MWW said

When that fails then go to ad hominem attacks ("I know that this is a lie. Really? How?)

He then sets speed record for scoring an own goal by making an ad hominem attack in the very next sentence.

Oh well, can't expect better in a country where half the people voted for making Sarah Palin a breath away from becoming the most powerful person in the world.

Our current immigration system is a mess.

If you are a highly skilled worker that is likely to add positive economic value you are faced with what is a fairly nasty process getting permission to work in the US.

If you are a low skilled worker that can get into the US illegally you can find work and qualify for large amounts of taxpayer support.

Immigration reform advocates don't do their cause any good when they ignore that. They don't help their cause when they lump skilled and unskilled workers together.

They especially don't help their cause when they fail to acknowledge that the last comprehensive immigration reform effort (under Reagan) failed to get a handle on illegal immigration of low skilled workers.

If immigration advocates want to advance the cause of reform they need to acknowledge those problems and suggest policies that will address them.

To Neal:
Never forget: "data" is not the plural of "anecdote".

This sounds cute and all that but more often than not data really is plural of anecdote. (Anecdote = single observation).

And you are grasping that straw too hard - I merely provided an *example* (FYI: "one of a number of things, or a part of something, taken to show the character of the whole"). And I can't care less for the argument about Tyler's authority. His profession has conclusively shown its uselessness and complete lack of predictive power. Tyler himself is not exactly Delphic Oracle either. That he has a PhD does not make me see black where he says I should see white.

To mww:
so what [if] somebody created roofing robots. Then even the Latinos wouldn't have jobs. Nobody addresses that, do they?

They do, when it's the subject of discussion. When the subject of discussion is a politically-concocted lie that cheap immigrant labor does not displace native workers (*that* is the claim being discussed), addressing your point, however interesting it might be, is irrelevant.

Tyler, sorry for the earlier post. This is a great site you guys run, with your own efforts. I went over the top there and apologize.

Sometimes when i hear academics make sweeping statements, from their tenured, whole summer off, every holiday, medical/dental benefits and pensions perch -- sometimes i take offense. Like Harvard not letting the ROTC on their campus . . . . things like that, this just gets to me sometimes.

Neil, the 'Illegals are in the country 'Illegally' do you think they answer the door when the Census Worker knocks? Yet, having said that, have you seen the long line of benefits they're entitled to if they do? I don't remember getting that in the mail. But what's that encourage? Feeding at the government trough and if we go down that road where's that going to take us? Vote for the Political party that gives you the most? Where does that lead?

Overall i think Latino immigration has been a tremendous benefit to this country. Generally law-abiding, great work-ethic that'll show you energy that you didn't know you had, family oriented, decent people that'd be a benefit to any community they emigrated to -- that's been my personal experience. And i've had a lot of it because i've been working with them and competing with them for work :) have you?

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.

This is the kind of CYA junk that helps to discredit economics.
My conclusion is that the USA should have more legal immigration, especially of those who already speak good English and are University educated (doctors & nurses especially desired). For the benefits.

In economics, dealing with real people and unable to have double-blind, nor even blind, experiments for real decisions, data is certainly a sum of anecdotes. At best. Cherry-picking some statistics to support the pre-determined thesis is the more usual route, and is worse than anecdotes.

Low wage/low starting skill immigration puts downward pressure on all low wage jobs -- as well as many overall more highly dispersed economic benefits. American roofers, and construction workers in general, are among the specific losers. Homebuyers, and all businesses supporting new housing and their customers, were among the more diverse winners.

It seems likely that the current US tax-paid efforts at supporting low-wage earners "as if" they are middle class, 2-car owner homebuyers, means that low-wage immigrants do get more in gov't benefits than they pay. Why aren't there more actual studies with details of real people (like in medical studies with real patients)?

The terrible issues of illegal immigration are not what the NYT article is about -- but not discussing the biggest issue about immigration makes it seem like a deliberate attempt to label all those against illegal immigration (like me), as also against immigration.

Finally, the reality is that US workers are, on the world stage, on average overpaid. Vastly different & higher wages for similar jobs is not long-term sustainable in a globalized economy; but will certainly lead to unstoppable political pressure to reduce illegal immigration before other ways of recognizing that Americans are overpaid. (No political party wants to say this truth.)

And gov't workers are EVEN MORE overpaid. That, too, will likely be addressed earlier.

whole summer off

Thanks for signaling just how clueless you are.

I have to agree immigration doesn’t hurt the workforce at all really. I have experienced firsthand work that immigrants would have normally done and it was high intensive manual labor. It was work that the average majority worker would have never done with the low wages that was paid for the work. Immigrants will do this type of work because generally the reason they are coming to the States is to create a better life than the life they had originally. They feel the wages and honest work they do is a better alternative to what they could be doing within their home country. So in turn while immigrants fill these jobs that most majority natives won’t do, this gives the opportunity to the higher skilled native workers originally employed in the low wage job to eventually move into a new, high wage jobs. So immigrants can take over low wage workforce to help their current financial situations and this will create newer higher paid jobs for native workers. Basically immigration creates a win-win solution to new jobs in a way but it can also be bad for jobs because eventually these low paid immigrants may eventually have resent for the workers that get paid more. They may feel they are being cheated by the system because they feel they should be able to progress like everyone else instead of having to stay in the same position. However, this is a whole different situation that really is the only bad side to immigration which I believe has a solution and that’s helping these immigrants to obtain higher skills through training and education.

I really do wonder why Tyler would post something about immigration, when he obviously knows that it will degrade the level of commenting. Also, Economists in general are ignorant of why so many people so passionately oppose immigration. In any argument where emotions are involved, the relevant facts are the facts that lead to the emotions. Maybe a whole lot of people are angry because the lives of their family members are worse off than they used to be. Maybe it is something else. However, people are unhappy about something, and whatever it is, they believe immigration is its cause. Perhaps they are angry that hard work is no longer enough to guarantee an American a middle-class lifestyle and financial security. Now, one must be able to get a degree or a license, etc. to ensure such a lifestyle. And perhaps yes, immigration and globalization are a reason that hard work no longer equals a good job for life. Perhaps, from a moral standpoint, the fact that hard work doesn't guarantee a person in the U.S. such things is a huge loss that cannot adequately be captured in a econometric model. For such a loss isn't just the loss of the American dream, but it is the loss of a broader ideal of fairness that shouldn't have ever been undermined in the first place. The answer to the fact that hard work in Mexico doesn't guarantee one financial security or a decent livelihood shouldn't be to alter the structure of the U.S. economy such that the U.S. has the exact same problems that people in Mexico are fleeing. Also, if anyone responds to this post, I am familiar with a Hayekian critique of what I'm saying, and I am still saying it, so give me the benefit of the doubt, and remember that human capital is very costly, and is even more costly and difficult to obtain for the working class. Nothing about the new global order makes it easier for the working class to obtain human capital.

"Basically, TC is arguing that poor people are good for American and we need to import more of them to make up for the domestic shortage."

Yes. And that's a valid political stand.

Politically, we don't want Americans to get stuck in dead-end jobs that will keep them poor. A politician who said he did want that would lose.

So we can automate those jobs, or we can hire foreigners. It's cheaper to hire poor foreigners, and also if we don't give them the chance to take jobs Americans don't want, they'll be stuck with worse choices. But we don't want to make those foreigners citizens or we're back to putting Americans into dead-end jobs that will keep them poor.

The Americans who would otherwise be stuck with those jobs are instead unemployed. Ideally we would have higher-paying jobs for them, but we don't. So we tell them to spend 4 years going to college or something -- anything to put off the problem -- because we don't have a solution. The politicians are better off if they can persuade the unemployed that it's their own fault they are losers.

So in the ideal case, somebody who has just graduated from a crap high school will work menial jobs to pick up the cash to go to community college, perhaps night school, and will fail, and then will decide that she just doesn't have what it takes, that she just plain isn't as good as that Harvard graduate who got the good job, that there's nobody to blame it on but herself, so she will be resigned to whatever happens.

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