Posted on 09/06/2005 10:35:51 AM PDT by Willie Green
For education and discussion only. Not for commercial use.
Even with the economy adding jobs last year, the number of Americans who fell into poverty in 2004 rose to 37 million, up 1.1 million from 2003, according to Census Bureau figures released August 29. It marks the fourth straight increase in the government's annual poverty measure, indicating that the recovery from the 2000 recession has not "trickled down" to everyone. Indeed, the Census Bureau also reported that "2004 marked the second consecutive year in which real median household income showed no change."
These new statistics put a damper on the statement made by Commerce Secretary earlier in the month: "President Bush has created the healthy economic environment that is encouraging businesses to hire, and is raising the standard of living in America . President Bush's ambitious economic agenda has helped nearly four million Americans find employment since May 2003." However, the kind of jobs being created makes a difference as to whether living standards are being raised and whether the country is really moving forward.
One of the factors "encouraging business to hire" is the availability of cheap labor, much of it from illegal immigrants. According to an article in the November/December 2003 issue of Southwest Economy published by the Federal Reserve Bank of Dallas, "Immigrants overwhelmingly filled blue-collar jobs (operators, fabricators, and laborers) but also accounted for as much as half the growth in categories such as administrative support and services....It also means that as immigrants entered these occupations, native workers exited." This was particularly true in the blue collar category where immigrants accounted for nearly 700% of the new jobs! That means they pushed tens of thousands of Americans out of those jobs, by underbidding their wages.
As the Dallas FRB stated, "the foreign-born share of growth has risen, and it reached 51 percent of the total between 1996 and 2002." The report writers tried to put a positive spin on the situation, claiming "natives typically have more options, and during periods of weak job growth, they can exit the labor force and pursue other alternatives, such as going back to school." Of course, many Americans have no viable alternatives to working, but even those who do go back to school may not be able to find jobs when they finish their studies.
The great success story of the United States is that it raised the working class into the middle class, the real path to higher standards of living for the population as a whole. But there are those in the business community who seem to think the American achievement has been overdone. In their view, we need more poverty, not less. Open borders and a new "guest workers" program to legalize millions of illegal aliens is what groups like the Chamber of Commerce desire, in effect creating a proletariat.
To many businessmen, cutting labor costs by reducing wage levels seems expedient. And in an economy where the laws against illegal immigration have collapsed, there is even competitive pressure on firms to match what rivals may be doing, even if owners and managers may personally find the practice distasteful. But the proper way to cut labor costs per unit of output is to increase productivity, a process that boosts worker incomes and company profits at the same time, and that is the only way to elevate the living standards of an entire society. The unregulated availability of cheap labor leads away from innovation. Technological progress is promoted by the pursuit of "labor saving" methods in markets where labor supplies are tight and expensive.
Last May, a report from the Federal Reserve Bank of Philadelphia looked at whether the availability of cheap, unskilled workers with limited educations slowed the adoption of new technology. The paper, "Immigration, Skill Mix, and the Choice of Technique" by FRB economist Ethan Lewis, concluded, "Using detailed plant-level data from the 1988 and 1993 Surveys of Manufacturing Technology, we found in both 1988 and 1993, in markets with a higher relative availability of less skilled labor, comparable plants – even plants in the same narrow (4-digit SIC) industries – used systematically less automation. Moreover, between 1988 and 1993 plants in areas experiencing faster less-skilled relative labor supply growth adopted automation technology more slowly, both overall and relative to expectations, and even de-adoption was not uncommon." De-adoption! There is no positive spin for a retreat from technological progress.
Dr. Evans continued, "Manufacturing automation is particularly suited to evaluating the impact of immigration because less-skilled workers in SMT-covered industries, especially immigrants, are concentrated in labor-intensive assembly, welding, and other tasks that these technologies replace....The combined data show that, in two separate cross sections, the higher the relative number of workers who were high school dropouts in a metropolitan area, the less automated the plants in the area were. In addition, between 1988 and 1993, plants' use of technology grew more slowly, both overall and relative to forecasts, where the relative number of dropouts in the local work force grew more quickly."
The FRB studies from Philadelphia and Dallas mesh. A third of immigrants have less than a high school education, and these are heavily concentrated among illegal immigrants. The legal immigration system puts a priority on those who are educated and possess needed skills. The poverty rate among Hispanics was 21.9% in 2004, reflecting the fact that so many in this community, though hard working, are unable to make a living because they lack the skills to operate in an advanced economy. So to accommodate them, should we make out economy less advanced?
If one looks around the world at those foreign societies with the worst living standards, their problem is clearly not a lack of cheap labor. Indeed, their problem is that cheap labor is all they have. What they need is capital investment in advanced methods. Economic theory, however, argues that managers will use the least-cost method of production, and when labor is the abundant factor, labor-intensive methods will be chosen over capital-intensive methods that use relatively expensive technology. This can restructure an entire economy in the wrong direction. America's shift from a manufacturing economy where scientific progress is most fruitful, to a service economy dominated by cheap labor fits the model of a country in long-term decline.
The United States needs to choose which path it wants to follow. America has historically been an economy short on labor. Though a "nation of immigrants," there was an entire continent to fill up. Until the frontier closed a century ago, there were never enough people to utilize all the land, resources, and business opportunities available. The emphasis was thus on boosting productivity, substituting capital for labor in both field and factory, to make the best use of the working population.
The one exception was the pre-Civil War South, which used slave labor. The slave-owners prospered on their plantations, but the South as a whole stagnated. To defend their reactionary system, their political leaders even tried to undermine the policies that promoted the much more productive development of Northern industry and Midwest agriculture. The Civil War was as much a contest of economic systems as soldiers, and the Confederacy lost that audit in decisive fashion.
Economic progress needs to be U.S. policy. But to keep on that path, the flood of unskilled and impoverished aliens needs to be halted before they further drag down American living standards. National legislation, and its enforcement, must overrule the short-sighted inclinations of business. Maximizing output per worker, rather than the number of workers; and building up the skills and incomes of workers, not undermining them with the poor and the uneducated, is the right way to advance American civilization.
Outsource the lawyers.
Thanks for the ping.
I am also worried about free trade, which is linked to the issue of border security. In your opinion, are the effects of free trade policies so extensive that it's beyond repair, or can corrective action be taken to alleviate these problems? If you believe the problem can be fixed, what actions would correct the situation?
Tariffs, enforcing immigration laws.
You're right. It's so simple, yet obvious. What's the point in having immigration laws if they're going to be ignored. And the cautious, judicious use of tariffs is very much a part of the American tradition.
Those that promote unrestricted trade and unrestricted immigration have no idea about the big picture, and that being in a republic, where the people still have the vote, the more stressed a nation becomes, the more appealing it becomes for those to exploit economic tensions and fears. So while many may quote the WSJ and Limbaughs(and even on immigration he is starting to question the Bush admin) one liners, the stark reality of the siatuation is this situation can not be sustained.
It is sad that the political endgame will end badly for anything called conservative, despite the fact that such immigration polices are hardly conservative by any classical sense of the word, and I hate to say this, but if big business, the rich, agri-business, even to a large extent small business gets hit by more regulations and taxes than ever before, I wont shed a tear.
I have had it frankly, and I have had it for quite some time, along with many others who are traditional conservatives, and while I will NEVER vote for Democrats, or support them in any way, that does not mean I have to support mainstream Republicans. To paraphrase a line from a movie this summer "I wont kill you, but I dont have to save you"
"...while I will NEVER vote for Democrats, or support them in any way, that does not mean I have to support mainstream Republicans. To paraphrase a line from a movie this summer "I wont kill you, but I don't have to save you""
I agree, as Hippocrates said: "...make a habit of two things—to help, or at least to do no harm."
YOU SAID..."Get a better education - get a better job. Start your own business. Stop whining." Good advice. I did that myself. So now lets talk about the article that was posted. Key point of the article IMHO..... "If one looks around the world at those foreign societies with the worst living standards, their problem is clearly not a lack of cheap labor. Indeed, their problem is that cheap labor is all they have. What they need is capital investment in advanced methods. Economic theory, however, argues that managers will use the least-cost method of production, and when labor is the abundant factor, labor-intensive methods will be chosen over capital-intensive methods that use relatively expensive technology. This can restructure an entire economy in the wrong direction. America's shift from a manufacturing economy where scientific progress is most fruitful, to a service economy dominated by cheap labor fits the model of a country in long-term decline." This is an excellent point, and one I agree with, being an engineer. Throughout history, machines have been invented to replace labor intensive operations, the result being that economies become more productive. Importing cheap, uneducated, non literate, nonenglish speaking manual labor is going in the wrong direction...its merely a short term solution to improving productivity. Can or will you now comment on this point?
Apologize...somethins' not right with the formatting.
Yesterday I couldn't spell engineer.
Now I are one.
There is no labor surplus. There is in fact a huge demand for unskilled labor. We can meet that demand so that business can hire more management, or let the business move to where the workers are outside the US and outsource the management positions as well.
I believe that most people who are not succeeding in this economy should look into the mirror instead of pointing their fingers at Dubya or DC.
A question that is on the lips of conservatives throughout America. George W. Bush refuses to answer that question with anything other than another amnesty.
You need to get with Once-ler, he was wanting to get together a ping list...
Actually I was making fun of the ping lists, but humor is difficult with just the written word and some of my audience ain't too bright.
I'm also not for open borders and I don't know anyone who is.
I think illegal immigration should to be stopped. It is a danger to our security. Terrorists may be slipping in, and not being spotted because a family of 7 is caught instead.
I support Dubya's guest worker program to eliminate the job vacuum our shrinking native population is causing. With this one step I believe we could eliminate over 50% of the illegal flow across our borders. Perhaps much more. I am not for indiscriminately letting any one across the border. I'm for allowing workers in, not criminals and terrorists and I expect checks and registration for all guest workers.
I think it makes little sense to solve the problem of ( picking a number out of thin air ) 200,000 criminals and terrorist crossing our border by expanding the problem and trying to stop 3 million illegal crossings every year. It's like trying to stop excessive speeding by arresting everyone driving over 55MPH. Can it be done? Maybe but it will cost a lot of freedom if we give Government complete control of our lives. I remember the out cry when Dubya wanted to pass a Patriot Act designed to catch terrorists. Now we want to give them the power to investigate and capture 20 million people. That is gonna be a tough sell for some.
If I had one wish today, it would be that everyone reads and understands what you've said here. You've earned your name. Thanks. Our handlers are very arrogant and act as if they have actually created some new marvelous economic system. And we are so arrogant that we believe we can't become serfs.
Good post.
That's an fair analysis of a civilization in decline.
It seems that people in the US (and most capitalistic societies) are moving into and out of "poverty" all the time.
Mark
Yeah but we need "cheap labor" so this country can be divided and more easily ruled by the axis of venality the WSJ/NewRepublic/WeaklyStandard/NYTs editorial junta.
I figured as much. Personally, I believe any attempt to link proponents of free-market theory with advocates for illegal immigration is a product of an over-active imagination and a lazy intellect. Witness what happened above . . . someone shoots off his mouth (if that is possible on the 'net), and then runs for cover. It truly makes one question, are these people merely against illegal immigration, or something else?
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