TWENTY YEARS ago the leaders of Europe agreed on a bold step: a new currency called the euro. They promised that the euro would improve life for everybody—and denounced all opposition as ignorant, xenophobic, and backward. Their words gained extra plausibility because many of the opponents of the euro really were ignorant, xenophobic, and backward.
Yet the backward critics were right, and the enlightened proponents were wrong. And so it is with the immigration debate in the United States.
Nothing unifies the American elite like immigration. From Barack Obama to Paul Ryan, from the editorial board of The New York Times to that of The Wall Street Journal, from the offices of Facebook to those of Goldman Sachs, everybody who counts more or less agrees.
Yes, there are differences of detail: Democrats want a quick pathway to citizenship (so that formerly illegal residents can become voters faster); Republicans want a slower one. But compared to any other major issue before the country, the differences seem vanishingly small.
Unfortunately, the broad elite agreement in favor of something like the Senate’s Gang of Eight deal says less about the merits of the deal than about the widening gap between American political and economic elites and the country they govern.
For most Americans, the dominant economic fact of the past 15 years has been the deteriorating market for their labor. They must work longer and harder for less pay and fewer benefits. And since the financial crisis of 2008, many have found it difficult to get work at all. Unemployment still exceeds 7 percent even as we approach the fifth anniversary of the Lehman Brothers bankruptcy; nearly half of recent college graduates are unemployed or underemployed.
Yet from the point of view of some Americans, labor remains too costly. American wages—although no longer anything like the highest in the world—remain considerably higher than elsewhere on the planet, even after adjusting for productivity differentials. People earn more than they otherwise might, just by the accident of being American.
The great unspoken question in the immigration debate is whether this “living in America” wage premium is a benefit to be cherished or a problem to be overcome. To a startling extent, political leaders agree: the wage premium is a problem—and immigration is the answer.
That point of view is seldom phrased quite so bluntly. Instead we hear concern about “labor shortages,” “skills mismatches,” and “jobs Americans won’t do.” In a market economy, however, there are no shortages. There is always a price at which supply will rise to meet demand. Sometimes that price takes the form of higher pay. Sometimes it takes the form of capital investments to reduce a job’s difficulty or danger.
What employers mean when they refer to labor shortages is “shortage at the wage we prefer to pay.” Here’s how this preference operates in the labor market. Back in the mid-1970s, meatpacking was an industry overwhelmingly characterized by native-born labor. Meatpackers earned an average of $17.41 an hour, only slightly less than the average wage in all manufacturing. (All the dollar figures I’m about to use are inflation-adjusted to 2006 purchasing power.) Over the next three decades, native-born labor in the meatpacking industry was displaced by immigrant labor, much of it illegal. Wages correspondingly collapsed. By 2006, meatpackers averaged $11.47 an hour, more than $5 less than the average manufacturing wage—which had itself declined nearly $1.25 over the same period.
What’s happened to meatpacking has happened to other occupations, both unskilled (notably janitorial) and highly skilled (software engineering).
On the other hand, there’s no question that immigration has brought huge benefits to others: the immigrants themselves, of course, but also those whose work is less susceptible to immigrant competition—and who buy goods and services whose cost is lowered by immigrant labor.
It’s often said that immigration is good for “the economy.” This is true, in aggregate. Immigration means a bigger gross domestic product than we’d otherwise have. (More people equals more output.) Immigration likewise means higher productivity than we’d otherwise have. (The accountant who once vacuumed her own floor can now more readily hire Merry Maids to do the job instead, enabling her to spend more of her time billing clients.) And of course other things being equal, over time higher productivity should imply higher average incomes.
But nobody lives in “the economy.” Each of us live in our own personal economy, and more than most economic policies, immigration concentrates its benefits on some and loads its harms on others. That higher income “on average” conceals the arithmetic that the harms of immigration fall on poorer Americans while the benefits mostly accrue to wealthier people and to immigrants themselves.
It’s hard, however, to appreciate that arithmetic if you’re one of those luckier beneficiaries. American society is already organized so much in your favor that you almost come to expect one more advantage as just the way things were ordained to be. And since people like you dominate politics and media, you get one more advantage on top of all the others: the gratifying feeling that you are on the only side of the immigration argument that is entitled to a respectful hearing.