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Sunday, October 01, 2006

Immigration is Good

This argues that, when the costs and benefits are compared, illegal immigration is a net benefit:

Illegal -- but Essential, by David Streitfeld, LA Times: Shortly after dawn, the day laborers began gathering beneath a San Diego Freeway overpass in West Los Angeles. A house painter pulled up in a pickup, looking for an assistant. He offered $12 an hour. A worker jumped in. Next to arrive was a white-haired woman driving a Honda. Her garden needed a makeover. She'd pay $11 an hour. She departed with a second worker. ...

Down here, at the West L.A. Community Job Center, arrangements were being made to remodel ... living rooms, landscape ... yards, rebuild ... decks. The work is undertaken by men from Mexico and Central America. Most are in this country illegally. The jobs, which last only a day or two and pay cash, are all but invisible to the state and federal governments. No one has to fill out paperwork, follow safety regulations or pay taxes.

Yet what happens here is far from marginal. The jobs that flow out of this day-laborer hiring spot — and from thousands of others around the state, some as informal as a street corner — are a pillar of California's economic strength.

To see why, check out Adrian Lopez, 20, who is kicking around a soccer ball as he waits. Lopez, who came here from the Mexican state of Oaxaca, is carrying in his Everest backpack a Sony Walkman from the Best Buy across the street. It's got a CD ... bought at a Ritmo Latino store. He has a bottle of Kirkland Premium Drinking Water, purchased at Costco, and a spare Old Navy shirt. He likes the grilled steak at Baja Bud's. ... "Immigrants buy everything here," Lopez said in Spanish.

The presence in the United States of Lopez and 12 million other illegal immigrants is one of the most contentious issues of the era. ... Economists are less divided. In the main, they say the American engines of industry and commerce have always been fueled by a steady supply of new arrivals. Immigrants, they contend, contribute to consumer spending and, instead of replacing native workers, create jobs. ...

Measuring the contributions of illegal workers is a difficult task, however. Many numbers are vague or open to dispute. A few experts contend that the gains are not clear-cut and that any benefits are far from being universally shared. ...

[E]conomists concede that [some] ... native-born Americans may be hurt by competition from illegal immigrants who are willing to work cheaply. But any harm, they say, is outweighed by the benefits to the overall economy. ... Restaurant prices are pushed down by illegal labor in the kitchen, fruit and vegetable prices by illegal field hands, new-home prices by illegal drywallers.

Immigrants aren't just a weapon against inflation. The tens of thousands of illegal nannies in the Los Angeles area, for example, lower the cost of child care, freeing mothers to return to work. This in turn increases families' incomes, which encourages spending and fuels the economy.

Many immigrants send a portion of their earnings home to their families, but their influence here remains potent. The Economic Roundtable, a Los Angeles think tank, estimates that the 400,000 illegal workers in L.A. County spend $5.7 billion annually on food, rent, transportation and other necessities.

The sales taxes they pay on all those consumer purchases boost the state treasury. The growing number of immigrants who use false papers to get payroll jobs are contributing to Social Security without the right to receive payments from the fund. That props up the beleaguered system by at least $5 billion a year, analysts say.

Other benefits may be less obvious, such as the gains in property values enjoyed by homeowners. ... Their apartments and houses may be shabby, but their sheer numbers exert a profound effect. In a state that never has enough housing, the hundreds of thousands of units rented to immigrant families put upward pressure on all prices.

Then there are the bad things that aren't happening despite the immigrants' presence. For instance, they don't seem to be creating an unemployment problem. Joblessness in California, with 24% of the country's illegal immigrants, has tracked the low national rate.

All this evidence, many economists say, makes a powerful argument that immigrants' role can be characterized as somewhere between important and irreplaceable. ...

Many Californians forcefully disagree with this assessment, saying immigrants have dragged down the quality of life in the state. They point to neighborhoods overflowing with poor immigrants. In some occupations, such as landscaping and construction, workers who don't speak Spanish say they can't get hired.

Other costs carry a more defined price tag. The California Hospital Assn. says emergency-room care for uninsured immigrants, including delivery of babies, costs taxpayers and private insurers about $650 million a year.

Whether born here or brought here, children of illegal immigrants have access to a free education. The Palo Alto-based Center for the Continuing Study of the California Economy estimates that this schooling costs as much as $6 billion annually. Teitelbaum says the cost is even higher if you take into account how the influx has strained classrooms. ...

When Panorama City in the San Fernando Valley boomed after World War II, ... General Motors made Chevrolets there, offering at peak production a solid income to more than 5,000 workers.

In 1992, the plant, the Southland's last car factory, was closed. ... Similar closures happened throughout the country. But when the plants shut down in Ohio or Pennsylvania, they tended to become permanent ruins. ... Pittsburgh, Detroit and Cleveland have had to grapple with massive, long-term population declines.

In Panorama City, vitality quickly reemerged in a new language and a new culture. What it had — which the cities back East lacked — was the proximity of Mexico. In the 1990s, ... [i]n Panorama City, the Latino population grew from a significant minority to an outright majority.

The community around the former GM plant is thriving, if not exactly upscale. The plant itself is a shopping center called, straightforwardly enough, the Plant. It is anchored by a Home Depot where illegal immigrants wait for work that will pay about half what the autoworkers got, with no benefits and no promises about tomorrow.

On the surrounding streets are clinics, cheap restaurants and music and furniture stores catering to Latinos. It's one of many centers of the informal economy in L.A., where most transactions are in cash.

To many Californians, this is not a change for the better. "I really don't consider the low-income parts of California to even be California anymore," said Kevin Waterson, an administrative employee of UC Davis, near Sacramento. "The quality of life is much more like that in Mexico."

A year ago, the Public Policy Institute of California polled state residents on whether immigrants were "a burden to California because they use public services" or "a benefit to California because of their hard work and job skills."

"Benefit" was picked by 56% and "burden" by 36%. Many of those in the latter camp, including Waterson, see illegal immigrants as competition. The struggle is less about jobs than scarce community resources, including affordable homes, gridlock-free roads and good schools.

Waterson grew up in Fontana in San Bernardino County, the son of a computer programmer and a billing clerk who were able to buy a three-bedroom house, own two cars and build a nest egg. That status, achieved by millions of Californians after World War II, now feels out of reach.

"There are a lot of places in Los Angeles I want to live that I can't afford," said Waterson, 27. "The places I can afford, I don't want to live." It's not just his perception. The Brookings Institution recently found that Los Angeles was the nation's most polarized city by wealth. ...

Waterson keeps looking for all those benefits the economists say immigration has brought to him. But if the informal economy benefits both the immigrants and the well off, it doesn't seem to be helping him and his wife, Julia, very much.

They don't use immigrants to mow the lawn or wash the car or take care of the kids. They can't afford to eat out, so they don't gain from the toil of illegal restaurant workers. They're renters, so any immigrant-driven boost to real estate just puts a home of their own further out of reach.

The informal economy that much of California has embraced so enthusiastically can be criticized on other grounds.

Small cash-and-carry shops and vendors who cater to immigrants may not pay sales taxes to the state or business license fees to local government. People who hire day laborers cheat the state by not using companies that pay payroll taxes. The laborers cheat the state by not paying income taxes. All of these groups put legal workers and legal businesses at an unfair competitive disadvantage. ...

But for Los Angeles County, the informal economy has been better than nothing — and nothing, urban affairs expert and Economic Roundtable President Daniel Flaming says, is what the county would have had otherwise.

"When manufacturing collapsed, there was no effort to salvage the infrastructure for other purposes," he said. "The formal economy here has been stagnant since the beginning of the 1990s. The only growth has been in under-the-table employment, predominantly fueled by desperate workers and in particular undocumented workers."

Without immigrants, Flaming said, Los Angeles would be smaller and weaker and poorer — Detroit or Pittsburgh or Cleveland with better weather. ... "We should be thankful to immigrants," Flaming said. "Without them, things would be much worse."

First the newcomers stabilized Panorama City. Now they are pushing it forward. The median value of a single-family home has doubled since 2000. And on the edge of the Plant mall, there's a sign that the informal economy might be yielding to a more traditional, bigger-budget state of affairs. Starbucks, that dispenser of $4 venti tangerine frappuccinos to the middle class, has just opened a store. ...

This is not a call to open the doors and say come one, come all. If too many people arrive too fast, they cannot be absorbed into the economy easily and we will have problems. But at reasonably liberal rates, with a mix of skills, there is no need to fear that immigration will bring about negative consequences. Instead, there are good reasons to believe the effects will be positive.

    Posted by on Sunday, October 1, 2006 at 03:33 AM in Economics, Immigration, Policy, Politics | Permalink  TrackBack (1)  Comments (79)

          

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    You can't accuse Mark Thoma of not presenting both sides of the argument. On Sunday he posted this:Immigration is Good This argues that, when the costs and benefits are compared, illegal immigration is a net benefit: Illegal -- but Essential, by David ... [Read More]

    Tracked on Monday, October 02, 2006 at 12:42 AM


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