September 20, 2006

How much does illegal immigration save in labor costs?

A reader summarizes the Seattle Times article: "Low-paid illegal work force has little impact on prices:"

It is part of a series of articles about immigration. I've ignored or skimmed most of them but the headline of this one caught my attention and I read the whole thing this morning.

I haven't read or heard this before - I've only heard that illegal immigration has a small impact, if any, on wages but surely drives prices down so everyone wins! I didn't expect to read the opposite in a major daily.

"You might assume that the plentiful supply of low-wage illegal workers would translate into significantly lower prices for the goods and services they produce. In fact, their impact on consumer prices - call it the "illegal-worker discount" - is surprisingly small.

The bag of Washington state apples you bought last weekend? Probably a few cents cheaper than it otherwise would have been, economists estimate. That steak dinner at a downtown restaurant? Maybe a buck off. Your new house in Subdivision Estates? Hard to say, but perhaps a few thousand dollars less expensive.

The underlying reason, economists say, is that for most goods the labor - whether legal or illegal, native- or foreign-born - represents only a sliver of the retail price."

Or course, they can't help but end by trying to argue that illegal immigration is good, despite the entire article to that point: "Of course, the "illegal-immigrant discount" affects different layers of society differently.

The more often you eat out, stay in hotels or get your yard trimmed, the more you benefit from the illegal-immigrant discount.

And by increasing the supply of low-skilled labor relative to high-skilled labor, illegal immigration effectively boosts the purchasing power of the better-educated, more-skilled - and richer - portion of society.

The MIT study, by researcher Patricia Cortes, estimated that the low-skilled immigration wave of the 1990s - much of it outside the bounds of immigration law - raised the "real wages" of college graduates by 0.71 percent, and of high-school graduates and people with some college by 0.59 percent.

High-school dropouts? No discount for them: Cortes estimated that their real wages were cut by 2.66 percent. But since most adult Americans have at least a high-school diploma, Cortes concluded that most people benefited from low-skilled immigration - at least a little."

I'd love to see what the Seattle Times had to say if that argument came from a conservative in support of, say, tax cuts.

No mention of all the increased costs illegal immigration brings, of course.

The PDF accompanying the article with graphs is quite interesting: "Construction wages decline even during housing boom."

My published articles are archived at -- Steve Sailer

1 comment:

Anonymous said...

You mean... good to a select number of people!

College graduates benefit the most.
HS graduates benefit some.
Uneducated people lose a LOT

But it shows that there are people who certainly would be speaking in favor of it.