Are tougher immigration laws good or bad for wages?

A discussion with a colleague today led to my reflecting about this issue.

I thought of a recent insight offered by none other than Gary Sheffield of the Detroit Tigers, who expressed his views about Latin Americans, African Americans, and representation in Major League Baseball.

His take on why African American representation in the MLB has fallen so much is that teams and coaches can "tell [them] what to do -- being able to control them." His point was that a Dominican player probably felt less able to speak his mind around his employers, since he probably isn't a U.S. citizen, may have come from a more impoverished background, and fears losing his job that much more.

Why is this relevant for the immigration debate?

Suppose you are an undocumented worker. Do you command a higher or lower wage than you would if you were legal?

On the one hand, you might say that the risk of deportation is costly, so you should demand a higher wage than you otherwise would in order to bear that risk and work in the U.S. Relative to wages earned in the home country, this story is probably true.

But if employers knew their employees were illegal, and if those employees were aware of their knowledge, employers might offer lower wages to illegals. In this situation, illegals are like the Latin American baseball players Sheffield is describing, while domestic low-wage workers are like the African American ballplayers he describes.

Could new "Z" visas for guest workers raise wages, for guest workers and for domestic workers who must compete with them for jobs?

Perspectives on Immigration

David Brooks writes today that the culture clash on immigration is less Republican vs. Democrat, more college educated vs. not, if it is anything in particular.

I thought of a recent New Yorker article, on college attendance as an adult version of the first childhood sleepover. Everything at your friend's house is foreign, uncomfortable, and scary. For many of us, college is a time of much personal growth through exposure to the unfamiliar.

To be sure, real differences exist between people, and it would be wrong to suggest that getting along is just an issue of exposure and understanding. The Dutch experience with immigration in recent years is a good example of how tolerance and understanding alone can sometimes be insufficient under certain circumstances --- namely when immigrant groups may not be so tolerant themselves.

While obtaining a college education may not necessarily convey an open, tolerant perspective on immigration, at least it might.

Immigration reform will have to wait ... again

It's hard to ascertain whether there were too many cooks spoiling the soup, too many compromises to fully satisfy either camp, or just not enough clauses and pages, but it looks like immigration reform has been shelved again.

Death throes of immigration bill?

The New York Times is reporting that another cloture vote is set for tonight, June 7. If it fails and debate continues, Harry Reid will probably table the bill for months.

Although it's sometimes a good sign when a compromise bill comes under attack from the extremes of both sides, in the Senate that can be a liability. It will be interesting to see whether the piecemeal amendments stop or not.

Immigration, skills, and competition

Tom Friedman's Wednesday column expressed the view that Ph.D graduates and other highly educated immigrants on student visas should automatically get green cards.

It seems easy to agree with this view, but the naturalization of high-skill immigrants has an economic impact with winners and losers, just like immigration consisting of low-skill workers.

Why is it easier to agree with Friedman? The people who compete with immigrants who have Ph.D's are natives with Ph.D's. As a member of the latter group, I can tell you that there are many foreign-born professors with whom I am "competing."

But I'm in favor of immigration, and I think granting citizenship to more Ph.D recipients would be a good thing. Is that because I have certain political views or come from a particular background, or is it because I think my well-being is more insulated from competition in the labor market?

It seems to me that a key stumbling block impeding immigration reform must be the exposure to the downside of labor market risk --- losing your job --- that is disproportionately felt by domestic unskilled workers.

More details about immigration bill emerge

I wish I knew a canonical source for this. Maybe that's no accident; the Senate's job is probably easier without full disclosure of the draft bill's contents!

Something that really struck me about reporting today was the plan to provide 400,000 guest worker visas per year. That may not sound like a lot, but it's about what new illegal immigration is each year. That is, 400,000 more folks come without papers each year.

I think senators are right to be concerned that such a program, with required returns of 1 year in-between stays of 2 years, might really create a two-class society. But it seems to me that we already have something like that, by default.

To me, the most nebulous portion of all this is the terms of the "amnesty" (don't say that word too loudly) for the 12 million undocumented folks here already. David Brooks writes of "stiff fines" these people would face. Many undocumented immigrants already pay taxes, so it's hard to know what these fines might be. It's still unclear to me whether illegals currently in the country would have to return home or what.

Immigration bill details

I'm sure the specifics of the immigration legislation working its way through Congress will be in a state of constant flux, but the latest version is relatively well described by the Washington Post here.


The most remarkable provision is the requirement that the 12 million estimated undocumented immigrants up and return to their home countries in order to pursue citizenship legally. Talk about a jarring change, both to those individuals and their families, many of whom may be in the U.S. legally already; but also to the domestic economy.

There are about 9.3 million native-born workers and about 6 million foreign-born workers without a high-school degree, according to statistics compiled in a CIS report by Steven Camarota. If illegals comprise 50% of that figure, or about 3 million workers, then requiring them to return home would reduce the domestic unskilled labor force by 20 percent.

The good news would be that unskilled native workers and legal immigrants would see higher wages, perhaps as much as 6 percent higher if the elasticity is 0.3. But domestic consumers should be prepared to pay higher prices and possibly face shortages.