Translation: Wages would rise as business invested to take advantage of the lower wages.
On Tue, Jun 25, 2013 at 12:35 PM, Eugene Coyle <[email protected]> wrote: > Sounds as if Eduardo Porter studied Micro with Mankiw. " > > > >> Wages would rise as businesses invested to take advantage > >> of the expanded labor force. " > > Yeah, that's all that's stopping the boom, not enough workers! > > Gene > > > On Jun 25, 2013, at 10:54 AM, Jim Devine wrote: > > > New York TIMES / June 25, 2013, 12:15 pm > > > > Immigration and the Labor Market > > By EDUARDO PORTER > > > > Are American workers are about to experience unwelcome new competition > > for their jobs? The bill moving through Congress to overhaul the > > nation’s immigration laws, if approved, would give employers access to > > expanded visa programs that would admit hundreds of thousands of > > immigrant workers, of both low and high skills, to toil in workplaces > > from strawberry fields to technology companies. > > > > Weighing the economic claims in the Congressional debate. > > > > The legislation also offers legal status to millions of immigrants > > working illegally across the country, and ultimately a shot at > > citizenship. The change would encourage many to roam freely throughout > > the economy, leaving dead-end jobs in immigrant-heavy sectors of the > > labor market to seek higher pay elsewhere. > > > > But by many accounts, most American workers need not worry about the > > prospect of hordes of workers entering the country with an eye on > > their jobs. Rather, immigration is seen as more likely to leave > > American workers better off. > > > > The latest organization to come to this conclusion is the > > Congressional Budget Office, which issued a report this month > > concluding that the immigration bill would add six million workers to > > the American job market by 2023 and nine million by 2033 – increasing > > the labor force by 5 percent. > > > > In the beginning, the jump in immigration would hit pay, the office > > said. It expects that by 2023 average wages would be 0.1 percent > > lower, on average, than they would have been absent a change in law. > > > > Still, most American workers would have little to worry about. Average > > wages would decline to a large extent because most of the new > > immigrant workers would be paid less than domestic laborers, pulling > > the average down. Most importantly, the decline would only be > > temporary. Wages would rise as businesses invested to take advantage > > of the expanded labor force. By 2033, the C.B.O. forecast, average > > wages would be 0.5 percent higher than they would have been without > > the new immigrants. > > > > These conclusions may seem to fly in the face of the laws of supply > > and demand. But they are not quite so odd. They can become obvious, in > > fact, when accounting for the response of American companies, and > > workers, to the inflows of foreign labor. > > > > The belief that immigration would simply displace American workers > > relies on the assumption that employers would do nothing but replace a > > costlier domestic labor force with cheaper imports. But companies > > actually invest and expand to reap the higher profits that the new > > labor allows. This provides new opportunities for immigrants and > > domestic workers alike. > > > > [That is, if immigrants can't work in the U.S., businesses will move > > their operations to where those folks are, produce stuff, and sell it > > to people in the U.S.?] > > > > In other words, immigration can produce jobs for Americans, too. > > Restaurants are much less common in Norway than the United States > > because Norway lacks the cheap labor — making a dinner out in Oslo > > prohibitively expensive. In many New York restaurants, the American > > waiters and maitre d’ owe their jobs to the underpaid immigrants > > working illegally in the kitchen, whose low wages allow the restaurant > > to exist. > > > > What’s more, immigration expands productivity. Highly skilled > > immigrant workers generate more productive innovations. And the influx > > of new workers of a variety of skills, high and low, would promote > > specialization. > > > > Giovanni Peri, an economist at the University of California, Davis, > > and Chad Sparber of Colgate University found that American workers in > > states with large shares of less-educated immigrants gravitate towards > > communications-related occupations, their area of comparative > > advantage, while the immigrants stick to manual tasks and physical > > labor. > > > > This increases the growth rate of the economy and pushes wages higher. > > [really??] Mr. Peri estimated that the wave of immigrants that > > entered the United States between 1990 and 2007 increased workers’ > > incomes by about $5,100 a year on average, in 2005 dollars. This > > amounts to more than a fifth of the income gains over the period. > > > > There will be losers, especially among the workers most like the > > newcomers. A 50-year-old janitor with no high school diploma, for > > instance, will find it hard to make a transition into another job when > > immigrants move into the building maintenance business. But this group > > is probably small, and composed mostly of illegal immigrants already > > in the workplace. > > > > George Borjas of Harvard University argues that those without a high > > school diploma – about 8 percent of the labor force — are easily > > replaced by immigrants and are likely to suffer a noticeable drop in > > wages if low-skill immigration increases. Mr. Peri disagrees. He > > argues that high-school dropouts could find jobs in parts of the labor > > market that might even benefit from new immigrants’ arrival. > > > > The Congressional Budget Office looked at it differently. Rather than > > split the work force by educational attainment, it sliced it into five > > equal cohorts of skill, from the least educated fifth to the most. It > > found that none of these groups is hurt by immigration over the long > > run, in absolute terms. Some gain more, and some gain less. [no > > transition costs?] > > > > Unskilled American workers – who never completed high school, or maybe > > got an equivalency diploma — would do relatively poorly. So would > > highly educated workers, who would face more competition from new > > immigrant scientists and engineers with H1-B visas. > > > > Average wages in both these slices would decline 0.3 percent relative > > to the average by 2033. The rest of workers, by contrast, would see > > their relative wages rise by 0.5 percent. > > > > But even though the gains would not be distributed evenly, according > > to the study, every group would win. “Average wages would be higher > > under the bill than under current law for workers in all quintiles of > > the skill distribution,” it said. > > > > -- > > Jim Devine / "Reality is that which, when you stop believing in it, > > doesn't go away." -- Philip K. Dick > > _______________________________________________ > > pen-l mailing list > > [email protected] > > https://lists.csuchico.edu/mailman/listinfo/pen-l > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Cheers, Tom Walker (Sandwichman)
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