Posted on 01/16/2004 4:47:17 PM PST by libertylass
January 07, 2004, 9:23 a.m. Jobs Americans Won’t Do; Voodoo Economics from the White House.
By Mark Krikorian
Today the president announced his plan for a vast new guestworker system, which would grant amnesty to millions of illegals currently in the United States, as well as import millions of new workers from abroad. (The president will also call for an increase in permanent legal immigration beyond the current rate of one million a year.)
I make the argument against amnesty in the cover story for the upcoming print version of NR, but here I want to look at the basic assumption underlying the whole Bush plan: that there are jobs Americans simply won't do, so that the importation of foreigners is essential. Whether these foreign workers are illegal aliens, guestworkers, or permanent legal immigrants is a detail to be worked out by us, the argument goes, but our need for them is unchanged.
Even many opponents of the proposed Bush Amnesty assume this to be true, leading them to propose new and improved guestworker programs, with provisions for stricter controls against permanent settlement, greater incentives to return, tighter enforcement against unscrupulous employers, etc.
As well-meaning as such efforts may be, the basic assumption is false — there is simply no economic reason to import foreign workers.
If the supply of foreign workers were to dry up (say, through actually enforcing the immigration law, for starters), employers would respond to this new, tighter, labor market in two ways. One, they would offer higher wages, increased benefits, and improved working conditions, so as to recruit and retain people from the remaining pool of workers. At the same time, the same employers would look for ways to eliminate some of the jobs they now are having trouble filling. The result would be a new equilibrium, with blue-collar workers making somewhat better money, but each one of those workers being more productive.
Many people fear the first part of such a response, claiming that prices for fruits and vegetables would skyrocket, fueling inflation. But since all unskilled labor — from Americans and foreigners, in all industries — accounts for such a small part of our economy, perhaps four percent of GDP, we can tighten the labor market without any fear of sparking meaningful inflation. Agricultural economist Philip Martin has pointed out that labor accounts for only about ten percent of the retail price of a head of lettuce, for instance, so even doubling the wages of pickers would have little noticeable effect on consumers.
But it's the second part of the response to a tighter labor market that people just don't get. By holding down natural wage growth in labor-intensive industries, immigration serves as a subsidy for low-wage, low-productivity ways of doing business, retarding technological progress and productivity growth.
That this is so should not be a surprise. Julian Simon, in his 1981 classic, The Ultimate Resource, wrote about how scarcity leads to innovation:
It is important to recognize that discoveries of improved methods and of substitute products are not just luck. They happen in response to "scarcity" — an increase in cost. Even after a discovery is made, there is a good chance that it will not be put into operation until there is need for it due to rising cost. This point is important: Scarcity and technological advance are not two unrelated competitors in a race; rather, each influences the other. As it is for copper or oil, this fact is true also for labor; as wages have risen over time, innovators have devised ways of substituting capital for labor, increasing productivity to the benefit of all. The converse, of course, is also true; the artificial superabundance of a resource will tend to remove much of the incentive for innovation.
Stagnating innovation caused by excessive immigration is perhaps most apparent in the most immigrant-dependent activity — the harvest of fresh fruit and vegetables. The period from 1960 to 1975 (roughly from the end of the "Bracero" program, which imported Mexican farmworkers, to the beginning of the mass illegal immigration we are still experiencing today) was a period of considerable agricultural mechanization. But a continuing increase in the acreage and number of crops harvested mechanically did not materialize as expected, in large part because the supply of workers remained artificially large due to the growing illegal immigration we were politically unwilling to stop.
An example of a productivity improvement that "will not be put into operation until there is need for it due to rising cost," as Simon said, is in raisin grapes]. The production of raisins in California's Central Valley is one of the most labor-intensive activities in North America. Conventional methods require bunches of grapes to be cut by hand, manually placed in a tray for drying, manually turned, manually collected.
But starting in the 1950s in Australia (where there was no large supply of foreign farm labor), farmers were compelled by circumstances to develop a laborsaving method called "dried-on-the-vine" (DOV) production. This involves growing the grapevines on trellises, then, when the grapes are ready, cutting the base of the vine instead of cutting each bunch of grapes individually. This new method radically reduces labor demand at harvest time and increases yield per acre by up to 200 percent. But this high-productivity, innovative method of production has spread very slowly in the United States because the mass availability of foreign workers has served as a disincentive to farmers to make the necessary capital investment.
But perhaps immigration's role in retarding economic modernization is confined to agriculture, which, after all, is very different from the rest of the economy. Nope. Manufacturing sees the same phenomenon of a scarcity of low-skilled labor yielding innovation while a surfeit yields stagnation. An example of the latter: A 1995 report on southern California's apparel industry, prepared by Southern California Edison, warned of the danger to the industry of reliance on low-cost foreign labor:
In southern California, apparel productivity gains have been made through slow-growth in wages. While a large, low-cost labor pool has been a boon to apparel production in the past, overreliance on relatively low-cost sources of labor may now cost the industry dearly. The fact is, southern California has fallen behind both domestic and international competitors, even some of its lowest-labor-cost competitors, in applying the array of production and communications technologies available to the industry (such as computer aided design and electronic data interchange)." (Emphasis in original) Conversely, home builders, who are still less reliant on foreign workers than some other industries, have begun to modernize construction techniques. The higher cost of labor means that "In the long run, we'll see a move toward homes built in factories," as Gopal Ahluwalia, director of research at the National Association of Home Builders, told the Washington Post several years ago. But as immigrants increasingly move into this industry, we can expect such innovation to spread much more slowly than it would otherwise.
But surely immigration is needed fill jobs in the service industry? After all, without immigrants, who will pump our gas? Oh, wait — we never imported immigrants for that and so now we pump our own gas, aided by technology that lets us pay at the pump — thus we have fewer attendants but more gas stations and get in and out faster than we used to when we trusted our car to the man who wore the Texaco star.
Other innovations suggest how, despite the protestations of employers, a tight low-skilled labor market can spur modernization even in the service sector: Automated switches have replaced most telephone operators, continuous-batch washing machines reduce labor demand for hotels, buffet-style restaurants need much less staff that full-service ones. As unlikely as it might seem, many VA hospitals are now using mobile robots to ferry medicines from their pharmacies to various nurse's stations, eliminating the need for a worker to perform that task. And devices like automatic vacuum cleaners, lawn mowers, and pool cleaners are increasingly available to consumers. Keeping down low-skilled labor costs through the president's vast new guestworker plan would stifle this ongoing modernization process.
The idea that a modern society like ours requires the ministrations of foreign workers, because there is no other way to do get these jobs done, smacks of the apocryphal quote from a 19th-century patent commissioner: "Everything that can be invented has been invented."
— NRO Contributor Mark Krikorian is executive director of the Center for Immigration Studies and a visiting fellow at the Nixon Center.
RIGHT, they were jobs with wages that ADULT Americans could not survive on, that our kids used to have for spare money.
Now days, the jobs are no longer being confined to that criteria, they are the jobs that American Citizens need to pay morgages, car payments, send kids to college, etc. The illegal mexicans want those jobs. At the better wages. Thoes jobs need to go to AMERICAN CITIZENS.
TLI
Yeah, it would be a real shame to have Americans actually pulling down that kind of income and doing all kinds of lazy ass things like paying taxes on it and buying homes and cars. Much better to bring in a bunch of Mexicans to work for 1/3 that and send more of it back to Mexico.
Bush said it was right to go to war damn the polls. He is now saying it is right for the country damn the polls.I trust his judgement.
AMEN!!!!!!!!!
... [jobs] that our kids used to have for spare money.
A lot of those jobs that ''our kids used to have for spare money'' are not available to anyone under 18 anymore. Anyone under 18 isn't getting a job running a lawnmower, a hedge trimmer, a snowblower. He's not running a skilsaw or working on a roofing crew. There are damned few jobs available to a 16 or 17 year old. A good part of the labor market for illegal immigrants has been created as a result of workplace safety legislation that bars workers under the age of 18 from holding a lot of jobs that they used to hold.
Aye, there's the rub. As long as you can get LOTS of cheap labor, why change?
Back in the '70s I lived in the San Joaquin valley where among other things, they grew almonds and walnuts. To harvest them you had to take a long bamboo pole and beat hell out of the tree limbs to knock the ripe nuts down. VERY labor intensive and time-consuming.
I don't know what triggered it, but the geniuses at UC Davis came up with a machine with padded jaws. They'd run that machine up to an almond or walnut tree, clutch it in its "jaws" and then rapidly shake the tree. Ergo, the crop is picked in minutes with one guy and a machine.
Now you can't tell me that American ingenuity cannot do the same with some of these stoop/labor-intensive crops. But Hey, as long as we can get these cheap Mexicans . . .
Hardly.
I also guess you would like to pay $10 apiece for a tomato or cucumber. All the farm products in this country would cost a fortune.
Now you're just being silly.
Checked out the outsourcing of jobs lately. Almost all of them are because of unions and their rules and regulations.
All those non-union engineers and programmers might have a hard time believing that.
Bush said it was right to go to war damn the polls. He is now saying it is right for the country damn the polls.I trust his judgement.
Trust Karl Rove all you want.
Did you read the article? The entire point of it is that if there's a scarcity then there's innovation:
But starting in the 1950s in Australia (where there was no large supply of foreign farm labor), farmers were compelled by circumstances to develop a laborsaving method called "dried-on-the-vine" (DOV) production.
You won't get $10 cukes because as soon as the price starts to go up then farms will either start to employ different methods (DOV in this case) or they'll get a more efficient machine.
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