John Weeks

[forthcoming book: The Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy, Anthem Press, January 2014]

Newly arrived Americans at Ellis Island, circa 1920. Recognize a family member?

In mid-October the Democrats in Congress successfully blocked a far-Right parliamentary coup, a victory more notable for what it prevented than for what it achieved.  Still, we should not be churlish; we should grant them their due.  Had the Neolithic Troglodytes of the Republican Party carried the day our erstwhile democracy would be even more erstwhile.

The media scuttlebutt (or “skinny”, if you prefer it) suggests that the President’s agenda, addition to his on-going service to financial markets, should and will focus on “reform” of immigration laws and procedures.  The word “reform” is much loved by the neoliberals, prompting me to prefer the more neutral “change”.  I would propose a rather radical prior change, that the US border police and vigilante extremists stop murdering people attempting to cross the US-Mexican border.

Most discussion revolves around the mechanism for legalizing the status of millions of people working and living in the United States who entered the country without knowledge of the Authorities.  In many if not most cases, these immigrants have children born in the United States, creating the possibility of the rather anomalous travesty, that the parents could face deportation but not the children.

The unsuspecting reader or watcher who turns to the media to learn about immigration issues tends to emerge misled, misguided and misinformed.  In that context I offer a bit of analysis of the economics of immigration.  We frequently encounter several standard arguments, only one of which I deconstruct in this column.

We repreatedly find the long-standing assertion that immigration drives down the wages of American workers by “bringing in” cheap labor.  For example, in a report of the Federation for American Immigration Reform we find the following statement,

Today’s immigration system is dysfunctional because it is not responsive to the socioeconomic conditions of the country. Only a small share of legally admitted immigrants is sponsored by employers while the bulk are [sic! is] admitted because of family ties to earlier immigrants who may be living in poverty or near poverty. As a result, immigration contributes to an already-existing surplus of low-skilled workers, increasing job competition and driving down wages and conditions to the detriment of American workers. The presence of a large illegal workforce perpetuates a vicious cycle as degraded work conditions discourage Americans from seeking these jobs and make employers more dependent on an illegal foreign workforce. America’s massive low-skill labor force and illegal alien population allow employers to offer low pay and deplorable conditions.

An indication that matters are not as simple as they seem is the fact that the two states in which the proportion of foreign-born people is greatest are also are among the states with the highest earnings per worker (California and New York).

This apparent inconsistency strongly suggests that the impact of immigration on wages does not result simply from the number or proportion of undocumented workers in a population.  A longer view of real earnings in the United States shows quite a different, but related cause of falling wages – the disastrous decline of trade union influence and membership.

The chart below shows average weekly earnings of private sector non-managerial employees from 1964 through 2010, along with the number of strike days each year, and the share of the private labor force in trade unions (“union density”).   The three are measured as percentage point differences from the average of all 47 years.  The link between the decline of strikes and real wages is obvious.  For example, in the early 1970s, real earnings peaked at over 40 percent of their average for all years, and in 1970 strikes reached their maximum (about 53 million working days).

The movement in real earnings follows closely the fall in strike days from 1964 through 1995.  After 1995 real earnings did begin to rise, but remain far below the 1970s maximum to this day.  The chart shows a general law of wages: it is not the “supply” of labor that is key to the level of wages, it is the militancy of labor.

US Real Average Earnings, Strike Days and Union Membership, 1964-2010

(measured as percentage point differences from the average for all years)

Chart calculated from number in the Economic Report of the President 2013 and the Bureau of Labor Statistics. Chart taken from my new book.

What does immigration have to do with the chart?  Almost all non-union, immigrant workers contribute to the decline of labor militancy and trade union membership.  Further, undocumented immigrants are almost impossible to organize.  Should an undocumented worker reveal her or his presence through union activity, the result will be deportation, and it happens regularly.  To put it simply, the illegal or undocumented status of workers provides employers with a powerful weapon to prevent labor militancy.

It is in this context that we should interpret the right wing opposition to any legislation that facilitates legalizing the status of undocumented workers.  Much of the opposition at the grassroots level – e.g., the locked-and-loaded Texas rednecks patrolling the border with Mexico – arises from deep-seated racism and xenophobia.  However, their plutocratic paymasters (and paymistresses) have a more functional motivation – the terminal weakening of working class resistance.

Legislation to legalize undocumented workers is very much in the interest of the working class, as many if not most union leaders recognize.  Outside of the United States an outstanding example of this is the trade union leadership in the United Kingdom, most notably Len McCluskey, the head of Unite-the-Union, and the General Secretary of the UK Trade Unions Congress, Frances O’Grady (yes, a woman!).

As important as the legalization may be, it should serve as the stepping stone to a much bigger rock, the legal requirement that all workers must be union members (some variation on the Closed Shop) or at least pay union dues (the Agency Shop).  The John McCain’s of this world do not support immigration reform to help the working class, quite the contrary.  But that would be the unavoidable consequence of effective legislation.  Then we would have not just a change, but a true progressive reform.

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John Weeks is Professor Emeritus and Senior Researcher at the Centre for Development Policy and Research, and Research on Money and Finance Group at the School of Oriental & African Studies at the University of London.