About 32% of Americans surveyed in an opinion poll believe that illegal immigrants take jobs away from domestic workers. The results are from polls conducted by major media giants like Fox, New York Times, Washington Post, and Time Magazine.
I think the polls presented a question that respondents had to answer “yes” or “no” and, therefore, presented the respondents with a false dilemma. The correct answer is that illegal immigrants take jobs away from domestic workers, but they do not take jobs away on a one to one ratio. In other words, if there are 10 illegal immigrants, there are not 10 displaced domestic workers. An example will help clarify.
Smoking Joe Camel hires workers for his second-hand smoking grinding business, Grinders. Joe hires both immigrant and native labor. Joe doesn’t want his labor just standing around blowing smoking rings because non productive workers will have his profit go up in smoke. Smoke grinding doesn’t take any special skill, but has some unpleasant aspects. You have to inhale smoke. Your clothes always smell. Up to a point, Joe will hire more workers when the wage is lower. As the wage increases, Joe makes less profit on each employee. So as the wage increases, Joe hires fewer employees.
Smoking Joe knows how much his customers are willing to pay and how productive his employees are. If Joe has to cough up $15 for a worker, Joe will hire only one worker. Joe will hire four workers at $10, and seven workers at $5. Right now, the current wage is $5 so Joe hires seven employees of which two, Alex and Bob are native to North America and five are illegal immigrants.
Now suppose the country gets hard on illegal immigrants and we repatriate those five illegal workers. How many workers will Grinders hire now and what will be the wage rate?
Grinders will hire two more native born workers, Carrie and Daniel at a wage of $10 each. The new wage will only attract two more Americans into the industry but 5 foreign workers will be lost. Less workers also means less is going to be produced. How does this work?
Have you ever walked on a surface with changing slopes? When you are walking on flat ground, each step you take moves you forward by the entire length of the step. When you walkup a hill, you can’t take as big of steps. When you take a step you might only go up half. The same analogy can be used when workers are paid a graduating wage. If everyone is paid the minimum wage, then foreign workers will take jobs away on a one to one basis because it’s like running on a flat surface. When the wages are allowed to increase to attract more labor, then it’s like running up a hill. Immigrants do not take jobs away on a job by job basis when wages are paid by ability, schooling, and other investments into productivity.
If we build a wall to keep foreign labor out, will jobs go overseas? It could be that American labor is in direct competition with foreign labor anyway. Suppose that two workers are hired to dust. One of the workers, Wilt, is seven-foot tall. The other worker, Bill is five-foot. They are both able to dust, but Wilt doesn’t need a ladder to reach the high parts. Wilt will be able to dust more because he has a natural height advantage.
It could be that America is in direct competition with foreign labor in which the foreign workers have a natural advantage. Perhaps foreign labor has a skin less sensitive to sunlight. Maybe the foreign labor has a natural mathematical aptitude. These laborers would find themselves in occupations that take advantage of their natural endowments.
Building a Berlin wall will not prevent jobs from leaving the country when the jobs leaving the country can be completed by workers with a natural affinity in those occupations. Lou Dobbs, a CNBC reporter and author of “Exporting America” believes that 14 million middle class jobs will leave the country. Dobbs cites Manufacturing and tech support services like Dell help as examples.
Deporting illegal immigrants will not create more jobs for Americans on a one to one basis because employers will have to pay a higher wage to domestic workers. If consumers in the United States want to pay more for everything they buy, then deporting illegal immigrants is a good idea. Given the rate the economies of Mexico and the United States are expanding, eventually the wages in both countries will equalize and immigration will not be an issue.