The Economics of Illegal Immigration

Harvard professor Lawrence Katz is co-author of a 2005 study, "The Evolution of the Mexican Workforce in the United States." He explores the impact of illegal immigration on wages for domestic-born, low-income workers with Farai Chideya.

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ED GORDON, host:

From NPR News, this is NEWS AND NOTES. I'm Ed Gordon.

This week immigration protest and politics have dominated the news. In a moment, we'll speak Congresswoman Maxine Waters about the ongoing legislative struggle over immigration. But first the debate. One side argues that these undocumented workers are taking jobs from U.S. citizens and putting a strain on America's economic system.

The other side says these workers provide valuable services and take jobs that U.S. citizens will not. But is it really that simple? Lawrence Katz is a labor economist at Harvard University and co-author of the 2005 study, The Evaluation of Mexican Workforce in the United States. He points out that the American work force has changed significantly in the last 20 years because of a number of factors, including the waning influence of labor unions and the staggering growth in the number of foreign workers.

Mr. Katz explained his findings to NPR's Farai Chideya.

Mr. LAWRENCE KATZ (Labor Economist, Harvard University): What we attempted to do is we tried to look at the hypothetical of what would have happened over the last 25 years if there had not been such a large increase in the number of immigrants, particularly from Mexico coming in to work in the United States.

And what you see is when you get large shocks of workers coming across the border entering particular occupations is the vast majority of Americans benefit because the increase in supply of workers of these occupations lowers the prices. It's cheaper to get your walls plastered; it's cheaper to buy childcare services; it's cheaper to get food processed.

On the other hand, so most of us benefit, but workers directly competing are paying the cost, because they receive lower wages and they get discouraged from entering these occupations and fields. So two groups gain big time. The immigrants themselves have huge increases in income. Most Americans benefit as consumers, but a small group of the most vulnerable Americans pay the cost.

CHIDEYA: Do you have any more information on how undereducated workers, these low wage workers, break down by race and ethnicity, the ones who are U.S. citizens?

Mr. KATZ: Well, the U.S. citizens who are competing with immigrants are disproportionately African American, disproportionately Hispanic, you know, born in the United States.

CHIDEYA: Is it conceivable that Mexican immigrants who have legal status are also losing out in wages?

Mr. KATZ: It's not only conceivable, it's highly probable. Most studies actually find the groups whose wages are most affected are the earlier wave of immigrants with similar sort of characteristics. And in some cases they're moving up the ladder, becoming the supervisors of new immigrants.

But I think most Americans do benefit from this, and the question is, is there a way that we can find to help out the more vulnerable workers while most of us continue to receive the benefits?

CHIDEYA: In some of the cities where we've seen these major immigration protests, the people who you talk about as the most vulnerable are living side by side, neighborhood by neighborhood, with the people who may be benefiting. So in Los Angeles' South Central area you have a predominately African American neighborhood which has transitioned into a neighborhood filled with Mexican immigrants, I'm sure some there with papers and some there without.

In cities like Houston you also have black and Latino populations. So it seems to me that the issues that you see playing out in your study are, you know, being also played out in a very micro level in America's cities.

Mr. KATZ: Oh yes, they're quite present there and there are, you know, a large number of issues, of employers being in many cases more wiling to hire recent immigrants than African American young workers, given some of the problems with undocumented immigration, which creates a workforce that in some sense has less ability to stand up their rights because their status in the U.S. is, which is a worrisome aspect of some policy questions like guest worker programs and stuff, which create potentially something that looks more like indentured servants, where your status in the U.S. depends on a particular employer.

That's something employers might be very happy to have, but not something that's very beneficial to other workers who have to compete with people.

But, you know, in some sense we all may be able to benefit if we could do more with things like the earned income tax credit, giving employers greater incentives to hire U.S. workers who are more vulnerable. Attempts to stop immigration, given the huge economic incentives, have not been particularly effective in the past.

CHIDEYA: Lawrence Katz is a labor economist at Harvard. Thank you so much for talking with us today.

Mr. KATZ: Thank you.

GORDON: That was NPR's Farai Chideya.

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