The Economics of Immigration


Got to get down some thoughts on the question of immigration. It’s a hot-button political issue right now in the United States. I’ll leave aside for the moment the compilation of biblical texts showing how, in the theocratic state envisioned in the Torah, foreigners were to be treated (hints: not to be oppressed, to be loved as oneself, not to be barred from gleaning the leftovers of the wheat and grape harvest, to be included with those celebrating national feasts), and talk in real-world contemporary political and economic terms about the elephant in the room in the whole conversation about illegal immigration in the United States.

Why do people risk their lives to cross the border from Mexico into the United States? The commonly reported answer: to work at low-paying jobs that American citizens don’t want, usually as fieldworkers in agriculture. This much is pretty well agreed upon. Solutions proposed to this problem range from building a hundreds-of-miles-long fence at the border and hiring lots of agents to keep the border “secure” so as to reduce this flow of workers, all the way to providing a means for these “undocumented” workers to gain some sort of legal “green card” status, allowing them to be in the country for the purpose of working at those jobs, and eventually, perhaps, if they go through all the right procedures, begin the long and arduous task of applying for citizenship; all of which, in current political discourse, falls under the pejorative word “amnesty.” There’s all kinds of political conversation going on right now about these matters, and whether an “enforcement-only” approach or a “comprehensive” approach is better for the country. But nobody is talking about what really needs to happen to stem the flow of people across the border.

What is needed is for jobs paying a decent wage to become available in Mexico (and other countries). And what is needed for that to happen, is for the United States government to adopt a policy which will (a) put pressure on governments that do not have a decent minimum wage and, even more importantly, (b) provide economic sanctions in the form of tarriffs, taxes, or other penalties against companies which do business both inside and outside the United States but pay their non-US workers such a significantly low rate that those workers would risk their lives to get over here so they could earn bottom-of-the-economy US wages to support their families.

Full employment at a decent wage within the country of origin would shut down the economic motivation for illegal immigration to the United States. It’s a free-market solution to a social problem. It would keep US jobs for US citizens. The only losers would be, in the short run, coporations which take their profits from the sweat of below-subsistence-wage workers (whether here or elsewhere) and, again in the short run, consumers who might get a real-world free-market shock over the price of beans, bananas, coffee, sugar and other agricultural commodities (and manufactured goods in the case of companies which have shipped their jobs overseas in order to escape the cost of labor in the United States). However, our recent experience with the price of oil and gasoline has shown that at the consumer level we seem quite surprisingly capable of absorbing rather steep price increases in response to market forces.

In the long run, the winners would be:

  • workers in Mexico and elsewhere who would get to stay home and support their families without risking their lives at an increasingly militarized border;
  • workers in American agriculture, some of them, to be sure, recent immigrants, who could command somewhat higher pay because the endless supply of cheap throwaway labor would have begun to dry up;
  • that seemingly large segment of Americans who are alarmed at the influx of illegal immigrants, which would slow dramatically;
  • the United States government, which would be able to implement a border policy that requires fewer resources than would otherwise be necessary
  • Economies south of the border who would begin to see the emergence of a middle class
  • Workers in US industry, who would see fewer of their jobs transferred elsewhere as the differential in labor cost from country to country is reduced.

Now, there is an immigration policy. Anybody want to talk about it?

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4 thoughts on “The Economics of Immigration

  1. Well said. Of course, America is complicit in this injustice, since our major corporations (Whirlpool, General Motors, etc. etc.) have closed their American factories and set up shop in Mexico to take advantage of the cheap labor. All hail the mighty hand of NAFTA! What should happen is some kind of arrangement whereby American companies setting up manufacturing plants in Mexico have to pay Mexican workers the same wage they would pay American ones, or something close to it. This would de-incentivize outsourcing, and if other things are cheaper (like land, etc), at least the Mexican workers would be paid a higher wage.

    I realize that will never happen, but unless we realize we are part of the problem, there is little hope for a solution.

  2. Your ideas would fit well into any comprehensive plan for immigration. But, Like Beale said, we also have to stop trade agreements that punish Mexican workers and farmers. We flooded their market with our cheap corn, and it put many thousands of growers there out of business.

    Also, at some point, we have to admit that the vast majority of Americans are not training themselves or their children to do low skilled jobs, other than perhaps retail, where they will always have the edge because they speak English. Also, for the economy to grow even at modest rates, we need more unskilled workers than we give birth to each year.

    First step, level the playing field by granting resident status. Invite all aliens in to register as residents, some will be put on a path toward citizenship, others, not. Once we know who is here, we can then (if Americans demand it, though, I don’t) slam the door shut, build the damn wall, fill the moat, whatever.

    Funny, I have been mulling over a blogger summit to reach a sort of statewide “agreement”. Just maybe…

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