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Are Illegal Immigrants Really Taking Jobs Away From American Workers?

http://jobs.aol.com/articles/2011/06...erican-worker/

By Dan Fastenberg, Posted Jun 6th 2011 @ 2:30PM

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When the Supreme Court voted to uphold the "Legal Arizona Workers Act" (LAWA) on May 25, the ability for states to revoke business licenses for firms hiring illegal immigrants was protected. (LAWA is distinct from Arizona SB 1070, which empowered law enforcement officers in Arizona to engage in racial profiling.)

Reaction to the decision among likely voters was strongly in favor: A Rasmussen poll conducted on May 27 and 28 found that 61 percent of Americans favor a law in their state that would shut down companies that knowingly and repeatedly hire illegal immigrants.

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And activists who advocate for restrictive immigration policies welcomed the ruling. "There's a downward effect on wages," says Jessica Vaughn, the director of policy studies for the D.C.-based Center for Immigration Studies, referring to the introduction of undocumented workers in the market. "There's so many occupations where wages have just been stagnant for many years, or even declined, like in construction, building trades industry and custodial work. Of course, it's not just one thing. You can't control competition from China. But immigration policy is something that we can control as a nation."

Support for the penalization of companies hiring illegal workers can be chalked up to a variety of motivations. But the view that it protects American jobs has been embraced by many, including politicians like Rep. Lamar Smith (R-Texas), the chair of the House Judiciary Committee and a member of the Reclaim American Jobs Caucus. "Not only is this law constitutional, it is common sense. American jobs should be preserved for Americans and legal workers," he said of the high court's 5-3 ruling. "Today, there are 7 million individuals working in the United States illegally. E-Verify will help turn off the jobs magnet that encourages illegal immigration."

But the debate over whether there is any correlation at all between immigration policy and the fortunes of the American workforce is in fact an open one. And according to Pia Orrenius, the senior economist for the Federal Reserve Bank of Dallas, the major question among most economists is actually why the impact of the nation's estimated 12 million illegal immigrants on the is so small.

Given that the topic of the economic impact of immigration is so politically charged, scores of studies have been ordered on the subject. The widely-shared consensus holds that for every 10 percent increase in the share of foreign-born workers in a specific area there's less than 1 percent change in the average wages of legal residents, including for low-skilled workers, says Orrenius. (Wages are used as the economic metric for employment in the U.S.)

Two leading papers that present the view of a minimal negative economic impact are: "Immigration and National Wages: Clarifying the Theory and Empirics," published in 2008 by academics Gianmarco Ottoviano and Giovanni Peri; and the landmark, "The New Americans: Economic, Demographic, and Fiscal Effects of Immigration," published in 1997 by James P. Smith and Barry Edmontson, working under the aegis of the 1990 Immigration Act.

These economists caution against extrapolating from anecdotes of immigrants coming to a specific town and taking jobs. Smith and Edmontson do concede, though, that "the losers may be the less-skilled domestic workers who compete with immigrants and whose wages will fall." But they go on to say: "To the extent that immigrants specialize in activities that otherwise would not have existed domestically, immigration can be beneficial for all domestic residents. In this case, there is little substitution of new immigrant workers for domestic workers."

The argument that an infusion of foreign workers represents a new and non-competing workforce, and therefore poses little threat to the American worker, is buttressed by other economic analysis. Among them is the related concept that as immigrants carry out jobs that natives wouldn't want, or even wouldn't exist if it weren't done by a foreigner, the native-born American is freed up to specialize. And that complementary model improves overall efficiency. Finally, the so-called "immigration surplus" holds that the US economy must benefit from a net gain in goods and services because wages earned by immigrants tend to be lower than the cost equivalent of what they produce.