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Illegal immigration: benign or malign?

The subject of illegal immigration, always fraught with emotion, has become even more so after U.S. District Judge Susan Bolton’s recent decision to block the more controversial parts of Arizona’s immigration enforcement law. Clearly, a number of weighty issues affect immigration policy reform, but Americans opposed to doing anything drastic about illegal immigration often point to the vital role that illegal immigrants supposedly play in keeping the U.S. economy humming.

In other words, the impact of illegal immigration on the U.S. economy is benign. Is this really the case? Let us investigate.

Illegal immigrants in this country are overwhelmingly unskilled or low-skill foreign workers, and the argument frequently is made that such workers are needed because they do the jobs that Americans will not do. These jobs include activities like picking strawberries, working in the construction business and cleaning hotel rooms. If all the low-skill foreign workers engaged in such occupations were to disappear, would strawberries not get picked? Would buildings not get constructed? Would our hotels cease to provide housekeeping services?

The compelling logic of supply and demand tells us that when the supply of a good or service is reduced, its price generally rises. This means that the wage paid for the above kinds of occupations would have to rise to balance the now-reduced supply with demand. This actually would be a good thing, because it would mean higher incomes for low-skill American workers who frequently are in competition with low-skill foreign workers for the same jobs. Given our 9.5 percent unemployment rate, it is difficult to see how, particularly in the face of rising wages, there would be no American low-skill workers willing to take the jobs.

The numbers of low-skill foreign workers, both legal and illegal, have increased in the last three decades. This has caused wages to stagnate in the sectors in which these individuals work. While this has led to lower prices for certain kinds of goods and services, the more odious net effect has been a reduction in the purchasing power of low-skill families and an increase in the purchasing power of high-income families.

Indeed, the stagnation of wages for low-skill jobs has been a salient factor in the rising income inequality that we all bemoan. The economist Barry Chiswick has rightly noted that the continued increase in the flow of low-skill foreign workers is like having a regressive tax that imposes a disproportionate burden on the poorer members of our society.

If all the illegal immigrants in the United States were to magically disappear, the effect on our economy would hardly be disastrous. Adaptability and flexibility are the distinguishing features of our economy, and we would find ways to adjust to higher prices in some sectors. More importantly, life as we know it would certainly not come to an end!

Amitrajeet A. Batabyal is the Arthur J. Gosnell professor of economics at Rochester Institute of Technology; these views are his own.

8/13/10 (c) 2010 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail rbj@rbj.net.


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