August 31, 2003

Unhappy Labor (Investor/Taxpayer) Day?

By Steve Sailer

For our fellow Americans who actually are laborers, it’s no longer such a happy day—or year, or career for that matter—because the Immigration Tax falls most severely on their wages.

I'm not the most sophisticated political philosopher (as last week's column no doubt showed). But somehow I don't think any philosophy could justify sticking your fellow citizens at the bottom of the ladder with the biggest bill.

UCLA's Chicano Studies Research Center, of all places, recently attempted to estimate how much heavy immigration costs American workingmen. (Click here to download their 184k PDF file). Sociologist Lisa Catanzarite looked at many different occupations across 38 major metropolitan areas. She found that the higher the percentage of "recent immigrant Latino men" [RILM] in each local job, the lower the wages paid to citizens and established immigrants.

She writes:

"The pay penalty in occupation-MAs [Metropolitan Areas] with 25% RILM [recent immigrant Latino men] amounts to $2,369 per year; at 15% RILM, the penalty is $1,421, and at 5% RILM, $474. These are substantial wage discounts, given that annual earnings average $21,590. In other words, in occupations with 25% RILM, workers earn only 89% as much as workers in comparable fields without RILM."

In other words: all else being equal, if the makeup of your occupation's local labor pool changes from 0% new immigrant to 25%, your income shrinks 11%.

Of course, it could drop even further—because percentages of RILMs are often much higher than 25%. Catanzarite notes:

"… many metropolitan areas… have witnessed the emergence of “brown-collar” occupations. That is, occupations where immigrant Latinos are over-represented, largely in low-level service, construction, agriculture, and manufacturing jobs, including waiters’ assistants, gardeners and groundskeepers, cooks, farm workers, and painters, in MAs such as Anaheim-Santa Ana, Chicago, Fresno, Jersey City, Los Angeles, New York City, and San Diego. Immigrant Latinos constitute as much as 40-71% of workers in many of these fields."

That mass unskilled immigration drives down the wages of the unskilled will not come as a surprise to anyone who has ever heard of the Law of Supply and Demand. But apparently doesn't include Dr. Catanzarite. She blames instead "the devaluation of work performed by low-status groups."

I mentioned Catanzarite’s explanation to my wife. She replied: "That's just childish thinking. Grasping the concept of supply and demand is part of growing up."

Still, Dr. Catanzarite is a sociologist at a Chicano Studies program, so you shouldn't expect too much. I feel more inclined to congratulate her on the half-full glass-ness of her analysis.

In contrast, I'm much less forgiving of the staffers of the Wall Street Journal Editorial Page, who routinely assure us, in violation of everything taught on the first day of Econ 101, that immigrants take jobs that Americans just won't do—no matter how much we're paid.

Of course, investors less blinded by ideology than the WSJ Edit Pagers have to worry about immigration, too—especially if they hold state government bonds. Standard & Poor's downgraded California's bonds to BBB on July 26, only two levels above junk. And immigrant-magnet New York has the second worst credit rating.

In fact, an interesting new study has found that the proportion of foreign born in a state's population in the 1990 Census correlates quite strongly with how badly a state's long-term bonds are rated in 2003.

It's not hard to understand why importing cheap labor eventually produces a budget mess like California's. Initially, high wages attract young foreign men. They bring strong backs and are too scared of the government to demand much in services. But they drive up the percentage of the economy that's kept off the books and untaxed.

As these young men get settled, they send for their women. Their big families begin flooding the public schools, emergency rooms, and prisons. Then the young men turn into middle-aged men whose backs aren't so strong anymore. So they start going on worker's comp and disability.

Due to the "rotten borough" problem – the paradox that voters in immigrant districts have more impact than voters in the rest of the state, because non-citizens are counted for apportionment purposes – the immigrants who are eligible to vote (or who vote fraudulently) elect a disproportionate number of legislators. Thus California's Hispanic Democrats cast only 8% of the votes in 2002, but elected 20% of the legislators.

Almost all of these legislators are liberal Democrats. They do what liberal Democrats do: vote for more spending.

So current mass immigration means not just an unhappy Labor Day, but an unhappy investor/taxpayer fiscal year.

However, mass immigration apparently still makes the WSJ boys (and girls) happy. How very odd.