August 29, 2003

New Borjas Bombshell: Immigration Now Impacting College Grads’ Incomes

By Peter Brimelow

On Labor Day weekend, Americans’ fancy resignedly turns to thoughts of education. In much of the country, not withstanding the late-summer heat, toddlers and teenagers have already begun trooping back into the maw of the vast K-12 bureaucracy.  And everywhere, students and their fee-paying parents are contemplating college.

It may all be a waste of time and money. Well, not a waste, exactly. But the rewards to education may not be what Americans anticipate – because of immigration.

The source of this stark message: another Borjas bombshell – a new research paper from Cuban-born Harvard University economist George Borjas, author of Friends Or Strangers and Heaven’s Door, who more than anyone has turned around the immigration debate among labor economists by demonstrating that the post-1965 immigrant influx has brought no significant benefit to native-born Americans and in fact is probably costing them money, through welfare and other transfer payments.

Borjas’ new finding, euphoniously entitled “The Labor Demand Curve Is Downward Sloping: Re-Examining The Impact Of Immigration On The Labor Market,” has been available since June as a working paper from the National Bureau of Economic Research. It will be published in the Quarterly Journal of Economics this Fall.

Curiously, the paper has received no attention in the Establishment media.

That’s what VDARE.COM is for.

Borjas’ conclusion: immigration 1980-2000 increased the workforce by some 11 percent. This “supply shock” reduced the wages of the average native-born worker in 2000 by 3.2 percent.

The supply shock’s impact differed dramatically across education groups. For native-born high school dropouts, wages were reduced by 8.9 percent. But, significantly, even for native-born college graduates, wages were reduced on average by 4.9 percent.

The impact was greatest on college graduates with 11-15 years work experience – i.e. most likely to have young families—when it amounted to 5.9 percent.

But even new college graduates, with 1-5 years experience, faced a reduction of wages of 3.5 percent.

Think about that when you’re paying tuition fees.

Of course, elementary economic theory predicts that, all other things being equal, when you increase the supply of anything, its price will fall. But this effect has taken a relatively long time to show up in the U.S. labor market after the immigration floodgates were opened by the 1965 legislation. Borjas himself couldn’t detect the effect when he published Friends And Strangers in 1990, so he said so. Subsequently, he realized that American were moving out of immigrant-impacted areas, causing the wage effect to be detectable only at a national level. So he said that too. 

Immigration enthusiasts, politically committed to their cornucopian view of immigration, just went on blithely citing Borjas’ earlier view. Catoite Stuart Anderson, subsequently a Bush Administration immigration official (!), did this as late as 1995, when I nailed him for it in National Review, in the brief period before it was effectively captured by the neoconservative/ Beltway establishment.

The beauty of Borjas’ new analysis is that he has disaggregated census data both by education level and also by work experience. It turns out that the impact of immigration influx on the native-born varies a great deal.

In particular, because a lot of immigrants are relatively unskilled, but a significant minority are highly-educated, the wage impact is most intense at both ends of the native-born education range. Previously, immigration’s impact had been thought to be felt only by the unskilled.

Of course, the fact that immigration is impacting the educated native-born is not news to specialists like Norm Matloff, Rob Sanchez and American refugees from Silicon Valley.  But now there’s striking proof of a general effect—on the most articulate and organized sectors of American society.