And global warming due to CO2 isn't significant. If you don't want to believe something you can always find excuses not to.

Well said, Kevin.

If you don't want to believe something you can always find excuses not to.

What a terribly wrong-headed (and ironic) criticism, given the content of Kevin's post.

If you don't want to believe something you can always find excuses not to.
Posted by: James B. Shearer

probably ... but I think the point was that it's harder to find data supporting unreasonable prejudices.

If this is the best we can come up with after 20 years and 8 million illegal immigrants, there really isn't a serious economic argument to make against immigration from Mexico.

Even if it is isn't, there is little serious economic argument to make against immigration from Mexico, as the effect of illegal immigration is greater than the effect of a similar amount of legal immigration would be, since illegal immigrants have disincentives to seek to enforce legal labor protections and, therefore, are employable at cheaper costs than legal immigrants would be.

Thus, even if there is a significant impact from illegal immigration, it poses an argument only against high levels of illegal immigration -- it doesn't provide a basis to argue against immigration policy reform that serves to correct illegality by expanding legal immigration.

Everyone agrees that illegal immigration is a bad thing, and that the US would be better off if there were no undocumented aliens living in the US, and no persons illegally entering. The debate, though those on one side try to obscure this, is not between supporters and opponents of illegal immigration, but between different beliefs about the desirability of competing ideas about how to deal with the existing fact of illegal immigration to move us closer to the ideal state.

Liberals like Kevin Drum ignore the ILLEGAL part of immigration. If I could prove that drug dealers and murderers produce a modest benefit to the economy, I suppose liberals would support them too!

cultural backlash, and the fact that illegal immigrants are, err, illegal. the net economic impact of double parking in new york is probably nugatory, but that doesn't mean i don't pay my parking tickets.

Don't forget: Intolernace. Hate. Racial prejudices. Greed. Us against them.

Nads, I think the unreasonable belief is that unskilled labor is exempt from normal market forces and that increasing supply won't put downward pressure on wages. American sugar producers don't want competition from foreign sources because it would lower prices. Is this an unreasonable prejudice on their part?

Fake Al appears to be ignorant of the difference between a criminal offense and an action incurring a civil penalty. Who'da thunk it?

At the end of the NY times article Borjas suggests that other distributional problems for the high-school drop out are hidden and that immigration might still hurt them. No saying what they are, but I'd have more faith if he spent as much time working on how to deal with these problems as on why we should limit immigration. Also, it's important to keep in mind that the net possitive effect of immigration is partly due to the fact that immigrants are bared from most public benefits (almost all of them, in fact) for 5 years. This, or something like it, seems reasonable to me.

AL: If I could prove that drug dealers and murderers produce a modest benefit to the economy, I suppose liberals would support them too!

james: then there should be evidence to support that position, right?

evidence of a net positive impact overall, and minimal disruption targeted to a minority should force a questioning of the underlying assumption that immigration is subject to traditional supply/demand equations.

and it then naturally brings up the question of, if not economic, what is really bothering people about the invading brown hordes.

There are a lot of issues besides the wages of dropouts.

All I know is that numerous studies place the cost of illegal immigration at billions of dollars (the actual amount varies widely, depending on assumptions) both at the state and federal levels.

States have asked for billions in Federal reimbursement for these costs.

It's interesting that liberals think that hiring illegals is will encourage investment and job growth, but tax cuts for businesses won't.

Just wondering: If, as the article said, Ohio is free of illegal immigrants, who's doing the work in that state that Americans won't do?

Liberals like Kevin Drum ignore the ILLEGAL part of immigration. If I could prove that drug dealers and murderers produce a modest benefit to the economy, I suppose liberals would support them too!
Posted by: Al on April 16, 2006 at 5:42 PM

Conservatives like Al only focus on the illegal acts of others. Are you sure all your 'deductions' on this year's tax return are legal, Al? Do you always drive at, or below, the speed limit?

What about that felon Ann Coulter, who should be thrown in jail (and torured by Rummy) for voting in the wrong district?

tbrosz, he said mostly dead, not dead.

Twue wuv.

I bill the government about $300 every time Spanish-speaking illegal immigrants come to the emergency department for colds and other primary care problems that don't really require medical care. If you're not paying, there's no reason not to seek unnecessary care in the most expensive way. (If $300 sounds like a lot, remember that each visit to emergency room requires vital signs, med reconcilliation, and frequently tests, to be 100% sure that we are not missing something for which we could be sued.) Have these negative effects on the economy been taken into consideration in your calculations?

So because although unlimited illegal immigration may depress the wages of legal immigrants and native born HS dropouts, it allows increased investment so corporations can create even more jobs with abusive conditions, low pay, dangerous conditions, no legal protections. Fabulous! if you are upper level management in one of these corps. Not so fabulous for the rest of society.

How can anyone take this article seriously. It starts out by comparing the decrease in wages between drop outs in CA and OH. What BS. How can anyone take seriously an article that ignoress the fact that OH is in the rust belt. Better editors and NYT, please.

This could be a useful snapshot...or simply yet more how-to-lie-with-statistic's that represents much of what passes for economic science in humDrum land, the dopiest kingdom of them all.
I'm a high school dropout who gets a third of my income from welfare, a third from working the black seam and a final third from victimless crime. Thank you Liberal welfare state, thank you black economy and a huge thank you to the dickheads who still support all the failed prohibitions.
I make a very good living thank you very much and have no complaints. Apart maybe from the odd pseudo grumble at loopy fantasist's like Marxist and Austrian economics enthusiast's and preening political poodles like Kevin Drum. Actually though, to be honest, it's fun exposing their inane pretentions and pricking their puffed up baseless self importance.
A high school dropout can often run rings around a class of bourgeois managerial imbeciles who think they know-it-all.Better by far to be a high school drop out than a quintessential ' Kiss up -kick down' kinda guy.
The kinda guy Kevin is.

Bad Shift, in the ER of my former county an illegal immigrant was admitted who had been working on a roof in 100+ degree weather. He literally cooked his brain and internal organs. He will remain in a vegetative state and it's not the developer who will pay and doubtless the developer did not lose a minute of sleep over this guy's fate.

Professor Rat: Please. Tell us more about how smart you are! It doesn't sound self absorbed or insecure at all. Promise.

99 % of jobs that illegal immigrants do are subsidized jobs that do not provide living wages, any health benefits, etc. If the government enforce the requirements that all
“guest worker” jobs should pay living wages; most of those jobs will disappear due to
new technology and shift in habits of American consumers.
And the country will be much better off.

Nads, the prediction is that increasing the supply of unskilled labor will lower wages. The linked article says that wages for high school dropouts fell 17% in California and 31% in Ohio between 1980 and 2004. Looks like evidence in support of the prediction to me. The article does not really question that unskilled wages are hurt, it is just minimizing the magnitude of the effect. You could write a similar article downplaying global warming, just quibble about the data , quote a maverick climatologist or two and ignore future effects which are the real concern.

I like how it's always about the term "illegal" as if this administration and its supporters actually give a rat's behind about the laws they flout. The culture of corruption is so rampant in this country but it's always the brown people's fault. I don't think brown people had anything to do with Enron stealing those worker's pensions and 401K funds.

oooooooooooooooohhhhhh
ppppppuuuuuuuuuuuuuuuuuulllllllleeeeeeeeeeeeeezzzz

jumping from "gee, they keep changing their estimates about the impact on workers without High School Diplomas to -- "nothing to see here, move along" is a serious slight of hand.

I expect more from this site.

The notion that there are ANY jobs in America that Americans will not do is BULLSHIT!

Why do some talk out of one-side of their mouth, proclaiming this to be a SUPPLY problem because there aren't enough workers, blah blah blah blah...

And NEVER talkd about the DEMAND side -- a living wage that Americans could actually support families on.

Why do so many assume that corporations have the "right" to circumvent minimum wage and labor laws by bringing in illegal aliens?

Why do so many assert that every employer should have the right to hire somebody to do ANY job at ANY WAGE rate that they want to offer.

This post is really all based on a lie.

Every town has a place where day working immigrants, both legal and illegal, meet so as to be picked up for work.

What if out-of-work high school drop-outs were paid by someone to show up at these locations and try to get hired as day laborers?

It would certainly disprove the notion that these are jobs americans don't want. Or maybe it wouldn't.

I agree that there is no economic argument to be made. And, I do not agree with the cultural argument (in fact i would prefer a higher PERCENTAGE of our country to be immigrants) but what about environmental/space concerns? Pressure on our open lands? Implications for further sprawl? Why is this not talked about. I mean, have you seen parts of california, atlanta, north carolina, DC, etc. etc. lately? The sprawl goes on forever.

I agree that there is no economic argument to be made. And, I do not agree with the cultural argument (in fact i would prefer a higher PERCENTAGE of our country to be immigrants) but what about environmental/space concerns? Pressure on our open lands? Implications for further sprawl? Why is this not talked about. I mean, have you seen parts of california, atlanta, north carolina, DC, etc. etc. lately? The sprawl goes on forever.

The economic analysis is really quite simple and the effects that are being measured, reduced wage deflation and increased investment as a result of increased low cost labor supply, are completely in line with economic theory.

Let's look at an example. If an industry has to pay its workers $15/hour it may hire 100 workers. When the taxpayer is forced to subsidize the labor by 50% the cost to the employer becomes only $7.50/hr and this frees up capital to be invested in expanding production, which also creates more job opportunities where the empoyer can hire an additional 100 employees for $7.50/hr with the taxpayer subsidizing the remainder of the employee cost. This sounds like a winning formula that the economists have developed - ignore taxpayer subsidy in the economic analysis and we can subsidize our way to immense job growth and capital infrastructure expansion. You know, if only General Motors could pay its employees $2/hr and the taxpayer could pay the other $38/hr, they could expand their production and become major employers again. Why they could probably hire another 100,000 employees if they only have to pay them $2/hr. You know, why don't we go even further with this plan and actually pay employers to hire people and then the metrics would be even more fabulous.

To purposely leave out an economic variable, such as taxpayer subsidy, will dramatically skew the remaining variables.

On a more systemic level of analysis, what good is done by having industries, like let's say strawberry farming, taking place in the US when they require subsidized low cost labor in order to survive. These types of industries, when economically analyzed in a systemic frame, are actually a drag on the economy. The best solution is for them to relocate to Mexico or Brazil and operate without gov't subsidy for the low cost labor that they require.

The more liberal commentary I read on this topic the more frustrated I become and this may actually push me into the libertarian free-market open borders crowd. If no one wants to be mean to illegals and they want to open up the border, then if we completely abandon the social welfare state, then I can join Kevin Drum in not being concerned. Kill off taxpayer subsidy and let citizens and non-citizens rise and fall according to the market and then I won't really give a damn how many illegals are in our midst, for I won't have to be paying for them.

I'm with you Kevin.

The statement that there are "jobs Americans won't do" is to be expected coming from over-privileged, arrogant snobs like the bushies who have never had to do these types of jobs. It is a condescending, demeaning statement that disrepects the dignity of the people that do these jobs. If the bushies and the elites who think unlimited illegal work is great had had to do this type of work maybe they wouldn't be so damn condescending. All jobs should and the people who do them should be valued and given fair wages and conditions.

But what about the huge cost of hospitalization and medical treatment? What about the illegals who drive uninsured, thus raising costs to others?

Let's add that illegal immigrants disproportionately bring down the prices of goods that are disproportionately consumed by the poor.

I doubt that software costs are significantly impacted by illegal immigrants but food prices are.

Illegal immigrants bring down costs in the entire food supply chain from the farms where we raise aimals and vegetables to the businesses that pack and distribute them to the stores that sell them.

It would not surprise me if even high school drop outs are net beneficiaries of illegal immigration.

Actually determining that might depend on whether or not we assume that government transfer payments would increase to compensate for higher food costs if we eliminated illegal immigration.

Claiming that low wages for illegals raises investment is crazy. You would see more capital investment if wages for menial jobs were higher and it became economical to replace people by technology/machines. Borjas and Katz are just looking for a way to avoid the obvious. I'm with jbs on this one.

How long before you come out against the minimum wage, Kevin?

As soon as I see a serious proposal by Republicans to punish their corporate masters for hiring illegals, I will agree we have a serious debate taking place. Until that time, I see a Republican party desperate to stop the short-term bleeding for 2006, with only 3rd grade ideas (a big fence! send 12 million people out of the country!) to get the base riled up.

Probably, though, a "war on immigrants" would be a lot like the "war on drugs." Anyone who wants to convince me the former would be more successful than the latter is free to try.

Let's also note that the high costs imposed on services by illegal immigrants are caused by the way we handle immigration.

Illegal immigrants pay thousands of dollars to be smuggled into the US.

Say we changed the rules...

"Buy a plane ticket, deposit $x,000 with the INS as insurance, behavior bond, and ticket home if you're broke later, and go find a job."

Want to bet people wouldn't go for it?

And want to bet that having, say, $5,000 in an interest bearing account that they will get back in 5 years or when they leave the US if they keep their noses clean wouldn't be a powerful incentive to stop immigrants from even jay walking, never mind committing more serious crimes?

I consider myself a liberal democrat, but Kevin's argument is so narrowly focused it is ridiculous. There are the costs of medicine, schools, added traffic congestion, overcrowded neighborhoods, crime and the fact that illegal immigrants bring down average wages. Americans WILL do jobs illegals do, just not for as little... i.e. poverty wage where people live ten to a single bedroom apartment.

Kevin will have his way though I am sure and California will be overrun by Mexico. Hopefully, California won't end up being controlled by bribery and corruption, ala Mexico, but I doubt it.

California in 2060, should be blast.

No. One big mistake here looks to be the use of averages. When such a study says X has reduced the wages of soandso by 3.6%, they presumably mean an average over a large area or even the whole nation. But the effect in areas of high illegal immigration would likely be higher. If you are one of the affected persons in those areas, the damn average change being low is small comfort. (Same for "average income" increases and likewise spin from righties.) Of course there are other factors in play as well.

Kevin should have known better than to fall for yet another potentially BS argument using averages, and so should you.

test marker 51723

This sounds like utter BS to me. I know a little bit about economy and so far nobody has offered a convincing reason why a high supply of unskilled workers wouldn't result in pressure on wages as the theory predicts. Imho the explanations offered don't hold water:

Some companies only invested in the US because of the availability of unskilled workers - on the other hand, there are more unskilled workers im Mecixo and lower wages, plus the investion would be cheaper there! Even if this 'investment' claim would be true, wouldn't it be better to create those jobs in Mexico and thus reduce the pressure on mexicans to earn their money as illegal immigrants in the US?

There are not so many high school dropouts in the US - but this isn't about dropouts, this is about workers competing for jobs they are not skilled in. What about the masses of unemployed with criminal records? What about the elderly that got squeezed out of better paying jobs?

Higher-skilled workers could hire foreigners at low wages to mow their lawns and care for their children, freeing time for these workers to earn more - or to just hang around more in front of the TV. Besides, what about the high-skilled workers who won't get hired because others are doing overtime?

Statistics don't show a correlation between wages and the ammount of illegal immigrants in the states - and statistics don't say much about all those criminal enterprises who illegally pay workers less than the minimum wage, either.

Sorry, but it's totally surrealistic to argue that any reliable data on immigrant jobs, wages, and overall impact on the economy will be found in official statistics. The shadow economy that is dependent on the supply of illegal, 'blackmailable' workers isn't to be found in those numbers.

Only one statement is obviously true: There are US citizens that are profiting from the high numbers of illegal immigrants. But what isn't explained here is that it's the Mafia and other criminal employers.

Eli says:

Claiming that low wages for illegals raises investment is crazy. You would see more capital investment if wages for menial jobs were higher and it became economical to replace people by technology/machines.

Eli's right - if you reduce low wage labor you increase the proportion of capital vs. labor used in most enterprises. This, in turn, according to classic economic theory, should increase the return on capital and the proportion of the economy that goes to pay for capital vs. labor.

I don't see why anyone (other than the ultra-rich) should see that as a benefit.

On the other hand, if the US becomes more expensive we should also see more capital moving overseas to take advantage of lower foreign labor costs.

For example, I've moved a bunch of US capital to China to start up a software company here because labor costs are 10% - 20% of US costs.

BTW, there's no contradiction - in China one would expect labor intensive businesses and for capital to get a lower percentage of total returns but, especially for export businesses, for total returns to be higher so capital ends up with more.

That's exactly what you see. My customers are mostly garment factories. They employ thousands of workers, many of them doing things you would use a machine for in the US or wouldn't do at all (squads of people keeping lawns immaculate with no power machinery, skilled marker makers spending hours to improve fabric utilization on each design by a few percentage points instead of just using marker making software and accepting an extra 2 - 5% wastage).

Work like this in the US almost doesn't exist any more. What manufacturing is left is almost all high couture where high material costs and short runs make labor costs less important.

"illegal immigrants have disincentives to seek to enforce legal labor protections and, therefore, are employable at cheaper costs than legal immigrants would be."

"Thus, even if there is a significant impact from illegal immigration, it poses an argument only against high levels of illegal immigration -- it doesn't provide a basis to argue against immigration policy reform that serves to correct illegality by expanding legal immigration."

Good point, cmdicely! Much better than Kevin's second hand opinion. Also to be considered: Any total stopto illegal immigration without a legal alternative would result in a serious reduction of the money flow into Mexico and a higher rate of unemployment there. Do the US really want an unstable neighbor at their southern border?

My opinion is: Illegal immigration has to be rigorosly prevented in this times of terror. The border has to be better secured in order to keep terrorists out. The US should offer legal means of immigration instead, for a comparable (preferably slightly lower) number of workers. There has to be a possible path towards citizenship for those who want to stay. Plus the administration needs to do more to support the mexican economy and reduce the pressure on mexican workers to leave their country and their families.

"This, in turn, according to classic economic theory, should increase the return on capital and the proportion of the economy that goes to pay for capital vs. labor. I don't see why anyone (other than the ultra-rich) should see that as a benefit."

Hmm, wouldn't it be a benefit if the shares of capital in the hands of the middle and lower classes would be higher? But you (and the theory) are right and, according to german experts, this is the reason why Germany still can compete among leading industrial nations. Our wages are very high in comparison, but this forced the industry to invest in sophisticated, highly automated machinery that is among the best in the world. This raised productivity and enabled the companies to pay the higher wages. OK, our unemployment rate may be twice yours, but there are other reasons for that. We're still among the leading nations regarding the exports. Higher exports would be nice for the US balance of trade, too...

The hassles, problems, compromises and relentless pressures and dilution of content that goes on every day for the overworked teachers in my children's classrooms because 1/3 to half of the kids in their classes speak no English has me mad as hell and I am not up to taking it any more despite how I think myself a liberal on so many other issues except how the local Indian tribe dances for joy in giving us the finger as they gobble up the land around them to expand gambling and setting up businesses and pay no taxes but the nonIndian guy with his business does pay taxes to the hilt. Not to mention seeing the four and five kids in tow among the Mexican families. But not as bad as the Mormons!

"Not to mention seeing the four and five kids in tow among the Mexican families."

That's typical for parents without good provisions for old age. They rely on their children to support them - the more, the merrier. Btw, are illegal immigrants eligible for social security? What do you think?

When will La raza come out of the closet and change its name to Los racistas? I have never seen such a racist display in this nation, for over forty years, as I have seen in these “immigrant protests” in the past few weeks. Who would have the nerve to state that laws should not apply to them because of their race? The “we should not be deported because we are American Indians and Europeans took the Americas from us” is the biggest bunch of BS spoken in this nation since the KKK marched in the 1960’s

"The “we should not be deported because we are American Indians and Europeans took the Americas from us” is the biggest bunch of BS spoken in this nation since the KKK marched in the 1960’s"

Agreed. How many of those signs did you see among the masses? How many swastika tatoos will you find in an average US prison?

The “we should not be deported because we are American Indians and Europeans took the Americas from us” is the biggest bunch of BS spoken in this nation since the KKK marched in the 1960’s.

Why is it bullshit? It seems to me these people have a substantive moral claim.

Cultural backlash is another red herring. How about just culture?

Michel Tremblay, the great Quebec playwright, just this week gave up on Quebec sovereignty after 40 years because it is now all about economics only. Culture doesn't count in the debate.

Here, you have non-economists using economic arguments only, while culture is reduced to "cultural backlash". Wow. The growth of a huge minority can't be discussed other than in economic terms. No wonder there is the joke about the US: What is the difference between the US and yogurt? Culture.

Well, I guess that settles it- illegal immigration is good. So, since illegal immigration is a net benefit, why limit ourselves to the benefit that can be provided by Mexico? There are millions upon millions of Africans, Asians, and Europeans who would be happy to give us the same benefits. Why discriminate? Let 'em all in.

(Above is sarcasm, just in case it's not obvious.)

"It seems to me these people have a substantive moral claim."

I've got some problems with that. How substantive is the claim that your ancestors 400-500 years ago owned that land? My grandpa owned a house in a city that now belongs to Poland and still I don't protest in Warsaw to claim special rights....

Oh, btw, I think the claim on lands that belonged to ancestors 2000 years ago is rididulous, too...

"Here, you have non-economists using economic arguments only, while culture is reduced to "cultural backlash"."

From history lessons, I seem to remember the culture of 'a melting pot of nations'. What happened to that? That's so 20th century?

To word it deifferently: What 'culture' do you want to preserve? Maybe the culture of the beginning of the 20th century, when there were large parts of the US where german was the predominant language? Hehe!
Imho, there's one outstanding cultural achievement of the US and that's the drive for change.

TangoMan--

So you want to eliminate all government programs so that you don't have to pay for illegal immigrants' benefits?

Wow, I've never seen a better example of "cutting off your nose to spite your face" in my life!

And also, I'd really like for you to explain to me exactly how strawberry pickers in California are recepients of government subsidies whereas strawberry pickers in Brazil or Mexico would not be. Last time I checked, Brazil and Mexico also had agricultural subsidies, public schools, health clinics, etc. So unless you're talking about some other mysterious kind of "subsidy", I don't understand what you're getting at. Instead of pining for a mythical free-market paradise, you should be hoping that the nations of Latin America finally act like civilized places and get their government programs working in a proper and non-corrupt way.

Also, California happens to be the best climate for growing vegetables and fruits in the world, so there will always be high demand for agricultural workers in that particular place. Plants can't just be grown wherever 'the market' dictates. While it is true that certain farming areas in the US are kept going mainly through government subsidies (US sugar, anyone?) , this is certainly not the case with the Central Valley. This land would be profitable agro land with or without subsidy.

In the real world, unskilled African-Americans and a lot of young people are saying they can't get manual labor jobs in construction, roofing, and other building trades. In New Orleans, there are well documented reports of union crews being laid off by contractors who are hiring illegal aliens. I guess the victims in these cases will feel much better after they've read the study Kevin cites.

"US sugar, anyone?"

Yup, it's a joke today. But if a rising demand for ethanol fuel would lead to higher prices, maybe even US sugar canes would make sense.

"In New Orleans, there are well documented reports of union crews being laid off by contractors who are hiring illegal aliens. I guess the victims in these cases will feel much better after they've read the study Kevin cites."

Yup! But don't forget, everything will look fine in the statistics!

Over 50% of black men in their 20’s are jobless, and 72% of black men in their 20’s who are high school drop-outs are jobless.

When you don't have a job any more, I guess the impact to your wages due to illegal immigrants is small. If employers could not turn to more pliable and low-wage illegal workers, they may have had to dig deeper into the reserves of non-working, able-bodied American. Instead, they can just ignore them.

Source:
http://select.nytimes.com/gst/abstract.html?res=F20D10FA34550C738EDDAA0894DE404482

Gray says:

Hmm, wouldn't it be a benefit if the shares of capital in the hands of the middle and lower classes would be higher? But you (and the theory) are right and, according to german experts, this is the reason why Germany still can compete among leading industrial nations. Our wages are very high in comparison, but this forced the industry to invest in sophisticated, highly automated machinery that is among the best in the world. This raised productivity and enabled the companies to pay the higher wages. OK, our unemployment rate may be twice yours, but there are other reasons for that. We're still among the leading nations regarding the exports. Higher exports would be nice for the US balance of trade, too...

This is a really great example of how people can use pervert economics for political purposes.

What do you mean when you say that Germany is still competing? As you point out, your unemployment is twice ours and new factories in Germany are few and far between.

If machines are really a good substitute for cheap labor then people would use them even if cheap labor was available. Fact is, they're not as good. To get the same result in Germany you need to invest more capital than you do in countries like Poland or China.

That means that unless there are good reasons for being in Germany (ie. proximity to suppliers or customers or a need for skills that don't exist in other countries) capital will move to other countries and Germany today faces an inexorable decline.

Moreover, those advantages I mentioned are pretty fleeting.

Look at Hong Kong and China.

Twenty years ago Hong Kong factories wanted to import Chinese workers. It was politically impossible and they were told to spend the money for Hong Kong people. Instead they opened up factories on the mainland but kept their back offices in HK.

Once they got used to China they started moving their back offices to China but keeping front office staff - customer facing people - in HK.

But as more and more factories moved to China the customers started visiting China as well - they wanted to see the factories where their good were being made - so the front offices moved to China as well.

One of my customers has migrated over the last 10 years from having its factories in China but all back office and front office staff in HK to having a show room and one receptionist in HK while all other staff are in China and come to HK on an as needed basis. They still have HK people on payroll but only about 15, down from over 200.

That's Germany's future too.

Gray--

Well, I'd imagine they'd be more likely to get their ethanol from corn like they do now. Is there talk of a major push for sugar-cane ethanol?

Of course, corn ethanol don't make too much sense from an environmental or energy policy standpoint, considering how much petroleum goes into producing a bushel of our tasty yellow friend. (mainly through fertilizer) Maybe sugar ethanol actually would be better...

This piece was a bit short on specifics. Why is it that employers decided to increase investments in capital equipment because more workers were standing outside the gate? And if the Mexican workers weren't here the jobs would probably be done overseas? Its probably my own particular industrial bias, construction, but there are a lot of jobs done by Mexican and Central American workers that simply could not be done by Indians, Chinese, etc., pouring concrete, masonry, landscaping, agricultural work, etc.

One of the (R) right wing arguements is that undocumented immigrants 'bid down' the wages for lower level jobs. The solution to that problem is simple; raise the minimum wage. Any Capitalist worried about immigration lowering wages already has a tool, minimum wage laws. Unfortunately, most of the right-wing (R) are tools.

Kevin Drum:

Are you a serious commentator, or just a hack?

Wage levels are not the only factor in an economic argument. Others include things like all those billions of dollars the LAUSD is spending to build schools. A large part of their students are illegal aliens or the children of same.

On that topic, an extremely disturbing percentage of CA high school students are dropping out. Maybe you could hire Dan Walters to help you think about this issue and figure out not only to what extent massive illegal immigration is involved, but the economic costs of the fallout from that.

Here's a very partial list of some of the issues involved with illegal immigration:

* increased corruption in the U.S. as companies that profit from illegal immigration donate to politicians who look the other way

* increased numbers of low-wage workers coming into a high cost of living country (resulting in people living in garages or even tents in backyards)

* lowered wages for our own low-wage workers, many of whom have simply stopped looking for work

* increased chance of worker abuse and workplace injuries and deaths (much higher for illegal aliens)

* entrenching the corrupt Mexican government rather than forcing them to reform

* assisting the government of Mexico meddling in our internal politics

* assisting attempts to weaken U.S. citizenship and sovereignty

* foreign citizens marching in our streets demanding rights to which they aren't entitled

* among other diseases, drug-resistant tuberculosis

There's more, but if Drum expects anyone to take him seriously on this issue he needs to start doing a lot of research.

-- Illegal immigration news

>>>You know, if only General Motors could pay its employees $2/hr and the taxpayer could pay the other $38/hr, they could expand their production and become major employers again. Why they could probably hire another 100,000 employees if they only have to pay them $2/hr.

"What do you mean when you say that Germany is still competing? As you point out, your unemployment is twice ours and new factories in Germany are few and far between."

I only see a widening gap in foreign trade balances: http://www.census.gov/foreign-trade/balance/c4280.html
And maybe it escaped your attention, but we still have a manufacturing sector that's woth it's name! That there are problems in distributing the national income in a social equitably way doesn't mean that the nation per se isn't doing well.
As for capital vs. labor, one of the side effects of the use of more expensive machinery is that it very often raises quality, too. Plus you need higher skilled workers to handle it. So this isn't about getting the same result, this is about getting a higher quality result! Of course, no nation can beat the 'el cheapos'. Imho the only solution for western industrial nations under the threat of globalisation is to divert into products that require a higher qualified workforce. Look at your own numbers, the wages in China are at max. 20% US standard. Do you believe US wages could be lowered to a point that would be comparable to this? No way!

"You know, if only General Motors could pay its employees $2/hr and the taxpayer could pay the other $38/hr, they could expand their production and become major employers again. Why they could probably hire another 100,000 employees if they only have to pay them $2/hr."

Tangoman - exactly! This has been my point for the last year on this issue. Why is it good for some industries to benefit from the illegal alien subsidy and not others? Would losing part of the US agricultural industry be worse than losing the US automobile industry, electronics industry, steel, etc? I think not.

Listening and reading liberals opine on economic issues is more entertaining than hearing Bush explain the intricacies of foreign policy. They should stick to what they do best - calling us "racists" for supporting people who commit ongoing misdemeanors.

Michael Friedman--

I'm not sure about what you're saying. Obviously, at some point wages in China are going to have to go up. They are kept artificially low by the government, but this isn't going to work in the long run. Even Hu himself was on TV today saying that the current course is unsubstainable. And what was he proposing? Better social programs, environmental responsibility, etc. Was it just rhetoric? Probably. But the fact that he even needs to PRETEND about such things is a sign that the strange hybrid monster that is the Chinese government is starting to wake up to their true position.

Also, your position as a manufacturer may be giving a kind of bias to your views. But the economies of Western Europe and the US are no longer based on manufacturing, which can be easily moved. They are based on services which are much more rooted in place and in local networks of trust. Your doctor or lawyer is not going to move to Xi'an. There's only so much you can do over the phone, which explains why most Americans and Europeans still have jobs despite the fact that there are two billion Indians and Chinese that could do their jobs much cheaper.

Germany has a higher unemployment rate than the US partly because:

A) it measures its unemployment rate in a very different way
B) the German central bank has an obsession with tight money, much more so even than the US Federal Reserve.
C) A lot of Germans would, for cultural reasons I suppose, prefer to remain on unemployment instead of taking shitty jobs quickly like our unfortunates do here. Unemployment there ain't as bad as unemployment here.
D) Unemployment benefits last longer in Germany, so naturally people stay unemployed longer. You can say that this is an "inefficiency" but most Germans would probably disagree with you and say that it in intentional result of a conscious policy.

junglemutt--

Wait, what exactly is the "illegal alien subsidy"? I'm not trying to be snarky (yet). I just don't know what you're talking about. Is it just the fact that the government is paying for schools and health clinics for illegal aliens or do you have some kind of more direct subsidy that you're thinking of?

"Probably, though, a "war on immigrants" would be a lot like the "war on drugs." Anyone who wants to convince me the former would be more successful than the latter is free to try."

GoVols -
Apparently you forgot TITLE VII--EMPLOYMENT ELIGIBILITY VERIFICATION of HR 4437?
http://www.govtrack.us/congress/billtext.xpd?bill=h109-4437

Does this convince you that the House Reps. want to "punish their corporate masters"?

Last week The Economist had an article about an economic study that showed a similar minimal impact immigrants had on lowering wages and on the economy as a whole (a positive). But try using it as an argument. The Americans I talk to socially, well educated middle class suburbanites, believe the media hype that our emergency rooms are overrun with migrants from Mexico, our public schools are filled with troublesome non-English speakers, and that all of those workers they see all around them toiling from dawn to dusk are not paying any taxes.

Last year at Easter dinner it was Teri Schiavo dominating the conversation. Today's dinner it was immigration. Despite scientific evidence and personal history, my mother and her husband are both children of immigrants, they swallow whole the bunkum that Latin American immigrants are not assimilating faster than their parents or are as hard working. They were not much interested in the war of 1848 either, but they sure knew Jesus died for their sins.

Good points, kokblok, thx. Nevertheless, unemployment IS a huge problem here and a high burden on the administrations budget. Imho, one reason for the missing jobs is the low demand the customers generate on our national market. The US countless times demanded apropriate measures to counter this, to no avail. Under the Kohl and Schröder administrations, the people who really would wish to spend more money, the lower and middle classes, had to bear additional burdens while the rich got some nice tac deductions, especially after the fall of the wall. Sounds familiar? Dunno how this should have resulted in a stimulation of the market. We seem to have some voodoo economists in charge here, too.

kokblok-

Schools, health care, only withdrawing the FICA tax in most cases, etc. are just the beginning of the subsidy. The bulk of the subsidy is the fact that the agricultural industry is permitted to pay less than the going wage for labor. If we did this for every industry operating here, we'd qualify for the EU.

junglemutt--
I don't think most opponents of illegal immigration are "racists". Nor do I think that our economy would suffer much if we were somehow able to close off our border effectively.
And I don't think that closing the border would be a humanitarian disaster. Mexico ain't that horrible a place to live. No one is starving and they got some good infrastructure down there. I'm tired of people bad-mouthing Mexico like it's the fucking Congo or something.

So, employment verification--fine. The wall is just stupid and, if you have a proper verification system, redundant.

My question is: what do you propose to do with the millions of established illegals that are already in the country? Your answer to this question plays a large role in determining whether I think you're a raving lunatic or a sharp fellow.

But my broader point is that I don't really think immigration has strong NEGATIVE effects, either. If you're really worried about downward wage pressure, how about cutting our birth rate by a little bit? A high birth rate depresses wages, after all. Or why not work on cutting our average life expectancy? The sooner folks die, the less wage pressure on the rest of us!

"If we did this for every industry operating here, we'd qualify for the EU."

Thx for pointing this out. Of course this is some kind of hidden subsidies.

"Do the US really want an unstable neighbor at their southern border?"

I'm not able to decipher if you're writing this with a straight face?

Please tell me again, when was Mexico stable?

junglemutt--

But that is not a "subsidy", at least in any normal economic sense. What makes you think that the "market rate" is above the "going rate" for agricultural labor? Isn't it a darling argument of the right wing that the minimum wage itself creates this situation by not allowing the "free market" to reach equilibrium at the "proper" wage?

I fail to see a "subsidy" here. Now I'm all in favor of the minimum wage and I think dismantling it to stop illegal immigration in a few industries would be a monumental throwing-the-baby-out-with-the-bathwater blunder, but as a man of the right surely you can see that the lack of enforcement of a minimum wage provision is not the same thing as a subsidy.

Furthermore, most illegals work under fake documents in tax-paying jobs well above the minimum wage. Surely, these employers aren't benefitting from any "subsidy".

sorry, that second sentence should read: "What makes you think the wages paid to illegal agro workers is above the "going rate" for agro labor"?

"The wall is just stupid and, if you have a proper verification system, redundant."

Stopping immigration by erecting a wall would create a dangerous situation south of the border. So illegal immigration has to be replaced by legal means to work in the US, the current green card program isn't enough.
But still, secure borders are needed to prevent terrorist infiltration!

kokblok,

The illegal immigrant subsidy to which people are referring is really a subsidy to low educated immigrants that was documented by two reports from the National Research Council back in '96 and '98. Immigrants who are H.S. dropouts end up costing taxpayers $89,000 more than the economic value they produce over their lifetimes. Immigrants who are H.S. graduates end up costing us $31,000. Those who have some college education, but not necessarily graduates, end up contributing $105,000 over their lifetimes to the American economy.

If you think about it for a moment it really is intuitive. We live in the world's most advanced economy and it costs quite a bit to live here, to pay for education, to pay for healthcare, etc. How much economic value does the average person with only a 6th grade education produce and how much do we need to subsidize them?

What happens is when 60% of illegals have no more than a 6th grade education, the jobs that they do are limited and the value they create is less than what they consume, therefore the employers who hire them benefit by off-loading costs onto society at large. If the employee had to pay, via their earnings, for what they consume in public services, they couldn't, and then the employer would have to either raise their wage or mechanize or locate to a jurisdiction with a lower cost of living.

You were questioning my earlier comment about social services. Here's what I mean - what we're doing is importing a class of people who are very dependent on social services and these social services have to be funded. If liberals like the social welfare state then they need to recognize that open borders is a sure route to killing social welfare programs because you can't keep adding net tax recipients to a system while holding net tax contributors constant. So, it becomes a choice of one or the other, and if liberals want to be "nice guys" by ignoring economic reality and welcoming the under-educated hordes then why should guys like me fight you. I'm a net tax contributor, by a long shot, so if these illegals don't become a burden to me then that removes one of my main objections to open borders. If liberals don't care about instituting a universal health care program to benefit American citizens and would rather have open borders, then all citizens and illegals who can't pay for medical care can suffer together. I'd rather focus my allegiance to the welfare of my fellow citizens than on illegals and I can live with a social welfare system so long as the floodgates are closed and the bottom of the pyramid, those who are net tax recipients, doesn't keep expanding.

"Furthermore, most illegals work under fake documents in tax-paying jobs well above the minimum wage."
I've never understood how this may work. If you are employed under a falsified social security number, federal agents should be questioning your boss after the first ss payment made the alarm bells at the administration ring. If you use a correct ss number form another guy, double payments incoming at the ss administration should trigger the same response. How do they calculate the benefits if they don't keep track of the numbers???

TangoMan--

I still don't really see this as a "subsidy", except in a most roundabout way. If that's a subsidy, then all low-wage employers are in effect given subsidies, because all low-wage employers employ high school dropouts and graduates. It makes no difference whether they're "native" or not. Thus I fail to see how those employers who hire immigrants are the recepients of any specific "subsidy".

"My question is: what do you propose to do with the millions of established illegals that are already in the country? Your answer to this question plays a large role in determining whether I think you're a raving lunatic or a sharp fellow."

Really now, you shouldn't base my sanity on only this issue. hahaha

No, seriously, here's my (perfect) solution.....The illegals came here for jobs, correct? That is the key to the solution.

We don't need any additional laws, we don't need HR 4437 or any of the McKennedy, Spectre, Frist bills. We don't even need to invest any money in bolstering the SSA's database.

We already have everything in place. And we only need to do one this...Give employers one year to clear their payrolls of illegal aliens. Most small companies can do this with one telephone call to the SSA. If you provide the SSA with the SSN's&names of your employees, they can tell you which numbers and names don't match their already existing database. The employer will dismiss their illegal laborers, all other employers will do likewise, and the illegal labor market will be virtually nonexistent. After a several month period of unsuccessful job hunting, most illegal aliens will realize that job prospects are futile and will return home. This will solve 75% of the problem.

Nobody needs to be "draconianly" deported, no wall is needed, companies don't even need to be fined - IF THEY COMPLY. If they don't, then ACTUALLY punish them. Oh, and many in lower-class America gets a resultant raise! Win, win, win - all the way around. Except we pay 10% more for stawberries & lettuce, hotel rooms, dining-out, and for a mowed lawn.

Now, is that reasonable?

Gray--
There are no double payments because they choose SS numbers of dead guys or something like that.

It does seem like it wouldn't work that well, but that just shows how disorganized our government can be.

"Immigrants who are H.S. dropouts end up costing taxpayers $89,000 more than the economic value they produce over their lifetimes. Immigrants who are H.S. graduates end up costing us $31,000."

Hmm, so how much do US dropouts and US graduates cost? If people are working all the time, how can it be they create a negative value? Where's the catch?

If the economy benefits so much from low skill workers why do we continue to spend so much money educating native born Americans? Think of the economic boom we could have if we shut down publicly funded high schools and colleges to increase our homegrown pool of unskilled labor.

junglemutt--

Yes it's reasonable, if you want an army of 12 million homeless unemployed immigrants marching on your town, massive economic disruption, an even larger underground economy, blood in the streets, etc, etc, etc...

Sorry, they aren't just going to quietly slink back to Mexico. Most of these people have been here for years, are fixtures of the local community, etc...

Why not just let 'em stay and then say "No More"? Surely we can live with the current level, and if that SS verification scheme actually works, then we wouldn't have musch to worry about for the future...

There now, that's better than blood in the streets, now isn't it?

If that's a subsidy, then all low-wage employers are in effect given subsidies,

They are, but the difference is that they're citizens and we have little choice but to fund them. There's no need to bring in millions more who need this funding, especially when our workforce participation rates are dropping, and we've seen a 20% increase in Social Security Disability recipients from 2000 to 2004. That's a huge increase and it's likely that there are a number of discouraged workers in the mix.

"If that's a subsidy, then all low-wage employers are in effect given subsidies, because all low-wage employers employ high school dropouts and graduates."

Imho the problem only arrises if the employers pay less than the worker would need to afford the essentials of living for himself and his family. In these cases, the society (state, nation) has to close the gap. Check the WalMart example!

Hmm, so how much do US dropouts and US graduates cost? If people are working all the time, how can it be they create a negative value? Where's the catch?

US citizens cost even more because they qualify for a whole lot more of social programs. Think about this though - what are the future obligations if we add 12 million illegals to the citizen roster? Most are requiring subsidy as it stands now, so what happens when the qualify fully for more generous social benefits.

The social welfare state will become less sustainable, but if liberals are making the choice between universal health care and being nice to illegals, then they've got no one but themselves to blame when the system becomes unsustainble.

Carter--

The "economy" may indeed benefit from low-wage workers. But, no one wants to actually BE the low-wage worker. That's why voters push for better education, etc. So that that OTHER guy's kid can make money for THEIR kid!

"There are no double payments because they choose SS numbers of dead guys or something like that.

It does seem like it wouldn't work that well, but that just shows how disorganized our government can be."

Here's the way it works - the illegal buys a fictitious SS card or simply provides his employer with any "made-up" SSN. The employer sends that info. into the SSA. After a few weeks, the SSA sends a written notice to the employer that the name & number don't match. They employer takes that notice and tosses it in the garbage. The federal govt., which previously would send the INS (currently ICE) to inspect blatant violating companies, also does nothing, because we're talking about the Bush Admin. - BIG BUSINESS rules!

You see, almost all employers already know who their illegal employees are. They choose to do nothing about it, because currently nothing will happen to them if they don't. This is nothing more than a hoax on the American public, which after all, is quite naive about the entire process, as are most radio and TV commentators as well.

junglemutt--

I think that's a bit of an exaggeration. Obviously, some companies are punished for hiring illegals. Not a huge number maybe, but it does happen fairly often...

"They are, but the difference is that they're citizens and we have little choice but to fund them."

Huh, Tangoman, the society has no choice but to fund the EMPLOYERS? Now that's VERY rightwing. Or are you suggesting that it's normal that a hard working guy who has the disadvantage of no special qualification can't even afford his own healthcare in the US of 2006? What do you propose him to do? Steal a rope and hang himself? :-/

Tango, there are some awful flaws in your logic. US dropouts and graduates cost even more? So who's paying for this, the rich? If this is true, don't you think that this shows that there's something wrong with the wages? Even during the ice-age, a hard working man used to be able to earn his own living, and I've heard that the vast majority of those guys never saw a school...

Again, why don't those scoungers just commit suicide out of shame. Obviously, nobody needs them.

kokblok,

Obviously I wasn't arguing that we need to be giving US employers subsidies. I misread the comment to which I was replying and I was referring to employees.

Kokblock,

I beg to differ. Remember these aren't "criminals", they only came here for jobs, right? And most of them came here in the last 10 years. These aren't people who would riot, they're just like you or me, except they didn't obey our immigration law, in fact they broke 3 federal laws by working here illegally.

Also, they didn't come here because they were unemployed, they came here because they were under-employed. They knew they could triple or quadruple their Mexican/Latin American salaries.

Also, only approx. 60% are from Mexico, a large number are from Central and South America. ie. approx. 400,000 are Peruvian nationals. Trust me, they will go back to Peru and Mexico, etc.

There are literally 4 billion people in the world that will come here legally, the problem is that not all are qualified, and if we enforce our existing laws - NONE OF THE CURRENT ILLEGALS ARE QUALIFIED TO BE HERE EITHER.

Hundreds of thousands of law-abiding foreign nationals already paid their permanent resident visa costs and are just waiting for the US Embassy to call them. Let's reward them, they followed the rules - That is the American way!

junglemutt--

And by the way, I don't really see how this is going to be enforced retroactively. The backlog is enormous. I work for the government myself and I know very well that such a huge enforcement effort is not going to be logistically possible.

We're talking about an incredibly labor-intensive process of getting individual employers into local and state courts. The fees alone would be staggering, as would the added manpower neccesary to do the job. Do you have any idea how many full-time employees the Department of Justice or INS have currently? They would have to triple or quadruple their staff, at least.
I suspect one reason why serious enforcement hasn't been a priority is that no one wants to pay for it.

In our legal system, cases generally have to come up by individuals harmed by the illegal action. They bring violations to court and then judges decide on individual cases. This is how most minimum-wage violations get discovered. There ain't no government investigator working on this stuff---they can hardly afford to go after the murderers! What you are proposing is a massive federal program unlike anything we have ever seen before.

By the way, if everyone knows who's illegal, why aren't there more cases of US citizens ratting out companies that hire illegals? Anyone could do it--just call up the INS hotline. If illegal immigration really were so horrible, don't you think all those aggrieved natives would be on the phone ratting out their co-workers? Or is it only "theoretical" illegals they're opposed to? There is obviously massive collusion going on, between employer, illegal employees, other employees, customers, etc.

"I think that's a bit of an exaggeration. Obviously, some companies are punished for hiring illegals. Not a huge number maybe, but it does happen fairly often..."

Four (4) were fined in 2004!! In the entire US of A! Seriously - I work with DOJ.

Name is Gray, but ok. Still, you should think about if it's healthy for a society to allow wages that result in a vast number of peole that have to be subsidies by society. Why take the money form the rich in form of taces to give ti to the needy, when you could raise the wages of the poor, thus reduce the income of the rich but in return tax them less? Maybe I'm a dreamer, but this sounds like being more fair to me...

oops, sorry for that load of typos :(

US dropouts and graduates cost even more? So who's paying for this, the rich? If this is true, don't you think that this shows that there's something wrong with the wages?

Why do you think we have a $45 trillion unfunded liability just for medicare? This at a time when our entire GDP is $11 trillion.

Wages can only go up to the level where the employee is generating a surplus value for the employer. No employer is going to pay an employee $12/hr when a machine can do the job for $10/hr. Now, rather than letting labor market forces create labor supply shortages and thus raise the wage level to a point closer to the labor substitution point we're keeping the labor market generously supplied. If you look at the national data, you see that the capital has been increasing its share of national wealth and labor has been losing.

There is room for wages to rise, bounded of course by the productivity of the worker. When wages rise then the employee is better able to fund their own expenditures and rely less on the public.

"Four (4) were fined in 2004!! In the entire US of A! Seriously - I work with DOJ."

Unbelievable. How many agents work in investigating these crimes, two or three?

junglemutt--

That is just delusional. Most of these people haven't lived in Mexico or wherever for many years. Most of them have gotten married, quite often to legal US citizens. A large proportion are parents of children born in the US (who are therefore US citizens and may not even still have citizenship of their heritage country). Most of them are deeply enmeshed in the local societies in which they live.

Yes, they are "law-abiding". But there is only so much one can take.

I'd say that being forced to leave your child in another country would cause most people to snap. And it won't just be "illegals"...it will be all those legal friends and families of illegals. You know, all those hundreds of thousands of people that were marching in the street? Yeah, those guys.

Sorry, mass deportation ain't gonna happen. Ever. Have any better ideas?

We're talking about an incredibly labor-intensive process of getting individual employers into local