Do low wages for unskilled workers weaken the case for more immigration?

Here is a point which I think the anti-immigration forces are getting wrong, mostly on the side of economics.  It can be pointed out that low-skilled (native) labor in the United States has not seen strong income gains for some time.  You might then wonder whether it makes sense to bring more unskilled labor into the country.

In my view the evidence (and here) suggests that the negative wage pressures on unskilled labor, to the extent they have international origins at all (as opposed to TGS or automation or political factors), come more from outsourcing and trade than from immigration.  So if you limit low-skilled immigration, outsourcing likely will go up, as it would be harder to find cheap labor in the United States.  The United States will lose the complementary jobs as well, such as the truck driver who brings cafeteria snacks to the call center.  Conversely, if you increase low-skilled immigration, you will also get more investment in the United States and more complementary jobs as well and possibly some increasing returns from clustering and maybe more net tax revenue too.  On top of that the individuals themselves have greater choice as to where to spend their lives and build their careers.

Here’s another way to put it.  Either factor price equalization will go on or not, noting that capital flows are the more active marginal lever here and there is no serious talk of banning capital outflow.  If FPE isn’t going to happen much, no big deal either way.  If FPE is going to happen, you still might want to have it happen with more of those jobs inside your country.

Again, you may wish to counterbalance this against any political costs from having more unskilled labor in your country, as I mentioned earlier.  But from an economic point of view, the case for accepting the immigration — including low-skilled immigration — still seems strong to me.


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