August 23, 2006

National Data, By Edwin S. Rubenstein

Pew Study Buries Inconvenient Immigration Truths

“Rapid increases in the foreign-born population at the state level are not associated with negative effects on the employment of native-born workers…” [Growth in the Foreign-Born Workforce and Employment of the Native Born August 10, 2006 by Rakesh]

So says the latest study from the Pew Hispanic Center.

Warning: Double negatives can be dangerous to your intellectual health.

When read quickly, the statement seems to imply that immigrant workers enhance employment, wages, and living standards of native workers.

But, despite the headlines, the Pew study is, at best, agnostic on the impact of immigration on native employment.

Among its findings:

That’s the best Pew can do?

As unimpressive as the results are, they probably understate the impact on native workers. Flaws in Pew’s research methodology:

Apples to Oranges: Pew researchers compare immigrant growth rates to native employment rate levels at the end of the period. This methodology virtually ensures misleading results. If, for example, immigrants are attracted to states where native employment rates are already high, their presence could be viewed as a boon for natives even if native employment rates declined. Similarly, immigration to low-employment rate states could be seen as harming native workers even if native employment rates were to rise. This begs the question: why not compare the changes of both variables?

Our hunch: Pew initially did this, but went to Plan B when the desired (pro-immigration) results did not materialize. The current study shows every sign of a hit job gone awry.

State as a unit of analysis:  The Pew study defines a state as the labor market penetrated by immigrants, correlating immigrant growth with native employment rates for each state. But many native workers will move out of state in response to low-wage immigrant competition, while out of state employers seeking cheap labor will move in. These interstate flows of labor and capital disperse the impact of immigration throughout the country. As a result, state-to-state comparisons of employment rates and immigration are not very revealing. The full impact of immigration can be captured only at the national level.

Employment rate as a policy goal: Is a higher fraction of working natives a good thing? Not always. Increasing native employment rates may signal the inability of primary wage earners to support their families, or the need of aging Boomers to postpone retirement. The displacement of native workers by immigrants exacerbates both trends.

Wages are a far better indicator of worker well-being. And, as Harvard’s George Borjas, has documented, they are showing that immigration is having an increasing negative impact.