MIGRATION-US:
The Myth of Low-Wage Warfare
Analysis by Peter Costantini*

SEATTLE, Washington,  (IPS) - How could it be that an influx of less-educated workers from poor countries would not significantly harm low-income U.S. workers?

If the labour market were a zero-sum game, there might be fierce competition between them. But experts say other factors compensate for increases in the supply of low-wage labour and soften its effects.

"American labour markets appear to be rather segmented," according to Douglas Massey, co-director of the Mexican Migration Project at Princeton University. "There are certain sectors where foreigners enter and they complement Americans in production and don't really have any displacement or wage effects."

Massey pointed to agriculture as the clearest example of this segmentation. There have been few white farmworkers since the 1930s, he said. To attract them, employers would have to raise wages considerably. But if they did this, the produce would end up being imported from abroad because that would be cheaper, or farmers would find it economical to mechanise more jobs.

Although competition may exist in some areas between immigrants and native workers, its main impact falls on a declining number of U.S. workers. Among all immigrants, the proportion who did not finish high school is about 38 percent, according to the 2000 U.S. Census. For illegal immigrants, the figure is closer to two-thirds. Of the U.S.-born workforce, the proportion of high-school dropouts is much smaller, under 15 percent, and in urban areas it has fallen by more than a quarter over the past two decades.

Low-wage immigrant workers may foster economic growth in the areas and industries where they work.

When firms profit from the cheap labour of immigrants, they sometimes respond by reinvesting that money in expanding their production. When they do, this increased capital investment can create new jobs.

Angelo Amador, director of Immigration Policy at the U.S. Chamber of Commerce, pointed to the example of meat-packing in Nebraska. "The factories were closing and people were moving, there was more unemployment and the wages were going down," he said in an interview.

"Once they had this influx of immigrants to work at these factories, some of the closed plants reopened and the economy around the area actually picked up. And they found that the wages even went up."

There is a potential multiplier effect, too: when an industry like meat-packing expands, it can create jobs in firms that provide equipment, supplies and services to the industry.

In areas with booming economies, when workers are needed to fill jobs, immigrant workers can fill gaps. Still, Amador said, there should be some guarantees that U.S. citizens will be able to compete for these newly created jobs.

Certain kinds of jobs would likely have been moved out of the country had immigrants not taken them at lower wages here. This is particularly true in agriculture and manufacturing, where U.S. businesses are competing with Mexico and other developing countries.

By contrast, firms that employ immigrants may become more competitive in global markets. This can enable them to expand rather than shipping the jobs overseas. "People focus on immigration," said Massey, "but it's a globalised economy within which all factors of production except land are moving."

In the U.S., wages for less-educated, lower-income workers have been mostly stagnant over the past three decades. If immigration is not a major cause of lower wages and job losses, what are the more significant pressures?

A ubiquitous factor has been the automation and reorganisation of work, which has relentlessly reduced the demand for low-skilled workers in many U.S. industries.

In manufacturing, runaway shops, outsourcing and sub-contracting of some functions have eliminated many manual jobs with relatively good pay and benefits over the past few decades.

But very little of this job loss can be attributed to competition from immigrants, who work mostly in other sectors. The loss of such jobs has mainly been caused by the inability of U.S. manufacturing firms to compete with foreign ones and by movement of their operations offshore.

New York Times columnist Nicholas Kristof describes a neighbour he knew in his childhood who earned 26 dollars an hour in a union job in 1971. For the last decade, he says, the neighbour has had to work as a janitor for not much more than the minimum wage..

The long-term decline of labour unions in the U.S., often accelerated by union-busting, has also helped depress wages on the lower end of the scale. U.S. labour laws that favour business and an anti-union political environment have increased the difficulty of union organising among unskilled workers, native and immigrant.

At the same time, the long-term decline in the inflation-adjusted value of the minimum wage has moved the floor of the labour market downward.

Ruth Milkman, a sociologist at the University of California at Los Angeles, has found a distinctive pattern in some industries, including construction and building services, now dominated by immigrants in Los Angeles. These jobs had once been unionised, offered relatively good wages and benefits, and were held overwhelmingly by U.S.-born workers.

Starting in the late 1970s, she told IPS, there was "a very direct employer effort to downgrade them, mainly through destroying unionism". As the jobs became less desirable, native-born workers often left voluntarily for the greener pastures offered by other sectors of a robust local economy. Only after that process did employers turn to immigrants.

"So there really isn't any kind of story of competition there, it's an ethnic succession story," Milkman asserts. "Wages do go down, but I don't think it has much to do with immigration. Immigration is a result rather than a cause."

For African-Americans, some particular factors do far more damage to their economic prospects than competition from immigrants, argues labour economist David Card. A criminal justice system that incarcerates large numbers of young black men, many for minor drug offences, leaves them with bleak job prospects when they are released. Poverty-related medical issues such as diabetes and congestive heart failure are exacerbated by lack of access to medical care because many have no health insurance.

Many forces have conspired to reduce wages and job opportunities for those at the bottom of the labour force. At the same time, many immigrants, legal and illegal, have entered the U.S. economy over the past 15 years.

Not surprisingly, a study by Stephen Camarota of the Washington-based Centre for Immigration Studies found that employment of low-wage immigrants rose while that of low-wage native workers fell by more than twice as much from 2000 to 2005.

But according to Harry J. Holzer, former chief economist at the U.S. Department of Labour, these findings "do not prove that the former development caused the latter." Rather than competition from immigrants, Holzer attributes the employment situation of native-born U.S. citizens primarily to "the underlying weakness of the U.S. labour market".

As Holzer testified before Congress, "Of course, some less-educated Americans have been hurt by immigration, and more importantly by many other forces in the U.S. labour market -- such as new technologies, foreign trade, the diminishing presence of unions, and the decline in the statutory levels of the minimum wage."

Rather than trying to curb immigration, Holzer suggested, low-wage workers would benefit more from improving education and training, increasing the minimum wage, making it easier to organise unions, and providing more widespread child care, parental leave and health insurance.

The U.S. could also take a lesson from the integration of Spain, Portugal and other poorer countries into the European Union, suggests Carlos Gil, emeritus professor of history at the University of Washington.

"The Europeans created a social fund for worker-retraining programmes after they opened their national borders and created one single market. Why can't we look for similar approaches?"

*This article is the second of a two-part series on the impact of migration on the U.S. labour market.