Restricting Immigration Doesn’t Help the Blue Collar Jobless

This article first appeared on the Cato Institute site.

On January 8, Senator Tom Cotton (R-AR) gave a speech on the floor of the Senate about “putting an end, once and for all, to chain migrations.”

The main argument that Senator Cotton made is that immigrants lower the wages of blue-collar American workers. Senator Cotton said:

That means that you have thousands and thousands of workers with absolutely no consideration for what it means for the workers who are already here …

The wages of people who work with their hands and work on their feet hold the type of jobs that require you to take a shower after you get off work, not before they got to work.

Blue-collar workers have begun to see an increase in their wages over the last year for the first time in decades and that is in no small part because of the administration’s efforts to get immigration under control.

There is vast empirical evidence that contradicts Cotton and shows that the wage effect is minuscule, concentrated on only high school dropouts, or that immigration actually increases the wages of lower-skilled Americans.

Even worse for Cotton’s argument, the wages for low-skilled American workers actually rose less slowly the last time the government cut low-skilled immigration to raise wages. I’ve provided evidence pushing against Cotton’s position in previous posts, but this one will present new evidence from the Mariel Boatlift.

The last major academic debate on the wage effects of immigration concerned the Mariel Boatlift when about 125,000 Cuban refugees surged into Miami over a few months in 1980.

Indeed, this debate was so important that even Trump Administration White House aide Stephen Miller cited it in a press conference in 2017.

GettyImages-825645730 Electricians finish a building at Canal Crossing, a luxury apartment community near New Haven on August 2, 2017 in Hamden, Connecticut. Spencer Platt/Getty

The Mariel Boatlift was a wonderful quasi-natural experiment that economists have exploited numerous times to estimate the effect of immigrants on wages.

David Card wrote a paper in 1990 showing that the effect of Mariel on wages and employment was near zero. Recently, George Borjas of Harvard wrote another paper that found Mariel actually had an enormously negative effect on wages – a result that has been challenged by Giovanni Peri and Vasil Yasenov and Michael Clemens and Jennifer Hunt. Professor Borjas responded here.

I added a bit to this debate by pointing out that under Borjas’s methods, the wages of Miamians with only a high school degree rose at the same time as the Boatlift and that wages for Hispanic dropouts in Miami rose rapidly shortly after the Boatlift, a perplexing result for the most-substitutable workers.

The rest of this column will ignore the criticisms of Borjas’s Mariel Boatlift paper and instead use his methods to show that the wages of blue-collar Miamians were not negatively affected relative to the placebo cities. This will use some of the most recent and relevant economics research to see whether Senator Cotton can make a convincing case that immigrants lower the wages of blue-collar American workers.

We used the same CPS dataset that Borjas used for the full empirical exercise of 1977-2003. The placebos are comparison sets of cities. They are all cities that aren’t Miami (labeled as “Miami”), those selected by David Card, those that are similar to Miami in terms of employment prior to 1980, and those with similar low-skilled work forced prior to 1980.

I define blue-collar workers in two ways. The first is all workers with less than a college degree. The second is all workers who have at least a high school degree but less than college.

The first group of blue-collar workers is those with less than a college education. We ran a differences-in-differences model that shows a statistically significant decline in average wages by around 2.5 percent that is significant at the 1 percent level in Miami, relative to all other cities, after the Boatlift. (Table 1).

This finding is much smaller than Borjas’s negative finding. For the employment and Card placebos, native employment and wages increased at the 10 percent and 1 percent level in Miami. There were no statistically significant effects on the wages of Miamians compared to the low-skill placebo.

According to Borjas’s paper, this group of workers includes 86.9 percent of the Marielitos and 81.2 percent of native Miami workers.

The second group of blue-collar workers is those who have at least graduated high school but don’t have a college degree. Their wages increased by 5.5 percent in the Miami placebo and by 4.7 percent in the employment placebo, both at the 1 percent level, after the Boatlift (Table 2).

The effect of the Mariel Boatlift on the wages of blue-collar workers in the Card and low-skill placebos are statistically insignificant. According to Borjas’s paper, this group of workers includes 29.1 percent of the Marielitos and 54.4 percent of native Miami workers.

For both tables, the percentages are large enough that we should see a negative wage impact but we do not. The cross-skill complementarities likely cancel it out.

Table 1  

Less than College Workers

                  Miami      Card Placebo     Employment Placebo    Low-Skill Placebo

Diff in Diff  -.025***    0.009*                0.055***                         0.004

                 (0.009)     (0.005)               (0.017)                          (0.007)

Table 2  

Workers with High School Degree and Less than College

                  Miami    Card Placebo Employment Placebo Low-Skill Placebo

Diff in Diff   0.055*** 0.007             0.047***                      0.003                   

                 (0.010)   (0.005)           (0.018)                        (0.006)

The dependent variable is the natural log of weekly wages. Each specification includes city and year fixed effects. Standard errors clustered by the city.  

Significance levels denoted *** p

This quick exercise is further evidence that the wages of blue-collar Americans, most of whom have at least a high school education, are not much affected by immigrant workers.

If the goal is to bolster working class wages, cutting legal immigration will not do it.

Alex Nowrasteh is an immigration policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity.

Andrew Forrester provided substantial and important assistance for this column.