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  October 13, 2010

Do Undocumented Workers Take Jobs and Lower Wages?

Dube: Increasing evidence that legalizing undocumented workers has a positive effect on the economy
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Arindrajit Dube is Assistant Professor Economics at University of Mass (Amherst). Dube is a labor economist who received his BA in Economics and MA in Development Policy from Stanford, and his Ph.D. in Economics from the University of Chicago.His current work includes: the impact of minimum wage around state borders; the impact of labor relations in hospitals on patient health outcomes; the effects of employer mandates on health benefitsHis past work includes the assessment of the impact of the San Francisco minimum wage ordinance; the impact of outsourcing of labor services; how trade and capital mobility affects the labor market; changes in employment based health coverage in response to rising employee contributions; and the public cost of low wage jobs.


PAUL JAY, SENIOR EDITOR, TRNN: Welcome back to The Real News Network. I'm Paul Jay in Washington. The November elections are only a few weeks away. And one of the debates that's raging is the question of immigration, immigration reform. And the charge is made low-wage workers take away jobs from Americans, and we need to control immigration in order to defend wages and working conditions. Is it true? What are the facts of this? Well, now joining us from Amherst, Massachusetts, an associate of the PERI institute, teaches economics at the university in Amherst, is Arin Dube. Thanks for joining us again, Arin.


JAY: So what's the answer? Does this recent couple of decades or more of low-wage immigration, waves of it, not lower the wages and take away jobs from people who were already here?

DUBE: So let's take a look at the nature of the immigration first. Today about 13 percent of the population is foreign-born. Of that, about half are from Latin America—Mexico or Central America, predominantly—and another quarter from Asia. So one of the things that I think concerns people is that nearly half of the overall immigrant workforce actually do not have a high school diploma, so that means that these are relatively lower-skilled and lower-wage workers. And the fear is that that must mean that they have really competed away jobs from native-born workers, especially those native-born workers with lower credentials.

JAY: Also, do we know what percentage or what the estimate is of those workers who are undocumented, either who don't have work permits or citizenship?

DUBE: So, again, about 10 million or so is the estimate of the number of undocumented workers in the United States, and, of course, very large majority of those workers are likely to not also have a high school diploma or anything, certainly, more than a high school degree.

JAY: Well, the debate's mostly raging around undocumented workers and that they're the ones that are willing to accept such low wages and force down the wages in areas, and thus create a situation where other, documented citizens can't compete for those jobs 'cause they wouldn't work for so little money.

DUBE: That's right. So there are really sort of two views of this, right? One view is that immigrants are taking jobs away from native-born workers. That has one of two effects: either native-born workers become unemployed, or they're forced into going to other jobs which pay worse and hence their wages fall. A second view is that actually immigrants are expanding certain occupations and industries, and these are really new jobs that are being created, not taking anyone's job away, but rather creating new jobs in certain sectors, such as, say, restaurants. The restaurant industry has grown, both in absolute terms and in relative terms, in the last 20 years. Would that have happened were it not for a relatively large pool of migrant workers? That is, actually, the question that some people have looked at.

JAY: So what's the evidence show?

DUBE: Evidence in terms of the academic research is—on the one hand, there is a good amount of controversy. On the other hand, the surprising thing about that controversy is that it's really a debate whether the effect is fairly small or none at all. So in that sense I think the academic debate, people may be surprised to find out, is about whether the effect from the entirety of the immigration that's happened since 1980, whether that has pushed down wages of native-born high school dropouts by 4 percent or zero percent or somewhere in the middle.

JAY: So you're saying the worst it could be or the most it could be is 4 percent.

DUBE: Exactly.

JAY: So not such a significant number.

DUBE: And 4 percent, mind you, not of the entire workforce, but of the native-born workforce without a high school diploma. For other groups there's actually no evidence of negative wage effect, and actually growing evidence that there may be positive wage effects for higher-skilled workers. There's also increased evidence that native-born workers may re-specialize to jobs that require more communication or English proficiency, other interactive skills, if you will, when there's more immigrant workers, which actually may mean that their wages may actually rise in some cases from the presence of lower-skilled workers working with them. An example of this is think of job opportunities for foremen in construction when there's more immigrant construction workers. So these are the kind of additional effects which may actually mean why the wage-fall effect on lower-skilled workers may not even be the full part of the story. And at any rate, that is going to be somewhere between, as I said, zero and 4 percent is basically what you find in the academic literature.

JAY: Now, some people argue, I guess, the reverse of this in some ways, that if—has anyone modeled that if all the undocumented workers were just overnight documented, would that then lead to a rise in wages?

DUBE: That's a really good question. We have some evidence of this, of what happened in the 1980s, and we found that where after there was documentation of workers, their wages tended to rise by about 25 percent. That's actually a really good thing, because think about it, if their wages rise—.

JAY: Well, it's a good thing if you're not an employer. If you're an employer, it's not such a good thing to see a rise of 25 percent.

DUBE: Exactly. But from the perspectives of other native-born workers who may be competing with them, if their wages are rising, that's actually good not just for them but for other similarly skilled workers who are native-born as well. So I think that's actually a really important counterfactual that's often not kept in mind in this debate about, you know, what to do with immigration, because people think that, you know, sometimes, like, well, what if we could just throw them out? Well, throwing them out is actually just impossible as a logistical issue, whatever the moral issue may be, so that's just not a really useful counterfactual. On the other hand, continuing the status quo is what really is—should be compared with giving documentation status or making it easier to give documentation status, which will tend to increase the wages of both the undocumented workers themselves, as well as for possible workforce who are native-born.

JAY: Where is the example of that? 'Cause that's very significant. If documenting workers can lead ​to as high as a 25 percent increase of other what had been lower-wage workers, that's extremely significant, because you would then have that much more demand in the economy, which in theory leads to actually an increase of employment opportunities.

DUBE: Right. Just to be clear, the 25 percent increase in the wages or thereabout is for the undocumented workers themselves, is based on what the last round of immigration reform in the '80s. For similar workers, there are some positive effects which are much smaller than 25 percent. But the general point remains that, yes, increasing wages and purchasing power, of course, is something that will have some positive effect given our macroeconomic condition, but also has a good positive effect in the longer run, because after all, we want people to be in productive jobs that pay well.

JAY: But the argument is is that you've got a limited pie of jobs, so if you have that many more documented workers, they're going to start competing not only for the kind of low-wage agricultural work they've had, but perhaps they'll start competing for other kinds of work. And workers—you can hear workers say, you know, that's unfair competition.

DUBE: That's possible. At the same time, what we do see is that some of the reason you have the segmentation in the kind of jobs that are being done by undocumented workers or immigrants more generally has to do more with language acquisition and other skill set, as opposed to simply having documentation status. Those are not going to change overnight just because they have documentation status. So there may be limits on how much competition a documented immigrant is going to actually bring into the picture from immigration reform by itself.

JAY: Is there any study or evidence that shows whether more documentation makes a bigger pie—in other words, actually leads to more jobs—because there's more demand in the economy? Has anyone done that modeling?

DUBE: Generally speaking, increased immigration also brings in increased capital and investment. That is something that people have modeled. And this is one of the channels through which—why it's not the case that when you suddenly have, say, you know, 1,000 more immigrants, that they just take jobs away, because it actually increases capital deepening, potentially. Investment is spurred in that area. So in that sense there is a macro reason why there's not this one-for-one job competition that occurs when there are immigrants who come in.

JAY: Thanks very much for joining us, Arin.

DUBE: My pleasure.

JAY: And thank you for joining us on The Real News Network.

End of Transcript

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