Scripps Howard News Service, March 7, 2006, Tuesday

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Scripps Howard News Service

March 07, 2006, Tuesday 1:22 PM EST

SECTION: BUSINESS

HEADLINE: Influx of foreign workers a boon to wages?

BYLINE: ANDREW LEPAGE, Sacramento Bee

BODY:
A newly released study concludes that as immigration has increased, so have the wages for the vast majority of U.S.-born workers over the past 30 years - a finding that contradicts some previous research.
The study, co-authored by an economist at the University of California-Davis, found that the more immigrants a city received, the greater the gains in average wages for most U.S.-born workers.
"The consensus view is that immigration has a negative impact on the real wages of native workers," wrote economist Giovanni Peri, who worked on the study with Gianmarco Ottaviano, an economist at the University of Bologna in Italy. "We have shown that ... the effects of immigration on the average wages of (U.S.) natives indeed turn positive and large."
Among other things, the study used U.S. Census data from 1970 to 2000 to measure how changes in the number of foreign-born workers correlated with changes in the average wage for U.S.-born workers. It also looked at the types of jobs immigrants and U.S.-born workers took to determine the extent to which they might have competed for the same work.
The research found that, over the 30-year period studied, each 1 percent increase in the number of foreign-born workers in America's 100 largest cities was accompanied by a 0.3 percent increase in real wages for native workers.
In the 1990s, the typical city saw its pool of foreign-born workers rise 5 percent.
The research suggests that the increase translated into about a 1 percent gain in the average wage for all U.S.-born workers. The gain was as much as 1.5 percent for those with a high school diploma or college degree.
The authors found an even bigger impact in the Sacramento region, where the number of foreign-born workers rose 8 percent from 1970 to 2000. Over that period, Peri said, wages for U.S.-born workers rose an inflation-adjusted 2 percent.
Peri's work touches on just one aspect of the debate over immigration. It does not address how much the government spends on services for immigrants, how much immigrants pay in taxes or the impact they have on the cost of housing.
Moreover, Peri said, the apparently beneficial effect of immigration on the wages of U.S.-born workers is not limitless. He found the positive correlation seems to plateau in cities where 35 percent or more of the work force is foreign-born.
The study sparked mixed reaction among those who research labor issues.
"These are very important findings that come at a critical moment in the immigration debate," said Harley Shaiken, a University of California-Berkeley, professor who specializes in labor issues. "What the study indicates is that if we view the contribution of immigrants to the total economy there may be important gains to all workers that have previously been ignored."
But George Borjas, a Harvard University economist who has published research on immigration's impact on wages, said he has serious concerns about the study. After reading a summary, he said he's not convinced it was immigrants who drove up the wages of U.S.-born workers, as opposed to high-wage cities attracting more immigrants.
"Immigrants have no incentive whatsoever to go to low-wage areas," Borjas said. "Why would they want to go to a city that doesn't provide economic growth?"
Borjas' own research shows that, nationally, U.S.-born workers without a high school education - roughly the poorest tenth of the work force - saw a 7.4 percent drop in wages between 1980 and 2000 as immigration boosted the supply of labor. He found that the average annual earnings for all U.S.-born male workers fell $1,700, or about 4 percent.
Peri said his study controlled for factors beyond immigration that could have caused wages for U.S.-born workers to grow, including growth in productivity and public spending on schooling and health care.
Peri, himself an Italian immigrant, did find a downside for some U.S.-born workers: Immigration tended to lower wages for the lowest-skilled U.S.-born workers - those without a high school diploma. However, his research showed a more mild impact - a 1.2 percent loss in wages in the 1990s - than Borjas found.
The trend toward immigrants driving down wages for lower-skilled U.S.-born workers has a disproportionately large impact on blacks, said Vernon Briggs, a labor economist at Cornell University.
"There is no group that has benefited less from immigration," Briggs said of blacks, noting that about 25 percent lived in poverty as of the 2000 census and compete for many of the same jobs as many low-skilled immigrants.
So how is it that the bulk of the work force benefits from a rising tide of immigrants?
One reason is that most immigrants are either highly educated or have less than a high school diploma, Peri said, and both groups tend to take jobs that most U.S.-born workers don't choose. That means immigrants don't compete with most U.S.-born workers, hence they don't adversely affect their wages.
At the same time, he said, increased competition among immigrants for jobs at both ends of the spectrum - such as high-paid computer programming and low-paid care for the elderly - drives down costs for U.S.-born workers and employers alike.
(Distributed by Scripps Howard News Service, www.shns.com.)