April 28, 2006

  • Friday, April 28, 2006
    Interesting angle on the immigration debate.  Low skill US born
    workers displaced by immigrants might migrate to low immigrant areas
    like here in Minneapolis   Especially, in North Minneapolis,
    the “bad” area of town  there seems to be a large increase in
    crime, especially murder and arson.  We might reach a point again,
    as in the mid 1990′s when Minneapolis “aka Murderapolis” had a higher
    murder rate than New York City.  Minnesota has among the highest
    welfare benifits in the US with no residency requirement.  The
    people in the poorer neighborhoods, most of whom are just poor, not
    criminals take the brunt of this crime.  Our “white progressive
    do-gooders” care not a wit about these law abiding low income
    people.  Here is the link and story text.

    http://vdare.com/rubenstein/060427_nd.htm

    VDARE.COM – http://vdare.com/rubenstein/060427_nd.htm

    April 27, 2006

    National Data, By
    Edwin S. Rubenstein

    WSJ Edit Page
    Contradicts Self on Immigration, Minimum Wage

    When
    supply goes up,

    price goes down.     Few economic principles are

    less controversial.     Unless, that is, we’re
    discussing the economics of immigration.

    Thus, in
    a recent study of local labor markets, U.C. economist
    David Card claimed to find that

    low-skilled foreigners     have had little or no impact
    on native wages.

    As
    usual, this result was immediately seized upon and
    amplified by the

    immigration enthusiasts’ MSM echo chamber,     for
    example the Wall Street Journal Editorial Page. [
    The
    Impact of Immigration    ,     By Pia Orrenius, April
    25, 2006]. And, as usual, it’s wrong.

    Card
    focused on local labor market trends. He highlighted the
    dramatic rise in

    immigrant labor force     shares between 1980 and 2000
    for selected cities, as follows:
    (Table 1)



     

    1980

    2000



    bullet New York:


    		23.2 percent 41.8 percent



    bullet Los Angeles:


    		25.3 percent 47.8 percent



    bullet Miami:


    		41.1 percent 61.2 percent



    bullet Houston: 


    		9.4 percent  26.0 percent



    bullet San
    Francisco:


    		17.0 percent 36.4 percent



    bullet All cities:


    		9.5 percent 18.0 percent


    Card
    then goes on to measure the relationship between a
    locality’s immigrant worker share and the relative wages
    of

    native dropouts     in that locality. His conclusion:


    “Looking across major cities,
    differential immigrant inflows are strongly correlated
    with the relative supply of high school dropouts.
    Nevertheless, data from the 2000 Census shows that
    relative wages of native dropouts are uncorrelated with
    the relative supply of less educated workers, as they
    were in earlier years….Overall, evidence that immigrants
    have harmed the opportunities of less educated natives
    is scant.”     [David
    Card,

    “Is the New Immigration Really So Bad?”
    Department of Economics, UC Berkeley, January 2005.] 

    (Number
    nerd note: the correlation coefficient—r-squared—between
    immigration and the relative wages of native dropouts
    was a positive but miniscule 0.001)

    In fact,
    the “no correlation” result probably says more
    about Card’s research methodology than economic reality.
     

    We are a
    mobile society. Flows of capital and labor among U.S.
    cities distribute the impact of immigration

    throughout the country.

    But if
    immigrants gravitate to cities with above-average wage
    growth, there would be appear to be a positive
    correlation between immigration and wages even though
    the

    influx of foreign workers     may keep wages lower than
    they would otherwise be. Similarly,

    low-skilled natives     are apt to shun

    high immigration cities    , or

    leave them     in search of better opportunities
    elsewhere.

    As
    economist George Borjas has demonstrated, a
    comprehensive accounting of immigration’s impact on the
    U.S. labor market requires a national rather than a
    local perspective—and does indeed show that immigration
    drives down wages. [The Evolution Of The Mexican-Born
    Workforce In The United States,     National Bureau of
    Economic Research Working Paper, April 2005 (
    PDF)]

    While
    Card acknowledges potential problems with his
    city-by-city approach (i.e., native dropouts may move
    out when immigrants move in) he claims to control for
    this, and is quick to attack the national framework of
    Borjas and others. His complaint: they focus only on
    total population rather than the immigrant share of
    dropouts and other skill groups. In fact, Borjas

    does disaggregate by educational level,     finding the
    drag on native wages greatest at the top and bottom of
    the education spectrum.

    Indeed,
    in his current paper, Card inadvertently presents some
    evidence suggesting that this

    out-migration     has occurred. Here are his figures
    showing that, between in 1980 and 2000, native dropouts
    fell as a share of the native workforce in—perhaps
    because they moved away:
    (Table 2.)




      1980 2000



    bullet New York:


    		26.4 percent 17.5 percent



    bullet Los Angeles:


    		19.5 percent 14.4 percent



    bullet Miami:


    		23.3 percent 18.6 percent



    bullet Houston:


    		25.1 percent 15.5 percent



    bullet San Francisco:


    		14.3 percent 6.9 percent



    bullet All cities:


    		23.0 percent 13.0 percent

    This is
    not the first time Card has cut corners to make a point.
    During the

    Clinton years,     he shook up the economics profession
    with a series of studies that apparently showed that a
    higher minimum wage would have no impact on employment.

    In one
    such study, used by the Clinton Administration to
    justify a minimum wage increase, Card and his co-author,
    Princeton economist Alan Krueger, used data obtained in
    a telephone survey of fast food restaurants to claim
    that increasing the minimum wage did not depress and
    might even expand the demand for labor.
    ["Minimum
    Wages and Employment: A Case Study of the Fast-Food
    Industry in New Jersey and Pennsylvania    ,    "
    American Economic Review,     September 1994]

    Back
    then, the Wall Street Journal Editorial Page was
    quick to attack this counter-intuitive result. (See, if
    you care to

    pay     for it, Dog bites man: Minimum wage
    hikes still hurt,     By Richard Berman Wall Street
    Journal,     March 29, 1995 or Higher Minimum
    Wage, Higher Dropout Rate,     by

    Robert J. Barro,     Wall Street Journal, January
    11, 1996[not online for free])

    But
    where is the Wall Street Journal now that the
    same trick is being played to justify immigration? [Ask the WSJ]

    At least
    Card is consistent in his liberal bias.


    Edwin S. Rubenstein (email
    him) is President of

    ESR Research Economic Consultants     in Indianapolis.


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