Im-Politic: A Study of Immigration Economics that Ignores the Economy

Tags

Breitbart.com, Im-Politic, immigrants, Immigration, income, inequality, Leah Boustan, middle class, Neil Munro, Raj Chetty, Ran Abramiztsky, social mobility, The New York Times, Washington Post, welfare

Well, there goes one of the main arguments against more permissive U.S. immigration policies right down the tubes, according to both the Washington Post and New York Times. This month, both have run major articles spotlighting new scholarly findings claiming to show that today’s immigrants rise up the national income ladder just as fast as the tides of newcomers to American shores in the late 19th and early 20th centuries.

So far from saddling the country with huge numbers of extra residents overwhelmingly likely to stay as poor, and burdensome to society on net as when they first arrive, encouraging more immigration will greatly enlarge America’s pool of success stories and greatly enrich the nation.

Or will they? The trouble is, the more you think about the new data and the conclusions flowing so freely from it, the more unanswered crucial questions appear. I’ll base this analysis mainly on the Post piece, which provides more statistics comparing the economic records of those two great immigration cohorts.

The economists making the case that recent immigrants are no likelier to become a permanent underclass than their forebears are Ran Abramitzky of Stanford University and Leah Boustan of Princeton University. Their conclusion is based on statistics they claim show that men born into poor immigrant families in specific years of the “Ellis Island era” (1880 and 1910) caught up to the rest of the country income-wise at just about the same pace as the men (and women) born into poor immigrant families in 1997.

For both the Ellis Island immigrants and their latter-day counterparts, the measure of economic success is the earnings of these second generation immigrant men between the ages of 30 and 50, and how they’ve supposedly risen.

But these scholars appear to completely overlook numerous sea changes in the U.S. economy between 1880 and 2015 that obviously have had decisive effects on the income growth performance of immigrant cohorts that have arrived at different points during this 135-year stretch.

For example, more recent immigrants have clearly benefited from various state and national welfare programs that either were completely unavailable to previous such groups, or existed only in the most rudimentary forms. Since cash benefits are counted by the Census Bureau as income, and given the evidence that immigrants are heavy welfare users compared with the rest of the population, the discrepancy surely distorts the Abramitzky-Boustan comparisons in favor of those more recent immigrants.

Nor do the two scholars seem to take into account the dramatic slowing of income mobility between the late-19^th and early 21^st centuries. And much evidence shows that it”s been considerable. For example, this widely cited study concludes that “The United States had more relative occupational mobility [which generated upward income mobility] generations through the 1900–1920…than the United States in the second half of the twentieth century.”

And these conclusions have been reenforced for the late 20th century and extended into the 21st by a team of economists headed by Harvard University’s As summarized in the first graph in this different New York Times article, the percentage of all U.S. children (including those from immigant families) born into the average American household with a chance of earning more than their parents fell by about half between 1940 and 1980.

Additionally, the Chetty team – whose work is viewed by many as the latest gold standard in the field – discovered that lower-income Americans (also including immigrant families) have by no means escaped this pattern.

In other words, the move by the children of low-income immigrant cohorts to the 65th U.S. income percentile – the Abramitzky-Boustan measure of income ladder-climbing – isn’t nearly what it used to be. (For some perspective, the 50th percentile is something of a proxy for “middle-class incomes.”)  

And further reenforcing the idea that individuals’ ladder-climbing nowadays doesn’t yield nearly the economic stability and security affects as in the past are two other widely noted trends marking the U.S. economy and workforce in recent decades: a major widening of income inequality, and the growing inability of single-earner households to live middle-class lives.

In other words, two economists from leading universities have evidently conducted research about a major U.S. economic issue that ignores much of what’s been happening to the U.S. economy during the period they examine. And at least two leading newspapers have uncritically swallowed their findings. It’s clear that climbing into the middle class isn’t the only feature of American life that isn’t nearly what it used to be. 

P.S. For work raising different, generally broader questions about these and other immigration-related findings by Boustan in particular, see this piece by Breitbart.com‘s Neil Munro. 

 

 

Advertisement

(What’s Left of) Our Economy: Illegal Immigrant Poverty Rates Mock Claims that they’re U.S. Economic Saviors

Tags

Census Breau, citizens, illegal immigrants, illegal immigration, immigrants, Immigration, non-citizens, Pew Research Center, poverty, social mobility, taxes, Vox.com, {What's Left of) Our Economy

As the U.S. immigration policy debate rages on, claims continue that more lenient admissions policies, including amnesty policies that would clearly strengthen the magnet for more illegal immigration, are urgently needed to fix the nation’s demographically imperiled pension finances.

One of the latest examples comes from the left-leaning news and opinion site Vox.com:

“Economic estimates show that immigration would help save the Social Security system. Not just legal immigration — illegal immigration too.”

“Undocumented immigrants and immigrants with legal status pay billions of dollars each year into the Social Security system through payroll taxes. Based on estimates in the trustees report, the more immigrants that come in, the longer the Social Security system will stay solvent. That’s because immigrants, on average, are a lot younger than the overall US population, so their retirement is far off. And undocumented immigrants pay for Social Security, but they’re not allowed to get benefits.”

I’ve previously debunked such claims about illegal immigrants by showing both that their contribution to the national tax haul currently is much less a drop in the national bucket, and that it’s likely to stay tiny because social mobility in America has slowed to a crawl – meaning in particular that prospects keep getting bleaker for major income ladder climbing by the kinds of low-skill, poorly educated workers who dominate illegal immigrants’ ranks.

So it’s important to report that some recent data from the Census Bureau strongly confirms that mobility point – along with suggesting that one of the best ways to give illegal immigrants a leg up is to cut back their numbers seriously.

The statistics come in the form of figures kept by the Bureau on the “detailed social and economic statistics for age groups as well as racial groups that include the Hispanic, black or African-American, Asian and foreign-born populations.” These include numbers on poverty rates for native-born Americans, naturalized foreign-born citizens, and non-citizens (who of course by definition are foreign born). The latter aren’t necessarily illegals – for a variety of reasons, many legal immigrants never apply for citizenship, or don’t do so right away. But the non-citizen group would include all the illegals.

It seemed to me that the best way to tell if this non-citizen group and its illegal members are making noteworthy economic progress would be to focus on those in the 18-64-year old age group – i.e., those overwhelmingly likeliest to be employed, or seeking employment. The data go back to 1995 and up to 2015, so changes over a respectable period of time can be assessed. Below are the main findings, which also compare how poverty rates for non-citizens of working age have fared versus their native-born and naturalized citizen counterparts.

Year      native born 18-64s    naturalized 18-64s      non-citizen 18-64s

1995          10.8%                           8.4%                           25.7%

2001            8.8%                           8.1%                           17.8%

2007         10.0%                            8.5%                           19.9%

2009         11.9%                          10.1%                           24.2%

2015          9.7%                             8.9%                           17.9%

The most obvious takeaway is that the the poverty rates for the non-citizens of working age have remained much higher than those for the rest of the population of working age. And in absolute terms, for a high-income country like the United States, they’re exceedingly high.

These numbers also show that the poverty rate for the working age non-citizens has declined considerably faster than that for native-born Americans (-30.35 percent vs -10.19 percent). And that 30-plus percent drop contrasts especially strikingly with the change in the naturalized citizen rate – which actually rose by 5.95 percent.

So doesn’t that latter trend strongly suggest that illegal workers do keep increasing earnings significantly? Not so fast. First, remember that the performance of the illegals is undoubtedly worse than that of non-citizens as a whole. After all, illegals don’t have a heck of a lot of bargaining power at the workplace. Second, as RealityChek regulars know, the most accurate read on economic trends comes from comparing similar phases of the economic cycle – e.g., recessions with recessions, expansions with expansions.

And in that vein, what the data underscore to me is that the biggest drop in the working age non-citizens’ poverty rate came during the last half of the strongest and longest American expansion to date – that which lasted from 1991 to 2001. Between 1995 and 2001, it fell by 30.73 percent. During the bubble era expansion of 2001-2007, the non-citizen poverty rate actually increased (by 11.80 percent). Their fortunes improved notably during the first six years of the current expansion – decreasing by 26.03 percent. But that slowdown was more modest than that of the 1991-2001 recovery.

It’s certainly possible that since then, the rate has fallen further – and that this expansion will start speeding up, leading to additional improvement. But given the length of this recovery (more than nine years), that would be surprising – at least for any prolonged period.

Further improvement, however, could indeed be on the horizon because during the current recovery years, when that 26 percent fall in the poverty rate took place, the illegal immigrant population shrunk – from 11.5 million to 11.0 million, according to the pretty authoritative Pew Research Center. I say “pretty authoritative” because measuring activity related to illegality is always difficult. But these Pew data strike me as reasonable because all else equal, whenever the supply of anything (like illegal immigrant workers) decreases, its value (earnings) tends to increase.

So if the Trump administration can keep illegal inflows down, illegal workers’ poverty rates seem likely to fall further because of rising pay. But ironically, this development would also weaken the case that illegals will prove to be the U.S. economy’s financial salvation. For their incomes will remain very low in absolute terms by any reasonable measure, and their numbers will be smaller than their supporters seem to assume.

Moreover, the less illegal immigrant competition they face, again all else equal, the higher the pay of the much greater population of native-born workers will rise. Legal immigrants stand to benefit as well.

Something to keep in mind when you next hear some Open Borders enthusiast shout, “Abolish ICE [U.S. Immigration and Customs Enforcement]!”

Im-Politic: No Let-Up in Immigration Fakeonomics – and Fake History

Tags

business, Center for American Entrepreneurship, chain migration, Dreamers, Fortune 500, illegal immigrants, Im-Politic, Immigration, RAISE Act, social mobility, start-ups

The Open Borders Lobby is now touting a new study claiming that the Trump administration and Congress should permanently legalize the roughly 800,000 so-called “Dreamers” in part because of “the remarkable and persistent importance of immigrants to the creation and growth of America’s largest, most successful, and most valuable companies.” Moreover, it’s making the case that the findings should be shaping the entire “on-going national debate about immigration policy.”

There just one big problem: If you’re sympathetic to the plight of those immigrant children brought to the United States illegally by their equally illegal parents, and/or to the idea that the country needs an even more lenient immigration policy than the present version, you should hope that much stronger arguments for these positions are developed. Because the study, issued by the Center for American Entrepreneurship (CAE) is a classic of Fake Policy Analysis.

CAE is clearly correct in noting “the well-established importance of immigrants to entrepreneurship in the United States….” But it’s headline finding – that a large percentage of today’s Fortune 500 companies have been founded or co-founded by immigrants or their children – should simply remind readers of a simple historical truth: America has been a “nation of immigrants” since the founding because it’s generally been a relatively young, thinly populated country that’s needed to build up its human resources and actively sought this goal. The data have absolutely nothing to do with the main questions dominating the immigration policy debate these days, such as legalizing the Dreamers; or amnesty-ing the entire current illegal population; or reducing or ending “chain migration”; or cutting legal immigration levels.

Skeptical? Just check out the CAE’s numbers. At a glance they do seem to vindicate claims that immigrants have been much more entrepreneurial than the American population in general. And if you believe in capitalism and free markets, that’s incredibly important.

But look more closely, and the relevance to contemporary immigration debates vanishes. For an enormous percentage of the immigrant entrepreneurs listed here arrived and made their marks in the 19^th and early 20^th centuries, when the country’s immigrant population grew substantially faster than the population as a whole. Between 1850 (the earliest official data available) and 1910 (the date of the last U.S. Census before World War I, when immigration inflows of course dramatically dropped, and before 1924, when legislation slashed inflows and established discriminatory foreign country quotas), America’s foreign born population grew from 9.7 percent to 14.7 percent. And obviously, before 1850, it was at least as large, and growing at least as fast.

So of course during this period, immigrants were especially important in business formation. They were especially important in all demographic respects.

It’s also curious, to put it mildly, that the CAE would use immigrants’ children to buttress its case about immigrant entrepreneurship. These children founded or co-founded more than 57 percent of the “immigrant-founded” companies the Center has spotlighted. (In other words, immigrants themselves founded only about 43 percent of the so-called immigrant founded firms, and therefore only 18.4 percent of current Fortune 500 companies.)

But what’s the rationale for including them? Why not count the third generation, too? Because an entrepreneurship gene is for some reason not passed on to these immigrant descendants? Or somehow watered down? And why would this be? Because the second generation is likelier than the immigrants themselves to marry someone from the supposedly less entrepreneurial native-born population?

Counting the children – along with the prominence of these progeny – also seems to undercut the belief that immigrants are outsized business creators either because their very decision to leave their native lands reveals unusually high levels of get-up-and-go; or because as newcomers to the United States, they faced unusual barriers, like discrimination, in achieving prosperity; or some combination of the two.

For immigrant children established considerably more major companies than immigrants themselves. And presumably, they faced fewer obstacles, and were more steeped in native norms, than their foreign-born parents.

And finally, if you’re wondering why any of these findings should bear on today’s main immigration policy debates, you’re right – mainly because social mobility in America has been on the wane for decades, and in particular for the kinds of relatively poorly skilled and educated individuals who have dominated recent immigration inflows and the illegal population.

This trend significantly reduces the odds that the Dreamers – who for the most part share these characteristics – won’t match the business-creation record of previous immigrant generations. Ditto for today’s other illegals and the legal beneficiaries of chain migration.

Focusing on immigration policy as a business-formation booster, let alone cure-all, also ignores all the purely domestic obstacles to greater entrepreneurship – like weak social mobility and all the policy mistakes and inadequacies (and economic and social ills) behind it; like growing levels of business concentration and consequent declining levels of competition, which shrink the space for start-ups; like today’s feeble levels of consumer demand, which have surely undercut overall business investment.

When those problems are addressed more effectively, the United States will no doubt see a revival or entrepreneurship. And just as certainly, it will be in a much stronger position to handle the costs of recent immigration levels – and even possibly increase them.

(What’s Left of) Our Economy: Liberals’ Immigration Reform Dreams are Just That

Tags

Immigration, immigration reform, inequality, Piketty, social mobility, {What's Left of) Our Economy

With its blue-chip corporate backing and its strong establishmentarian pro-globalizing/free trade bias, it’s natural and sensible to portray the Council on Foreign Relations and its flagship journal Foreign Affairs as charter members of the cheap labor/Open Borders/lobby.

So it’s a welcome shock to report that the magazine has just published an article that should bust apart for good the strange bedfellows political juggernaut that still threatens to push pro-amnesty-style immigration reform through Congress.

Nothing in the article would logically stop Big Business from pushing to loosen U.S. immigration policy further and thus pump up the country’s labor supply and drive wages down even lower. (They’ve been falling during the recovery in real terms in the private sector.) But the new piece by University of California-Davis economist Gregory Clark should prompt big second thoughts about immigration reform among labor unions and its other liberal backers – unless they’re no longer first and foremost concerned with the well-being of the existing American workforce.

For Clark has spotlighted a massive irony that I’ve tweeted about, but that left-of-center immigration reformers have refused to acknowledge: The same obstacles that they have long complained keep hindering social mobility and widening the rich-poor gap in America also mock their stated expectations that a flood of newcomers and legalized illegals will boost the economy because of their huge unleashed earnings power and potential.

The idea that immigration reform will expand the population of “makers” rather than “takers” has long been central to the liberal case for immigration reform. In the words of President Obama, “when each new wave of immigrants arrived, they faced resistance from those who were already here. They faced hardship. …But over time, as they went about their daily lives, as they earned a living, as they raised a family, as they built a community, as their kids went to school here, they did their part to build a nation….And that’s still true today.”

Much Mainstream Media coverage of immigration issues and flows strongly agrees. Take this 2006 article from the doctrinaire laissez-faire Economist: “The worry [of immigration policy critics] that America is importing a new Hispanic underclass, as some claim, is also probably unfounded. Granted, foreign-born Hispanics are less educated and earn less than the average American. But that is hardly surprising, given that so many were until recently Mexican peasants. What matters is whether they are socially mobile, and it seems that they are.”

Indeed, according to the magazine, “First-generation male Mexican immigrants earn only half as much as white men. But the second generation have overtaken black men and earn three-quarters as much as whites.”

Clark’s Foreign Affairs article exposes why such contentions represent inexcusable hopium – especially given that even long before they idolized French economist Thomas Piketty’s new book, such progressives vigorously insisted that growing inequality is baked into modern American and other forms of capitalism.

As Clark makes clear, especially because low-wage and low-skill Mexicans and other Latinos dominate U.S. illegal immigration flows and populations, “there can be no doubt that immigration is widening social inequality in the United States” – and will continue to do so for the indefinite future. Clark even debunks the assumption that better, more generous public policies will ensure the illegal and other Latino immigrant economic success that could validate current reform efforts.

Clark’s related conclusion seems too pessimistic for me – that “the American Dream was always an illusion” for immigrants because the success of newcomers and their descendents stemmed from the high skill and education levels the first generation brought to the nation to begin with. For example, is it really true for the most part that “The Jews of the Russian Empire were certainly poor, but they were an educated elite within their home societies”? The success they and subsequent generations of late-19th and early 20th century immigrants achieved seems more the result of the genuinely greater opportunities offered by the U.S. economy of those and succeeding years.

But given the widening inequality broadly recognized more recently, his warning about the consequences of reform efforts in current circumstances sounds spot on: “Blindly pursuing that [American dream meme] will only lead to a future with dire social challenges.” Will liberal immigration reformers be intellectually honest enough to recognize that he’s right?