SPEAKERS CONTENTS INSERTS Tables
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IMPACT OF IMMIGRATION ON RECENT IMMIGRANTS AND BLACK AND HISPANIC CITIZENS
IMMIGRATION AND CLAIMS
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
MARCH 11, 1999
Serial No. 18
Printed for the use of the Committee on the Judiciary
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For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
LINDSEY O. GRAHAM, South Carolina
MARY BONO, California
SPENCER BACHUS, Alabama
Page 3 PREV PAGE TOP OF DOCJOE SCARBOROUGH, Florida
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
THOMAS E. MOONEY, SR., General Counsel-Chief of Staff
JULIAN EPSTEIN, Minority Chief Counsel and Staff Director
Subcommittee on Immigration and Claims
LAMAR S. SMITH, Texas, Chairman
BILL McCOLLUM, Florida
Page 4 PREV PAGE TOP OF DOCELTON GALLEGLY, California
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
MARY BONO, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas
HOWARD L. BERMAN, California
ZOE LOFGREN, California
BARNEY FRANK, Massachusetts
MARTIN T. MEEHAN, Massachusetts
GEORGE FISHMAN, Chief Counsel
JIM WILON, Counsel
LAURA BAXTER, Counsel
CINDY BLACKSTON, Professional Staff
LEON BUCK, Minority Counsel
C O N T E N T S
March 11, 1999
Page 5 PREV PAGE TOP OF DOC Smith, Hon. Lamar, a Representative in Congress from the State of Texas, and chairman, Subcommittee on Immigration and Claims
Beck, Roy, Director, Numbers U.S.A.
Betts, Julian R., Associate Professor, Department of Economics, University of California, San Diego and Adjunct Fellow, Public Policy Institute of California
Borjas, George J., Professor, John F. Kennedy School of Government, Harvard University
Briggs, Vernon M., Jr., Professor, School of Industrial and Labor Relations, Cornell University
Camarota, Steven A., Resident Scholar, Center for Immigration Studies
Moore, Stephen, Director of Fiscal Policy Studies, CATO Institute
Morris, Frank L., Sr., Ph.D.
Partridge, Mark D., Professor, Department of Economics, St. Cloud State University
Page 6 PREV PAGE TOP OF DOC Spriggs, William, Director of Research and Public Policy, National Urban League
Vernez, Georges, Director, Center for Research on Immigration Policy, RAND
Wray, L. Randall, Senior Scholar, Jerome Levy Economics Institute, Bard College Fellow and Associate Professor, Department of Economics, University of Denver
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Beck, Roy, Director, Numbers U.S.A.: Prepared statement
Betts, Julian R., Associate Professor, Department of Economics, University of California, San Diego and Adjunct Fellow, Public Policy Institute of California: Prepared statement
Borjas, George J., Professor, John F. Kennedy School of Government, Harvard University: Prepared statement
Briggs, Vernon M., Jr., Professor, School of Industrial and Labor Relations, Cornell University: Prepared statement
Camarota, Steven A., Resident Scholar, Center for Immigration Studies: Prepared statement
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Jackson Lee, Hon. Sheila, a Representative in Congress from the State of Texas: Prepared statement
Moore, Stephen, Director of Fiscal Policy Studies, CATO Institute: Prepared statement
Morris, Frank, L., Sr., Ph.D.: Prepared statement
Partridge, Mark D., Professor, Department of Economics, St. Cloud State University: Prepared statement
Smith Hon. Lamar, a Representative in Congress from the State of Texas, and chairman, Subcommittee on Immigration and Claims: Prepared statement
Vernez, Georges, Director, Center for Research on Immigration Policy, RAND: Prepared statement
Wray, L. Randall, Senior Scholar, Jerome Levy Economics Institute, Bard College Fellow and Associate Professor, Department of Economics, University of Denver: Prepared statement
IMPACT OF IMMIGRATION ON RECENT IMMIGRANTS AND BLACK AND HISPANIC CITIZENS
THURSDAY, MARCH 11, 1999
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House of Representatives,
Subcommittee on Immigration
Committee on the Judiciary,
The subcommittee met, pursuant to call, at 10 a.m., in Room 2226, Rayburn House Office Building, Hon. Lamar Smith [chairman of the subcommittee] presiding.
OPENING STATEMENT OF CHAIRMAN SMITH
Mr. SMITH. The Subcommittee on Immigration and Claims will come to order. And let me make some preliminary announcements. And so while I am speaking to you, before we get to the opening statements, I note that the ranking member will come later. I know she has a conflict and is testifying before another committee.
Let me also say that we have lots of conflicts today. I hope members will be coming in over time. The Intellectual Property Subcommittee had a markup this morning. Five members of this committee are also members of that subcommittee. It is unusual for them to have a markup at this time of the year.
The Banking Committee is also having a briefing today. The ranking member of the Banking Committee is a member of this subcommittee as well, as is the chairman of the Crime Subcommittee, who is having his own hearing. And that means literally everybody else who is not otherwise engaged is here right now. And, as I said, when the other meetings finish, we will be able to as well.
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Apparently this is a vote that we have right now. Let us go on, though, and make a couple of more observations. Despite the conflicts that we have with other members not yet being here, I will not detract from the importance of this hearing, which I personally consider to be one of the most important of the year.
I want to thank all of those witnesses who have come today on both panels, the first panel as well as the second. Many individuals have come a great distance. Many individuals are here at some inconvenience. I think that the only individuals we have made happy are perhaps some of the students back on campus who are now going to get a day out of their class.
I might also say in regard to today's hearing without demeaning in any shape or form any other panel that we have had is that I do not know of another time where we have had such a collectionand I mean both panels in this commentsuch a collection of intellect and experience before.
I am tempted to go with the JFK quote about the Nobel Prize winners in the White House, but that might be only a slight exaggeration. I do appreciate everybody's being here and the expertise that they bring and then the effort that they have made as well.
Lastly, we will have to wait for this vote to be over. Then we will begin. Given the importance of the meeting, given the expertise at hand, I would expect at least a couple of sequences of questions just to alert you to sort of a time frame.
My hope was to have finished by 12:30. Perhaps we will make that. Perhaps we won't. Like I say, this is an important subject. And I do not want to short it in any way.
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I think the best thing if it is all right is that those of us who are here will go vote and return as quickly as we can, which will be in about 10 minutes. Then we will proceed. The subcommittee will stand in recess until that time.
Mr. SMITH. The Immigration Subcommittee will resume. What I am going to try to do to expedite so that we do not keep our witnesses any longer than we need to is go on. I want to give my opening statement. Then, unfortunately, we are going to have more votes come up. Then I will rush there and rush back as soon as we can. So it is going to be a little bit of a tedious process here. I thank you for your indulgence.
I also want to thank Dr. Spriggs for being willing to exchange with Stephen Moore. We made one switch on the panels because Mr. Moore needs to catch a plane at noon.
Let me go on with my opening statement. And then we will proceed and go as far as we can until the vote comes. Each year close to 900,000 legal immigrants enter the United States. Of these, about 300,000 have less than a high school education. Our hearing today considers the destructive impact of this policy on the opportunities of American workers with no more than a high school diploma. The studies suggest that those impacted within the group primarily are recent immigrants and black and Hispanic citizens.
Our policy must be to create opportunity for all. But our current immigration policy is doing just the opposite. It has created totally unintended consequences. A policy intended to bring together families is undermining families. A policy intended to open up economic opportunity is slamming the door shut on those who are ready to play by the rules.
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Among reports of a growing, prospering economy are other more troubling reports on a growing gap between well-to-do and the working poor. Today's hearing focuses on the impact of our immigration policies on these working poor.
February's unemployment rates tell the tale. The National unemployment rate is about 4 percent. But for those with less than a high school education, it is more than twice as high, over 8 percent. In Houston and many other cities where there are high recent immigrant populations, the unemployment rates are in double digits for those with less education. Where is opportunity for these individuals and their families?
Numerous polls indicate that black and Hispanic Americans know this only too well. This is no surprise, given that they are hurt disproportionately by our immigration policy today.
We cannot pretend that the adverse impact of mass immigration on minorities does not exist. We can and should find solutions to protect the jobs and wages of recent immigrants and black and Hispanic citizens.
How often do we read about the long-term unemployed or the working poor or single mothers with no mention of the serious impact of immigration on their employment, wages, and working conditions?
How often do we hear that some businesses refuse to hire young black or Hispanic men for entry-level jobs but then clamor to hire those from other countries? How often do we hear comments about the growing gap between the well-to-do and the working poor that do not mention that almost half of the relative decline in wages of high school dropouts is caused by immigration?
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Think of a single mother barely surviving in a minimum wage job who sees her annual wages depressed by $1,000 because she must compete with more and more unskilled immigrants. She very well might be a recent immigrant seeking a better life for herself and her children or she might be able to trace her roots in this country back generations and is simply seeking the American dream denied her ancestors.
Think what she could do for herself and her children with that lost money: buy a used car so she does not have to take a bus to work, put a down payment on a modest home, fix the furnace before winter comes. Worse, think what will happen if she actually loses her job because of the never-ending competition with new arrivals.
It is certainly not the immigrants themselves who are to blame and who, understandably, want to come to America. It is our immigration policy. But who knows how many people have been hurt by the unintended consequences of such an outdated immigration policy?
A series of recent studies has all documented the effects of immigration policy on low-skilled American workers and recent immigrants. The National Research Council of the National Academy of Sciences concluded that immigration was responsible for ''about 44 percent of the total decline in relative wages of high school dropouts between 1980 and 1994.''
The RAND Corporation reported that in California, ''the widening gap between the number of jobs available for non-college-educated workers and the increasing number of new non-college-educated immigrants signals growing competition for jobs and, hence, a further decline in relative earnings at the low end of the labor market.''
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The U.S. Commission on Immigration Reform, chaired by Barbara Jordan, a predecessor of the ranking member, found that ''immigration of unskilled immigrants comes at a cost to unskilled U.S. workers.''
The Hudson Institute stated that ''U.S. immigration policy serves primarily to increase the number of U.S. residents who lack even a high school degree. America must stop recruiting workers for jobs that do not exist or exist only at the lowest wages.''
The Brookings Institution publishes a paper concluding that ''immigration has had a marked adverse impact on the economic status of the least skilled U.S. workers.''
The Center for Immigration Studies calculated that ''immigration may reduce the wages of the average native in a low-skilled occupation by $1,915 a year.'' These studies just reinforce what common sense tells us.
Add three facts together. First, immigrants will account for half of the increase in the workforce in the 1990's.
Second, the skill level of immigrants relative to Americans has been declining for years. Thirty-five percent of immigrant workers who have arrived since 1990 do not have a high school education, compared to 9 percent of native-born workers. Some 300,000 legal immigrants without high school educations arrive each year and, of course, will total about 3 million this decade.
Page 14 PREV PAGE TOP OF DOC And, third, close to 90 percent of all future jobs will require post-high school education, more than a high school education.
Our policy must create opportunity for all. Current immigration policy would have many Americans and recent immigrants competing with hundreds of thousands of newcomers without high school degrees for a fixed number of low-skilled jobs. This is a recipe for disaster for millions of blue collar workers and their families.
No one should complain about the plight of the working poor or the persistence of minority unemployment or the levels of income inequality without acknowledging the unintended consequence of our present immigration policy.
Of course, immigration is neither all good nor all bad. Immigrants benefit America in many ways. But we should design our immigration policy so that it enhances, rather than diminishes, opportunities for American workers. We should protect the jobs of the working poor. We can make life easier and better for all Americans, wherever they were born.
The destruction of the jobs and wages of blue collar workers cries out for a bipartisan solution. The people's representatives should look out for the people. This hearing and one to be held in 2 weeks on the thirst of the economy for skilled and educated workers will provide obvious, common sense insights into how we can design American immigration policy to achieve this goal.
Now, that concludes my opening statement.
Page 15 PREV PAGE TOP OF DOC [The prepared statement of Mr. Smith follows:]
PREPARED STATEMENT OF HON. LAMAR SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS, AND CHAIRMAN, SUBCOMMITTEE ON IMMIGRATION AND CLAIMS
Each year, close to 900,000 legal immigrants enter the United States. Of these, about 300,000 have less than a high school education. Our hearing today considers the destructive impact of this policy on the opportunities of American workers with no more than a high school diploma. The studies suggest that those impacted within this group primarily are recent immigrants and black and Hispanic citizens.
Our policy must be to create opportunity for all. But our current immigration policy is doing just the opposite. It has created totally unintended consequences. A policy intended to bring together families is undermining families, a policy intended to open up economic opportunity is slamming the door shut on those who are ready to play by the rules.
Among reports of a growing, prospering economy are other more troubling reports on a growing gap between the well-to-do and the working poor. Today's hearing focuses on the impact of our immigration policies on those working poor.
February's unemployment rates tell the tale. The National unemployment rate is about 4%. But for those with less than a high school education, it is more than twice as high, over 8%. In Houston and many other cities where there are high recent immigrant populations, the unemployment rates are in double digits for those with less education. Where is opportunity for these individuals and their families?
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Numerous polls indicate that black and Hispanic Americans know this only too well. This is no surprise, given that they are hurt disproportionately by our immigration policy today.
We can't pretend that the adverse impact of mass immigration on minorities doesn't exist. We can and should find solutions to protect the jobs and wages of recent immigrants, and black and Hispanic citizens.
How often do we read about the long-term unemployed or the working poor or single mothers with no mention of the serious impact of immigration on their employment, wages, and working conditions?
How often do we hear that some businesses refuse to hire young black or Hispanic men for entry-level jobs, but then clamor to hire those from other countries? How often do we hear comments about the growing gap between the well-to-do and the working poor that don't mention that almost half of the relative decline in wages of high school dropouts is caused by immigration?
Think of a single mother barely surviving in a minimum wage job who sees her annual wages depressed by a thousand dollars because she must compete with more and more unskilled immigrants. She very well might be a recent immigrant seeking a better life for herself and her children. Or she might be able to trace her roots in this country back generations and is simply seeking the American Dream denied her ancestors.
Page 17 PREV PAGE TOP OF DOC Think what she could do for herself and her children with that lost moneybuy a used car so she doesn't have to take a bus to work, put a down payment on a modest home, fix the furnace before winter comes. Worse, think what will happen if she actually loses her job because of the never-ending competition from new arrivals. It is certainly not the immigrants themselves who are to blame and who understandably want to come to America, it is our immigration policy. But who knows how many people have been hurt by the unintended consequences of our outdated immigration policy?
A series of recent studies have all documented the effects of immigration policy on low-skilled American workers and recent immigrants:
The National Research Council of the National Academy of Sciences concludes that immigration was responsible for ''about 44% of the total decline in relative wage[s] of high school dropouts. . . between 1980 and 1994.''
The RAND Corporation reports that, in California, ''the widening gap between the number of jobs available for non-college-educated workers and the increasing number of new non-college-educated immigrants signals growing competition for jobs and, hence, a further decline in relative earnings at the low end of the labor market.''
The U.S. Commission on Immigration Reform, chaired by Barbara Jordan, a predecessor of the ranking member, finds that ''immigration of unskilled immigrants comes at a cost to unskilled U.S. workers. . .''
The Hudson Institute states that ''U.S. immigration policy serves primarily to increase the number of U.S. residents who lack even a high-school degree. America must stop recruiting workers for jobs that do not exist or exist only at the lowest wages.''
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The Brookings Institution publishes a paper concluding that ''immigration has had a marked adverse impact on the economic status of the least skilled U.S. workers. . . ''
The Center for Immigration Studies calculates that ''immigration may reduce the wages of the average native in a low-skilled occupation by. . . $1,915 a year.''
These studies just reinforce what common sense tells us. Add three facts together:
First: Immigrants will account for half of the increase in the workforce in the 1990s.
Second: The skill level of immigrants relative to Americans has been declining for years35% of immigrant workers who have arrived since 1990 do not have a high school education, compared to 9% of native-born workers. Some 300,000 legal immigrants without high school educations arrive each yearand will total three million this decade.
And Third: Close to 90% of all future jobs will require post-high school education.
Our policy must create opportunity for all. Current immigration policy would have many Americans and recent immigrants competing with hundreds of thousands of newcomers without high school degrees for a fixed number of low-skilled jobs. This is a recipe for disaster for millions of blue-collar workers and their families.
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No one should complain about the plight of the working poor or the persistence of minority unemployment or the levels of income inequality without acknowledging the unintended consequences of our present immigration policy.
Of course, immigration is neither all good nor all bad. Immigrants benefit America in many ways. But we should design our immigration policy so that it enhances rather than diminishes opportunities for American workers. We should protect the jobs of the working poor. We can make a better life for all Americans, wherever they were born.
The destruction of the jobs and wages of blue-collar workers cries out for a bipartisan solution. The people's representatives should look out for the people. This hearing and one to be held in two weeks on the thirst of the economy for skilled and educated workers will provide obvious, common-sense insights into how we can design American immigration policy to achieve this goal.
Mr. SMITH. If we can, let us at least proceed 10 minutes. And we will see how much longer we can go.
And we will start with Dr. L. Randall Wray, Senior Scholar at The Jerome Levy Economics Institute of Bard College. I will introduce each one of you as you all get ready to make your prepared remarks.
Dr. Wray, if you will proceed?
Page 20 PREV PAGE TOP OF DOCSTATEMENT OF L. RANDALL WRAY, SENIOR SCHOLAR, JEROME LEVY ECONOMICS INSTITUTE, BARD COLLEGE FELLOW AND ASSOCIATE PROFESSOR, DEPARTMENT OF ECONOMICS, UNIVERSITY OF DENVER
Mr. WRAY. Thank you. I want to thank the Chairman for the invitation to appear before this Committee. I have been asked to set the stage by talking about the current state of the labor market.
My prepared statement, co-authored with my colleague Marc-Andre Pigeon, examines the impact that the current expansion has had on job opportunities. In particular, we question whether the so-called rising tide has lifted all boats.
Overall, unemployment rates have fallen dramatically and employment rates have risen during the 1990's. Indeed, as Figures 1 and 2 of the Policy Brief (pages 10 and 11) indicate, the biggest improvement has been at the bottom of the educational ladder.
This is important because fully half of the American population over age 25 has not attended college. However, on closer examination, we found that the data on employment rates and unemployment rates are quite misleading for those at the bottom. In fact, less than 700,000 of the almost 12 million jobs created during the Clinton expansion went to the half of the population age 25 and over that has not attended college. This is presented in Table 2 on page 14. Indeed, high school dropouts actually suffered a net loss of 95,000 jobs over the expansion.
Job creation during the Clinton expansion was only barely enough to keep pace with the increase in the number of new college-educated workers entering the labor force. Thus, while it is true that unemployment rates are low, this does not mean there is an abundance of jobs, at least for the low-skilled.
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In any case, the problem faced by those at the bottom of the skill ladder is not really one of unemployment but, rather, that large numbers of them are simply not counted as unemployed because they drop out of the labor force.
The gaps between those with a college degree and high school dropouts are large. For example, the employment rate for college graduates over age 25 is nearly 80 percent, while it is only 40 percent for high school dropouts.
Furthermore, the long-term trend is quite shocking. Since 1970, the employment rate of those aged 25 to 64, which is the prime age for working, has risen by nearly 10 percentage points for those who attended college, while it has fallen by almost 10 percentage points for high school dropouts.
We have calculated that if the employment rate for all educational groups were brought up to that currently enjoyed by college graduates, 15 million more prime age workers will be contributing to our nation's output.
These are big numbers we are talking about. Putting 15 million more to work would easily wipe out the whole Social Security shortfall and leave plenty to resolve other economic problems of the present and future.
There are probably many reasons for the relatively poor employment experience for the half of the population that has not attended college. However, lack of job prospects has got to be an important contributing factor.
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We conclude that economic expansion alone is not enough to help the less educated, which is why we propose an employment opportunity program that would provide a job to anyone ready, willing, and able to work. These jobs could pay the minimum wage plus health and child care benefits. Administration could be decentralized with participating employers setting reasonable performance standards that would have to be met by program employees.
The Government would require a significant training component for all of these jobs in order to prepare participants for eventual private sector employment. Because of increased productivity and because private sector employers could recruit from among those employed in the program, we expect a well-designed job opportunity program to lead to greater price stability than under the current system, which relies on unemployment to reduce inflation pressures.
In conclusion, the Clinton expansion was not sufficiently robust to increase job opportunities for the less educated. Active labor market policies are required to increase their experience and training so that when private sector demand is high enough, there is an alternative to bidding up the wages of college-educated workers.
A job opportunity program can offer full employment and greater price stability while simultaneously lifting the boats of those left behind by even robust economic expansions.
Page 23 PREV PAGE TOP OF DOC [The prepared statement of Mr. Wray follows:]
PREPARED STATEMENT OF L. RANDALL WRAY, SENIOR SCHOLAR, JEROME LEVY ECONOMICS INSTITUTE, BARD COLLEGE FELLOW AND ASSOCIATE PROFESSOR, DEPARTMENT OF ECONOMICS, UNIVERSITY OF DENVER
My Prepared Statement, co-authored with my colleague Mark-Andre Pigeon, is an examination of the impact that the current expansion has had on job opportunities. In particular we question whether the ''rising tide'' has lifted all boats. The overall picture is one of falling unemployment rates and rising employment rates in the 1990's. This seems to be consistent with the view that labor markets are tight. However, employment gains have not been evenly shared. Only 700,000 of the almost 12 million new jobs created during the Clinton expansion went to the half of the population aged 25 and over that has not attended college. The putatively tight labor market has not succeeded in creating significant numbers of jobs for those with no college education.
It is true that among those aged 25 and over, unemployment rates have fallen and employment rates have risen most for those on the lower half of the education ladder. However, these numbers do not tell the whole story. First, the gaps between those with a college degree and high school dropouts are huge, especially for employment rates (an average of 79 percent and 37 percent, respectively, for the period 1992 to mid 1998). Second, the gains may be temporary as the trend toward rising employment rates and falling unemployment rates for lower-skilled workers can be expected to be reversed as soon as the economy slows, with the ''last hired'' being the ''first fired.'' Finally, and more importantly, closer analysis of the data reveals that all of the ''improvement'' in the official numbers can be explained by a decline in the population of those who have not attended collegenot by an increase in their employment levels. Indeed, we found that high school dropouts actually lost 95,000 jobs over the expansion. Job creation during the Clinton expansion was only barely enough to keep pace with the increase in the number of new college-educated workers entering the labor force.
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The crucial problem for the less educated is that most simply fall out of the labor force. Two-thirds of the more than 56 million noninstitutionalized adults aged 25 and over who are out of the labor force have no college education. Admittedly, many do not wish to work. However, it is useful to calculate how many of those currently outside the labor force might constitute a potential source of labor supply. By assuming that people with less education could have participation rates comparable to those with a college degree, we estimated that there were 26.3 million potentially employable persons aged 25 and over in 1998. If we take out those 65 and over, we estimate there are still about 15 million potentially employable persons aged 25 to 64.
Clearly, economic expansion alone is not enough to help the less educated, which is why we propose a job opportunity program to provide a job to anyone ready, willing, and able to work. These jobs would pay the minimum wage plus health and child care benefits. Administration and supervision would be decentralized, with participating employers setting reasonable performance standards that would have to be met by program employees. The Federal Government would require a significant training component for all these jobs in order to prepare participants for eventual private sector employment. Because of the increased productivity of the ''buffer stock'' of labor, and because private sector employers could recruit from among those employed in the program, we expect a well-designed job opportunity program to lead to greater price stability than under the current system, which relies on unemployment to reduce inflation pressures.
The Clinton expansion was not sufficiently robust to increase job opportunities for the less educated. Active labor market policies are required to increase their experience and training so that when private sector demand is high enough, there is an alternative to bidding up the wages of college-educated workers. The job opportunity program can offer full employment and greater price stability, while simultaneously lifting the boats of those left behind by robust economic expansions.
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Did the Clinton Rising Tide Raise All Boats?
As the long, relatively robust Clinton-era expansion comes to its apparent end, it is time to take stock of the impact it has had on labor market opportunities. The official unemployment rate has fallen to 4.5 percent, the lowest level in three decades. President Clinton is rightly proud of the number of jobs created during this expansion. The long-term downward trend of real wages that began in the early 1970's was stopped. Real wages have increased 4.2 percent since 1994, the longest period of sustained increases since the late 1960's and early 1970's. From June 1997 to June 1998, average nominal hourly earnings rose by 4.1 percent, or by 2.4 percentage points more than the rate of increase of the consumer price index (up only 1.7 percent over the same period). Further, demand for experienced and skilled workers has been so high that average weekly hours worked has climbed dramatically. Many commentators have remarked on the tightness of the labor market. Employers from various regions have reported difficulty in filling job vacancies and Federal Reserve chairman Alan Greenspan has issued warnings that the extremely low inflation rates experienced in recent years may not continue because the labor market tightness will place pressure on wages, and thus on costs and prices (Greenspan 1998).
The question we ask here, however, is whether employment gains have been shared across the labor force. More specifically, does a rising economic tide lift the boats of those with lower skill levels or will specific policies be required to provide employment opportunities to the less skilled? We find that over the entire Clinton expansion only 700,000 of the almost 12 million new jobs created went to the half of the population that has not attended college. The putatively tight labor market has not succeeded in luring workers with no college education into the labor force. Thus, even at the peak of the expansion, there is still an intolerably high level of wasted human resources. We conclude that well-targeted, active labor market policies will be required for those left behind by the Clinton rising tide.
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Overall Labor Market Conditions
Superficially, it would appear that the Clinton tide has indeed lifted all boats. Not only are the aggregate employment statistics overwhelmingly positive, but the data also suggest that employment gains are widespread across sex, race, and age categories. For example, Bureau of Labor Statistics data in Table 1 show that the unemployment rate in the first half of 1998 for males aged 20 and over is the lowest since the early 1970's. For females aged 20 and over the 1998 unemployment rate is the best since the late 1960's. Even teens (16 to 19 years old), traditionally beset by unemployment considerably higher than other population segments, are finding a more receptive job market. The teen unemployment rate is at an almost 30-year low despite the fact that, as we shall soon see, college education is more important today than it was 30 years ago for obtaining and keeping a job.
Table 1 also shows that job growth has spread to traditionally disadvantaged racial groups. Blacks and Hispanics enjoy the lowest unemployment rates since the data were first disaggregated by race in the early 1970's. To be sure, both racial groups continue to endure unemployment rates much higher than their white counterparts, indicating that there remains considerable room for progress. For example, in the first half of 1998 blacks aged 16 and over had an unemployment rate of 9.05 percent compared with 3.88 percent for whites. Employment-to-population ratios (hereafter referred to as employment rates) are more ambiguous but still suggest similar trends. The overall employment rate for workers aged 16 and over has grown steadily throughout the 1990's and is at a record high of 64.1 percent. The current expansion has also led to improvements in the employment rates for Hispanics, black teens, and black females.
Page 27 PREV PAGE TOP OF DOC The overall picture then is one of falling unemployment rates and rising employment rates in the mid 1990's. This seems to be consistent with the view that labor markets are tight. However, closer analysis indicates that this is true only for the half of the population that has attended college.
Labor Market Conditions for Low-Skilled Workers
One might expect that as an expansion continues and as labor market conditions become tight, employers would reach further down the skills continuum. Perhaps an employer would prefer to hire a college graduate, but if the market has become so tight that college graduates must be bid away from other firms, the employer might have to settle for an employee who has not earned a college degree and invest in additional training to bring the employee's skills up to the desired level. An employer who would have been happy to hire someone with a couple of years of college education might have to settle for a high school graduate. And so on down to the employer who must reach into the pool of high school dropouts.
We would expect that as labor markets tighten, unemployment rates would fall first for workers of higher skill levels and then for workers with less skill and education. Employers would then seek employees from among those who were out of the labor force, trying to entice them with appealing labor market opportunities and higher wages. We would thus see rising employment rates, first for the higher skilled and then for the lower skilled. Eventually, if labor markets became sufficiently tight, the labor force participation rates for all skill levels should converge toward some maximum feasible rate.
On the surface, this appears to be happening. For example, Joseph Ritter states that ''lower-skill groups have increased their employment rates significantly; since 1994 the ratio for those who did not finish high school has risen by about 3 percentage points'' (Ritter 1998, 1). Indeed, Ritter reports that all of thegrowth of the overall employment rate can be attributed to those who have not obtained a college degree, with the greatest gains at the lowest levels of educational attainment. As Figure 1 shows, the employment rate for those with a college degree or better has remained virtually constant throughout the expansion at just under 79 percent; the rate for those with some college (those who either did not graduate from college or earned an associate's degree) has risen 1.3 percentage points to 72.3 percent; and the rate for high school graduates has risen 1.1 percentage points to 62.7 percent. In contrast, the employment rate for high school dropouts has risen more than 3 percentage points to 39.6 percent.1
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Ritter notes that although ''unemployment rates produce a less dramatic picture'' (1998, 1), they, too, provide supporting evidence for the view that a rising tide has lifted all boats. As Figure 2 shows, between 1992 and 1998 the unemployment rate fell from 3.2 percent to 1.8 percent for college graduates, from 5.7 percent to 3.1 percent for workers with some college, and from 6.8 percent to 4.7 percent for high school graduates. As with employment rates, the largest gain was experienced at the bottom of the educational ladder: the unemployment rate fell 4.4 percentageoints to 7.1 percent for high school dropouts.
Presently, 17 percent of the population 25 and over have not finished high school, 33 percent are high school graduates but did not attend college, 25 percent have some college education or an associate's degree, and another 25 percent have a college degree (see Figure 3). Thus, the U.S. population is just about evenly divided between those who have at least some college and those who have none. Analysts believe that educational attainment is a good proxy for skill level, so the data for employment and unemployment rates seem to support the belief that the current expansion has increased job opportunities, with the greatest gains accruing to those with the lowest skill leveland especially for high school dropouts. One could conclude that if the expansion continues, job opportunities would ''trickle down'' so that eventually both the unemployment rate and the employment rate of high school dropouts might approach those for college graduates.
There are several reasons to question such a rosy scenario. First, the gaps between those who attended college and high school dropouts are huge, especially for employment rates. Well over half of noninstitutionalized high school dropouts remain out of the labor force, compared with only a quarter of those who attended college. If the current expansion raises the employment rate for high school dropouts by only about 3 percentage points over a period of 6 years, by simple extrapolation, the expansion would have to continue for another 78 years before the gap could be closed.
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Second, one would expect the trend to be reversed as soon as the economy slows, with the ''last hired'' low-skilled workers being the ''first fired.'' Many analysts, including David A. Levy and Wynne Godley of the Levy Institute, believe that the expansion will soon end and that the likelihood of a deep and prolonged recession is high. This means the gaps could become wider than they were in 1992, before the expansion.
Finally, and more importantly, careful analysis of employment and population data casts doubt even on the conclusion that employment opportunities increased significantly for the less skilled during the robust Clinton expansion. While it is true that unemployment rates fell and that employment rates rose, it is less than clear that these data indicate substantially more favorable labor market conditions for the lower half of the skills ladder. Indeed, the apparent improvement may have had more to do with reduction of the population of those who have not attended college. For example, the high school dropout population fell by 2.8 million, or 9 percent, and the number out of the labor force fell by nearly 2 million (see Table 2). Further, as we will show, almost all the job gains went to the population with at least some college education.
Figures 4 and 5 present the data in diagrammatic form to clarify the situation. The top part of Figure 4 shows that the U.S. population grew by 11.4 million between 1992 and 1998, employment rose by 11.6 million, unemployment fell by 2.7 million, and the number of individuals out of the labor force rose by 2.5 million. The situation, then, is consistent with the view that we currently have a tight labor market because employment grew faster than population. However, the bottom part of Figure 4 shows that virtually all of the population growth consisted of additions of individuals who had some college or had graduated collegetwo groups that already had high employment rates. The number of high school dropouts fell by 2.8 million, with the largest decline in the number of high school dropouts who were out of the labor force.2 Indeed, somewhat surprisingly, there was no net gain in the number of high school dropouts employed over the whole expansion. This means that all of the rise of the employment rate for that group (reported above and by Ritter) was due to a shrinking population and none to rising employment. High school graduates gained just under 800,000 jobs, while 10.8 million of the 11.6 million new jobs went to those who had at least some college education. Although it is true that the number of unemployed fell by 745,000 for high school dropouts and by 1.1 million for high school graduates, the overall employment picture is not one of substantial improvement for those with low skills. One could argue, based on the increase in their employment rate, that the situation of those who did not attend college (high school dropouts and graduates) improved. However, over the entire Clinton expansion, only about 6 percent of the new jobs (roughly 700,000 jobs) were created for the half of the population that has not attended college. Thus, we believe the data at least partially contradict the story that says a tight labor market is forcing firms to reach down to hire the less skilled.
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Figure 5 examines the employment picture in more detail. We calculated how much of the increase of employment came from a reduction in the number of unemployed, how much from a reduction in workers who are out of the labor force, and how much from population growth. Of the 11.6 million net employment increase, 2.7 million can be attributed to a reduction of unemployment, with 1.8 million attributed to a reduction of unemployment among those who did not attend college (1.1 million high school graduates and 745,000 high school dropouts) and just under 1 million to a reduction of unemployment of those with at least some college (287,000 college graduates and 572,000 with some college). The remaining increase of 8.9 million in employment can be attributed to net entrants into the labor force, due to rising population and to rising labor force participation rates. Somewhat surprisingly, high school dropouts and high school graduates account for a net loss here; reduction of unemployment (by 1.8 million) for these groups is more than the total increase of employment for these two groups (689,000)by an amount equal to more than a million. In other words, all of the employment gain that can be attributed to net entrants came from jobs given to workers who attended college. Net entrants with at least some college amounted to 10.1 million and reduction of unemployment for this group filled another 859,000 jobs. This means that 10.9 million new jobs were filled by that half of the population with at least some college education, leaving less than 700,000 new jobs to be shared by the half of the population that did not attend college.
When we further analyze the net entrants to separate re-entrants from new entrants, we estimate that all the employment growth can be attributed to new entrants. Here we have used proxies because it is impossible to identify re-entrants and new entrants using aggregate time series data. We took population growth (or decline) for each educational group and multiplied it by the group's 1992 employment rate to obtain an estimate of how many of the net additions to (subtractions from) that group's population should have been expected to find jobs (lose jobs). Again, the college-educated account for more than the total net employment gain by new entrantssheer growth of the numbers of college educated should have been sufficient to fill over 10 million new jobs. In other words, job creation during the Clinton expansion was marginally greater than what was required to provide jobs for college-educated new entrants; the ''extra'' jobs were filled by reducing the ranks of the unemployed. Job creation was not sufficient to draw workers from out of the labor force; indeed, in an important sense, there was net job opportunity loss for the low-skilled, out-of-the-labor-force individuals. This can be attributed either to relatively rapid growth of the college-educated population or to the relatively low pace of net job creation, as one prefers. The overall picture is certainly not one of tremendous employment gains for the bottom half of the skills ladder.
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Our analysis, then, raises questions about the degree of labor market tightness. Although it may be true that labor bottlenecks exist, the overall picture is not one of significant pressure on labor marketsjob creation just kept pace with the increase of the number of college-educated workers. This view is consistent with a recent analysis by Bluestone and Rose (1998), who call into question the usefulness of the unemployment rate as a measure of labor market slack because it fails to reflect accurately hours worked by people who already have jobs. This shortcoming, they argue, goes a long way toward explaining why the actual unemployment rate has bettered most conventional measures of the nonaccelerating-inflation rate of unemployment (NAIRU) without sparking inflation. The authors show how hours worked have been steadily climbing since the early 1980's, returning to a level not seen since the late 1960's and leading to a de facto labor supply increase that has kept a lid on wages. They argue that the steep decline in the unemployment rate over the last 5 years occurred alongside increased job insecurity and more or less stagnant hourly wages, which have made workers willing to work longer hours at prevailing wages. Longer working hours have increased the elasticity of labor supply so that output can rise at a fast clip without inducing inflation by producing bottlenecks for workers with particular skillssince the already employed workers can be induced to put in extra hours.
As Bluestone and Rose show, the picture for high school dropouts appears worse still when one looks at hours worked data. College workers have, on average, the longest workweek, followed by high school graduates, workers with some college, and, finally, high school dropouts. In 1995, for example, the average college worker put in 41.6 hours, 18 percent more than high school dropouts, who averaged only 35.2 hours, and the gap has been steadily widening. Whereas employees in the college graduate, some college, and high school graduate categories have all increased hours worked since the 1970's, high school dropouts have seen a systematic decline. Thus, not only are high school dropouts stymied by an unreceptive job market, but they are also missing out on one of the few ways that workers have been able to increase real income in recent years, and that is by working additional hours.
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This reinforces the notion that there remains considerable slack for those in the lowest educational category. Not only is the employment rate much lower for high school dropouts than for other educational categories, but these workers also have much unused capacity in terms of hours worked. Recent wage data give added weight to this argument. Wages and benefits for blue-collar workers rose 2.7 percent for the year ended June 1998, compared with a 4 percent increase for white-collar workers and a 3.9 percent increase for service-sector workers.
The Potentially Employable
As we noted above, unemployment rates for the less educated are significantly higher than for those with at least some college. For example, high school dropouts currently have an unemployment rate greater than 7 percent, while the rate is 1.8 percent for college graduates and 3.4 percent for the 25 and over labor force as a whole. However, much more importantly, the employment rate is strikingly lower for those with the lowest educational attainment; an astounding 57 percent of the noninstitutionalized, 25 and over, high school dropout population is currently out of the labor force, compared with just under 20 percent of college graduates in the same age group. Even after the long and robust expansion of the 1990's, over 56 million noninstitutionalized, 25 and over adults remain out of the labor forcemany times greater than the 3.9 million who are officially unemployed. Admittedly, many of the 56 million do not wish to participate in the labor force; some are willing to participate only on some conditions, and almost 27.7 million are 65 and over. However, it is useful to try to estimate how many of those currently out of the labor force might be a potential source of labor supply.
Economists have long understood that flows among official categories are large: about half of those individuals who lose jobs become officially classified as out of the labor force rather than as unemployed (Marshall, Briggs, and King 1984, 364). Further, many of those who obtain jobs come from out of the labor force rather than from the unemployed, and there are individuals who officially come from out of the labor force to join the ranks of the unemployed. Some empirical research has even shown that for certain population segments there may be no substantive difference between being unemployed and out of the labor force (Summers and Clark 1979; Tano 1991; Gonul 1992; and Jones and Riddell, forthcoming). For this reason, one cannot rely solely on data for the officially unemployed to obtain estimates of how many individuals would accept jobs if they became available. Further, job availability alone does not determine whether an individual will come into the labor force. Individuals may be out of the labor force for a number of reasons: prospective wages may be too low (for example, for those with low skills); family responsibilities may be too great (for example, a person might have to remain home to care for children or sick relatives); cultural norms and expectations may raise barriers (for example, labor force participation by women is frowned upon among some groups); poor health (mental and physical) or personal characteristics (gang membership, criminal record) may diminish individuals' desire to work and their desirability from the perspective of potential employers.
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A recent study by former Bureau of Labor Statistics economist Monica Castillo (1998) provides evidence that individuals classified as nonparticipants are not always unwilling or unable to work. Castillo found that 10 percent (or 6.2 million) of those classified as out of the labor force in 1994 said they wanted a job. Blacks and young people made up a large portion of these people. By 1995, 41 percent of nonparticipants who had said they wanted a job in the 1994 survey were in the labor force. In other words, of the 6.2 million who had been out of the labor force but said they wanted to work, more than 2.5 million came into the labor force during the next year. Castillo's study also indicates that prior work experience as well as current participation in the labor force are important factors in determining future employability. For example, only one-third of those who in 1994 were classified as nonparticipants and said they wanted a job were able to find work in 1995, compared with a 53 percent success rate (in finding a job) for those who in 1994 were classified as unemployed. These data suggest there is a significant pool of potential workers outside the measured labor force. However, most of them find it difficult to get a job even when they come into the labor force to search for work.
It is highly likely that characteristics that reduce the likelihood that one is in the labor force are negatively correlated with educational attainment. Thus, low employment rates for those without any college education cannot be attributed to lack of job availability alone. Many of these individuals have characteristics that make them less likely to be employed in addition to having low education and skills. However, we believe it is still worthwhile to obtain what might be thought of as an upper-bound estimate of the number of potentially employable, which would include not only those who are actively seeking work (now counted as unemployed), but also those who are currently out of the labor force but who might be employed if some conditions were met.
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We will assume that the labor force participation rate for college graduates, 25 and over, in the middle of 1998 (80.4 percent) represents a feasible maximum on the grounds that given tight labor markets for the highly skilled, all college graduates who want to work are now working or actively seeking work, with only some frictional unemployment and with virtually no one involuntarily out of the labor force. Using the participation rate of the college graduates to find the target number of employed (80.4 percent of the population), we then calculated how many potentially employable individuals existed for each educational category by subtracting the number of employed from the target number of employed (see Table 3). Our calculations show that as of mid 1998, there were 624,000 college graduates, 3.4 million individuals who had some college, 10.2 million high school graduates, and 12.1 million high school dropouts, for a total of 26.3 million potentially employable. This means that if we could increase labor force participation rates of all educational groups up to the rate currently experienced by college graduates, 26.3 million more individuals would be in the labor force. Obviously, this number is much in excess of the number of officially unemployed (which was less than 4 million for the 25 and over population in mid 1998).
As shown in Table 3 and Figure 6, the current expansion has reduced the number of potentially employable by about 2.5 million. Essentially, all of the reduction can be attributed to a reduction of the number of unemployed (a point we made above); in spite of the extent of the expansion, there has been no improvement with regard to job opportunities for those who are out of the labor force. The rising tide has done nothing to reduce the waste of human potential that results from keeping out of the labor force individuals who may be able to participate. If each of the 26.3 million had been employed full time and had produced $5 worth of GDP per hour employed, GDP would have been $263 billion higher.
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We separated each educational category into two age groups25 to 64 and 65 and overto see if the inclusion of people 65 and over was responsible for the startlingly high number of potentially employable workers, especially among high school dropouts (see Figure 7).3 Using the 1998 (first half) participation rate for college graduates in the age group 25 to 64, which is 88 percent, we then calculated how many potentially employable individuals existed for each educational category in the same way as before. The removal of the 65 and over population has the effect of reducing the number of potentially employable workers by about 11.4 million, with almost all of the decline accounted for by the bottom half of the education ladder.
More than half of the decline can be accounted for by high school dropouts alone. This is not surprising. First, we estimate that about two-thirds of the 65 and over population have a high school diploma or less versus about half for the entire population. Second, and from the point of view of more traditional labor market analysis, one would expect 65 and over people to place a higher premium on leisure time, especially middle-and upper-class seniors with pensions and hefty retirement funds, not to mention government safety nets. Thus, we might not expect a large influx of workers from the 65 and over population segmentespecially those with a college education.
On the other hand, given that lifetime earnings are significantly affected by educational attainment, we expect that many of the nearly 10.6 million elderly with no college experience that we counted as potentially employable would, if given a chance, supplement their relatively low retirement income with wages if jobs were made available. Indeed, the vast majority of the 65 and over population is classified as out of the labor force and the tendency is particularly striking for high school dropouts. We estimate that about 92 percent of high school dropouts aged 65 and over are out of the labor force, compared with 79 percent for college graduates of the same age. College-educated individuals 65 and over are either working or have probably chosen to stay out of the labor force. High school dropouts 65 and over probably do not have a choice.
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That being said, the figure of 15 million potentially employable workers for the 25 to 64 age group is a reasonable estimate of the number of people who could work and it might be supplemented by some number of elderly workers who would choose to participate in labor markets if given a chance. We also note that the unemployment rate for high school dropouts worsens when we exclude 65 and over individuals, rising to about 7.3 percent from 7.0 percent because few of the 65 and over population are counted as unemployed. Furthermore, no matter how one looks at it, there is still a glaring disparity between the number of potentially employable workers at the low end of the education scale and the number at the high end. Certainly, most of the unemployment for college graduates can be accounted for by frictional unemployment. The same cannot be said for high school dropouts or high school graduates who are unemployed or might be involuntarily out of the labor force.
Of course, it would be wrong to suppose that the 26.3 million potentially employable people over the age of 25, or the 15 million potentially employable in the 25 to 64 age group, are producing nothing of value. Many are caring for young children or the sick, many participate as volunteers in a variety of useful activities, many provide household services that make it easier for others to participate more fully in the labor force, and others probably participate in ''underground'' activitiessome of which may add to our nation's quality of life while others probably reduce it. Also, given our state of knowledge, it is impossible to predict accurately how many of these individuals would voluntarily participate under reasonable conditions (for example, if a job were offered at a minimum wage with a package of benefits that might include health care and child care). Our point here is not to assert that it is vital to ensure that every one of these individuals participates in the labor force, but to question the ability of a rising tide to raise all boats.
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One might object to our analysis on the basis of Occam's razor: perhaps all of those who are currently out of the labor force really are out of the labor force. We see reasons to believe that this is not the case. First, as mentioned above, we know that flows among the official categories are largea person currently counted as out of the labor force may well show up as employed or unemployed in a later survey. As the study by Castillo demonstrated, many of those currently out of the labor force do want to work and may well enter the labor force over the course of a year. Second, anecdotal evidence indicates that when a major employer announces new positions, long queues of applicants result; employers complain about the quality of applicants, but not about the lack of applicants.
It is important not to lose sight of the essence of our argument. We believe it is misleading to conduct a ''static'' analysis of labor market conditions; what is required is a ''dynamic'' analysis. Although it may be true that many of those with low educational attainment really do not want to or cannot work, this does not mean that policy should turn a blind eye to the problem. The relatively low employment rate of high school dropouts and even of high school graduates after removal of the 65 and over population indicates there is a serious social problem that apparently cannot be resolved by a robust and long expansion alone. Even if none of these individuals could be drawn into the labor force now, we need to put into place policies that would increase job opportunities for the next crop of young people who for whatever reason do not attend college. It is highly probable that the longer individuals remain outside the labor force, the less likely it becomes that they will become employed, especially if they have low educational attainment. Long bouts of unemployment also entail high personal and societal costs. Various psychological studies have linked prolonged unemployment to a drop in expectations and motivation to seek work (Feather and Davenport 1981), perception of diminished self-worth (Cohn 1978), and higher rates of suicide, mental illness, and alcohol abuse (Mallinckrodt and Fretz 1988). Other studies have shown that unemployment is highly correlated with crime, gang membership, divorce, and loss of human capital.
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Employment opportunities must be created to raise the labor force participation rates of the young who will not attend college. To repeat, half of the U.S. population has not attended college and this ratio is not likely to change any time soon. So, even if far less than our calculated 26.3 million are potentially employable today, well-designed policies could reduce the waste of human potential that undoubtedly exists and will continue to exist when over 60 percent of high school dropouts (or 42 percent after removing the 65 and over population) and nearly 40 percent of high school graduates (or 25 percent after removing the 65 and over population) are not employed, even after a long and robust expansion.
A Rising Tide Is Not Enough
Our analysis harkens back to the old debate between Keynesians and Institutionalists on the best way to increase job opportunities for disadvantaged groups. Is an expanding economy with macro policies to fine-tune aggregate demand sufficient, as the Keynesians argue, or are well-targeted micro policies required, as the Institutionalists hold? During the 1960's and 1970's the Keynesian position came to dominate. While it is true that interventionist labor market programs were tried even during the Keynesian 1960's and reached a culmination in the early 1970's, they were gradually scaled back, if not abandoned altogether, by the end of the 1970's. At the same time, the stagflationary 1970's cast doubt on Keynesian aggregate demand fine-tuning, with most economists concluding that attempts to lower unemployment rates through macro policies that kept aggregate demand high brought unacceptably high inflation rates. Thus, by the 1990's both the Keynesians and the Institutionalists had fallen out of favor.
The prevailing view now is that free markets will generate high growth and low unemployment (or, at least, the ''natural rate'' of unemployment). However, many analysts have already remarked on the curious nature of the Reagan-era expansion, during which inequality increased significantly (Peterson 1994). We have shown here that while job markets superficially appear to be tight, few job opportunities have ''trickled down.'' This complements analyses by other authors that show the Clinton expansion has not reduced inequality (Wolff 1998; Mishel and Bernstein 1995; Karoly 1996). Our conclusion is that neither the Reagan rising tide nor the Clinton rising tide has been sufficient to lift the boats at the bottom. It appears that the Institutionalists were right after all. No matter whether expansions are packaged as Keynesian-led, supply side-led, or free market-led, they must be supplemented with active labor market policy if job opportunities are to be increased for those at the bottom.
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Policy should provide paths to labor force participation other than college attendance. Even if an expansion could be maintained for decades, this would not increase the employment rates of the bottom half of the population to the rate enjoyed by college graduates. Although it is true that expansions lower unemployment rates of all groups, high unemployment rates are not the major problem for those with low educational attainment. Rather, their problem is one of low employment rates. Expansions appear to promote ''hiring off the top,'' that is, filling job vacancies with those who have attended college while doing far less for those at the bottom. We expect that inflation would be induced long before firms would ''hire off the bottom'' at a pace sufficient to significantly enhance real job opportunities for high school dropouts.
The United States has a long tradition of active labor market policies, ranging from informal policies such as unrestricted immigration in the late nineteenth and early twentieth century to broad-based policies such as the Comprehensive Employment and Training Act (CETA), which was enacted in 1973 (see Tables 4, 5, and 6). As Marshall, Briggs, and King (1984) make clear, CETA represented the apex of interventionist labor market policies that took root in the post-World War II era, particularly during the 1960's and 1970's. Prior to this Keynesian period, employment policy was to a large extent an ad hoc method of coping with an immediate problem, such as the influx of soldiers from the first and second World Wars (Smith-Fess Act, 1920; Servicemen's Readjustment Act, 1944) or a temporary measure to cope with the Great Depression (Wagner-Peyser Act, 1933). Economic policy was dominated by the view that unemployment was at worst a short-term phenomenon.5 Of course, there were some longer-term strategies, as shown in the tables, but they were concerned mainly with education (Morill Act, 1862) or apprenticeship programs (National Apprenticeship Act, 1937).
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CETA was a radically different beast. It represented an amalgamation of three important pieces of labor legislation from the 1960's and early 1970's. The first was the Manpower Development and Training Act (MDTA) of 1962, which provided for a range of services including classroom job training, adult basic education, English as a second language, counseling, and a host of other programs designed to produce workers suited to the job market. The second was the Economic Opportunity Act (EOA) of 1964, which sought to make a frontal attack on the roots of poverty through employment and training programs for children, teenagers, and older workers in rural areas. The third was the Emergency Employment Act (EEA) of 1971, which provided funds for hiring unemployed workers in public sector jobs and was designed to cope with the increasing number of unemployed. Subsumed within the EEA was the Public Service Employment (PSE) program, which was also initially seen as a temporary program to fight unemployment but was later reworked into a countercyclical fiscal tool that could also be used to redress certain sex and race imbalances in the employment ranks.
Over time, CETA changed from a comprehensive, active labor market program to a public sector employment program designed to offset private sector employment fluctuations. In 1978 CETA was reoriented toward helping only those who were both unemployed and economically disadvantaged. The 1978 changes also centralized power and added layers of complexity that reduced local interest in the program. CETA was left to die in 1982 under the Reagan administration, which replaced it with a similar though more private sector-oriented policy program called the Job Training Partnership Act (JTPA) in 1982. Since the 1980's, the Federal Government's role in labor markets has been minimal.
The long history of U.S. labor market policies gives us at least a starting point for understanding what does and does not work. Wage subsidies such as those advocated by Phelps (1997) might induce some private sector employers to hire workers with low educational attainment and provide on-the-job training. However, there is the danger that employers will simply replace existing workers with subsidized workers or that the subsidies will interfere with price signals. Another policy action worth considering is government provision of (or subsidization of) health care and child care benefits, which would make employment more attractive to those who remain out of the labor force due to family commitments or to obtain Medicaid.
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Such policies may be helpful, but we favor a more comprehensive approach. Hyman Minsky argued that an infinitely elastic demand for labor at a fixed wage would guarantee a real job opportunity for anyone who wants to work (Minsky 1986). Along similar lines, we propose a job opportunity program that would ''hire off the bottom,'' taking all those who are ready, willing, and able to work but who cannot find employers willing to hire them. The Federal Government would announce that it would provide the financing to pay the legislated minimum wage, plus health care and child care benefits, to anyone ready, willing, and able to work. Government agencies at all levels (federal, state, local) and designated not-for-profit organizations could hire as many new employees as desired, with direct labor costs, including health and child care benefits, paid by the Federal Government. Administration and supervision would thus be decentralized, with participating employers setting reasonable performance standards that would have to be met by program employees. The Federal Government would require that all these jobs have a significant training component in order to prepare participants for eventual private sector (or public sector) employment. In addition, detailed work records would be kept so that prospective nonprogram employers could recruit from among program participants. The goal would be to create a pool of employable, ''buffer stock'' labor from which employers could draw as an alternative to recruiting from colleges.
This program would ''hire off the bottom''; it would provide job opportunities to all who want to work. It would guarantee full employment, or zero unemployment, in the sense that anyone could choose to work in the program at the minimum wage. Clearly, many would choose to remain unemployed or out of the labor force rather than work at the minimum wage; it is doubtful that many unemployed college graduates would choose to work in the program. However, the program is not designed to solve the unemployment problems of the unemployed highly skilled workers, but is focused on those who cannot obtain private sector work.6
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Past U.S. experience with conceptually similar policies tells us that such a program would prove effective. Indeed, in an evaluation of public service employment policies, Gottschalk concludes that ''the U.S. experiments with PSE indicate that minimum-wage jobs would be demanded if offered'' (1998, 93). One such PSE program was the Youth Incentive Entitlement Pilot Project (YIEPP), which operated from 1978 and 1981 and offered wage subsidies to private sector employers for providing a part-time minimum wage job or full-time summer job to anyone 16 to 19 years old who stayed in school. The program proved successful at, among other things, improving earnings for teens and reducing unemployment differences between blacks and whites. YIEPP is also instructive in that it showed the limitations of private sector wage subsidies. Only 18 percent of eligible employers chose to participate in the program despite a 100 percent wage subsidy for all workers.
Our ''hire off the bottom'' policy proposal is much more ambitious than YIEPP. It can achieve a degree of employment that cannot be attained by expansion alone; the problem with traditional ''Keynesian'' stimulus programs is that they might set off inflation long before job opportunities for those with low educational attainment increase. By hiring off the bottom and by fixing the wage in the job opportunity program at the minimum wage, inflation pressures are minimized. Indeed, we believe the buffer stock of labor will lead to greater price stability than can be achieved under the current system, which relies on unemployment to reduce inflation pressures. For several reasons, discussed in Wray (1997), workers employed in the program would constitute a better pool of potential employees than the current unemployed population. An obvious reason is that someone working in the program is demonstrating that she or he is ''ready, willing, and able'' to work to a degree that most of the unemployed cannot.
Page 43 PREV PAGE TOP OF DOC As we have shown, most of the jobs created over the Clinton expansion were filled by those with at least some college education. Only a small number of the new jobs were filled by reducing the ranks of the college-educated unemployed (the number of college graduates who were unemployed fell by only 287,000 and the number of those with some college who were unemployed fell by about 500,000). Even the Clinton expansion was not sufficiently robust to cause employers to reach into the ranks of those who have not attended college. Thus, in some sense, the true price-stabilizing pool of reserve labor under the current system consists of the unemployed who have at least some college. Since this pool is far smaller than what is required to fill positions created by expansion, most new positions must be filled by new entrants with some college. In effect, the current system relies on a small cushion of perhaps three-quarters of a million unemployed with at least some college to help stabilize prices, together with whatever factors determine the flow of college-educated workers into the labor force.
As employers have demonstrated over the past expansion, most new jobs will not, and perhaps cannot, be filled by recruiting from among those who have not attended collegewhether they are classified as unemployed or out of the labor force. Policy is required to increase the experience and training of the group that does not attend college so that when private sector demand is high enough, there is an alternative to bidding up the wages of college-educated workers. The job opportunity program can offer full employment and greater price stability as complements in contrast to the conventional view of a trade-off between unemployment and inflation.
Certainly, this is only one of many possible active labor market programs that might be used to raise the employment rate of those who do not attend college. It could be supplemented with an enlarged apprenticeship program, either as a component of the job opportunity program or as a separate program. Additional funding could be provided for vocational training, through subsidies to private suppliers of such programs or through loans or other assistance to training program participants. Of course, our analysis reinforces the conclusion reached by a number of researchers that young people should stay in school. Thus, increased funding of ''stay in school'' programs is appropriate.
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Our analysis has questioned the degree to which labor markets really are tight, at least for the half of the population that has not attended college. We have also challenged the notion that a rising tide alone can significantly increase job opportunities for this group. We argue, as the old Institutionalists did, that it is time to implement a variety of active labor market policies, with a job opportunity program as its centerpiece. These policies can create conditions for full employment and price stability simultaneously.
1. Note that here and below we focus on the 25 and over population (unless otherwise indicated). This allows us to remove most individuals who would still be in high school or who might have completed high school and have not yet attended college, but who might plan to attend college. Thus, if the 25 and over population of high school dropouts declines, for example, this is primarily due to deaths rather than to an increase in the number graduating high school or attending college.
2. The category high school dropout includes people of all age groups. Being that a substantial portion of these are in the over 65 group, we can assume that most of the population decline can be attributed to deaths.
3. We removed the 65 and over population by assuming that the fraction of seniors in the 25 and over population was unchanged from 1997, the latest year for which data were readily available for the 25 to 64 population set. This can be justified because it is unlikely that population figures and the composition of population figures changed dramatically over the course of the past 7 months.
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4. Bell South Telecommunications recently said that it has taken more than 6 months to fill 500 newly created jobs in Florida. Even more surprisingly, it went through 10,000 applicants before getting the people it wanted (''Jobs Going Begging'' 1998).
5. For example, the workers employed in government make-work programs were counted as unemployed during the 1930's (Marshall, Briggs, and King 1984, 624). This clearly reflects the then dominant view that the crisis was only temporary and only temporary relief efforts were needed until ''equilibrium'' was restored.
6. We do not have space here to discuss the program in detail; the specifics are analyzed in Wray (1998 and forthcoming).
Bluestone, Barry, and Stephen Rose. 1998. The Unmeasured Labor Force, The Growth in Work Hours. Public Policy Brief no. 39. Annandale-on-Hudson, N.Y.: The Jerome Levy Economics Institute.
Castillo, Monica D. 1998. ''Persons Outside the Labor Force Who Want a Job.'' Monthly Labor Review, July.
Cohn, R. M. 1978. ''The Effect of Employment Status Change on Self Attitudes.'' Social Psychology 41: 8193.
Page 46 PREV PAGE TOP OF DOCFeather, N. T., and P. R. Davenport. 1981. ''Unemployment and Depressive Affect: A Motivational and Attributional Analysis.'' Journal of Personality and Social Psychology 41: 422436.
Gonul, Fusun. 1992. ''New Evidence on Whether Unemployment and Out of the Labor Force Are Distinct States.'' Journal of Human Resources 27, no. 2 (Spring): 329361.
Gottschalk, Peter. 1998. ''The Impact of Changes in Public Employment on Low-Wage Labor Markets.'' In Richard B. Freeman and Peter Gottschalk, eds., Generating Jobs: How to Increase Demand for Less-Skilled Workers. New York: Russell Sage Foundation.
Greenspan, Alan. 1998. ''The Economic Outlook and Challenges Facing Monetary Policy.'' Speech before the Economic Strategy Institute in Washington, D.C., January 8. Federal Reserve Board web site: http://www.bog.frb.fedus/boarddocs/speeches/default.cfm.
''Jobs Going Begging, Companies in Florida Adapt.'' 1998. New York Times, September 22, C4.
Jones, Stephen R. G., and W. Craig Riddell. Forthcoming. ''The Measurement of Unemployment: An Empirical Approach.'' Econometrica.
Karoly, Lynn A. 1996. ''Anatomy of the U.S. Income Distribution: Two Decades of Change.'' Oxford Review of Economic Policy 12, no. 1 (Spring): 7695.
Mallinckrodt, Brent, and Bruce R. Fretz. 1988. ''Social Support and the Impact of Job Loss on Older Professionals.'' Journal of Counseling Psychology 35: 281286.
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Mangum, Garth L. 1966. ''The Development of Manpower Policy, 196165.'' In Sar A. Levitan and Irving H. Siegel, eds., Dimensions of Manpower Policy: Programs and Research. Baltimore: Johns Hopkins Press.
Marshall, Ray, Vernon M. Briggs, and Allan G. King. 1984. Labor Economics. Homewood, Ill.: Irwin.
Minsky, Hyman P. 1986. Stabilizing an Unstable Economy. New Haven, Conn.: Yale University Press.
Mishel, Lawrence, and Jared Bernstein. 1995. ''America's Continuing Wage Problems: Deteriorating Real Wages for Most and Growing Inequality.'' In Lawrence Mishel and John Schmitt, eds., Beware the U.S. Model: Jobs and Wages in a Deregulated Economy. Washington, D.C.: Economic Policy Institute.
Peterson, Wallace C. 1994. Silent Depression: The Fate of the American Dream. New York: Norton.
Phelps, Edmund S. 1997. Rewarding Work. Cambridge, Mass.: Harvard University Press.
Ritter, Joseph A. 1998. ''School and Work.'' National Economic Trends, The Federal Reserve Bank of St. Louis, June.
Summers, Lawrence H., and Kim B. Clark. 1979. ''Labor Market Dynamics and Unemployment: A Reconsideration.'' Brookings Papers on Economic Activity 1:1360.
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Tano, Doki K. 1991. ''Are Unemployment and Out of the Labor Force Behaviorally Distinct Labor Force States?'' Economics Letters 36: 113117.
Wolff, Edward N. 1998. ''Recent Trends in the Size Distribution of Household Wealth.'' Journal of Economic Perspectives 12, no. 3 (Summer): 131150.
Wray, L. Randall. 1997. ''Government as Employer of Last Resort: Full Employment without Inflation.'' Working Paper no. 213. Annandale-on-Hudson, N.Y.: The Jerome Levy Economics Institute.
Forthcoming. Understanding Modern Money: The Key to Full Employment and Price Stability. Aldershot, Eng.: Elgar.
About the Authors
Marc-Andre Pigeon is a research assistant at the Levy Institute. His research interests include labor economics and finance-related issues. He has a special interest in the study of money, central bank interest rate policy, the genesis of financial crises, and the role of convention in all facets of economics. Pigeon received a B.A. from Carleton University, Ottawa, and is completing his M.A. at Ottawa University.
L. Randall Wray is a senior scholar at the Levy Institute. His current research is in the areas of full employment policy, monetary and fiscal policy, and monetary theory. Wray is a past president of the Association for Institutionalist Thought (AFIT) and is on the board of directors of the Association for Evolutionary Economics. He has been a Fulbright scholar to Italy and an Academic Specialist to Mexico for the U.S. Information Agency. Wray has published widely in journals and his latest book, Understanding Modern Money: The Key to Full Employment and Price Stability, is to be published in 1999. He received a B.A. from the University of the Pacific and an M.A. and Ph.D. from Washington University in St. Louis.
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Editor: Ajit Zacharias
The Public Policy Brief Series is a publication of The Jerome Levy Economics Institute of Bard College, Blithewood, Annandale-on-Hudson, NY 125045000. For information about the Levy Institute and to order Public Policy Briefs, call 9147587700 or 2028878464 (in Washington, D.C.), e-mail firstname.lastname@example.org, or visit the Levy Institute web site at http://www.levy.org.
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Copyright 1998 by The Jerome Levy Economics Institute. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information-retrieval system, without permission in writing from the publisher.
Mr. SMITH. Thank you, Dr. Wray. We will come back to those points during my questions.
Professor George J. Borjas is associated with John F. Kenny School of Government at Harvard University.
Page 50 PREV PAGE TOP OF DOCSTATEMENT OF GEORGE J. BORJAS, PROFESSOR, JOHN F. KENNEDY SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY
Mr. BORJAS. Let me first thank the Chairman for giving me the opportunity to discuss these very important issues before the Committee. As we all know, the resurgence of immigration in the past few decades has had a dramatic and unbalanced impact on the skill endowment of the American workforce. Although there are many skilled immigrants in this flow, there are even more less skilled immigrants.
For instance, the immigration that occurred between 1979 and 1995 increased the number of workers without a high school diploma by almost 21 percent but increased the number of workers who have at least a high school diploma by only 4 percent. And that is what I mean by unbalanced shift in the labor supply.
Today I would like to take the opportunity of being here to discuss two of the most important consequences of this very large less-skilled immigration on the U.S. economy: first, that the entry of large numbers of less-skilled immigrants probably had an adverse impact on the economic opportunities of less-skilled workers already living in the country; second, that the entry of large numbers of less-skilled immigrants redistributes wealth from less-skilled Americans to users and consumers of immigrant services and, at best, generates a small net benefit to the country.
Let me turn first to the first of these issues: the labor market impact of less-skilled immigration. It has proved difficult to document that immigration has a harmful impact on the employment opportunities of competing native workers.
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Much of the empirical evidence, however, is based on comparisons of the labor market outcomes of native workers who live in immigrant cities, such as L.A. or San Diego, with the outcomes of natives who live in cities where few immigrants live, such as Atlanta and Pittsburgh. These cross-city correlations sometimes suggest that the native wage is lower in labor markets where immigrants tend to cluster, but the wage differential between the markets may be so small that it is not worth worrying about.
But I would like to argue that a weak cross-city correlation does not necessarily prove or imply that immigrants have a benign impact on the employment opportunities of native workers.
Suppose, for example, that immigration into San Diego lowers the earnings of native workers there substantially. Native workers there will probably react. Many who move out of the area to other cities and workers who were thinking of moving to San Diego will now move someplace else instead.
As natives respond to immigration by voting with their feet, the adverse impact of immigration on the San Diego labor market is effectively diffuse to the entire economy so that in the end, all native workers who compete with immigrants and not just those who live in San Diego are worse off because of immigration.
And, in fact, recent research suggests that the economic impact of immigration at the national level, which is the correct unit in which to look at, may be quite important. As we all know, the 1980's witnessed a substantial increase in the wage gap between high school dropouts and workers with more education. The decade also witnessed the entry of very large numbers of less-skilled immigrants. It turns out that almost half of the decline in the relative wage of high school dropouts can be attributed to immigration.
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Let me now turn to the benefits for immigration and to the redistribution that takes place as a result of this. The immigration of less-skilled workers also provides benefits for the United States. These benefits arise because there exists production complementarities between immigrant workers and natives. Immigrants may bring in skills and abilities that may be scarce in the country.
All of the available estimates, however, suggest that the net benefits from immigration are quite small, probably less than $10 billion annually, even if one were to ignore the adverse fiscal impact of immigration on expenditures in social programs. This small net benefit, however, hides a potentially large redistribution of wealth that takes place from workers who compete with immigrants to persons who use or consume immigrant services. In other words, while immigration might increase the size of the economic pie slightly, it changes the way the pie is split in a very dramatic way.
This dramatic increase in wage inequality that occurred in the 1980's and 1990's raises important social, economic, and political concerns for the United States. And the fact that part of the increase in equality can be linked to immigration raises equally serious concerns about immigration policy.
In a sense, the country seems to pursue social policies that have conflicting goals. Presumably, the objective of many of the redistribution policies that are implemented through the welfare state is to redistribute income to the less-skilled to improve their economic status.
Page 53 PREV PAGE TOP OF DOC At the same time, however, current immigration policy encourages the admission of very large numbers of less-skilled workers. This type of immigration policy probably aggravates the social and economic problems faced by workers at the very bottom of the income distribution and helps undo and perhaps even unravel many of the benefits that would have accrued from the policies that are aimed to improve economic status of less-skilled workers.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Borjas follows:]
PREPARED STATEMENT OF GEORGE J. BORJAS, PROFESSOR, JOHN F. KENNEDY SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY
The resurgence of immigration that the United States experienced in the past few decades has had a dramatic-and unbalanced-impact on the skill endowment of the American work force. Although there are many skilled immigrants in this flow, there are even more less skilled immigrants. For example, the immigration that occurred between 1979 and 1995 increased the number of workers without a high school diploma by almost 21 percent, but increased the number of workers who have at least a high school diploma by only 4 percent.
This skewing of the skill distribution in the immigrant population is directly responsible for the rekindling of debate over the type of immigration policy that the United States should pursue. Today, I would like to take this opportunity to discuss the three most important consequences of less skilled immigration on the U.S. economy:
Page 54 PREV PAGE TOP OF DOC First, the entry of large numbers of less-skilled immigrants probably had an adverse impact on the economic opportunities faced by less-skilled workers already residing in the country.
Second, the entry of large numbers of less-skilled immigrants increased the tax burden that immigration imposes on native-born taxpayers.
Third, the entry of large numbers of less-skilled immigrants redistributes wealth from less-skilled Americans to users and consumers of immigrant services, and, at best, generates a small net benefit to the country.
1. THE LABOR MARKET IMPACT OF LESS SKILLED IMMIGRATION
It has proved surprisingly difficult to document that immigration has a harmful impact on the employment opportunities of competing native workers. For instance, the 1997 report of the National Academy of Sciences report argues that ''the weight of the empirical evidence suggests that the impact of immigration on the wages of competing native workers is small.''(see footnote 1)
Much of this empirical evidence, however, is based on comparisons of the labor market outcomes of native workers who reside in immigrant cities (such as Los Angeles and San Diego) with the outcomes of natives who reside in cities where few immigrants live (such as Atlanta and Pittsburgh). These ''spatial correlations'' often suggest that the average native wage is somewhat lower in labor markets where immigrants tend to cluster-but the wage differential between the markets may be so small that it is not worth worrying about.
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But I would like to point out that a weak spatial correlation does not necessarily prove that immigrants have a benign impact on the employment opportunities of native workers. Suppose, for example, that immigration into San Diego reduces the earnings of native workers there substantially. Native workers will probably react. Many will move out of the San Diego area to other cities, and workers who were considering moving to San Diego will now move somewhere else instead. As natives respond to immigration by voting with their feet, the adverse impact of immigration on the San Diego labor market is transmitted to the entire economy. In the end, all native workers are worse off because of immigration, not just those who reside in the immigrant cities.
Recent research suggests that the economic impact of immigration at the national level may be quite important. The 1980s witnessed a substantial increase in the wage gap between high school dropouts and workers with more education. The decade also witnessed the entry of large numbers of less skilled immigrants. It turns out that almost half of the decline in the relative wage of high school dropouts may be attributed to immigration.
2. LESS SKILLED IMMIGRATION AND THE WELFARE STATE
There is, by now, little disagreement over the fact that welfare use has increased rapidly in the immigrant population, and that this increase has had a dramatic impact on the tax burden borne by native-born taxpayers. The 1997 National Academy of Sciences report on the demographic and economic impact of immigration estimates that immigration increased the state-and-local taxes of the typical native household in California by $1,174 annually.(see footnote 2)
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One problem with this estimate of the annual costs of immigration is that much of the short-run fiscal impact of immigration arises because of expenditures in public schooling. Although providing schooling to immigrant children today is costly, such expenditures generate future benefits, including larger salaries and higher tax payments. A more complete accounting of the fiscal impact of immigration, therefore, must take into account not only the short-run impact, but also the long run effects that both immigrants and their descendants have on the fiscal ledger sheet.
The National Academy report also provided an estimate of the long-run fiscal impact of immigration, concluding that admitting one immigrant today yields an $80,000 total fiscal surplus at the national level over the next 300 years. Before one accepts the validity of this estimate, however, it is crucial to point out that this statistic flows directly from an assumption made in the ''fine print'' of the report. In particular, the National Academy study assumes that the federal government will finally get the courage to put its fiscal house in order in the year 2016, and pass a huge tax increase to ensure that the debt problem faced by the United States does not worsen thereafter. This assumption builds in the conclusion: immigration is beneficial because the country can spread the pain of a large tax bill over a larger population. In fact, the National Academy also conducted a simulation assuming that the federal government would continue its current tax and-spend policies. In this alternative scenario, the $80,000 net benefit quickly turned into a $15,000 net IOSS.(see footnote 3)
The short-run approachwhich looks at the fiscal impact of immigration in a single yearobviously ignores key parts of the cost-benefit calculation-and probably overstates the adverse fiscal impact of immigration over the long run. The only available long-run estimate, however, depends on an assumption that is almost certainly false, and it is this assumption that generates the result of a substantial net fiscal gain.
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3. REDISTRIBUTION AND THE GAINS FROM IMMIGRATION
The immigration of less-skilled workers also provides benefits for the United States. These benefits arise because there exist production complementarities between immigrant workers and natives: immigrants bring in skills and abilities that may be scarce in the United States. All the available estimates, however, suggest that the net benefits from immigration are small: probably less than $10 billion annuallyeven if one ignores the adverse fiscal impact of immigration on expenditures in social programs. This small net benefit, however, masks a potentially large redistribution of wealth from workers who compete with immigrants to persons who use or consume immigrant services. In other words, while immigration might increases the size of the economic pie slightly, it also changes the way the pie is split.
The dramatic increase in wage inequality that occurred in the 1980s and 1990s raises serious social, economic, and political concerns for the United States. And the fact that part of this increase can be linked to immigration raises equally serious concerns about immigration policy.
In an important sense, the United States pursues social policies that have conflicting goals. Presumably, the objective of many of the redistribution policies implemented through the welfare statefrom public assistance programs to the Earned Income Tax Creditis to redistribute income to less-skilled workers and to improve their economic status.
At the same time, immigration policy has encouraged the admission of very large numbers of less skilled workers. This type of immigration policy probably aggravates the social and economic problems faced by workers at the bottom of the income distribution, and helps undoand perhaps even unravel-many of the benefits that would have accrued from the distributive policies aimed at improving their economic status.
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Mr. SMITH. Okay. Thank you, Professor Borjas.
Dr. Camarota, I know you are gearing up there. I have already missed one vote. I think I had better go catch these next two or maybe even three, but they are 5-minute votes. So I hope we won't be too long. And I hope there will be some other members to return with me.
So we will stand in recess until that time. Thank you.
Mr. SMITH. If I could have your attention? The ranking member is in the hallway and has been sighted. So she will be here momentarily. I think we will wait just a minute for her to arrive, and then we will proceed.
Mr. Moore has changed his flight. So those of you who are anxious about whether he is going to make or not, we will make sure he does.
Mr. SMITH. My hope and intention, by the way, is to get through this hearing and not take a lunch break or, rather, not have lunch until after we have finished both panels, which may be 1 o'clock now, if that is all right with everybody.
Page 59 PREV PAGE TOP OF DOC [Recess.]
Mr. SMITH. Our ranking member has obviously arrived. So we will proceed. Dr. Camarota, if you will give us your testimony?
Mr. CAMAROTA. Good morning.
Mr. SMITH. I did not introduce you, I do not think, properly. You are Steven A. Camarota, Resident Scholar at the Center for Immigration Studies.
STATEMENT OF STEVEN A. CAMAROTA, RESIDENT SCHOLAR, CENTER FOR IMMIGRATION STUDIES
Mr. CAMAROTA. Thank you.
Good morning, Mr. Chairman and members of the Subcommittee. Thank you for inviting me to speak on this important topic.
As you are aware, over the last three decades, the immigrant population in the United States has grown enormously, from 9.6 million in 1970 to 26.3 million in 1998. At the same time as immigration increased, the skill level of immigrants relative to that of natives has declined.
As a result, immigrants make up a growing share of the unskilled and semiskilled workforce. This has important implications for the wages and job opportunities available to less-skilled natives, who increasingly find themselves in competition with an ever-growing number of immigrants.
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Just to give you a few statistics, in 1998, 36 percent of recent immigrants in the workforce lacked a high school education, compared to 9 percent of natives. Immigrants now comprise about 32 percent of all the high school dropouts in the workforce, while accounting for only 9 percent of other workers.
If we look at occupations, we see a similar pattern, with immigrants comprising 20 percent of workers in such service jobs as janitor, security guard, and child care worker but only 9 percent of individuals in managerial and professional jobs.
Attempts to measure empirically, what this actually means, for the wages and job opportunities available to natives have often come to contrary and conflicting conclusions. Older studies done in the 1980's and early 1990's which compare differences across cities generally found little effect from immigration. But, as we have already heard, these studies have been widely criticized because they are based on the assumption that the labor market effects of immigration are confined to only those cities where immigrants reside.
In order to avoid this problem, when it issued its 1997 study, the National Research Council estimated the likely impact of immigration by examining shifts at the national level in the supply of one type of worker relative to other types of workers caused by immigration.
The NRC concluded that the wages of high school dropouts, 11 million of whom are natives, are reduced by roughly 5 percent, or $13 billion, a year. I will say that again: $13 billion a year.
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Should we be concerned about the size of this effect? Some have argued no, pointing out that, after all, high school dropouts are only 10 percent of the workforce. So there is really no need to worry. But one can argue otherwise.
Dropouts make up almost one-third of native-born workers, in poverty. Additionally, 1.6 million native families or more than 3 million individuals, living in poverty depend on the wages of a person who lacks a high school education for their income and support.
Put another way, the wage losses suffered by dropouts according to the NRC study are roughly equal to combined Federal expenditures on subsidized school lunches, low-income energy assistance, and the Women, Infants, and Children Program.
In my view, if we are concerned about the poorand I certainly think we should beit is not correct to simply dismiss the effect on those who lack a high school education as unimportant.
Moreover, my own research suggests that the effect of immigration may be even greater than that estimated by the NRC. I compared differences across occupations nationally and found that immigration lowers the wages of the roughly 25 million natives employed in occupations that require no more than a high school education. And that effect may be as large as 10 percent. And since native-born minorities are about 50 percent more likely to be employed in these jobs, obviously they are much more likely to be affected.
Now, of course, other factors, such as technological change and increased trade, have also had a negative impact on less-skilled workers.
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However, immigration is unlike technology change or globalization because it is ultimately a discretionary policy of the Federal Government. After all, Congress cannot legislate a pause in the expansion of human knowledge or stop the Japanese from setting up factories in Malaysia, but it can reduce unskilled immigration.
To conclude, I think it is fair to say that arguments for or against immigration are as much political and moral as they are economic. If one is concerned about less-skilled workers in the United States, then clearly our current policy is unwise.
On the other hand, if one places a high priority on helping unskilled workers in other countries, then allowing a large number of such workers into the United States makes sense. Of course, only an infinitesimal portion of the world's poor could ever be helped in this way.
Those who support the current high level of unskilled immigration should at least do so with an understanding that it is likely to come at the expense of the most vulnerable and poorest workers in the United States.
[The prepared statement of Mr. Camarota follows:]
PREPARED STATEMENT OF STEVEN A. CAMAROTA, RESIDENT SCHOLAR, CENTER FOR IMMIGRATION STUDIES
Page 63 PREV PAGE TOP OF DOC Good morning Mr. Chairman and member of the subcommittee. My name is Steven Camarota, and I am resident.scholar at the Center for Immigration Studies, a non-profit, nonpartisan research organization which examines and critiques the impact of immigration on the United States. The Center receives no federal funds.
Few government policies can have so profound an effect on a nation as immigration. Large numbers of immigrants and their descendants cannot help but have a significant impact on the cultural, political, and economic situation in their new country. Over the last 30 years socioeconomic conditions, especially in the developing world, in conjunction with U.S. immigration policy have caused 20 million people to leave their homelands and emigrate legally to the United States. Additionally, the Immigration and Naturalization Service estimates that 420,000 new illegals settle permanently in the country each year. The current influx has caused an enormous growth in the immigrant population, from 9.6 million in 1970 (4.8% of the population) to 26.3 million (9.8% of the population) today.
As in the past, immigration has sparked an intense debate over the cost and benefits of allowing in such a large number of people. One of the central aspects of the immigration debate is its impact on American workers, especially those employed at the bottom of the labor market. These workers are thought to be especially vulnerable to immigrant competition because demand for this kind of labor is generally weak and immigrants are heavily concentrated in less-skilled and lower-paying jobs. While these workers have made some gains in the last few years, the real wages of workers at the bottom of the labor market are still below what they were in the 1970s.
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THE IMPACT ON LESS-SKILLED NATIVES
There are at least four reasons to be concerned about the impact of immigration on the wages of native workers. First, because they often come from countries where wages are much lower, immigrants may be willing to work for less. If immigrants do underbid natives for jobs, then in order to remain competitive in the labor market, natives will have to reduce their own expectations for compensation. Second, immigrants may be seen as more desirable workers by employers. If this is the case, natives will have to choose between offering their services for lower wages in order to remain competitive or suffer higher unemployment. The third reason for concern is that employers can use the threat of further immigration as a way of holding down the wages and benefits of workers. The more open the immigration policy, the more credible the threat becomes. The fourth and probably the most important reason to examine the impact of immigration on less-educated natives is that immigration increases the supply of labor. Basic economic theory predicts that the wages of those in competition with immigrants will decline as immigration increases the number of workers competing for jobs.
Turning to the first question, do immigrants work for less, especially those employed at the bottom of the labor market? For the most part, the research generally indicates that a few years after arrival, immigrant wages are very similar to those of natives in the same occupation with the same demographic characteristics. This may not be true in all places and at all times, but in general it seems that only newly arrived immigrants undercut native wages.
Page 65 PREV PAGE TOP OF DOC On the question of whether immigrants are seen as better employees, there is certainly alot of anecdotal evidence and some systematic evidence that immigrants are seen as better workers by some employers, especially in comparison to native-born African Americans. It is certainly not uncommon to find small business men and women who will admit that they prefer Hispanic or Asian immigrants over native-born blacks. This is especially true of Hispanic and Asian employers, who often prefer to hire from within their own communities. We would expect that this preference on the part of some employers to want immigrants will result in lower wages and higher unemployment for those natives who are seen as less desirable.
A study of the Harlem labor market by Newman and Lennon (1995) provides some systematic evidence that employers prefer immigrants to native-born blacks. Their study found that although immigrants were only 11 percent of the job candidates in their sample, they represented 26.4 percent of those hired. Moreover, 41 percent of the immigrants in the sample were able to find employment within one year, in contrast to only 14 percent of native-born blacks. The authors conclude that immigrants fare better in the low-wage labor market because employers see immigrants as more desirable employees than native-born African-Americans. I have also found some evidence in my work that in comparison to whites, there is an added negative effect for being black and in competition with immigrants.
While no real research has been done on this question, the threat of further immigration may also exert a significant downward pressure on wages. To see how this might work consider the following example: Workers in a meat packing plant that has seen a sudden rise in the number of immigrant workers will very quickly become aware that their employer now has another pool of labor from which he can draw. Thus, even if immigrants remain a relatively small portion of the plant's total workforce, because of our relatively open immigration policy, the potential of further immigration exists. Therefore, a relatively open immigration policy may have an effect on wages beyond what might be expected simply by looking at the number of immigrants in the country at any one time.
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The fourth reason for concern about the impact of immigration on the wages of natives is that it increases the supply of labor. Based on the March 1998 Current Population Survey there were about 16 million immigrants in the American workforce. However, they are not distributed evenly across occupations. In 1998, 31 percent of immigrants in the labor market had no high school education, and for those who entered in the preceding five years, 36 percent lacked a high school degree. In comparison, only 9 percent of natives in the work force did not have a high school education. Immigrants now comprise about 32 percent of the high school dropouts in the work force, while accounting for only 9 percent of workers with more than a high school education. If we look at occupations, we see the high concentration of immigrants at the bottom of labor market. In 1998, immigrants made up only 9 percent of individuals in managerial and professional jobs; in comparison, they comprised 20 percent of workers in service jobs, such as janitor, security guard, and child care worker. This means immigration has increased the supply of the some kinds of workers much more than others. As a result, any effect on the wages or job opportunities of natives will likely fall on natives employed in less-skilled and low-paying occupations.
Attempts to measure the actual labor market effects of recent immigration empirically have often come to contrary and conflicting conclusions. Studies done in the 1980s and early 1990s, which compared cities with different proportions of immigrants, generally found little effect from immigration (Butcher and Card, 1991; Altonji and Card, 1991; Bodas 1983, 1984). However, these studies have been widely criticized because they are based on the assumption that the labor market effects of immigration are confined to only those cities where immigrants reside.
Page 67 PREV PAGE TOP OF DOC The interconnected nature of the Nation's economy makes comparison of this kind very difficult for several reasons. Research by University of Michigan demographer William Frey (1993, 1996) and others, indicates that native-born workers, especially those natives with few years of schooling, tend to migrate out of high-immigrant areas. The migration of natives out of high-immigrant areas spreads the labor market effects of immigration from these areas to the rest of the country. There is also evidence that as the level of immigration increases to a city, the immigration of natives is reduced. In addition to internal migration patterns, the huge volume of goods and services exchanged between cities across the country creates pressure toward an equalization in the price of labor. For example, newly arrived immigrants who take jobs in manufacturing in a high-immigrant city such as Los Angeles come into direct and immediate competition with natives doing the same work in a low-immigrant city like Pittsburgh. The movement of capital seeking to take advantage of any immigrant-induced change in the local price of labor should also play a role in preserving wage equilibrium between cities. Beside the response of native workers and firms, immigrants themselves tend to migrate to those cities with higher wages. In short, the mobility of labor, goods, and capital as well as choices made by immigrants may diffuse the effect of immigration, making it very difficult to determine the impact of immigration by comparing cities.
One way researchers have attempted to deal with the problems associated with cross-city comparisons is to estimate the increase in the supply of labor in one skill category relative to another skill category brought about by immigration in the country as a whole. The wage consequences of immigration are then calculated based on an existing body of literature that has examined the wage effects of changes in the ratio of skilled to unskilled workers. The National Research Council (NRC) relied on this method in its 1997 report entitled The New Americans (Edmonston1 and Smith, 1997). The NRC estimates that immigration has had a significant negative effect only on the wages of high school dropouts. The NRC concluded that the wages of the this group, 11 million of whom are natives, are reduced by roughly five percent ($13 billion a year) as a consequence of immigration. Not a small effect. Dropouts make up a large share of the working poor. In 1998, nearly one out of three native workers living in poverty lacked a high school education. Additionally, 1.6 million native families or more than three million people living in poverty depended on the wages of a person who lacks a high school education for support. Put another way, the wage losses suffered by high school dropouts because of immigration are roughly equal to the combined federal expenditures on subsidized School Lunches, low-income energy assistance, and the Women Infants and Children program.
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My own research suggests that the effect of immigration may be even greater than the estimates in the NRC report (Camarota 1997, 1998). I compared differences across occupations nationally and found that the concentration of immigrants in an occupation does adversely affect the wages of natives in the same occupation. In other words, there is a negative relationship between the percentage of immigrants in an occupation and the wages of natives in the same occupation, even after controlling for a wide variety of factors. By treating the entire nation as one labor market and comparing the effects of immigration across occupations, this approach avoids many of the problems associated with cross-city comparison.
My results show that immigrants have a significant negative effect on the wages of natives employed in occupations performed by persons who have only a high school education or less. For the 23 percent of natives employed in these occupations (about 25 million workers), a I percent increase in the immigrant composition of their occupation reduces wages by. 8 percent. Since these occupations are now on average 19 percent immigrant, my finding suggests that immigration may reduce the wages of workers in these occupation by more than 10 percent. It should also be added that since native-born blacks and 11ispanics are 67 percent and 37 percent more likely respectively to be employed in the negatively affected occupations than are nativeborn whites, a much higher percentage of minorities are negatively affected by immigration. Moreover, because native-born blacks and Hispanics in these occupations earn on average 15 percent less than whites, the wage loss resulting from immigration is likely to represent a more significant reduction in the material prosperity for these groups.
Still other researchers have found that immigration adversely affects employment for natives. Augustine J. Kposowa (1995) found that a I percent increase in the immigrant composition of a metropolitan area increased unemployment among minorities by. 13 percent. She concludes, ''Non-whites appear to lose jobs to immigrants and their earnings are depressed by immigrants.'' In a report published by the Rand Corporation, Kevin McCarthy and Georges Vernez (1997) estimated that in California alone competition with immigrants for jobs was responsible for between 128,200 and 194,000 people being unemployed or having withdrawn from the workforce. Almost all of these individuals either are high school dropouts or have only a high school degree. Additionally, most are either women or minorities.
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Knowing that low-skilled natives are made poorer by immigration does not tell us what, if anything, we should do about it. The extent to which we take action to deal with the wage and employment effects of immigration depends on how concerned we are about the wages of the less-educated. A number of scholars have argued that the inability of low-skilled workers to earn a living wage contributes significantly to such social problems as welfare dependency, family breakup, and crime. One need not accept all the arguments made in this regard to acknowledge that a significant reduction in wages for the poorest Americans is a cause for real concern.
If we wish to do something about the effects of immigration, there are two possible sets of policy options that could be pursued. The first set would involve leaving immigration policy in place and doing more to ameliorate the harmful effects of immigration on natives in low-skilled occupations. Let me discuss two of the most commonly discussed ways of increasing wages without cutting immigration. Since the research indicates that the negative impact from immigration falls on those employed at the bottom of the labor market, an increase in the minimum may be helpful in offsetting some of the effects of immigration. Economic research indicates that the minimum wage does increase the wages for those who already have jobs. However, research also indicates that by raising the cost of labor, the minimum wage can cause unemployment by increasing the incentive to lay off workers and by making employers less willing to hire new ones. The size of the dis-employment effect, however, is a matter of significant debate in the economic literature. In regard to immigration, it seems clear that increasing the minimum wage and at the same time allowing in large numbers of less-skilled immigrants can only aggravate whatever dis-employment effects exist. In contrast, cutting low- and unskilled immigration would increase wages, without there being any potential for increasing unemployment among those earning the minimum wage.
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Another program that might be helpful in assisting those harmed by immigrant competition is the Earned Income Tax Credit (EITC). There is little doubt that the Credit increases the income of low-wage workers. However, in addition to the high cost to taxpayers, the Credit may also hold down wages because it acts as a subsidy to low-wage employers. That is, employers have less incentive to increase wages because workers are now being paid in part by the federal government. Cutting low- and unskilled immigration, on the other hand, has no such down side for less-skilled workers nor is it costly to taxpayers. Moreover, the Credit only increases earnings for those with jobs, it does not address increased unemployment among the less-skilled that comes with immigration. It is also worth remembering that dispersion of funds under the EITC is automatic. Since immigration lowers the wages for precisely those workers who already have low incomes, it is very likely that immigration increase the costs of the Credit to taxpayers. If is also possible that an increase in the Credit may only get incomes back to where they would have been had there been less immigration. Thus, to get the maximum benefit from an increase in the EITC it would be highly desirable to cut low- and unskilled immigration first and then increase the dollar value of the EITC. The resulting gains to low-wage workers are then more likely to amount to a significant improvement in the living standards of recipients.
The second set of policy options that might be enacted to deal with this problem would involve changing immigration policy with the intent of reducing job competition for natives and immigrants already here. If we were to reduce unskilled immigration we might want to change 10 the selection criteria to ensure that immigrants entering the country will not compete directly with the poorest and most vulnerable workers. At present, only about 12 percent of legal immigrants are admitted based on their skills or education. Since two-third of permanent residency visas are issued based on family relationships, reducing the flow of low-skilled legal immigrants would involve reducing the number of family-based visas. This might include eliminating the preferences now in the law for the siblings and adult children (over 21) of U.S. citizens and the adult children of legal permanent residents. These changes would not only reduce low-skilled legal immigration immediately, they would also limit the chain migration of low-skilled immigrants that occurs as the spouses of those admitted in the sibling and adult child categories petition to bring in their relatives. In addition to reducing the flow of low-skilled legal immigrants, a greater allocation of resources could be devoted to controlling illegal immigration especially in the interior of the country. This type of enforcement has not seen the same recent increases as border control. Illegal aliens tend to be very low skilled, with an estimated 75 percent lacking even a high school degree.
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BENEFITS OF IMMIGRATION
Of course, it is important to realize that wage losses suffered by the unskilled do not vanish into thin air. Many advocates of mass immigration will concede, at least in private, that low-and unskilled immigration reduces wages. However, they will point out that lower wages for the less-educated results in higher profits, and also increases the wages of more-educated Americans who can now be paid more. In other words, while immigration may make the poor poorer, it also creates a small net economic benefit for the country as a whole. The NRC estimated that the gain resulting from the wage loses suffered by the unskilled is equal to about I or 2 tenths of one percent of our total economy$1 to $10 billion. Thus, additional unskilled immigration can be justified on the ground that it creates a very small net benefit for the country as a whole, though it is bad for unskilled workers. The net gain is so small relative to the size of our economy because unskilled workers account for such a tiny proportion of the nation's total output. As a result, their wages can decline substantially without having a significant effect on the economy.
THE ECONOMIC AND FISCAL PARADOX
There is a very high cost to cheap immigrant labor. The economic benefit from immigration comes from the fact that immigrants are significantly less skilled than natives. The resulting high concentration of immigrants at the bottom of the labor market is what causes the significant wage reductions that in turn generate the net gain for employers and others. But unskilled immigrants also have a negative effect on public coffers. In other words, it is precisely those workers who create the economic benefit who are responsible for the fiscal burden. In fact, the fiscal cost (tax payments minus service use) created by immigrant households was estimated by the National Research Council to be between $11 and $22 billion dollars a year at the current time. This fiscal cost is large enough to offset the modest economic gains that come from access to immigrant labor. The fiscal burden associated with immigrants is entirely the result of low-and unskilled immigrants. The National Research Council in 1997 found that during the course of his or her lifetime, the average immigrant without a high school degree will use $89,000 more in public services than he or she pays in taxes. For an immigrant with only a high school degree the figure is $3 1,000. They also found that immigrants with a college education tend to be 12 a fiscal benefitpaying considerably more in taxes than they use in services. But, overall the fiscal effect is negative because so many immigrants are poor and uneducated. This means that when the fiscal effects of low-skilled immigrants are considered, immigration reduces the wages of the most vulnerable Americans and creates an added fiscal burden for American taxpayers. And this burden is large enough to offset up any economic gain resulting from lower wages for the unskilled. In light of its impact on the poor and public coffers, it is therefore very hard to justify the continued mass migration of very low-skilled immigrants on the grounds that it is good for the country as a whole.
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Of course, it is important to keep in mind that other factors in addition to immigration have had a negative impact on low-wage workers. Technological change and increased trade have also played a significant role in reducing the labor market opportunities for low-wage workers in the Untied States. However, immigration is unlike technological change or globalization because it is a discretionary policy that can be altered to suit our needs and values. After all, Congress cannot legislate a pause in the expansion of human knowledge or stop the Japanese from setting up factories in Malaysiabut it can reduce unskilled immigration. And based on the latest research, we can do so secure in the knowledge that doing so will not harm to the U.S. economy. In fact, it would probably be good for the country as a whole.
In the end, arguments for or against immigration are as much political and moral as they are economic. If one is concerned about low-wage and less-skilled workers in the United States, then clearly our current policy is unwise. On the other hand, if one places a high priority on 13 helping unskilled workers in other countries, then allowing in a large number of such workers makes sense. Of course, only an infinitesimal proportion of the world's poor could ever come to this country even under the most open immigration policy one might imagine. Those who support the current high level of unskilled immigration should at least do so with an understanding that it is likely to come at the expense of the most vulnerable and poorest workers in the United States.
Page 73 PREV PAGE TOP OF DOCAltonji, Joseph G. and David Card. 1991. ''The Effects of Immigration on the Labor Market Outcomes of Less-skilled Natives'' in John M. Abowd and Richard B. Freeman editors, Immigration, Trade and Labor. Chicago: University of Chicago Press.
Bodjas George. 1984. ''The Impact of Immigrants on the Earnings of the Native-Born,'' W.M. Briggs and M. Tienda, Editors, Immigration: Issues and Policies, Salt Lake City: Olympus.
Bodjas George J. 1983. ''The Substitutability of Black, Hispanic and White Labor. Economic Inquiry, Vol. 21.
Butcher, Kristin F. and David Card. 1991. ''Immigration and Wages: Evidence from the 1980s'' The American Economic Review Vol 81.
Camarota, Steven A. 1998. The Wages of Immigration: The Effect on the Low-Skilled Labor Market, Washington D.C.: Center for Immigration Studies
Camarota, Steven A. 1997. ''The Effect of Immigrants on the Earnings of Low-skilled Native Workers: Evidence from the June 1991 Current Population Survey,'' Social Science Quarterly, Vol. 78.
Edmonston, Barry and James Smith Ed. 1997. The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, Washington D.C.: National Academy Press.
Frey, William H. 1993. Race, Class and Poverty Polarization of US Metro Areas: Findings from the 1990 Census, Ann Arbor, Mich.: Population Studies Center.
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Frey, William H. 1996. ''Immigration, Domestic Migration, and Demographic Balkanization in America: New Evidence for the 1990s,'' Population and Development Review. Vol. 22.
Mr. SMITH. Thank you, Dr. Camarota.
Dr. Morris, former Dean of Morgan State University.
STATEMENT OF FRANK L. MORRIS, SR., Ph.D.
Mr. MORRIS. Thank you very much, Mr. Chairman and members of the Subcommittee.
I truly appreciate this opportunity to talk about this important issue again. My critical point is that not only are the high rates for immigration not in the interest of African Americans, they are not in the interest of low-wage Americans in general and especially those who have less than a high school education and who are in certain occupational fields.
Forgive my summary. I am not reading verbatim but from parts of my papers.
One of the things that is pretty clear is that in high immigrant occupations, 42 percent of the African American labor force is in high immigrant occupations, compared to only 22 percent of Americans in general. This I contend is one of the reasons for concern.
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My grandfather once said to me: Son, doing the right thing is often not difficult. The important thing is to know what is the right thing. It certainly is not the right thing to have high rates of immigration of less-skilled workers and the damage that this does to all Americans in the less-skilled category. African Americans are disproportionately in that category.
One of the things that we haven't recognized is how, contrary to the past, we haven't seemed to learn from the past from traditions of great African American leaders of the past. Frederick Douglass, W. E. B. duBois, Marcus Garvey, A. Philip Randolph, all recognize this fundamental issue of supply and demand, that in periods of great supply in a labor market, it means difficult times for African Americans. As the last hired and the first fired, whenever there are alternative sources of labor in America that American employers can choose form, African Americans are those who are the last chosen.
I quoted in my paper sources of numerous studies over time. One of my favorites, of course, is Sid Wilhelm's book ''Who Needs the Negro?''. This book states that it is really at times of war and at other times in tight labor markets, that African Americans can clearly benefit.
Well, in my paper, I go into the extensive discussions of the past, but I talk also about the pressures on our educational system, especially our public educational system in Texas, where 16 percent of all school-aged children are from immigrant parents. I talk about the impact of proportion of high-skilled labor and whether that has been a factor, which in my opinion, has not led us to correct the educational deficits that have a negative effect on African Americans.
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But overall the thrust of my argument, the thrust of my paper is that it is fallacious to assume that the high unemployment rates among young African Americans, is simply because they do not want jobs that are currently available.
Many areas of where we see high immigrant employment, especially in the services and construction, particularly in construction, are areas where, in the past, have been a source of significant employment for young African Americans. This simply is no longer the case in our areas of high immigration.
Now, I am not talking about a causal relationship. No one would argue, especially me, that the plight of African Americans is due to the fact that we have high rates of immigrants. Immigrants are really not the issue. What the issue is is our policy at a time when declining jobs are in manufacturing, and when declining jobs are available to the less skilled, that to have our high rates of immigration with a differential impact and in differential areas does not make sense.
The last recession, the laborers, those who are in the category of laborer, suffered disproportionately in the loss of jobs. This will also happen in the future and will make the situation be made worse because those are the jobs which also have disproportionately high immigrant participation.
In 1990, 10 percent of the U.S. labor force and a quarter of the workers without a high school diploma were immigrants. But as recently as 1998 in the labor statistics information, we see that for workers without a high school diploma, immigrants are 12.2 percent of the workforce and almost 31 percent of the immigrants do not have a high school diploma.
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African Americans, especially young African Americans, who have less skills, and less education do not need a flooded labor market to compete in. It does not help their situation.
Now, I have been consistently concerned at our deteriorating sense of American community. This seems to be deja vu all over again. In the last century, in periods of high immigration, the choice of the powers that be of American employers was to turn to immigrant labor. That delayed significantly the out-migration of African Americans from the south and to the industrial north until the first world war and afterwards, periods where there was not high immigration. This has led to significant kinds of economic lag times and difficulties for our less skilled that we still suffer from today.
So, all in all, my message is simple. It is an unfair pattern to place additional burdens on the back of our less skilled, our less educated, who in many ways are disproportionately African Americans, and to continue our policy at this high rate of immigration with disproportionate impacts in high immigrant states.
[The prepared statement of Mr. Morris follows:]
PREPARED STATEMENT OF FRANK L. MORRIS, SR., PH.D.
The current high rate of US immigration is not in the US National interest. Those especially hurt include in addition to many poor and working class African Americans include those Americans with less skills and education, especially those working in high immigrant occupations.
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In spite of a long history of African American political opposition to high immigration levels, current African American political leadership does not seem to be fully aware of either this long history or the negative effects of current immigration policies on African Americans.
As the American economy moves more and more toward a high demand for higher order intellectual and increased technical training for an information driven global technological dominant economy, the omission of generations of Aft-lean Americans who were not trained at the highest levels of science and technology in the United States will have devastating consequences. This is especially sad because if America had trained her women and minority scientists and engineers in proportion to their representation in American society. then there would not have. been the importation of foreign born scientists unless the sole purpose would be to drive down the price of scientific labor costs. The educational costs of high immigration to the nation and African Americans were even more serious at the K-12 levels.
Americans have had a long and sad history of giving preference to immigrant labor over African American labor and that pattern continues to the present. The problem is most intense and the competition is the greatest for the shrinking number of positions in the American economy which require low education and low skills. Our deteriorating sense of our American community seems to unfortunately be driving us to a new century where many African Americans will continue to lag behind our economic ladder impeded by intense immigrant competition for a -shrinking number of low skill positions and in addition increased immigrant competition for limited property tax funded public educational opportunities. To change this dismal prospect we should rationally begin to reduce our levels of immigration to levels that we can accommodate and assimilate without continually placing many of our less skilled and less educated citizens at risk.
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Mr. Chairman and members of the Subcommittee on Immigration and Claims I appreciate the opportunity to address this important issue again. The heart of my message is that the current high levels of immigration are not in the best interests of the United States as a whole and the level is especially not in the interests of some of the relatively less advantaged Americans which always included and continues to include a disproportionate share of African Americans.
Keep in mind that those who are especially hurt are not only many African Americans but also those Americans with less than a high school education, those Americans working in fields with a high proportion of immigrants working with them such as janitors, security guards, construction workers restaurant and hotel workers, taxi drivers and child care workers in high immigrant states and fields such as agriculture. In a number of these job categories the immigrant competition with African Americans has been devastating for African Americans in high immigrant states.
Our current policies are permitting one of the greatest if not the greatest wave of immigration at a time of great economic restructuring in America when real wages for the less educated have been stagnant and have only slowly begun to rise at the end of our unusual lengthy economic expansion; when the demand for unskilled American labor is on the decline and we continue to lose jobs in manufacturing, we Americans are admitting more immigrants than all the rest of the world combined and the great majority of those immigrants are unskilled.
Page 80 PREV PAGE TOP OF DOC Immigration is a clear example of many issues that currently have great impact upon African Americans but many African American political leaders either ignore it or act contrary to the interests of the African American community. This was not always the case. Until the end of world war II all African Americans leaders of stature always opposed large scale mass American immigration.(see footnote 4) Their reasons were clear. First American immigration policies were biased against people of color. Second they realized that African Americans (after slavery was abolished) were more likely to benefit from an American economy which suffered from a labor shortage rather than one with a labor surplus. Third, they realized that since African Americans were always the last hired and the first fired in labor markets, Americans seemed to prefer any available labor market supply before African Americans. Most of these conditions still persist except for the fact that overt racial discrimination in US immigration laws is no longer overt in most cases save possibly Haiti. The differences of the present from the past do not justify the lack of African American attention to this issue or the lack of African American political opposition to American immigration at this scale under current American economic conditions.
Too often the true impact of our current immigration policies on African American communities is either ignored, distorted, or not considered important enough to be given great weight or consideration in this debate. My point is not to devalue the immigrant experience, but to make the often ignored points that not only did all Americans not have an immigrant experience but more importantly, not all Americans have always benefited from an immigrant experience especially in times of large scale mass immigration.
The Effect of Past Immigration
Page 81 PREV PAGE TOP OF DOC There seems to be a selective American collective memory lapse about the negative effect of mass immigration such as we are currently experiencing upon our African American population. The fact of life is that African Americans do not currently and have not in the past benefited from periods of mass American immigration. We do not often acknowledge that the great migration of African Americans from the rural south to the north and west did not happen until mass US immigration was restricted during and after the first World War.(see footnote 5)
One of the facts of American history that is not widely discussed has been America's willingness to seem to prefer a new immigrant supply of labor when the alternative was to train and employ the more indigenous African American labor source. Booker T. Washington in his famous 1895 Atlanta exposition speech pleaded with the Industrialists not to look to a European labor supply but rather to the black and white labor supply in the south. Instead of providing vocational and craft training for blacks, America turned to an European immigrant pool of labor to stimulate first greater northern and western industries. African Americans were always the residual labor pool and never able to enjoy the benefits of full employment save for times of war when the preferred (white) immigrant supply was not available.(see footnote 6) African Americans were later denied (and continue to be denied) access to skilled craft guilds and later labor unions. The preference and utilization of immigrant over southern Black (and white) labor in the nineteenth century has helped to create an economic lag time that continues to plague African Americans as we are now on the verge of the 21st century. This new wave of immigration promises to continue to delay the timetable for many of our poor and less educated African Americans to enjoy the benefits of a more fair American economic justice.
Black basic education in the South and to a lesser degree in the North perpetrate inequitable schools under a legalized separate but equal cover until the 1950's and under formulas such as funding public schools from local property taxes which inherently bring inequities under our greatly segregated living communities in contemporary America.
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Impact of Current Immigration Levels on African Americans
Unfortunately African Americans and low income Americans are more negatively affected by current levels of immigration than any other Americans save possibly an increasing number of highly skilled and trained American Ph.Ds in some science and engineering fields. (see footnote 7)
Although the flawed immigration policy has had bad effects for all Americans, it has been devastating for American minorities such as African Americans. The generous immigration policy coupled with the much better and disproportionate and much better subsidy out of US taxpayer funds of foreign doctoral students over all American minority students and especially much better than the support given to African American doctoral students. North notes that because of the high and rising cost of graduate education, three quarters of the cost of training a typical foreign-born engineering Ph.D. from kindergarten to a doctorate is paid by the US taxpayers.(see footnote 8) This has created a situation that places the economic well being of the African American community in jeopardy because we have received inadequate doctoral training to prepare for or compete in an increasing information and higher order scientifically technologically driven current and future US economy.
The US. was the world's science and technology leader by greater margins in the 1950, 1960s and at earlier times before the great immigration importation of foreign scientists. The continued steps to increase skilled immigration in the sciences has the underlying and often unquestioned assumption that the under representations of minorities and women in American science is more a matter of limited ability among the under represented groups rather than of past and present public and private policies that have and continue to limit opportunities for the under represented groups.
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There are other issues involved with the acceptance of the relatively high levels suggested for the skilled immigrant category. The availability of a huge supply of highly educated foreign workers reduces the incentives that we will take the difficult steps to be sure that all of our native workers and scholars are likely to be developed. Furthermore it has come to light that those who often have had access to higher education in many countries overseas represent a privileged elite that had access to better educational opportunities than the majority of Americans and especially better educational opportunities than African Americans or low income Americans. Most natives of India who get access to higher education are upper class Hindus who represent only 17% of the Indian population but occupy almost all the most prestigious educational posts.(see footnote 9) We then provide often US subsidized education for doctoral degrees to students of wealth and privilege and better opportunities than we provide our own citizens. If we reduce Immigration access to these privileged flows we are then and only then likely to increase educational opportunity at home.
I point out that the presence and ready availability of foreign doctoral students does not provide the needed incentives to fix our American educational systems to provide better opportunities. For the African American minority community this is no longer a theoretical question. The loss of generations of highly trained scientists and scholars of color is more crucial than ever as we move as a society toward more global competition based upon information, communication and knowledge skills. I call this deficit the new slavery. I pointed out that the choice of immigrant person power over African American is consistent with our sad history and present condition of race relations. The evidence that this was and is a conscious choice is found in a chilling study by Leon Bouvier and John Martin of the Center for Immigration Studies. They found that since 1960, if American minorities and women had been represented in the engineering and science fields in proportion to their share of the population, immigration of foreign born scientists could be negligible. They furthermore found that the current large flows of foreign professionals into fields is likely to further discourage the difficult process of recruiting under represented parts of our population.(see footnote 10) Regrettably I can only conclude that the current status quo is doing just what it was intended to do.
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For African Americans our experience in the American labor market as the last hired but first fired has demonstrated that Americans always prefer any other labor supply over choosing African Americans if that choice is available, especially available through immigration. America had a choice from the 1960s through the 1990s. America could have increased her minority scientists through better public and private investment rather than increasing the share of foreign Ph. D.s, in science an engineering from 16.8% in 1960 to 40% in 1990.(see footnote 11) She chose not to take that route and we continue to not that route.
Sadly the effects of high immigration on African American educational opportunities are not most felt at the doctoral level. We all pay lip service to the contention that our people are our most Important resource in an economic environment that is increasingly dependent upon higher order creative, intellectual and technical skills to propel our increasingly technologically based information, communication and entertainment driven economy. Yet in many high immigrant states, African- American- students are in competition with children of Immigrant parents for a limited slice of the public school education resources. Throughout the nation almost 16% of all school age children have immigrant mothers and in my own state of Texas it is more than one in five. For those with children four years old and younger the percentages are higher. Nationwide it is almost 18% and in Texas it is more than 22%.(see footnote 12) It is no secret that in the Dallas metropolitan area where I reside, the conflict among members of the African American and Latino communities over the allocation of resources within the Dallas school board and district has been intense and unfortunate for the children.
American Preference for Immigration over African American Labor
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Make no mistake about it, the potential for employment is the greatest pull factor for immigration. If the supply of labor, especially unskilled labor, increases in markets where significant numbers of African Americans reside for any reason, you have either a wage depression or labor substitution effect upon African Americans, who because we have less education, work experience and small, business creation rates than other Americans, are disproportionally negatively impacted in those markets. I regret to point out that it is quite possible that high rates of immigration may be permitted to continue because while almost half ofAfrican Americans work in high immigrant occupations (42%), only a little more than one in five white Americans (22%) work in high Immigrant occupations.(see footnote 13)
It is important to point out that immigration is not evenly distributed across our great county but it has disproportionate impact upon states in the South and West (Texas, California and Florida) and cities of past and present significant immigrant flow patterns (Los Angeles, Houston, Miami, Chicago, New York, and Washington DC. come to mind.
A fact of life is that many African American citizens are living In dire straits in most of these areas of significant immigration. I consistently confront the myth that immigrants take jobs that other Americans such as-African Americans do not want. This is especially fallacious when we see the extent of immigrant employment in the light manufacturing, services and construction sectors.
The fact is that many African Americans, who as Americans, collectively have less access to education and higher education than other Americans, are especially anxious for job opportunities in light manufacturing, the services and especially construction. African American workers and especially young urban workers were and are being denied opportunities in construction that were given to immigrant construction workers in cities subiect to high immigrant migration.
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The argument is often made that the jobs that immigrants often take in our urban labor markets are jobs that others, such as African American laborers, do not want. The prototype of such jobs are often day labor positions. The assumption that African American workers do not want these positions is fallacious. According to recent data, the percent of immigrants in the labor force in the laborer and fabricator category (20%) almost equals the percentage of African Americans (22%).(see footnote 14)
Do not misread me. I am not posing a causal relationship Immigrants, neither legal nor illegal did not bring about the state of Black America. Yet the patience of African Americans wears thin when America welcomes and provides in this century as it did in the last, a better opportunity to achieve the American dream than it provides for African Americans.
America is the only country in the world that has mass immigration at a time of industrial restructuring of the economy. African Americans are disproportionally hurt by this process because almost half of all immigrants head for cities that also have a large number of African American residents searching and fighting for better low rent housing, better low skill requirement but high paying jobs, and better public school education for their offspring. Needless to say as manufacturing and industrial jobs decline, the competition for the other jobs becomes more intense and when this happens African Americans always lose for a variety of reasons. These reasons range from stereotypes about race to a preference to more vulnerable workers for whom the threat of deportation can be held over their heads.
In 1990, Immigrants were 10% of the US labor force and were a quarter of all workers without a high school diploma but by 1998 immigrants were 12.2% of the workforce and 31% of Immigrants, did not have a high school diploma.(see footnote 15) These workers had succeeded in displacing African American workers in such areas as the construction trade, the restaurant and hospitality services and in light manufacturing in many cities. We are creating the environment for social conflict.
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As mass immigration continues I see reports each day that spell out a continuing decline in the condition for African Americans in this country. A Wall Street Journal article(see footnote 16) pointed out that African Americans were the only Americans to suffer permanent job loses at our large corporations during the last recession. The worst losses of all categories was for laborer. The same pattern is still in effect for our next recession. Do not mistake this as a sign that African Americans do not want labor intensive jobs. Whenever we witness employers who have low skilled jobs available we find many African Americans who want to work but are often not chosen. This pattern especially holds for the impressive number of small businesses started by immigrants.
It is a sad but tragic fact that most Americans, much less most Immigrants do not really identify with most African Americans as part of a great American community primarily because of our collective and often sad history together. We now have evidence that many Immigrants. especially owners of Asian businesses in our large cities actually discriminate against- African Americans and especially African American youth in businesses located in Black communities.(see footnote 17) These immigrant owners actually prefer to hire illegal immigrants, especially illegal Hispanic Immigrants over African Americans. They readily accept the negative stereotypes of African Americans extensively portrayed in the movies and on videos. This point is critical because immigrant owned businesses account for one quarter of all low wage jobs and one third of the traditional entry jobs in both New York and Los Angles(see footnote 18). This tragedy is compounded because Black immigrants from the West Indies even discriminate against American blacks. These negative stereotypes are accepted by immigrants in spite of the fact that there are an average of 14 African American job applicants for every Harlem minimum wage job opening according to a study done by a Columbia University anthropologist.(see footnote 19)
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1995. P. 1.
We assume that past history does not impact on current events. Ale refuse to accept the possibility that to the extent that African. Americans see themselves being disadvantaged by newcomers, it is natural to feel resentment which may translate into desperation, racial tensions and violence. We should require that a immigrants show an understanding of American history and language by having to pass a test that they understand and are willing to accept some hard won parts of our American tradition on such issues as racial and gender equality.(see footnote 20) Many immigrants come from cultures where these concepts are foreign to their experience and they are less likely to have the opportunity to understand and address them if they also have no command of the English language. It goes without saying that American legislators should take the lead to see to it that there are incentives created for America to only admit Immigrants, with an appreciation for and an awareness of our history and traditions which place great value upon racial and gender equality and an appreciation for the long difficult road to achieve those gains.
I am consistently concerned with our deteriorating sense of an American community where we should have a greater responsibility to other Americans before we give the priority to non American citizens. We need to help protect American workers, especially low skilled African American workers, from the job displacement and eventual job wage depressing effect of workers who should not be competing in the American workplace. I note, with regret, the fact that many will identify and have great sympathy for the overall plight of Immigrant workers but be callus toward the fate of other Americans who have suffered from years and generations of unfair treatment. During many of these years and generations of unfair and discriminatory treatment, from other Americans to African Americans, immigrant Americans were able to benefit from employment opportunities which in the past were denied to African Americans. How unfair it is that this pattern still strongly influenced by high immigration levels continues to negatively effect African American workers.
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Just as immigration policy was and has been a contributing factor to the limited employment opportunities for African Americans in the last century and for at least 3 decades of this century, it is time that the labor market effects, especially the labor market effects of immigration on African Americans and other low income workers be addressed as a top priority. Our sense of common purpose and the brother and sisterhood of our shared American experience should permit us to do no less. We must begin to address the craps in our immigration policies that compound the disadvantages of our people of color at a time when the economic indicators for low income, low skilled African American is dismal. If we are not going to address this issue, then who will?
Frank Morris, retired most recently from the faculty of the University of Texas at Dallas as a visiting professor in the School of Social Sciences. He is also the principal representative in America of the Focus Consulting Group, a European company with offices in London, Brussels and Amsterdam.
In 1995 Dr. Morris refired as the Dean of Graduate Studies arid Research at Morgan State University in Baltimore. At Morgan he was instrumental in helping to land a five year five million dollar national transportation center and helping Morgan and eight other HBCU (Historically Black) graduate schools gain access to graduate support from title III of the federal Higher Education Act. He assisted in the completion of more than 30 student doctorates at Morgan.
Page 90 PREV PAGE TOP OF DOC His prior academic positions were ass Associate Dean of the Graduate School of Public Affairs at the University of Maryland at College Park, Visiting Professor in the O'Connor Chair at Colgate University, Associate Professor of Political Science and Urban Affairs at Northwestern University in Evanston Ill., and as a N41T teaching assistant.
His non academic experiences include: Executive Director of the Congressional Black Caucus Foundation (8385), service as a (non-retired) senior foreign service officer for the US. Agency for International Development in the State Department Chief of lanning arid Policy Analysis for the Federal Community Services Administration, Special Assistant to the Director of the National Institute for Education, arid other service in HUD and the New York State Mental Health Research Unit.
He received his BA. with High Honors from Colgate, a Masters in Public Administration from Syracuse (Maxwell School), and a Ph.D. in Political Science from the. Massachusetts Institute of Technology (MIT). His areas of expertise include international management, policy analysis and evaluation with specialties in immigration policy, education and environmental policies and public policies that impact upon African Americans. He has testified many times before the United States Congress. His honors an., include three awards from 3 different local NAACP chapters, the Superior Honor Award from the Department of State (the second highest State Department award), and a selection, in 1975, as a father of the year by the Chicago Defender newspaper.
He is a past president of the Council of Historically Black Graduate Schools and he represented the organization at the 1994 leadership summit called by the National NAACP. He is on the Board of the Center for Immigration Studies. He currently is Chairman of the Board of the Diversity Alliance for a Sustainable America (DASA) an organization of people of Color and Immigrants in support of a new American immigration policy with. reduced levels of legal arid illegal immigration. He has served on the Executive Deans Committee of the African American institute, the NAACP National Educational Advisory Board, the Minority Committee of the Council of Graduate Schools and the Graduate Record Examination (ETS) Graduate Dean Advisory Committee. He is on the National Board of Advisers of the Carrying Capacity Network (CCN.).
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In his UCC church service he currently is the National Chair man of the Board of (Domestic US) Homeland Ministries of the United Church of Christ..
He has been married for more than 40 years to the former M. Winston Baker. They have four children, two grown sons and two daughters, and they have four grandchildren. They reside in DeSoto Texas.
Mr. SMITH. Thank you, Dr. Morris.
Mr. Moore is the Director of Fiscal Policy Studies at the Cato Institute.
STATEMENT OF STEPHEN MOORE, DIRECTOR OF FISCAL POLICY STUDIES, CATO INSTITUTE
Mr. MOORE. Thank you, Mr. Chairman. And thank you, Congresswoman Jackson Lee, for inviting me to testify today. I appreciate your accommodating my schedule. I am in a little bit of a tight schedule, but I am comforted to know that when I leave here, there will be an immigrant cab driver waiting to whisk me away.
The past 17 years have been highly inconvenient to those who have argued that immigrants are damaging to the U.S. economy or to low-wage workers. We ought to remember the big picture and the story today. The big picture is that there is very little question that immigration has a positive impact on the overall United States economy. Over the past 17 years, the U.S. economy has grown by nearly 50 percent and has created 35 million new jobs. By the way, that is over a period when Europe has created virtually no jobs.
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Median family income in the U.S. has risen over the period 1981 to '97 from 39,000 to 45,500that is in real termsor by roughly 15 percent. This has been a broad-based expansion.
So if immigrants have an overall method of economic impact, as some of my colleagues have suggested, where is the evidence? This has been a period of very high immigration over the last 17 years, but it has also been a period of extraordinary growth. In fact, I would argue this is the greatest economic expansion that we have seen over the last 17 years in the history of the Western world.
According to the Federal Reserve Board, real household wealth in the U.S. has risen by 10 to 15 trillion dollars since 1981. By contrastand I think this is kind of interesting because I remember about five or 6 years ago when I was testifying, people used to hold up Japan as the model; of course, Japan takes no immigrants inJapan, a nation with virtually no immigration, has seen his wealth fall by more than one-third in the last 7 years.
Second, the economic expansion that I am describing of the 1980's and 1990's has been especially rewarding for minorities and for women. And, again, I would argue that this is because of immigration, not in spite of it.
Over the 1980's, the expansion of black incomes rose faster than white incomes. If you look at the income gap between blacks and whites in this country, the Census Bureau recently reported that has narrowed to its lowest level in recorded history.
Page 93 PREV PAGE TOP OF DOC If you look at what has happened over the last 17 years with respect to unemployment rates, the black unemployment rate has fallen substantially faster than the white unemployment rate over this period. The same is true with women. The female unemployment rate has fallen substantially faster than the male unemployment rate. Again, this is over a period where we have had high levels of immigration.
Third, there is no evidence that immigrants lower wages or increase unemployment at the national level. Lowell Gallaway, Richard Vedder, and I did a study looking at the twentieth century, comparing periods of high immigration with unemployment and wages. And we found that there was no correlation between those two things.
Next, there is no evidence that immigrants cause higher unemployment of minorities in cities. Now, this gets to a point that was made earlier about the fact that it is possible that the natives are moving out of cities with high immigration. The truth is actually just the opposite. And it is fairly obvious. If you look at, for example, states that are high immigration states, such as yours in Texas, Texas is a high immigration state, but there is also very large net domestic migration in states like California and states like Florida and states like Texas. So you are seeing immigrants and natives moving into the same areas, not immigrants chasing natives out of areas.
Six, the rate of economic advancement of minorities has been slower in cities with high levels of immigration than with levels of low immigration. My favorite example of this is a city like Detroit. And this is something that is very perplexing to us. If immigration is what is causing low wage rates in cities, then how do we explain the poor performance of minorities and less-skilled workers in a place like Detroit that has virtually no immigration?
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Let me make the last two points. And then I will move it over to my next colleague. An important point that has not been made this morning is that the gap between skilled and unskilled workers in terms of income gaps is happening.
It is very real. But this is something happening, Mr. Chairman, all over the world. It is happening in Japan. It is happening in Europe and so on. And it is happening in countries that don't have immigration. So it is hard to explain this rising gap between skilled and unskilled on immigration if even countries that don't have immigration have this wide a gap.
Finally, if we are concerned about helping low-wage workers and moving toward an immigration system that is more oriented toward immigrants in the high-skilled areas, then I would suggest a very simple policy prescription which would substantially improve the economic conditions of low-wage workers, and that is to increase substantially the supply of high-skilled immigrants.
In fact, we had a bill last year that I think was an excellent bill that increased the number of H(1)(b) high-skilled employer-sponsored immigration. I would recommend to this Committee that we substantially increase that number even further.
We are going to run out of those visas again this year. We should double or even triple the number of high-skilled workers. Remember, low-wage workers use the services that are produced in those high-wage areas. And, therefore, this is something that would benefit the low-skilled among us.
Page 95 PREV PAGE TOP OF DOC So, to sum up, if we are concerned about this gap, the most important thing we have to do is raise the skill levels of our workers. Getting rid of immigrants isn't going to do much. But if we want to do something in the short term with respect to immigration policy, the most important thing we should do as a nation to improve economic growth is dramatically increase the number of skill-based immigrants.
[The prepared statement of Mr. Moore follows:]
PREPARED STATEMENT OF STEPHEN MOORE, DIRECTOR OF FISCAL POLICY STUDIES, CATO INSTITUTE.
Thank you for the opportunity to testify before the Judiciary Committee on the issue of immigration and its impact on employment and wages for blacks and Hispanics. In my presentation this morning, I will make 8 points.
1) The big picture: there is very little question that immigration has a positive impact on the overall United States economy. Over the past 17 years the U. S. economy has grown by nearly 50 percent, has created 35 million new jobs (while Europe has created almost none), and has seen a decline in inflation to nearly zero. Median family income in the U.S. has risen over the period 19811997 from $39,000 to $45,500 or by roughly by 15 percent, according to the latest Census Bureau data. With inflation properly measured, median family income has risen since 1981 by closer to 25 percent. This is over a period when immigration has been high. Since 1980 the U.S. has admitted roughly 1S million new immigrants.
So if immigrants have an overall negative economic impact, as some of my colleagues have suggested, where is the evidence? High immigration has corresponded with the greatest period of wealth creation in the history of the western world. According to the Federal Reserve Board, real household wealth in the U.S. has risen by $10 to $15 trillion since 1981. By contrast, Japan, a nation with virtually no immigration, has seen its wealth fall by more than one-third in just the last 7 years.
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I believe that the evidence is almost overwhelming that immigrant workersboth high and low skilledhave been a major contributory factor to this unprecedented prosperity.
Today we address the issue of whether immigrants harm some groups within the population. This is an important issue, but we must keep in mind the big picture: that immigrants make the overwhelming number of Americans better offeven if some are disadvantaged.
2) The economic expansion of the 1980s and 1990s has been especially rewarding for minorities and for womenand this improvement has occurred with high immigration. Over this expansion black incomes have risen faster than white incomes. The black unemployment rate has fallen faster than the white unemployment rate. The unemployment rate for women has fallen faster than the unemployment rate for men.
Another fascinating statistic from the U.S. Census Bureau about this expansion. The income gap between blacks and whites and between men and women has narrowed to its lowest level in recorded history. From 1981 to 1997, the black incomes relative to whites has shrunk from 60 percent to 69 percentthe highest ever recorded. For women, the gap narrowed from 89 percent to 94 percent.
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So if the premise of this hearing is that high immigration hurts minorities, where is the evidence? We have had record immigration and we have record economic improvements for blacks. In fact, the evidence from the Census Bureau would seem to provide prima facie evidence that high immigration has benefited, rather than hurt women and blacks.
3) Asians are also a minority and they have unquestionably benefited from immigration. It is odd that a hearing on how immigrants impact minorities does not include Asians anywhere in the discussion. Asians only represent less than 5 percent of the U.S. population, and are therefore more of a minority than blacks and Hispanics. Asians now have per capita incomes in the United States that are above those of whites. Asian immigrants tend to compete in many of the same occupations as Americans of Asian descent. Yet there is no evidence that Asians are being hurt by new Asian arrivals?
4) There is no evidence that immigrants lower wages or increase unemployment at the National level. In 1990 economists Richard Vedder, Lowell Gallaway of Ohio University and myself measured variations in unemployment and immigration from 19001985. our regression results showed no statistical evidence that high immigration leads to subsequent high unemployment rates. Incidentally, today the U.S. allows in more immigrant workers than virtually all the other industrialized countries combined, but the U.S. has the lowest unemployment rate.
5) There is no evidence that immigrants cause higher unemployment of minorities in cities. In 1993 Julian Simon and I examined the relationship between unemployment and immigration in 70 large U.S. cities over the period 19701990. Our results, published in the Journal of Labor Research found: ''There is little or no observed increase in aggregate native unemployment due to immigration,even in the relatively short run during which adjustment frictions should be more severe.''
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6) The rate of economic advancement of minorities has been slower in cities with high levels of immigration than with low levels of immigration. No, this is not a misprint. The rate of improvement of native-born Americans is higher in high immigration cities than low immigration cities. It is important to remember that immigration is largely an urban phenomenon: more than half of all immigrants in the United States reside in just seven cities: Los Angeles, New York, Chicago, Miami, San Diego, Houston, and San Francisco.
In 1995 I conducted a study for the Hoover Institution which examined a range of economic variables for the 85 largest U.S. cities over the period 198094. Those cities with heavy 03 concentrations of immigrants outperformed cities with few immigrants. Compared to low-immigrant cities, high-immigrant cities had double the job creation rate, higher per capita incomes, lower poverty rates, and 20 percent less crime. Unemployment rates, however, were unusually large in high-immigrant cities.
The 15 cities with the largest increase in immigration from 198090 had 32 percent job growth, versus 27 percent job growth in average immigrant cities, and just 7 percent job growth in the 15 cities that lost immigration.
Growth of Per Capita Income
The 15 cities with the most immigrants in 1980 had higher subsequent per capita income growth from 198090 than cities with the fewest immigrants. The per capita income growth was 95 percent in the high immigrant cities in 1980, but just 88 percent in the low immigrant cities in that year.
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Those cities which had the largest percentage increase in immigration from 1980 to 1990 also fared better than cities which lost immigrants. The 15 high immigrant cities (198090) had per capita income growth of 84 percent, versus 76 percent for the 15 cities with a net loss of immigrants. But for both high and low immigrant cities, the gain in income was lower than the 92 percent income rise in cities with an average increase in immigration in the 1980s.
The cities with the most immigrants in 1990 had an average poverty rate of 13.3%. This was 20 percent below the 16.0% average poverty rate in the cities with the fewest immigrants.
The most dramatic difference in poverty, however, appears between the cities with the largest increase in immigration from 1980 to 1990 and the cities with a net loss of immigrants over that period. The cities that gained the most immigrants had a poverty level of 13.3%, versus 17.7% in the cities that lost immigrants. With just a few notable exceptions, such as Omaha and Indianapolis, high poverty rates are a characteristic of large U.S. cities with very low presence of immigrants.
It is also true that the cities adding the most immigrants from 198090 had lower increases in poverty (2.5 percentage points) than the cities that lost immigration (4.2 percentage points). But the cities with average increases in immigration in the 1980s had the smallest increase in poverty at 1.5 percentage points.
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These findings do not answer the critical question of whether the immigrants cause the better urban conditions, or whether benign urban conditions attract the immigrants. But the study does refute the assertion that the large rates of poverty and low wage rates in cities are caused by immigration. The assertion can not be true, because, with few exceptions, the U.S. cities where blacks and Hispanics are in greatest despair todayDetroit, St. Louis, Buffalo, Rochester, Garyfor examplehave virtually no immigrants.
7) There are three explanations for why immigrants do not depress wages or working conditionsexcept for in a few isolated industries. First, immigrant businesses are a source of substantial economic and fiscal gain for U.S. citizens. In our 1997 Cato Institute-National Immigration Forum, I identified ten high-tech firms founded by immigrants whose total revenues topped $28 billion in 1996 and whose total employment totaled more than 75,000 Americans. Immigrants have a higher rate of entrepreneurial activity than do natives.
Second, immigrants do not just take jobs, they create jobs through their purchases of goods and services. When immigrants purchase housing, groceries, computers, autos, VCRs, and the like, they are adding employment for American workers in these industries.
Third, immigrants add to the productivity of the American workforce. And all economists agree on two fundamental laws of labor economics. 1) Unemployment is a function of the wage rate; 2) the wage rate is a function of productivity. Immigrants could only be driving down average wage rates in the U.S. if they were driving down productivity. There is no evidence of that.
Page 101 PREV PAGE TOP OF DOC To state the point differently, reducing immigration would raise wages for natives only if a reduction in immigration magically raised U.S. worker productivity. There is no evidence that would occur.
8) One of the most important economic contributions of immigrants is their age Profilei.e. that they come when they are young. Only 3 percent of immigrants enter the U.S. over the age of 65, whereas 12 percent of Americans are over 65and that percentage will grow substantially in the future. The implication is that immigrants are huge net contributors to the Social Security and Medicare programs. Based on the calculations of the actuaries at the Social Security Administration, the Cato-National Immigration Forum study estimates the total value to the Social Security system from current levels of immigration. I find that the total net benefit (taxes paid over benefits received) to the Social Security system in today's dollars from continuing current levels of immigration is nearly $500 billion from 1998-2022 and nearly $2.0 trillion through 2072. Continuing immigration is an essential component to solving the long term financing problem of the Social Security system.
9) High skilled immigrants are especially beneficial to the U. S. economy. Low skilled immigrantsif they are not using welfare, are beneficial toobut the benefits are lower than for the high skilled. The best way to increase the percentage of high I would skilled immigrants is to increase the Hib immigrants. propose a doubling of the Hlb numbers. Incidentally, if there were a decline in wages in high-wage, high-skilled occupations, such as doctors, this wage adjustment would benefit low skilled workers.
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10) Even if it were true that immigration had a small, negative impact on minoritieswhich the evidence suggests is not true on aggregatethere are far better policy remedies to improving the economic prospects of blacks and His-panics than lowering immigration of low skilled workers. The Cato Institute can provide this committee with dozens of proposals that would benefit the wages and working conditions of low-skilled workers. For example, a reduction in the capital gains tax rate would have a substantially positive effect on minorities. School choice for minority parents would be extremely beneficial to inner city.
Mr. SMITH. Thank you, Mr. Moore.
Mr. Beck is the Director of Numbers U.S.A.
STATEMENT OF ROY BECK, DIRECTOR, NUMBERS U.S.A.
Mr. BECK. Thank you.
After some research and writing for the Atlantic Monthly, I was asked by W. W. Norton and Company to write a book this decade about the effect of immigration on the American people. And it ended up being focused primarily on the effects on the American worker and especially lower-skilled American workers.
There has been a lot of talk in this panel about the overall big picture. There is also a lot of talk in this panel about looking at those people who are left out. That is what I focused on as a journalistic endeavor to look at the occupations where immigration is the highest and look at the real lives, real people who are affected.
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As one of the other persons mentioned earlier, it is important not to say that just because only 10 million or 15 million may be affected by a certain amount, that these people are not important. They are often the most vulnerable.
My special look was at the meat-packing industry. It is interesting because these people in the meat-packing industry were not the most vulnerable. They didn't look the most vulnerable. They weren't the most poor. In fact, they were in great shape at the time when Congress ended up flooding their industry with immigrant workers.
The meat-packing industry today is dominated by immigrant workers. The tasks of disassembling the hogs, the sheep, and the cattle for this nation's appetites are nasty, tedious, and risky. But most news stories I see about these industries state that these are jobs Americans won't do. That is why they are filled with immigrant workers.
Until recently, however, and until this recent mass immigration renewal, these jobs were done almost entirely by native-born Americans. I spoke to many of them who still had these jobs until the early '80's. Until immigration levels began rapidly increasing in the late 1970's, these were jobs that Americans not only would do but they lined up to be hired to do.
Workers with few skills and little education could earn up to around $18 an hour by today's dollars. Strong unions guarded the health and safety of the workers. People held on to their slaughterhouse jobs like gold.
I talked to these families. They passed the jobs on from generation to generation because nearly all of these packing companies offered handsome pay and benefits. No company had trouble remaining profitable while treating their employees with respect and treating them well.
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But by the 1980's, the renewal of mass immigration that began in 1965 had so filled the labor markets with foreign workers that relatively new meat-packing companies were able to draw upon these pools of foreign workers and use them to undercut the established unionized firms.
The new corporations busted the unions. They slashed the wages so that the old giants of the industry could not compete while honoring their contracts to provide safe, middle class jobs to their workers.
All four, Wilson, Cutahay, Swift, and Armour, had to get out of the industry because they could not honor their union contracts in competition with these companies with their foreign workers, paying so much less.
Today it is not just pay that has deteriorated in this industry. Meat cutters now are injured 400 percent more often than workers in the average U.S. industries. The unions are not there to protect the workers anymore. In terms of injuries, meat-packing in the 1990's is the most dangerous industry in America. All of this has been transformed just over the last 1520 years.
The industry does not have to worry too much about a turnover rate of 50 to 100 percent in their plants because every year the Federal immigration program brings in new foreign workers to fill the slots.
A small army of scholars has written that the meat-cutter occupation has deteriorated back toward the level described by Upton Sinclair in his famous novel ''The Jungle.'' That was written in 1906.
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The research of that period is very interesting. It finds that Sinclair's book led to major reforms to improve the product safety of the industry but not the worker safety. In fact, continued flows of high immigration at the turn of the century allowed industries to keep pay and working conditions deplorable, the same as is happening today.
Meat-cutter jobs were improved substantially only in the 1920's, after Congress greatly reduced the flow of lower-skilled immigration into this country. And it was during the next 40 years of below average immigration that the meat-cutters' jobs turned into one of the best middle class low-skilled occupations in the country, an occupation that no longer exists.
Now, because of the renewal of mass immigration, the clock has been turned backwards. In many situations, such as Storm Lake, Iowa, the entire American-born workforce was laid off at the plant. And the plant was taken over by a new corporation, which hired primarily foreign workers, sometimes at around half the wages of the people replaced.
I have talked to many of these American workers who were replaced. And even 15 years later, their financial and personal lives have not recovered from these losses.
In many other situations, plants were shut down in urban areas and moved to rural areas. Now, this is part of a restructuring of the industry. And it is not related to immigration. It would have caused disruptions and dislocations among the workforce, regardless of immigration.
Page 106 PREV PAGE TOP OF DOC But apologists for the importation of foreign labor often say it is necessary for those rural factories to have foreign labor importation because there is not a sufficient labor force in these rural areas. Well, there wasn't. That is true. But if the Federal Government had not provided the foreign workers to these industries, those industries would have done what they always had to do prior. And that is they had to provide the incentives for American workers to move.
And there were tens of thousands of laid-off meat-cutters in the cities, especially of Kansas City, Omaha, Chicago, who could have been enticed to move out to those jobs. We did not have a national shortage of meat-cutters.
The victimization of the American workforce by this level of immigration, just as we had at the turn of the century, is not over. Every year we have these quadrupled levels of legal immigration plus very high levels of illegal immigration undermining new legions of American workers. In many cases the victims, like those in the 1970's and 1980's meat-packing industry, are American-born workers. But increasingly and disproportionately the victims of this immigration are earlier immigrants themselves who cannot pull themselves out of the ranks of the working poor because of each year's fresh new supply of foreign workers.
The foreign-born workers in the meat-packing industry today would be the chief beneficiaries of reductions in immigration, just as the immigrant meat-cutters in the 1920's rose to the middle class after cuts in immigration. It was the sincere concern for the worker victimization brought by too high immigration that led the late Barbara Jordan and her bipartisan Commission on Immigration Reform to recommend numerical cuts in immigration.
Page 107 PREV PAGE TOP OF DOC The recommended cuts were in categories in which immigrants are allowed in this country without any regard to their skills or to whether their entrance into the U.S. labor force would be positive or negative for those already in it.
I salute this Committee for turning its attention to the plight of America's lower-skilled workers. I think for too long the debate has been about questions about taxes and crime and a lot of other issues. This is an issue about justice, economic justice in this country. The American workers, both foreign-born and native-born, deserve to have a Congress that will stand up for them and not be running a program that victimizes them.
I hope you will begin implementing the Jordan commission's recommendations. I can think of no better place that you could start than by eliminating the chain migration categories.
[The prepared statement of Mr. Beck follows:]
PREPARED STATEMENT OF ROY BECK, DIRECTOR, NUMBERS U.S.A
My name is Roy Beck. After some research and writing I did for the Atlantic Monthly on immigration in 1994, the distinguished publisher W.W. Norton & Co. asked me to write a book that focused on the effects of current high levels of immigration on America's workers.
Page 108 PREV PAGE TOP OF DOC My research for the book led me to emphasize the largely untold stories of the victimization of lower-skilled American workers. My testimony today is based on my reporting for that book.
Since 1970, more than 35 million foreign citizens and their descendants have been added to the local communities and labor pools of the United States.
That is the numerical equivalent of having relocated within our borders the entire present population of all Central American countries. The Census Bureau shows that if Congress does not reduce present immigration levels back toward traditional numbers, immigration will add the equivalent of yet another Central America to the United States in an even shorter time.
Demographic change on such a massive scale inevitably has created winners and losers among Americans.
To find the losers, study closely what has happened to wages and working conditions in dry-walling and a number of other construction trades, in the poultry industry, in janitorial and housekeeping occupations, in agricultural work and in any other occupation with heavy participation by foreign workers.
The meat-packing industry offers a vivid example of how losers are created. The industry today is dominated by immigrant workers. The tasks of disassembling America's hogs, sheep and cattle are nasty, tedious and risky. Most news stories I see about these industries state that these are jobs Americans won't do.
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But until this recent renewal of mass immigration, those were jobs done almost entirely by native-born Americans. Until immigration levels began rapidly increasing in the late 1970s, they were jobs that Americans not only would do but formed lines to get hired to do.
Workers with few skills and little education could earn up to around $18 an hour in today's dollars. Strong unions guarded the health and safety of the workers.
People held on to their slaughterhouse jobs like gold. And they pulled strings to get their relatives and children into the plant. Because nearly all packing companies offered handsome pay and benefits, no company had trouble remaining profitable while treating its workers well.
But by the 1980s, the pool of foreign workers had grown so large that relatively new companies could use them to undercut the established unionized firms. The new corporations busted unions and slashed wages so that the old giants of the industryArmour, Swift, Wilson and Cudahycould not compete while honoring their contracts to provide safe, middle-class jobs to their workers. All four eventually got out of the slaughterhouse business.
Jobs have so deteriorated that it is difficult to keep workerswhether native-born Americans or immigrants. Stress-related disorders and injuries drive many workers off the jobs within months. During the 1990s, annual turnover rates of 50 to 100 percent have been common. Meatcutters now are injured 400 percent more often than workers in the average U.S. industry. In terms of injuries, meatpacking in the 1990s had become the most dangerous industry in America.
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The industry does not have to worry too much about the turnover, though, because the federal immigration program each year brings in new foreign workers to fill the vacant slots.
A small army of scholars has written that the meatcutter occupation has deteriorated back toward the level described by Upton Sinclair in his famous expose, The Jungle (1906).
A historical search finds that Sinclair's book led to major reforms to improve the product safety of the industry, but not the worker safety. Continued flows of high immigration during that time allowed industries to keep pay and working conditions deplorable. The meatcutter jobs improved substantially only after Congress in the 1920s greatly reduced the numerical level of immigration of low-skilled immigrants. It was during the next 40 years of below-average immigration that the meatcutters' jobs turned into one of the best middle-class, low-skill occupations in the country.
It is important to note that the recent deterioration of the meatcutter occupation occurred at the same time as revolutionary changes in the industry.
The upstart corporations in the 1960s and 1970s gained larger shares of the meatpacking business:
by shipping boxed beef instead of hanging carcasses,
Page 111 PREV PAGE TOP OF DOC by eliminating highly paid butchers in the middle,
by building new and more efficient plants while locating more of them near the rural areas where livestock raising was concentrated.
While all of that created human and economic dislocations, it was fully in line with the workings of a free market system in which entrepreneurs constantly search for cheaper methods of production and distribution to enable them to increase their sales while improving prices and quality for the consumer.
If it had stopped there, the workforce would have been reduced by about a third but there still would have been 130,000 meatcutters earning great middle-class incomes.
Instead, we ended up with 130,000 low-wage and dangerous jobs.
The changes in production and distribution should not have caused wage cuts. In fact, they improved the productivity of the workers. But instead of sharing in the fruits of that productivity, workers saw their wages fall precipitously because of the availability of foreign labor.
In many situations like that of Storm Lake, Iowa, the entire American-born workforce at a slaughterhouse was laid off as a plant was taken over by a new corporation which hired primarily foreign workers, sometimes at around half the wages of the people they replaced. I have talked with many American workers whose financial and personal lives have still not recovered from their losses.
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In many other situations, plants were shut down in urban areas and replaced with rural plants, especially in Kansas and Nebraska. Apologists for the importation of foreign labor often say it is necessary because those rural areas did not have a sufficient laborforce to supply the new plants. But if the federal government had not provided a foreign laborforce, the corporations would have had to provide incentives for the American meatcutters laid off in Kansas City, Chicago, Omaha and other cities to move to the new locations. Remember that the number of meatcutter jobs did not grow but was drastically reduced. There was no national shortage of meatcutters.
The victimization of the American laborforce is not over. Every year, these quadrupled levels of immigration are undermining new legions of American workers.
In many cases, the victimslike those in the 1970s and 1980s meatpacking industryare American-born workers. But disproportionately the victims are earlier immigrants who cannot pull themselves out of the working poor because of each year's fresh new supply of foreign workers.
The foreign-born workers in the meatpacking industry today would be chief beneficiaries of reductions in immigrationjust as the immigrant meatcutters in the 1920s rose to the middle class after cuts in immigration.
It was sincere concern for the worker victimization wrought by too-high immigration that led the late Barbara Jordan and her bi-partisan Commission on Immigration Reform to recommend numerical cuts in immigration.
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The recommended cuts were in categories in which immigrants are allowed into this country without any regard to their skills and or to whether their entrance into the U.S. laborforce would be positive or negative for those already in it.
For the sake of America's lower-skilled workersboth native and foreign-bornthe commission recommended ending the chain migration of extended families and the visa lottery. It also called for eliminating the corruption of the refugee program in which nearly half the people admitted do not meet any standard definition of refugee.
I salute this committee for turning its attention to the plight of America's lower-skilled workers. My personal recommendation is that you work in a bi-partisan fashion to show these workers the kind of respect and relief they deserve. I can think of no better start than to pass a bill ending chain migration.
Mr. SMITH. Thank you, Mr. Beck.
Dr. Wray, I am going to work myself down the line of the witnesses today. And let me say to the ranking member I had mentioned earlier today I suspect we will need several series of questions because I know we both have lots.
Dr. Wray, let me read a couple of sentences from your prepared statement. You say, ''Unemployment rates have fallen.'' In other words, we have enjoyed this economic expansion over the last number of years. You say, ''However, these numbers do not tell the whole story. First, the gaps between those with a college degree and high school dropouts are huge, especially for employment rates, an average of 79 percent and 37 percent, respectively, for the period 1992 to mid 1998. Second, the gains may be temporary with the last hired being the first fired,'' which is the point that Dr. Morris made as well.
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Finally, you say that all of the improvement in the official numbers can be explained by a decline in the population of those who have not attended college, not by an increase in their employment levels. Indeed, we found that high school dropouts actually lost 95,000 jobs over the expansion.
You say the critical problem for the less educated is that most simply fall out of the labor force. Is this the answer to the superficial appearance that the improvement in the economy has somehow benefitted everybody? In other words, the improvement is not an accurate reflection of the true status of the individuals we are concerned about, is it?
Mr. WRAY. Yes, especially for the half of the population that doesn't go to college. As we said, the vast majority of jobs have gone to those who have attended college, perhaps graduated, perhaps not, but at least have some college under their belts.
The job prospect for those who don't go to college simply has not been that good. Essentially there has been no job creation for that group.
Mr. SMITH. Thank you Dr. Wray.
Professor Borjas, you say the entry of large numbers of unskilled immigrants probably had an adverse impact on the economic opportunities faced by less-skilled workers already residing in the country.
You also mentioned that native workers vote with their feet. They leave the cities where they have competition with those from other countries. Is that why a city-to-city comparison is not as accurate as a state-by-state or some other comparison?
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Mr. BORJAS. The smaller the geographic level of which you are looking at the comparison, the less relevant to be constant because there are more possibilities of moving around.
In our own research, actually, we found that the state comparison also didn't capture the whole picture. You have to go to the national level to be able to get a good picture of what the impact was on labor supplies and on the wage differentials.
Mr. SMITH. Professor Borjas, you say it turns out that almost half of the decline in the relative wage of high school dropouts may be attributed to immigration. Is there any way to quantify that and put a dollar figure on that? I would be curious.
You know, we have seen $1,900 from one organization. We have seen 5 percent from another. We have seen 10 percent decline in wages from another.
Mr. BORJAS. Right.
Mr. SMITH. In other words, if the average wage of blue collar workers is $15,000, what is half of the decline, $7,500?
Mr. BORJAS. Right. There is. And I wish I had it with me, but I would be more than happy to submit it to you
Mr. SMITH. Okay.
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Mr. BORJAS [continuing]. Tomorrow or Monday when I get back.
Mr. SMITH. I would be interested in that. I know we have other witnesses who have quantified this.
Mr. BORJAS. Right.
Mr. SMITH. But I would be very interested in having you do it as well.
Mr. BORJAS. I will definitely do that.
Mr. SMITH. Then, lastly, you say that this type of immigration policy that we have today probably aggravates the social and economic problems faced by workers at the bottom of the in-kind distribution and helps undo and perhaps even unravel many of the benefits that would have accrued from the redistributive policies that are aimed at improving their economic status. How do you think we ought to change our immigration policy to prevent that kind of result?
Mr. BORJAS. I believe that immigration policy in the future should take account on just the family aspects of the current policy but also should include other variables in the admission process, including things such as education or aim in occupation and essentially economic impact of the immigrant.
Page 117 PREV PAGE TOP OF DOC So I would urge the committee to consider a policy that doesn't focus on just one variable to determine whether a person can get into the country or not, namely family connections, but to expand it to other variables for most immigrants.
Mr. SMITH. Thank you, Professor Borjas.
Dr. Camarota, you mentioned in your statement that basic economic theory predicts that the wages of those in competition with immigrants will decline as immigration increases in number of workers competing for jobs. If that is so obvious and if that is a basic economic theoryand I happen to agree with itwhy would anyone disagree?
Mr. CAMAROTA. Well, it is a question of
Mr. SMITH. What theory are they operating under that I need to know about?
Mr. CAMAROTA. Right. I mean, you can't just alter the supply of labor at the bottom of the labor market without having some consequences.
Mr. SMITH. Yes.
Mr. CAMAROTA. The problem comes in in trying to actually measure it. The data is incomplete, and it is difficult to capture the effects. We have talked about the cross-city comparisons and why that is probably not a valid way. When you look at just the aggregate supply and demand issues, it is clear that there probably is a significant effect at the bottom. And since the laws of supply and demand have not been repealed, that is what you would expect to see.
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So what sometimes happens to the immigration debate is people then talk about the benefits from those declines. And maybe that is perfectly reasonable.
So the National Research Council said one to ten billion as a kind of net benefit. But it seems to me that when you say that, you ought to finish the sentence by saying: But we did make the poor much poorer, and that is where we got the benefit from. And then you can come to some sort of value judgments.
To just throw a benefit figure out there without saying it came from wage losses suffered by the most vulnerable workers strikes me as disingenuous.
Mr. SMITH. You mentioned in your statement that the National Research Council estimates that immigration has had a significant negative effect on the wages of high school dropouts. The NRC concluded that the wages of this group, 11 million of whom are natives, are reduced by roughly 5 percent, $13 billion, a year as a consequence of immigration, not a small effect. Dropouts make up a large share of the working poor.
Let me ask you the question I asked Professor Borjas. Is there any way to quantify that 5 percent, $13 billion, a year that is the consequence or not?
Mr. CAMAROTA. Well, the 13 billion is the sort of aggregate level if you take the incomes of high school dropouts. And that is what 5 percent of it would be. But how much is it annually, what kind of annual figure it is for the individual? It is several hundred dollars, but I don't have the actual
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Mr. SMITH. It would justify it. Okay.
Mr. CAMAROTA. Yes.
Mr. SMITH. I know CIS thinks it is the $1,900.
Mr. CAMAROTA. Right. That was my research. Yes.
Mr. SMITH. We will come back. Another question is this: You talk about the problems associated with cross-city comparison. What is the problem with comparing city by city or do you agree with Professor Borjas that it needs to be on a national level?
Mr. CAMAROTA. Yes. I think that is right. I mean, we know that immigrants tend to settle in cities that have high employment because they are drawn there. So if you look at where immigrants live, you should find that unemployment should be relatively low because they have been drawn to the city for precisely that reason.
Additionally, of course, you have the fact that goods and services are exchanged between cities so that if someone takes a job, an immigrant takes a job, in light manufacturing in Los Angeles, that person comes into direct and immediate competition with a native doing the same work in a low-immigrant city like Pittsburgh. Yet, there are no immigrants in Pittsburgh. But the wage effects of immigration become very quickly transmitted throughout the country.
Page 120 PREV PAGE TOP OF DOC And there are other reasons as well. The mobility of capital and, as Dr. Borjas has suggested, the movement of labor as well should diffuse the effect from any one city over time.
Mr. SMITH. Thank you, Dr. Camarota.
My time is up. The gentle woman from Texas is recognized for questions.
Ms. JACKSON LEE. Thank you very much, Mr. Chairman.
Just a procedural note, if you might indulge me for that, to indicate to you my appreciation for your acknowledgement of the fact that this morning I was testifying before the subcommittee on commerce dealing with the question of the date rape drug, a legislative initiative that I have. And that took more than the time that I thought since I was not only testifying but was under extensive questioning. I appreciate your acknowledgement of that and to those who have gathered in this room.
I do, however, want to note that we left from that hearing because the votes started to come. We had a series of votes. And it was certainly my understanding that this comittee was on recess.
I would appreciate some understanding of the procedures of this comittee since I believe there is a rule that indicates that when there is a series of votes, the comittees are in recess. If we can get that understanding, it would help me inasmuch as I was voting and did not know that this comittee was back in order at that time.
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I do want to thank you for this hearing and note to the panel that I have not had an opportunity to give my opening statement. And I will do part of that afterwards, but I will do some of it at this point.
For concern, if you will, that I may be crossing the edge of a representative who represents an inner city district to the ire of many of my constituents on this issue, I am concerned about this hearing. Certainly it would seem that in representing an inner city district that has majority minority population, including 19 percent Hispanics, most of whom were born in the United States, that I do danger to my political future by not joining in with the cry that immigrants are the cause and the reason for the undermining economically of these constituents, but I think that we have the responsibility in this nation to take the high road on these very important concerns. And I think that we must look at issues frankly and directly.
I came to this nation originally, my ancestors, locked in the bottom of a belly of a slave boat. I am an immigrant. I did work that most other folk would not want to do. At least my ancestors did. We helped build the economic economy of this nation.
If you are here today to tell me that in the world of MTV and all that my young people see today, that they are prepared to do some of the jobs that are represented here today as jobs of opportunity, I think you are wrong.
The reason why I think we have problems in this nation is because we still have racism and opportunities for higher learning, opportunities for opening the doors of opportunity for those who have been living in this nation for such a long time tragically are still closed.
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Dr. Morris, I agree with you. Opportunities for higher education should be equal among those who come from other places as well as our citizens who are here in this nation. I will fight with you to make that happen.
But I clearly believe we are barking up the wrong tree when we begin to point out low-skilled jobs that are being taken away from those who are here in this nation.
We look at this panel, both panels, and we have academicians and scholars, but we don't have employers. We don't have corporate America, who can tell me why do they make the choices, if you will, between X and Y, A and B, citizen and noncitizen, and new immigrant and illegal immigrant. Why do they do that? Why do they in their hiring policies have racist tendencies, which would preclude some of the people from my district or my community or African Americans?
Why are we not investing sufficient monies to train and provide the skills so that those who have lived here can be in the high-tech jobs, those who have lived here can be middle management and CEOs and presidents of universities?
I would offer to say, Mr. Chairman, that I believe that in looking at this question, we have not looked at it in a broad enough manner. And so I hope that as we proceed today, many of you will be able to answer the questions that I have and that I have concern of.
Mr. Beck, can you tell me statistically how many Americans have been turned down from jobs in the slaughterhouses? Do you have the numbers? And do you have the percentages of African Americans who have applied? Do you have the policies of the corporations who own these slaughterhouses and how they have made the distinction to hire these individuals that you say they are now hiring?
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Mr. BECK. I do not have hiring and turndown statistics. I think if the question
Ms. JACKSON LEE. My time is abbreviated. You don't have those statistics, but do you have the policies of corporations, possibly, of their hiring policies?
Mr. BECK. The issue is that they are not turning down American workers. American workers are not applying for those jobs because the jobs, wages have been cut in half. And it has been turned into the most dangerous industry in America. What has happened is like has happened in so many of these low-skilled occupations. The occupations won't support middle class lifestyles. They supported lives of
Ms. JACKSON LEE. You agree with me that we need to have before us today corporations to understand their policies for diminishing jobs like that and, therefore, precluding Americans or discouraging them from applying?
Mr. BECK. I guess they do what they can do. It is
Ms. JACKSON LEE. That is an issue that I think is very important.
Mr. BECK. If they do it, they will drive wages down.
Ms. JACKSON LEE. That is an issue of safety that is very important.
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Dr. Morris, can you explore with me the point that I read in your materials about the inequity of graduate opportunities and how we can work on that issue for the young people, which I think are more predominant than those who may be interested in working in slaughterhouses in America today?
Mr. MORRIS. That has been for me a very, very important issue, Congress person. One of the things that happens is that we don't hold our universities accountable. Much of the funding which disproportionately supports our many international students who are from privileged backgrounds. These international students are privileged, defined as elites of their communities and recipents of special training, often geared to our GRE, which is usually the key factor for both admission and often the basis for determining financial aid at our doctoral granting research universities. So the decks are stacked.
Ms. JACKSON LEE. Forgive me for cutting you off. I don't mean to do so.
Mr. MORRIS. Sure.
Ms. JACKSON LEE. Your point is being well-taken.
So what we have is as incidents of inequities, of which we need to look at those certain pieces of our society; i.e., institutions of higher education, to balance the opportunities for existing citizens as they may be, such as somebody has talked about a Fulbright. Well, we send our students overseas.
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In any event, we balance the resources so that there is not an inequity. I have heard that discussion with affirmative action. We still need affirmative action. We may still need immigrants. But we need to balance if there are inequities.
Mr. MORRIS. You will see that in my written presentation, in my lengthy oral remarks, I didn't have time to address the necessity for the comprehensive kind of approach.
Ms. JACKSON LEE. Now, I agree with you. I will get you again, but may I get Mr. Moore because he has to leave?
Mr. Moore, help me out with my MTV analysis about whether or not we have throngs of Americans rushing to these kinds of jobs and, therefore, they are being precluded because these are new immigrants. And certainly we are all concerned about illegal immigration, which is another issue altogether. Mr. Moore?
Mr. MOORE. Well, I guess I have a little higher aspirations for America than Mr. Beck does. I don't see American workers that come before your district wanting to rush back into the slaughterhouses, quite frankly. I mean, I think those are workers who want to work in high-tech industries and telecommunications and so on.
When I look at industries like the slaughterhouse industry, the whole history of the United States has been where you have certain types of industries that have been traditional kind of gateways for immigrants to come into. And typically you do find industries where immigrants will come in. And they will displace Americans out of these particular industries. Does that mean the Americans go on the unemployment lines? It means that they have moved into other kinds of occupations.
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So I really believe that you have put your finger on the problem. If we are concerned, as we all in this room are, about low-skilled, uneducated workers, particularly African Americans, we have to improve the education for them. We have to improve the skill levels and so on. And I just don't think that taking away the immigrants is going to do anything to really improve the lot of those, for example, in your district.
Ms. JACKSON LEE. Well, I thank you for your time. Mr. Chairman, I thank you for your indulgence. I thank you very much, Mr. Moore, for coming.
Mr. SMITH. Thank you.
Ms. Lofgren of California is recognized for 5 minutes.
Ms. LOFGREN. Thank you very much, Mr. Chairman.
You know, as I listened to the testimony and read through that I missedwe had an Intellectual Property Subcommittee markup on my bill on encryption I could not miss this morningI am reminded of when I was in school. One of my teachers gave us an example of how do you prove something. The example she gave was that I no longer eat tomatoes and, consequently, there are no wild elephants rampaging down the street.
It is always important to try and sort through what is happening and what is causative. I think that is very difficult when it comes to predicting economic trends because there are so many things going on at once.
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For example, the issue of sort of skilled or semiskilled employment inI don't know the meat-packing industry, but I certainly know some other industries that once in some cases created a higher wage and more stable environment in the '50's, for example. At least that is the perception.
You know, there have been immigration trends. There has also been a dramatic decline in the rate of nongovernment-employed unionization. And so some people would look at that picture and say, ''This is a product of the decline in enforcement of labor laws and strong unions that got working people in at the middle class'' or ''It could be'' this or ''It could be'' that.
So I want to guard against being conclusionary. And I would urge all of us to do that. Nevertheless, at a time when our economy is really booming, I mean, it is an unprecedented time of prosperity, of low unemployment, rising wages, finally at all levels, I mean, not just at the highest levels but even the Wall Street Journal report showing that even those lagging are now having dramatic wage increases as a product of shortages, even unskilled labor that I see at home in Silicon Valley, where you can't hire someone to haul bricks or to do anything because you can't hire people to answer the phone. There is really no one available to do the work that is there.
One question I had is if it is possibleand I am going to ask you, Mr. Moore, because your testimony that the chartto make some estimates that don't fall into the wild elephant/tomato trap. On Table 6, your high-tech companies, started by immigrantsand I know the typo. I am sure it is Atmel, not Amtel, because that Atmel is in my district, along with Solectron, Sun, Intel, Cypress, and the like.
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What percentage of the employment opportunities created because Silicon Valley is fueled by intellect that has been homegrown and also imported have been connected with either the immigrant founders or the patent holders or the like? Has there been any analysis done of that or is it just guessing?
Mr. MOORE. Well, there have been some good studies. I always say to people that if you want to see the modern day American melting pot in action, you don't go to maybe New York City any more. You go to
Ms. LOFGREN. San Jose.
Mr. MOORE [continuing]. Where you live. You go to the Silicon Valley. It is estimated that about 20 to 25 percent of the workers in the high-tech industry today are immigrants. Now, some of those are the Andy Groves, who came from Hungary.
By the way, he came to the United States with virtually only the shirt on his back. And if we had a low-skilled policy in effect today, then a person like Andy Grove might not be able to come here.
Now, if you look at some of these major high-tech companies, I really believe that one of the things that is propelling this incredible expansionit has defied all expectationsis that about a third to a half of this expansion according to my estimates are being driven by high technology and the productivity improvements related to that.
Page 129 PREV PAGE TOP OF DOC So if we do anything in immigration policy that reduces the kind of productivity enhancements that are being made by this incredible industry, it is not just going to hurt your district. It is going to hurt Ms. Jackson Lee's district. It is going to hurt Lamar Smith's district. And we have to do whatever we can I think to continue to allow the workers to come in to fuel that expansion.
And that is why one of the things I recommended was an expansion of the H(1)(b)'s.
Ms. LOFGREN. Let me ask this. The immigration policy in America has always been a little schizophrenic. I mean, there is a multiplicity of goals that sometimes conflicts with each other. And one of the goals has been for many, many years to allow husbands and wives to be together and also to allow those who are fleeing from oppression to come to the beacon of freedom, the United States, that may be inconsistent with jobs or skill-based analysis, which is actually included in our immigration scheme and has been for many, many years.
I am wondering if, Dr. Wray, in your analysis you wouldI think it was your suggestion that we take a look at the skill level. How would we apply that in the refugee situation or would you exclude refugees from that consideration of skill level?
Mr. WRAY. I am not quite sure what the question is.
Ms. LOFGREN. Maybe I am not asking it very well. I mean, for example, we have recently taken some action to provide for Haitian refugees. I would guess that none of them have a high school diploma or higher education. We did it for a different purpose, which was to be a beacon of hope and also to have an impact in Haiti itself.
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If we are going to go to an analysis of skill sets and immigration, would we broadly apply that to refugees in addition to those who come in to the preference system? Would you apply it to the media relatives of U.S. citizens?
You know, you might have a very highly skilled CEO of a huge company whose spouse, especially in some more traditional cultures, does not have an education at all. How would you apply that?
Mr. WRAY. You are probably asking the wrong person.
Ms. LOFGREN. All right.
Mr. WRAY. I think that we need alternative paths to employment, alternatives to college, because such a large percentage of the population does not attend college. Immigration policy, it seems to me, needs
Ms. LOFGREN. Finish your sentence.
Mr. WRAY [continuing]. To be part of a national employment policy. And once we get that in place, then I think immigration is much less of an issue.
Ms. LOFGREN. Thank you. My time is up, Mr. Chairman.
Mr. SMITH. Thank you.
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Mr. Moore, I know you have to go. Do you have time for me to ask you one question real briefly?
On the way there, let me make the point that you may not have picked the best example. You mentioned Texas a while ago. Texas is in the bottom five states when it comes to poverty. It is in the bottom five when it comes to high school dropouts. And we are far in the bottom when it comes to per capita income. So that needs to be taken into consideration.
Also in regard to slaughterhouses, just an idea that comes to me, some job is better than no job. And, you know, those jobs apparently aren't too good for immigrants. So maybe others should consider those jobs as well. I know you don't necessarily disagree with that.
My question is this, though: Every major study that I am aware of the last couple of yearsand these are the immigration experts who said that there is a substantial adverse consequence of our current immigration policy on the lesser skilled, lesser educated in this country. We have had a number of witnesses on this panel. They will be on the next panel as well saying that a city-to-city comparison is not as valid as a national kind of picture.
I notice in some of your conclusions you were drawing on statistics that were pre-1985. And I think the great increase in immigration has actually occurred since 1985.
And then I know in a book that you cosponsor with Dr. Briggs, who is on the next panel, you said that we should increase immigration and give preference for education, skills, and English language proficiency. Well, I want to give you an out, and it is this. You also said in your opening statement, ''The overwhelming number of Americans are better off from immigration, even if some are disadvantaged.'' Who are the disadvantaged?
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Mr. MOORE. Well, I think there probably is some evidence that people are competing in those industries with immigrants. And the low-skilled areas probably are disadvantaged.
Mr. SMITH. Yes.
Mr. MOORE. My point is, though, that even if we don't have those immigrants, the real problem with those workers is that they have low skill levels.
Mr. SMITH. That is true.
Mr. MOORE. And this is a global economy. They are competing with people in
Mr. SMITH. But if the problem is their low skills, I don't know how it does anything but contribute to that problem if we keep increasing the number with low skills from wherever they may come.
Mr. MOORE. Let me make two quick points about that.
Mr. SMITH. Sure.
Mr. MOORE. One is, remember, one of the things that is really almost unique about the American economy relative to virtually all of the rest of the industrialized world is that the economic ladder really works in this country.
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So when we are talking about these low-skilled workers, for example, comparing a low-skilled worker, say, today with a low-skilled worker 15 years ago, that is not the same person because that low-skilled worker, has in many cases, moved up the economic ladder.
Mr. SMITH. No. I don't disagree with that. I am talking about the consequence of current people coming in who are
Mr. MOORE. Well, I am just saying that the immigration has not impeded this really wonderful effect of people climbing up out of poverty.
Mr. SMITH. Yes. No, that is a separate effect which I think is a good effect.
Mr. MOORE. Okay. Thank you.
Mr. SMITH. Thank you, Mr. Moore. I know you have to go if you do.
Let me resume, if I may, my question with Dr. Camarota. You made the point again in your statementI am taking advantage of the fact that I have the complete statement. You all were limited to only 5 minutes. You said that the National Research Council in 1997 found that the average immigrant without a high school degree will use $89,000 more in public services than he or she pays in taxes.
Page 134 PREV PAGE TOP OF DOC And then you made the point that those who support the current high level of unskilled immigration should at least do so with an understanding that it is likely to come at the expense of the most vulnerable and poorest workers in the United States.
Why is it that Congress is not addressing these substantial problems in your opinion?
Mr. CAMAROTA. You want a political analysis? I think that
Mr. SMITH. That may be dangerous.
Mr. CAMAROTA. Yes. I don't know. I think that I might not be the best person to answer that.
I think one of the reasons why Congress doesn't is that the fiscal burden created by immigration is mostly on the local level and state level. And so states where there aren't many immigrants simply say, ''Well, that is your problem in Texas.'' It should be added that that fiscal burden is thought to be large enough to eat up any economic gain we have got from making the poor poorer.
Mr. SMITH. It will have to be a national issue before it gets critical mass where we deal with it.
Mr. CAMAROTA. Right.
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Mr. SMITH. That may well be the case.
Dr. Morris, if I may read the second paragraph in your statement, ''In spite of a long history of African American political opposition to high immigration levels, current African American political leadership does not seem to be fully aware of either this long history or the negative effects of current immigration policies on African Americans.'' Why the silence?
Mr. MORRIS. I think one of the things that was clear in the past, especially in the periods of high immigration, was that most African Americans were in more marginal situations and were clearly part of the working class, overwhelmingly working or even much more marginally so.
To DuBois to Garvey to Douglass to even Booker T. Washington, DuBois and Washington didn't disagree on thatit was clear that the competition in labor markets had such a negative impact and the substitution effect, the preference of employers for any source other than the African American source. So it was clear to them.
I think today the fact that there has been some progress but I reflect a truly not close to being an equal. When Mr. Moore talks about that $10 trillion in terms of growth of investment incomes, and we talk about the position of African Americans in the labor market, and when we look at the wealth statistics, we find that African Americans relatively are even worse off. But that is the heart of another question.
Page 136 PREV PAGE TOP OF DOC So today's political leaders have a broader array of concerns and not a clear understanding of the impact on a smaller proportion of working class and poor blacks than leaders of the past.
Mr. SMITH. That is one of the reasons for these kinds of hearings, to help encourage that clear understanding. So I agree with you.
Also you say in your testimony that current immigration level is especially not in the interest of some of the relatively less advantaged Americans, which always included and continues to include a disproportionate share of African Americans. Then you say, ''I am consistently concerned with our deteriorating sense of an American community where we should have a greater responsibility to other Americans before we give the priority to non-American citizens.''
You don't see anything wrong with putting the interests of those who are in this country, whether it be citizens or recent immigrants, ahead of the individuals from other countries who have not yet arrived?
Mr. MORRIS. You know, I think that this is an unfortunate part of our history and our tradition when folks say that we are all immigrants or when we talk about a ladder as if there is a one-way ladder up. This has not played that way for the African American community.
And we have many effects of that. It is not an inevitable road up. There are indications now that we have less sense of community, ranging from the gated communities, the extensive segregation in housing, and so forth, that is still part of our American institutions. I don't need to give a great litany of the current effects of racial inequities.
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The fact is that African Americans have not had the priority. We have never had the priority in the last century. And we certainly have not in this century. And we will not in the next century in terms of the fact that of the plight of the least of our brethren and sisters.
You know, the high unemployment rates of some of the 18 and 19 and 20 to 24 minorities, is not a public policy priority for the country. And there are tremendous costs of this, tremendous risks of this.
The fact of our immigration policy is making it worse. It is not the cause, but it is making it considerably worse. And that is something that can be corrected.
Mr. SMITH. Thank you, Dr. Morris.
The gentle woman from Texas is recognized.
Ms. JACKSON LEE. Thank you very much, Mr. Chairman.
I might, if I would, submit for the record several articles. The Wall Street Journal, Friday, February 5th, 1999, ''Low-Wage Workers Make Strong Gains.'' I would ask unanimous consent to submit that for the record.
Mr. SMITH. Why don't you read them all? And then I will
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Ms. JACKSON LEE. All right. ''Jobless Rates for Blacks'' and ''Hispanics Fall,'' Washington Post, February 6, 1999, ''January Levels Are Lowest Since Collection of Data Began in 1980's.''
And ''The New Americans,'' an article by James P. Smith and Barry Edmonston on the demographic and economic impacts of immigration.
Mr. SMITH. Okay. Without objection, all of those articles will be made a part of the record.
Ms. JACKSON LEE. Thank you very much, Mr. Chairman.
I think that, as we hear the different points of view being made, we do come to at least one conclusion that we have a difficult challenge. The Chairman did not direct the question to me, but I would like to help answer it. And then I would like to raise some questions with the remaining panelists. And that is the question about why the voices of African Americans and maybe African American leadership has been silenced.
Let me qualify with a caveat. No, I don't pretend to speak for the leadership of African Americans. The good thing about us is that we are really not monolithic. We have different perspectives. But we do have I think one acknowledgement, and you hate to continue to emphasize it, but we think that there are other important issues in America. We think there are issues of the inequity in funding in education, in the amount of dollars that are given to historically black colleges, like the institution that you come from, Dr. Morris.
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We think the siege and attack on affirmative action are a far more serious fight when racism has not been snuffed out in America than it would be to pit one group against another.
I, for one, will be asking the Chairmanand I think I mentioned it to himto look at the inequities of capping lower numbers on immigrants on the continent of Africa, my ultimate place of origin, as opposed to others.
Why is there am imbalance in the caps of immigrants from one segment of the world who have degrees and credentials, as opposed to other segments of the world? I think that is an important question.
But I think that the reason why voices have been silence, different from W. duBois and Booker T. Washington and Frederick Douglassand I know the history of thatwhen the waves of European immigrants came in, the real question we have to ask is why corporate America and the employer base of America always push to the side African Americans when they are obviously here.
There have been lulls, if you will, in immigration because there have been World War II. There have been enormous periods when it has not been high because everyone has been in a constant flux.
My father worked on Madison Avenue as a cartoonist during the period of World War II, when three of his brothers went off to war. When the white soldiers came back, then potential white cartoonists, he was displaced. He is an American.
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And so I think the reason why I may show a little difference of opinion because I think this is certainly an important issue, we are in the Immigration Claims comittee to look overall, but we are not hitting at the key element, if you will, of this very serious problem. So I hope that in our further discussions, that we will be able to see the trees for the forest or is it vice versa, the forest for the trees.
Let me quote, Mr. Beck, a citation out of your book. And I know it is a citation because you have the case against immigration. I think you are citing someone. But it is in your book. And so I assume that you agree with it. ''Labor shortages almost always do wonders for the economic conditions of workers. Even in the macabre circumstances, as John Lerner noted in his account of massive death from famine and plague in Fourteenth Century Italy, the labor supply was so reduced that wages and working conditions rose considerably after the plagues and did much to better the lot of the poor classes.''
Now, I would ask you, Mr. Beck, whether or not we in 1999 have to look for these tragic circumstances. When we in Congress have the power to raise the minimum wage; we in Congress have the power to invest in more job training; we in Congress have the power to assess illegal immigration, of which I think Mr. Smith and I have much to agree on in terms of some of those concerns, but we in Congress can empower people with better job training, are we relegated to plagues and immigrant bashing in order to create opportunities for American workers?
Mr. BECK. Well, obviously not, neither of those. This page that you cited is something the Cato Institute likes to pull out. And it is something that every historian of the Renaissance points out. It is merely a statement
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Ms. JACKSON LEE. And I noted it was a quote.
Mr. BECK. Sure. But it is merely a statement of fact that when the labor force was drastically reduced, wages went up. Obviously that is not it an endorsement by those historians, nor is it an endorsement by me of plagues, but it does point out that labor shortages help. And we know that right now because we have a great long-running, good economy, we have labor, tight labor, markets. And that is the reason why finally, after so many years, we are seeing some improvement in wages and incomes in these other areas.
The question we have here is 35 million people have been added to the United States since 1970 by our immigration policy. That is the population of all the countries in Central America. And they have disproportionately gone into those low-wage labor markets.
I do not believe that we are ever going to be in a situation where all of our kids are going to be able to be college-educated scientists. There are going to be people who are going to be janitors and work in the slaughterhouses. And I think the question is: How do we make every job in America a job of dignity and to have enough so that there will be enough wage there for them to support families?
We have lost that over the last 20 years. And, as the congresswoman from California pointed out, there are many causes of that. And I think nobody here would suggest that immigration is the only cause, but there is strong indication at both micro and macro that immigration is a significant cause of that. And it is like what is the advantage we get that we are unwilling to cut back on some of this immigration, just as the Jordan commission suggested, in order to help these people.
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Ms. JACKSON LEE. Well, I am glad, Mr. Beck, that you have indicated that there are a lot of variables. And, in fact, even the data today does not completely assuage us of the fact that it is predominantly the immigration problem. And that is my concern, the direction of where we are going in this hearing
Mr. BECK. There is no need to bash
Ms. JACKSON LEE [continuing]. That there are so many other variables that come into being. Particularly in an industrialized nation or a capitalistic society, as we have, there are so many other elements and ailments. And I think we would do well to make sure that we don't go in one direction versus another and that we truly get at the crux of the problem.
I thank the chairman.
Mr. SMITH. Thank you.
I am going to make a point. Then I have one quick last question for Mr. Beck. Just to clarify something that you said briefly about immigration caps and pertaining to other countries, under our current immigration policy, every single country has the same cap. It is 7 percent of the total number of avaliable preference visas.
But the reason we don't have oftentimes more folks coming from African countries is not because they reach their cap. There just aren't enough people who are applying to come from Africa.
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There are many, many more individuals from other countries who do want to come. And then that is why we had that backlog of millions of people from some other nations. I just wanted to clarify that one thing.
Also I do agree with you that there are many ways to help the disadvantaged, and particularly those who still suffer from racism. But just because there are many ways to help those individuals doesn't mean when we have a way within our grasp to help them we shouldn't take advantage of it.
I don't think these solutions are necessarily mutually exclusive. And if we can help the disadvantaged and those who have suffered disproportionately from racism by changing our immigration policy for the best interest of America, that is something I think for us to consider.
Mr. Beck, the last quick question for you is: What role can and should organized labor play in the broader immigration debate?
Mr. BECK. Well
Mr. SMITH. I am afraid to ask that question, but, anyway, tell me what you think.
Mr. BECK. Well, organized labor, as most of us know, has historically been a champion for all American workers in keeping the labor supply tight.
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Mr. SMITH. Yes.
Mr. BECK. And it is interesting that the studies that have been done by Professor Williamson from Harvard and Professor Lindert from the University of California note that unions played an incredible role in the improvement of wages and working conditions of American workers in the '40's and '50's, but they concluded at the end that what gave the unions their power was the fact that we had had a low birth rate in the '30's and we had low immigration.
Right now the unions are fighting for their lives in many ways. And as a business, actually, about the only place where unions are improving is they are adding a lot of immigrant workers. And that, frankly, has compromised their traditional voice on the side of American workers on tight labor markets.
Mr. SMITH. Thank you, Mr. Beck.
I will yield the balance of my time to the ranking member so she can make some of her opening statement or the rest of the opening statement that she didn't make a while ago.
Ms. JACKSON LEE. Thank you very much, Mr. Chairman.
As you did, let me make a point as well on the question of the caps. Let me indicate a clarification of my point on caps as much as the approval of the visas that have been denied for many coming from the African Nations. That has been an ongoing problem. And so I hope that we can address that.
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Let me also note that earlier I had the opportunity to be with the Service Employees International Union, which is a union that represents many of these skilled workers.
Mr. SMITH. Would the gentle woman yield just for a minute? I realize that I wasn't polite to our panelists because I don't think there are any more questions. You are welcome to stay if you would like to, but you can be excused if you would like to as well.
The gentle lady is going to make her opening statement between this panel and the next panel, which we will continue with as soon as she finishes. So I don't know if you all need to leave or have planes to catch or luncheon engagements or whatever, but if that is all right with you, they are welcome to go on.
Ms. JACKSON LEE. But let me also add my appreciation, and maybe some of them want to listen to this. [Laughter.]
Mr. SMITH. In any case, thank you for your contributions. You are welcome to stay. We are going to squeeze in as much as we can. I am told that the
Ms. JACKSON LEE. How many votes do we have?
Mr. SMITH. We have two votes, but it is my intention to come back immediately after those votes and continue with the second panel.
Ms. JACKSON LEE. To those, let me thank you very much for your presentation and hope that I will be in touch with all of you all for what I think can be a positive response to the concerns.
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I did indicate, I was going to indicate and will go very briefly through my opening statement that I was with the Service Employees International Union, which represents many of the laborers in America. And the work collectively together, African Americans, Hispanics, and as well new immigrants. I do think that we have got to look currently with current ideas and not past ideas about what we do in immigration.
I hope that we will have a hearing prospectively or ongoing that can comment not only on the problems that we have with immigration and too many immigrants but also the benefits to businesses and investments and the idea of the billions of dollars that these new-found citizens spend in terms of purchasing American products.
I would like to point out that targeting the immigrant community merely evades any credible solution to a long-term problem, providing economic and educational opportunities for a community whose plight has been largely ignored by many of my friends in the majority of this House.
While some have claimed and will at this hearing that African Americans have suffered disproportionately from immigration, as I have submitted to the record, there are studies that suggest not or that we must find other solutions.
I believe that there have been lost jobs, but I have made the point over and over again what disturbs me is who has been the cause of these lost jobs. Why have existing citizens been pushed aside? Why have there been determinations to hire this person, A, over B in industries like the construction industries? What industries do we need to call in and ask why these determinations are being made? Does racism raise its ugly head again? Do we in America have to come together and deal and grip with our own serious problems that we have?
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For example, a recent study concluded that the evidence points to the conclusion that immigration has had a relatively small adverse impact on the wage and employment opportunities of competing native groups. This effect does not appear to be concentrated in local areas where immigrants live but, instead, disbursed across the United States. The disbursal comes about, in part, because competing native workers migrate out of the areas to which immigrants move.
Finally, the overall impact of immigration is minuscule given the enormous size of the American economy. Yet, I am cognizant of the fact that what goes around comes around and that this good economy may be something that we will be looking at as a bad economy in years to come. In fact, I am the author of legislation that is looking to job loss of many around this nation concerned about being able to respond to the loss of jobs among those, like engineers, in our energy industry.
The latest labor statistics released last month indicate that minority unemployment has fallen. Our unemployment rates among blacks and Hispanics fell last month to the lowest levels since the Federal Government began tracking them in the early 1970's.
In its annual report released this week, the White House Council of Economic Advisers said that both wage gains and greater employment in recent years have particularly benefitted minority groups.
So I believe that we have good news. I do believe we have bad news with the attack on affirmative action because, as we see the dismantling of affirmative action, for example, in California with higher education, in Texas with higher education, we clearly see the lack of opportunity for minority students, women students, particularly Hispanic and African Americans.
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So we do have a concern. And that concern is that we have building blocks to work on. And we do better when we don't point the finger. While it may be true that immigrants are competing with blacks for some low-skilled jobs, I think that most labor economists conclude that this is not a national problem. It is in particular industries and as well they conclude that it as an attempt to turn it into one is misplaced at best.
Again, my challenge for all of us is to look at the immigration history of this nation where immigrants have come. They have worked. They have moved up the ladder. Unfortunately, many of us who are minorities have come and worked and fallen off the ladder.
I want to work on the serious issues of education and investment. I want to work on the issues of making CEOs in this nation diverse so that they are CEOs who are Hispanic, CEOs who are African American, CEOs who are women who will then change the policies of a workforce in America and begin not to throw away the skilled workers, the bright young people, the disenfranchised young people who happen to be African American because of their race or the language they speak and will hire those young people. And I look forward to doing that.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Jackson Lee follows:]
PREPARED STATEMENT OF HON. SHEILA JACKSON LEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Page 149 PREV PAGE TOP OF DOC Good Morning Mr. Chairman. I would like to say at the outset that I am just as concerned as you are about any past, current or future potential impact that the current trends of American Immigration policy may have on low wage workers, and African-American and Hispanic citizens. I also come to this hearing with some pause and some concern.
I believe that it is a troubling situation that any member of a minority group would not be hired because an illegal immigrant was actually preferred for the job. However, there does not seem to be too much documented evidence out there to suggest that this is going on.
I am also concerned Mr. Chairman that this Congress not serve as a vehicle for fostering discrimination or for drawing a wedge between African-Americans and Hispanic Americans.
I am also concerned Mr. Chairman that while the purpose of this hearing is supposed to gain a better understanding of the impact that immigrants without a high school education have on the employment and wage-earning prospects of recent immigrants and Black and Hispanic citizens, most of the witness testimony that will be offered to us today concludes that immigration has had a negative impact on low skilled workers, and that their lack of education is the main reason of the low wage.
However, I do think that the focus of this hearing ignores the benefits of immigration. In several studies, some of which we will talk about today, find that immigrants create new jobs and spur economic growth from their businesses and investments and spend billions of dollars on American products and industries. I would merely like to point out that targeting the immigrant community merely evades any credible solution to a long-term problem: providing economic and educational opportunities for a community whose plight has been largely ignored by this Republican majority.
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While some have claimed and will at this hearing that African-Americans have suffered disproportionately from immigration, there are highly reputable studies that have been done to disprove this. The leading example of the study done by James Smith and Barry Edmonston. The title is: The New Americans: Economic, Demographic, and Fiscal Effects of Immigration.
This was a study done by a group of labor economists and one of the main conclusions that was reached was ''While some have suspected that blacks suffer disproportionately from the inflow of low-skilled immigrants, none of the available evidence suggests that blacks have been particularly hard-hit on a national level.
Some have lost their jobs, especially in places where immigrants are concentrated. But the majority of African-Americans live elsewhere, and their economic fortunes are tied largely to other factors. The study also concluded that the evidence points to the conclusion that immigration has had a relatively small adverse impact on the wage and employment opportunities of competing native groups.
This effect does not appear to be concentrated in the local areas where immigrants live, but instead is dispersed across the United States. This dispersal comes about in part because competing native workers migrate out of the areas to which immigrants move.
Finally, the overall impact of immigration is miniscule given the enormous size of the American economy. Also, the latest Labor Statistics released last month indicate that minority unemployment has fallen. Unemployment rates among Blacks and Hispanics fell last month to the lowest levels since the Federal government began tracking them in the early 1970s.
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In its annual report released this week, the White House's Council of Economic Advisers said that both wage gains and greater employment in recent years have particularly benefited minority groups.
After examining these results from the Labor Department, I still fail to see where the African American community has been devastated by immigration. I am very gratified that Chairman Smith and the Republican party is concerned about how minority communities are affected. However, I fear that the concern in this instance is slightly misplaced. Issues that effect minority communities are affirmative action, civil rights, fair housing, raising the minimum wage, improving public education, and affordable childcare. Immigration is not a problem for African-Americans. Hispanic and African Americans have worked together for years on those issues. This hearing has the potential to divide, not bring us together.
I would like to introduce into the record the National Research Council Study that I referenced above into the hearing record. This study is a nationally recognized study that is often used when examining this topic.
I believe that it is a reasonable conclusion that the overall impact of immigration is miniscule given the enormous size of the American economy. And second, the primary economic effect of immigration is to redistribute income from the poor and unskilled to skilled workers and owners of capital.
While it may be true that immigrants are competing with Blacks for some low-skilled jobs, I think that most labor economists conclude that this is not a national problem, and an attempt to turn it into one is misplaced at best.
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Let's work together to find a meaningful solution by creating these educational and economic opportunities, rather than dreaming up new proposals like a high school education for new immigrants prior to their arrival in the United States. These solutions should be reached in a bipartisan fashion.
Thank-you Mr. Chairman.
Mr. SMITH. Thank you.
Ms. JACKSON LEE. I yield back.
Mr. SMITH. Thank you.
We will go vote and be back in about 15 minutes. Thank you all again as witnesses on our first panel for the great contributions today.
Mr. SMITH. I think we are going to go on and start. I have been given the okay by the ranking member's staff director. So we will proceed. And I know that Ms. Jackson Lee is on her way back as well.
I hope you all were in the room when I said what I did about our first panel and made sure that I was including the second panel. Your testimony today is highly important. This is one of the most important hearings in my judgment we will hold all year long. And we will be using a lot of the information that you all give us to decide how to proceed and go forward.
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Professor Briggs, we will begin with you, if we might. I think it was a little awkward before. Let me introduce everybody on the panel. And then it will be a little bit easier as we go along. Professor Vernon Briggs, School of Industrial and Labor Relations, Cornell University; Dr. Georges Vernez, Director, Center for Research on Immigration Policy at the RAND Corporation; Dr. William Spriggs, Director of Research and Public Policy, National Urban League; Professor Mark Partridge, Department of Economics, St. Cloud State University in Minnesota; and Dr. Julian Betts, Department of Economics, University of California in San Diego.
Dr. Betts, that is in La Jolla; right?
Mr. BETTS. That is right.
Mr. SMITH. And you get paid for that job? No. Never mind. Never mind. Never mind.
Mr. BETTS. I am glad my chair is not here to hear that.
Mr. SMITH. Just appreciate all of you coming so far and being here today.
Professor Briggs, we will begin with you.
Page 154 PREV PAGE TOP OF DOCSTATEMENT OF VERNON M. BRIGGS, JR., PROFESSOR, SCHOOL OF INDUSTRIAL AND LABOR RELATIONS, CORNELL UNIVERSITY
Mr. BRIGGS. Thank you, Congressman Smith.
I appreciate the opportunity to be here and discuss what I believe still, as you said, is one of the most important issues facing this country: our nation's immigration policy and has continued to be incongruent with the nation's labor market trends.
I start my testimony with a quotation from President Kennedy, who said, ''For the great enemy of the truth is often not the lie, deliberate, contrived, and dishonest, but the myth, persistent, persuasive, and unrealistic. Too often we hold fast to the cliches of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.'' I don't think there is any area in public policy today where this is more of an issue than it is with respect to immigration: there is a lack of concern for real thought over what this policy is bringing about.
If immigration were small, who would care? But immigration today is a major factor in the growth of the U.S. population. The percentage of the population that is foreign-born has increased from 4.4 percent to 9.7 percent since 1965. It is an increase from 8.6 to 25.8 million people.
In the process, immigration has become a key feature of American life. In fact, Bureau of the Census has projected immigration will be the most important factor influencing the growth of the American population over the next 50 years. That fact alone ought to be significant enough to hold an enormous number of hearings on.
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In fact, the first time I was asked to testify before Congress 21 years ago, it was over the effect of immigration on population growth. At the time, Congress was very concerned about the growth of the population as a key issue itself.
Given its present momentum, the welfare of the nation can ill afford to live with the unrealistic immigration myth, no matter how ''persistent'' and how ''persuasive'' is the voice of its proponents.
The main concern with immigration, in my view, of all the other rationales for immigration, is its labor market effect. It is a truism that immigrants must work or they must be supported by those who do.
The issue here, then, is that immigration is a discretionary policy. There are a lot of other issues affecting the American labor force. And we have touched on those this morning.
But this is one of the issues that is the clearest one which policy has some sort of control over the outcome. Immigration is totally discretionary. And that discretionary policy ought to serve the national interest. In my view, it is not.
The cost of immigration needs to be taken into account as much as the benefits when it comes to designing the appropriate policy. The concerns of the losers are as relevant as are those of the winners. Such is especially the case when those most adversely affected and impacted are the least advantaged amongst us.
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When we look at the labor market, we see that one out of every eight workers in the United States is now foreign-born. That is an enormous number. The fact that those numbers are concentrated in a select number of states and in the urban areas of those select numbers of states makes this issue even more significant.
The 1990 census, which I think is the best oneyou have heard all kinds of conflicting data here this morningto use for information on the human capital of immigrants. The 1990 census revealed that 25 percent of the foreign-born adult population had less than a ninth grade education compared to only 10 percent of the native-born population at the time. Forty-two percent of the foreign-born population did not have the equivalent of a high school diploma, compared to 23 percent of the adult native-born in 1990.
Again, the data that you have been hearing references to this morning have been coming from the CPS estimates, which are based on samples. I am relying on the population survey of 1990. I think that it is the most relevant one for getting at this enormous impact.
There can be no debate over the fact that it is the low-skilled, low-wage sectors of the nation's urban labor markets that are most heavily impacted by immigrant job seekers. Not only do immigrant job seekers compete with each other for opportunities at the bottom of the nation's hierarchy, but they compete with the low-skilled, native-born at the same time.
The National Research Council has made some estimates of what that impact is. They found a $10 billion ''so-called benefit'' to the economy that is largely the result of wages being suppressed for low-skilled workers below what would otherwise have been.
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This is a ''benefit'' that only an economist can appreciate. It is no benefit to the low-skilled workers, who are already at the bottom of the nation's income distribution. It is an artificially imposed hardship imposed by government policy on native-born low-skilled workers. I think it has to be seen as being that.
Throughout my testimony, I talk about what is bringing this about: the continuing trend of declining educational attainment of the immigrant population since 1965. The National Research Council shows it is a characteristic of all aspects of the immigration system. It is not just illegal immigrants. It is part of the entire system: legal immigration, refugee policy, illegal immigration, the whole array of nonimmigrant policies.
With respect to the low-skilled labor market, this is where about one-third of all American workers are. It is a paradox that this part of the labor market is not growing. Jobs are not increasing for this segment of the labor force. Where the jobs are coming from are those occupations that have higher levels of skills and education. Thus, while the national unemployment rate is fallingand we have heard a lot about thatthe unemployment rate of foreign-born population is 50 percent higher than the national figure.
In 1997, the national unemployment rate was 4.9 percent. For foreign-born population, the unemployment rate was 7.4 percent. The unemployment rate for foreign-born without a high school diploma was 9.8 percent and for the native-born 14.5. These figures should dispel the notion that there is any shortage of unskilled labor in this nation. And they also vividly demonstrate the nation's greatest impact on the labor market is the least skilled segment of the labor force.
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I might also say I looked up some numbers in New York City last week. New York City has the largest number of immigrants of any city in the nation. Now, the present unemployment rate in New York City is not a prosperity rate. It is over 7 percent right now. The black unemployment rate in New York City last year was 13 percent. The Hispanic unemployment rate was 10.1 percent.
Now, for the black population without a high school diploma, that would probably translate into a 20 percent official unemployment rate. So there is no question that even in a city that gets a lot of publicity about how good the economy is doing, there is a disproportionate impact on who is benefitting and who is not.
Again, this is a city that has a significant foreign-born population, estimated now to be almost 38 percent of the total population. And that percentage is close to the all-time record high that occured at the beginning of the Twentieth Century in New York City.
So there is no question about the impact of immigration in a city like New York. I think it is the same elsewhere. The benefits of tight labor markets are not being felt by all people.
High unemployment and extensive differences in human capital between the foreign-born and the native-born population mean there is a significant difference in poverty rate between the two groups.
Well, in my testimony I give you the poverty rates, and the differential, the effects on income inequality. And I also indicate that immigration has affected labor market mobility. And there is plenty of research on this. There is no question about this that citizens are not moving into where the foreign-born population has been concentrated. Native-born are moving out of those areas where the immigrant population is concentrated. And immigrants don't move out of those labor market segments.
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Well, I will stop there, and we will talk about the recommendations later.
[The prepared statement of Mr. Briggs follows:]
PREPARED STATEMENT OF VERNON M. BRIGGS, JR., PROFESSOR, SCHOOL OF INDUSTRIAL AND LABOR RELATIONS, CORNELL UNIVERSITY
In one of his most memorable public addresses, President John F. Kennedy spoke to the 1962 Graduating Class at Yale University the following words:
''For the great enemy of the truth is very often not the liedeliberate, contrived, and dishonestbut the mythpersistent, persuasive and unrealistic. Too often we hold fast to the cliches of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.''
In no other area of public policy today are Kennedy's words more
appropriate than as they relate to the subject of immigration and its
impact on the U.S. economy. Immigration policy has been captured by special interests who peddle the notion that immigration is an unmitigated benefit to the nation and that it is costless. Nothing could be further from the truth. The immigration myth is based on the premise that attention need only be paid to the benefits while the costs can be totally ignored. Only with respect to the formulation of immigration policy is such nonsense tolerated as conventional wisdom.
Page 160 PREV PAGE TOP OF DOC If the scale of immigration was smallas it was from the 1930s through to the mid-1960sthe nation could live with the myth that immigration yields only benefits. But it is not. In 1965, the foreign-born accounted for only 4.4 percent of the populationthe lowest percentage since such data started being collected prior to the Civil War. The percentage had been falling for over 50 years. By 1997, however, the percentage had risen to 9.7 percent(plus some unknown additional increment of statistical undercount due to the estimated 6 million illegal immigrants currently in the country). Until there are legislative changes, the percentage will continue to rise. Thus, about one of every ten Americans in 1997 was foreign-born. In absolute terms, the foreign-born population grew from 8.6 million persons in 1965 to 25.8 million persons in 1997. In the process, immigration has again become a key feature of American life. Indeed, the U.S. Bureau of the Census has projected that immigration will be the most important factor influencing the growth of the American population over the next 50 years. Given its momentum, the welfare of the nation can ill-afford to live with the ''unrealistic'' immigration mythno matter how ''persistent'' and ''persuasive'' are the voices of its proponents.
The Point of Focus
Although the subject of immigration involves multiple considerations, they all have one common juncture point: the labor market. It is a truism that immigrants must work or they must be supported by those who do. So no matter how many other issues are thrown into the immigration caldron, the critical issue is what are the labor market consequences of what immigration policy produces or tolerates. For it must always be remembered that immigration is entirely a discretionary act. The mass immigration that the United States is currently experiencing is entirely a policy-driven phenomenon. No one has a right to immigrate or to seek refuge in the United Stateslegally or illegally. The ''costs'' of immigration need to be taken into account as much as do the ''benefits'' when it comes to designing the appropriate policy. The concerns of the ''losers'' are as relevant as those of the ''winners.'' Such is especially the case when those most adversely impacted are the least advantaged persons in the population and labor market.
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Labor Market Effects
Due to differences in the age and gender distribution of the foreign-born population from the native-born population, immigrants comprise a larger portion of the labor force than they do of the population as a whole. In 1997, foreign-born workers comprised 11.5 percent of the U.S. labor force (or almost one of every eight U.S. workers). In absolute numbers, 15.5 million workers were foreign-born. These are big numbers and, when concentrated in specific segments of the labor market, they have significant influences.
As in the past, post-1965 mass immigration is geographically concentrated. In 1997, five states (California, New York, Florida, Texas, and Illinois) accounted for 65 percent of the entire foreign-born population and 66 percent of the entire foreign-born labor force. The foreign-born are also overwhelmingly concentrated in only a handful of urban areasespecially in their central cities. These particular labor markets, however, are among the nation's largest in size: Los Angeles, New York, San Francisco, Miami, and Chicago. Collectively, these five cities accounted for 51 percent of all foreign-born workers. Although somewhat less numerous, immigrants also comprise significant percentages of the labor force of a number of other cities and increasingly in some rural towns.
The most significant labor market characteristic of the foreign-born labor work force, however, is the fact that it is disproportionately characterized by workers with low human capital endowments. The 1990 Census revealed that 25 percent of foreign-born adults who were 25 years and older had less than a ninth-grade education (compared with only 10 percent of native-born adults). Moreover, 42 percent of the foreign-born adult population did not have the equivalent of a high school diploma (compared to 23 percent of the native-born adult population). Thus, it is the low-skilled, low wage sector of the nation's major urban labor markets that are the most impacted by immigrant job-seekers. Not only do low-skilled immigrants compete with each other for whatever opportunities exist at the bottom of the nation's job hierarchy, but they also compete with the low-skilled native-born workers. Indeed, when the National Research Council (NRC) calculated in 1997 that immigration provides a net ''benefit'' to the U.S. economy of from $1 to 10 billion a year, the ''benefit'' was based largely on the result of the wage suppression of the wages of low-skilled workers whose wages are lower than they would have otherwise been. This, of course, is only a ''benefit'' that an economist can appreciate. It is certainly no ''benefit'' to low-skilled workers who are already at the bottom of the nation's income distribution. It is an artificially imposed hardship imposed by government policy on native-born low-skilled workers. The only actual wage ''benefit'' in this process is received by the immigrant workers themselves who typically earn considerably more at the bottom of the U.S. wage scale than they would have earned in his/her homeland. Low-skilled native-born workers lose; low-skilled foreign-workers benefit. Whose interests are U.S. policymakers supposed to protect?
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To make matters worse, the NRC report catalogued the steady decline of the educational attainment levels of post-1965 immigrants over the years. As a consequence of this prolonged decline in worker human capital, foreign-born workers earn on average less than native-born workers and the earnings gap between them has widened over the years. Immigrants from Latin America, who in 1997 accounted for over half of the entire foreign-born population of the nation, earn the lowest wages. The NRC, however, found no evidence of discriminatory wages being paid to immigrants. Rather, it states that immigrant workers are paid less than native-born workers because, in fact, they are far less skilled and more poorly educated. The relative decline in both skills and wages of the foreign-born population was attributed to the fact that most immigrants are coming from the poorer nations of the world, where average education, wages, and skill levels are far below those in the United States. As a direct consequence, post-1965 immigrants are disproportionately increasing the segment of the nation's labor supply that has the lowest human capital endowments. In the process, they are suppressing the wages of all workers in the lowest skill sector of the labor market.
While the low-skilled labor market is substantial in sizeconstituting perhaps as much as one-third of the U.S. labor forceit is confronted by the paradox that it is experiencing very little employment growth. Rather, employment growth is overwhelmingly occurring in the occupations in virtually all industries that have jobs requiring high skill and education requirements.
Thus, while the national unemployment rate has fallen to levels not seen since before 1970, unemployment rates for unskilled workers remain almost three times the national rate. Given the disproportionately low education levels of the adult foreign-born population, it is no surprise that the unemployment rate of the foreign-born exceeds that of the native-born by about 50%. To be specific, in 1997 (the last year for which all of the relevant data is presently available), the national unemployment rate was 4.9 percent but the unemployment rate for the foreign-born was 7.4 percent. The unemployment rate for foreign-born without a high school diploma was 9.8 percent and for the native-born it was 14.5 percent. These figures should dispel the notion that there is a shortage of unskilled workers in the nation and they also vividly demonstrate that immigration's greatest impact on the labor market is in the least skilled segment of the labor force that is already having the greatest difficulty finding employment.
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High unemployment, combined with the extensive differences in the human capital characteristics between the native-born and the foreign-born population, means there is also a significant variation in the incidence of poverty between the two groups. In 1997, 13.6 percent of the nation's total population were classified as living in poverty. For the foreign-born population, however, 20.9 percent were living under poverty conditions compared to 12.9 percent of the native-born population. Thus, it is not surprising that immigrant families rely more heavily on the use of both cash and non-cash welfare programs than do native-born families. This should be no surprise. If immigration policy is going to allow wages for low income workers to be supressed, they will need to find additional income from the public sector to meet the disproportionately high costs of living that characterizes life in most large cities. Thus, when the NRC calculated the net fiscal costs of public services to immigrants (e.g., those associated with increased education, medical, welfare, incarceration, and public housing) beyond what they pay in taxes, it found the cost to taxpayers ranged from $14.8 to $20.2 billion a year. Obviously, these fiscal costs are disproportionately distributed among the communities and states depending on the size of the foreign-born population in their respective jurisdictions. In California, for example, the NRC calculated that it costs every native-born household $1,178 a year in added taxes to cover the costs of government services provided to immigrants in the state in excess of the taxes the immigrants pay.
Collectively, all of these concerns translate into the bigger societal issue of the effect on income inequality. It is the Achilles Heel of the nation's prosperity in the 1990s. In 1994, the President's Council of Economic Advisers formally acknowledged that ''immigration has increased the relative supply of less-educated labor and appears to have contributed to the increasing inequality of income in the nation.'' Although their report claims that the aggregate effect is ''small'' on the national distribution of income, immigration is a major factor in the deterioration of wages and incomes for low-skilled workers and low income families. Indeed, in 1995 the Bureau of Labor Statistics reported that immigration accounted of approximately 20 to 25 percent of the increase in the wage gap between low and high-skilled workers during the 1980s in the 50 largest metropolitan areas of the United States. Likewise, the NRC study revealed that almost half of the decline in real wages for native-born high school dropouts from 19801994 can be attributed to the adverse competitive impact of unskilled foreign workers. Hence, just because the effects of immigration are dissipated when the perspective is at the national level does not mean that they are insignificant in those large local labor markets where mass immigration is a reality.
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Lastly, there is the adverse effect of prevailing immigration policy on labor mobilityespecially those workers with low skills. Research on this crucial issue has disclosed that the higher the concentration of immigrants in a local labor market, the less attractive is the locality to native-born workers. It has also revealed that foreign-born workers are less likely to move out of states where they are concentrated than are native-born workers. But, most importantly, unskilled native-born workersthose who are losing out in the competition for jobs with low-skilled immigrantsare more likely to leave their former communities to find jobs elsewhere.
What Should Be Done?
To mitigate the adverse impacts of immigration policy on the low-skilled labor market requires change in all components of the nation's immigration policy. It is not simply an issue of the adverse effects of continuing illegal immigration and the need to combat the ongoing hemorrhage of the nation's borders. Reforms must also include the reduction of the immigration admissions categories that are not specifically linked to the possession of human capital attributes in need by the labor market.
The starting point should be the enactment of the principal recommendations of the U.S. Commission on Immigration Reform (CIR): (1) the elimination of the extended family preferences for legal admission; (2) the elimination of the entry of ''unskilled workers'' under the employment-based immigration admission category; (3) the elimination of the ''diversity immigration'' category; (4) the inclusion of refugees within the total number of immigrants annually admitted each year; (5) the verification of social security numbers of all job hires; and (6) far more attention and resources given to interior enforcement at job sites of employer sanctions and other workplace labor standards. I would add to this list: (1) the need to reject all proposals for non-immigrant labor programs involving unskilled labor in general and agricultural workers in particular; (2) the end of the practice of reducing fines on employers who are found to have violated the employer sanctions provisions of the law; (3) maximum publicity given to the names of employers who are found to be in violation of the employer sanctions provisions; (4) the creation of a reliable and verifiable identification system that includes a photograph and other personal identifiers (if I have to show a picture photo of myself from a state-issued document to board a plane to attend this hearing, why should I not have to do the same to be hired for a job?); (5) and the entire political asylum system that is being massively abused as a cover by human smugglers of illegal immigrants who ecome essentially ''slave labor'' for restaurants, garment manufacturers, hotels, adult entertainment, and other low wage enterprises needs to be carefully reviewed and extensively overhauled with emphasis given to expedited decision making and verification that persons who are denied asylum actually leave the country.
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In assessing the political debacle of the immigration reform movement in the mid-1990s, political scientists James Gimpel and James Edwards wrote in 1998: ''The voice of the people has had little impact on the tone or direction of the immigration debate in Washington.'' They point out that despite the extensive research findings that show the need for significant legislative changes and that public opinion polls consistently show that the citizenry want these changes to take place, it makes no difference to the professional politicians. The myth that immigration has only benefits is perpetuated by special interest groups who have no concern for the national interest. Immigration reform, however, is not going to go away. The issue continues to fester. For as George Borjas and Richard Freeman, the key authors of the labor market portion of the aforementioned NRC report, have written in response to the gross distortions of their work by the pro-immigration lobby and the media:
Immigration creates winners and losers. Low income workers and taxpayers in immigrant states lose; those who employ immigrants or use immigrant services win, as do the immigrants themselves. The critical issue is how much do we care about the wellbeing of immigrants compared with the Americans who win and the Americans who lose?
Immigration policy is causing wage and income inequities and it is distorting the nation's labor market. Immigration is not a ''free lunch.'' Neither is it fair. Its costs are disproportionately borne by the poor and the most vulnerable in the labor force. It is past time to rein-in this rogue instrument of public policy.
Page 166 PREV PAGE TOP OF DOCREFERENCES
David A. Jaeger, ''Skill Differences and the Effect of Immigrants on the Wages of Natives,'' BLS Working Paper #273, U.S. Department of Labor, Bureau of Labor Statistics, (December, 1995), p. 21.
Economic Report of the President: 1994, (Washington, D.C.: U.S. Government Printing Office, 1994), p. 120.
George Borjas and Lynette Hilton, ''Immigration and the Welfare State: Immigration Participation in Means Tested Entitlement Programs,'' The Quarterly Journal of Economics, (May 1996), pp. 575604.
George J. Borjas and Richard B. Freeman, ''Findings We Never Found,'' New York Times, (December 10, 1997) p. A29.
James G. Gimpel and James R. Edwards, ''The Silent Majority,'' Journal of Commerce, (June 23, 1998), p. 8A.
Mary Kritz and June Marie Nogel, ''Nativity Concentration and Internal Migration Among the Foreign Born,'' Demography, (August, 1994), pp. 16.
National Research Council, The New Americans, (Washington, D.C.: National Academy Press, 1997).
Page 167 PREV PAGE TOP OF DOCPresident John F. Kennedy's Commencement Address at Yale University, June 11, 1962.
Robert Walker, Mark Ellis, and Richard Barff, ''Linked Migration Systems: Immigration and Internal Labor Market Flows,'' Economic Geography, (July, 1992), pp. 234248.
U.S. Bureau of the Census, Current Population Reports, #P251130 (Washington D.C. U.S. Department of Commerce 1996).
U.S. Commission on Immigration Reform, Becoming an American: Immigration and Immigrant Policy, (Washington, D.C.: U.S. Commission on Immigration Reform, 1997). See also the interim reports: U.S. Immigration Policy: Restoring Credibility, (Washington, D.C.: U.S. Commission on Immigration Reform, 1994), and Legal Immigration: Setting Priorities, (Washington, D.C.: U.S. Commission on Immigration Reform, 1996).
Vernon M. Briggs Jr., Mass Immigration and the National Interest, 2nd Edition, (Armonk, N.Y.: M.E. Sharpe, Inc. 1996).
Vernon M. Briggs, Jr. ''Income Disparity and Unionism: The Workplace Influences of Post-1965 Immigration Policy,'' in The Inequality Paradox: Growth of Income Disparity. Edited by James A. Auerbach and Richard Belous. (Washington, D.C.: The National Policy Association, 1998), pp. 112132.
William H. Frey, ''Immigration and Internal Migration Flight: A California Case Study,'' Population and Environment, (March, 1995), pp. 353375.
Page 168 PREV PAGE TOP OF DOC Mr. SMITH. Okay. I will ask you about those in the question and answer period.
Mr. BRIGGS. Okay.
Mr. SMITH. Thank you, Dr. Briggs.
STATEMENT OF GEORGES VERNEZ, DIRECTOR, CENTER FOR RESEARCH ON IMMIGRATION POLICY, RAND
Mr. VERNEZ. Thank you.
Mr. Chairman and members of the Subcommittee, to understand the effects of immigration on low-skilled workers in the United States, it is important to note that the effects of immigration are contextual. What I mean by that is that the effects of immigration at any one time depend on the characteristics of immigrants and they depend on the growth of the economy and its demands for skills. Over the past 30 years, these two phenomena have had a diverging dynamic. The share of immigrants entering this country with fewer than 12 years of education has increased steadily from 15 percent in the 1970's to nearly 40 percent in the 1990's in California.
As the share of new immigrants with a low level of education has increased, the number of jobs filled by them and their native-born counterparts has declined steadily by about 40 percent in the same period of time. The shift in demand for low-skilled workers by employers is characteristic of all industries, including those typically viewed as low-skilled.
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In this context, immigration to California has contributed to reduced job opportunities for native-born low-skilled workers, lower wage for all low-skilled workers, an increase in income disparities, a lack of economic progress for low-skilled immigrants, and a disproportionate fiscal burden for few communities.
This pattern of immigration has also benefitted employers in the form of lower costs for labor, contributed to retaining industries that might otherwise have downsized or moved off shore and benefitted all consumers in the form of lower prices for goods and services.
Immigration is affecting privately job opportunities of native-born high school dropouts and somewhat less those of native-born high school graduates. We have estimated that immigration has contributed in the range of 7 to 25 percent of the decline in employment rate from 67 percent in 1970 to 47 percent in 1990 for high school dropouts. This effect was larger for African Americans and lower for Hispanic and non-Hispanic whites.
Immigration into California also affected the earnings of low-skilled native-born workers in the 1970's, doing so more for African and Hispanic Americans than for non-Hispanic white Americans. For instance, we estimated that the earnings of African American males without a high school diploma would have been 10 to 16 percent, or about $45 to $76 per week, higher had there been no immigration.
You should note that the effect of immigration on job opportunities and on earnings of workers have varied over time. During the 1970's, earnings of both men and women were most affected while employment rates were less affected. During the 1980's, the reverse was true.
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One potential explanation for this variation of effects over time is that in the context of the high employment growth of the 1970's, immigration may not have so much increased competition for jobs as exercised a brake on the growth of wages. By contrast, during the slow employment growth of the 1980's, immigration had its largest impact on job opportunities.
Immigration has also contributed to the well-documented increase of inequality in earnings among workers and in income among families. From 1960 to 1990, the increase in earnings disparity was more than twice as large for workers in California than it was for workers in the rest of the nation.
Deborah Reed of the Public Policy Institute of California estimated that the disproportionately large share of low-skilled immigration into California explained about 24 percent of the rise in wage in equality in California.
Immigrant workers, too, have been affected by the pattern of low-skilled immigration over the past 30 years or so. Most importantly, they experience a decline in their earnings over their lifetimes. As a result, immigrants can be expected to exercise a long-term upward effect on the demand for public services.
The last effects of low-skilled immigration that I want to highlight today is the disproportionate fiscal impact it is having on the communities and jurisdictions where low-skilled immigrants are highly concentrated. More than half of low-skilled immigrants reside in just five of the largest metropolitan areas in the country: Los Angeles, New Jersey, San Francisco/Oakland, Miami, and Chicago. Within these areas, low-skilled immigrants are even further concentrated within a few jurisdictions.
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The National Research Council has estimated that in California, where 38 percent of the nation's low-skilled immigrants reside, the annual tax burden for a native-born household was roughly $1,200 in 1996. By contrast, the estimate for New Jersey, where proportionately few immigrants have located and few of them are low-skilled, the tax burden to the state and local governments as a whole was $226, nearly 5 times lower.
Of all public institutions, the schools are the most impacted by the uneven distribution of immigrants. We project in California that about 40 percent of the high school graduation class of 2010 will be children of immigrant parents.
Currently these children of low-skilled, low-income immigrants are about 15 percent less likely to graduate from high school and 3 times less likely to graduate from college than are children of more highly educated, higher-income parents. If these children are to compete in the U.S. economy and command adequate wages, their college-going and college-completion rates will have to increase significantly. This is a major challenge for California and for the nation.
[The prepared statement of Mr. Vernez follows:]
PREPARED STATEMENT OF GEORGES VERNEZ, DIRECTOR, CENTER FOR RESEARCH ON IMMIGRATION POLICY, RAND
Mr. Chairman and members of the House Subcommittee on Immigration and
Claims, thank you for the opportunity to testify on the impact of
immigration on low-skill American workers and on American communities.
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To understand the effects of immigration on low-skill workers in the United States, it is necessary to understand the diverging dynamics of immigration on the one hand and the economy on the other hand.
As you know, the share of immigrants entering the country with fewer than 12 years of education (i.e., less than a high school degree) has increased steadily since the 1970s. Whereas 15 percent of new immigrants came in with this level of education in the 1970s, so far more than one-third have done so in the 1990s. These immigrants are even more concentrated in a few states than are immigrants as a whole. For instance, 38 percent of low-skill immigrants in the country today reside in California, compared to 32 percent of all immigrants. About 40 percent of California's immigrants have fewer than 12 years of education. In Texas, this share exceeds 50 percent. Other states with relatively high shares of low-skill immigrants include Illinois (32 percent), Florida (27 percent), and New York (26 percent).
As the share of new immigrants with a low level of education has increased, the number of jobs available to them and to their native-born counterparts has declined steadily. In 1970, 31 million jobs were filled by workers with fewer than 12 years of education, compared to today's 19 million, a 40 percent decline. In the 1990s, the economy has added 12 million jobs, but only 4 percent of these were filled by workers with fewer than 12 years of education. The bulk of the net new jobs created by the economy, 70 percent, were filled by workers with at least some college education. This shift in the demand for education by employers is characteristic of all industries, including those viewed as low-skill, such as hotels and motels, restaurants, and textile and apparel. One outcome of this trend has been a sharp increase in the relative return to education.
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Our own studies, which focused primarily on California, and those of other researchers suggest that this pattern of immigration in the context of the changing U.S. economy has contributed to
Reduce job opportunities for native-born low-skill workers
Lower wages for all low-skill workers
An increase in income disparities
A lack of economic progress for low-skill immigrants
A disproportionate fiscal burden for a few communities.
Although the remainder of this testimony elaborates on these effects on low-skill workers and the communities in which they are located, we do not wish to imply that these are the only effects of immigration. It has been well documented that (1) employers benefit from migration in the form of lower costs for labor, (2) jobs have been retained in industries that might otherwise have had to downsize or move offshore, and (3) all consumers benefit from lower prices for goods and services. And, of course, the immigrants themselves enjoy a well-being and hope for their future (and that of their children) that would not have been possible in their home countries.
Let's first consider how immigration has affected workers in California. It has contributed most to lowering the job opportunities of native-born high school dropouts and somewhat less to lowering those of native-born high school graduates. Overall, the employment rate of native-born men decreased from 67 percent in 1970 to 47 percent in 1990 for high school dropouts and from 86 to 76 percent for high school graduates. We estimate that immigration contributed in the range of 7 (low boundary) to 25 percent (high boundary) to that decline. This effect was larger for African American men and lower for Hispanic and non-Hispanic white men. The employment rate of native-born men with at least some college remained constant.
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In contrast to the employment rates for men, those of native-born women increased over this same period, although by much less for low-educated than for college-educated women. From 1970 to 1990, the employment rate of high school dropouts increased from 33 to 35 percent, while the rate of high school graduates increased from 48 to 59 percent. We estimate that without immigration, the growth in employment rate of these native-born women would have been 20 to 30 percent higher. The employment rate of women with at least some college was not affected by immigration; their rate of employment increased from 53 to 72 percent from 1970 to 1990.
Overall, we estimate that by 1990, from 130,000 to 190,000 persons had dropped out of the labor force or were unemployed because of low-skill immigration in California. This figure represents about 3 to 5 percent of all those unemployed or out of the labor force.
Immigration into California also affected the earnings of low-skill native-born workers in the 1970s, doing so more for African and Hispanic Americans than for non-Hispanic white Americans. For instance, we estimate that the earnings of African American males without a high school diploma would have been 10 to 16 percentor $45 to $76 per weekhigher had there been no immigration. Earnings of on-Hispanic white males would have been 4 to 8 percentor $22 to $45 per weekhigher. This negative effect, however, did not carry through into the 1980s, and neither decade saw an adverse effect on the earnings of males who attended some college. The pattern for women was similar, though the adverse effect in the 1970s seemed to apply only to native-born women who did not finish high school.
You will note that the effects of immigration on job opportunities and on earnings of workers have varied over time. During the 1970s, earnings of both men and women were most affected, while employment rates saw relatively minor effects. During the 1980s, the reverse took place: employment opportunities were affected most, and earnings saw no effects at all. One potential explanation for this variation over time in the tradeoff between jobs and earnings is that job growth was much higher (30 percent) during the 1970s than during the 1980s. The greater job opportunities of the 1970s seemingly induced people to enter the labor force at higher rates than they would have otherwise. In this context of high employment growth, immigration may not have so much increased competition for jobs as exercised a brake on the growth of wages. By contrast, during the slower employment growth of the 1980s, immigration had its largest impact on job opportunities.
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Immigration has also contributed to the well-documented increase of inequality in earnings among workers and in income distribution among families. From 1960 to 1990, the increase in earnings disparity was more than twice as large for workers in California than for workers in the rest of the nation (45 versus 20 percent). In 1960, California enjoyed a lower earnings disparity among its workers than did the rest of the nation, but this pattern was reversed by 1980, and the gap has increased since then.
According to a recent study by Deborah Reed of the Public Policy Institute of California, about half of the disproportionate rise in earnings inequality in California can be explained by two factors. She estimates that one of these factors, the known increase in earnings for the college educated, explains about 30 percent of the rise in earnings inequality between 1967 and 1997. The other factor, the disproportionately large share of low-skill immigration into California, explains another 24 percent.
Immigrant workers, too, have been affected by the pattern of low-skill immigration over the past 30 years or so. Two effects are key. First, the real earnings of immigrants with 12 or fewer years of education have declined even more rapidly than those of their native-born counterparts. For instance, while the real earnings of native-born men declined by 24 percent between 1970 and 1990, those of foreign-born men declined by 29 percent. Over time, the gap in earnings between immigrants who lack any college education and native-borns with the same level of education has become progressively larger.
Second, low-skill immigrants not only receive lower earnings relative to native-born workers when they arrive, they also experience flat or decreasing earnings after age 30, losing grounds to native-borns as they age. The lack of economic mobility for these immigrants contrasts with the relatively high mobility of immigrants with at least some college education. These more-educated immigrants see their earnings increase fairly rapidly relative to those of native-borns, and within ten years of entry into the country, they earn as much as or more than native-borns do. This differential pattern of economic mobility associated with different levels of education applies equally to immigrant women and immigrant men. Earnings for an increasing number of young low-skill immigrants can thus be expected to remain low throughout their lifetime. In turn, these immigrants can be expected to have a long-term upward effect on the demand for public services and a downward effect on their children's educational attainment.
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The last effect of low-skill immigration that I want to highlight today is the disproportionate fiscal impact it is having on the communities and jurisdictions where low-skill immigrants are highly concentrated. More than half of low-skill immigrants reside in just five of the largest metropolitan areas in the country: Los Angeles, New York, San Francisco/Oakland, Miami, and Chicago. And within these areas, low-skill immigrants are even further concentrated within a few jurisdictions. Because these immigrants are associated with lower income and larger families, their public fiscal impact varies significantly across states, and across local jurisdictions within states. The National Research Council estimates that in California, where 38 percent of the nation's low-skill immigrants reside, the annual tax burden per native-born household was $1,170 in 1996. By contrast, the estimate for New Jersey, where proportionately fewer immigrants have located and fewer of them are low-skill, the tax burden to the state and local governments as a whole was $226, nearly five times lower.
Of all public community institutions, the schools are the most impacted by the uneven distribution of immigrants. Whereas the nation's schools will have to accommodate up to 15 percent more students over the next 15 years or so, those schools in states having high immigrant concentrations, such as California, will have to accommodate an even larger growth 30 to 40 percentin their student population. This growth in demand for education will eventually carry over to the nation's postsecondary education institutions.
A growing share of the increase in school-and college-age students will come from the children of immigrants. We project that in California, about 40 percent of the high school graduation class of 2010 will be children (more than two-thirds of whom were born in the United States) of immigrant parents. Educating these children for the information-based economy presents an added challenge. Currently, these children of low-educated, low-income immigrants are about 15 percent less likely to graduate from high school, 30 percent less likely to go on to college, and three times less likely to graduate from college than are children of more highly educated, higher-income parents. If these children are to compete in the U.S. economy and command adequate wages, their college-going and college-completion rates must increase significantly. To encourage them to go on to college, however, will require that the capacity of the nation's postsecondary institutions increase by an even greater increment: according to our estimates, by as much as an additional 12 percent nationwide and 30 percent in California.
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Vernez, Georges (1999). Immigrant Women in the United States Labor Force: Who Struggles? Who Succeeds? Lanham, MD: Lexington Books.
Vernez, Georges, Richard Krop, and Peter Rydell (1999). Closing the
Education Gap: Benefits and Costs, MR-1036-AMF, Santa Monica, Calif.: RAND.
Vernez, Georges (1998). Education's Hispanic Challenge, Working Paper No. 228, New York: The Jerome Levy Economics Institute, Bard College.
Vernez, Georges, and Richard Krop (1998). Projected Social Context for Education of Children: 19902015, PM-837-CB, Santa Monica, Calif.: RAND.
McCarthy, Kevin, and Georges Vernez (1998) Immigration in A Changing Economy, MR-854-OSD/CBR/FF/WFHF/IF/AMF, Santa Monica, Calif.: RAND.
McCarthy, Kevin, and Georges Vernez (1998). Immigration in A Changing
Economy: California's ExperienceQuestions and Answers, MR-854/1-OSD/CBR/FF/WFHF/IF/AMF, Santa Monica, Calif.: RAND.
National Resarch Council (1997). The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, Washington, D.C.: National Academy Press.
Page 178 PREV PAGE TOP OF DOCReed, Deborah (1999). California's Rising Income Inequality: Causes and Concerns, San Francisco, Calif.: Public Policy Institute of California.
Schoeni, Robert F. (1998). Labor Market Assimilation of Immigrant Women, Industrial & Labor Relations Review, Vol. 51, No. 3.
Schoeni, Robert (1998). Labor Market Outcomes of Immigrant Women in the United States, International Migration Review, Vol. 32.
Mr. SMITH. Thank you, Dr. Vernez.
STATEMENT OF WILLIAM SPRIGGS, DIRECTOR OF RESEARCH AND PUBLIC POLICY, NATIONAL URBAN LEAGUE
Mr. SPRIGGS. Thank you, Mr. Chairman, for inviting me. And thank you to Ranking Member Congresswoman Jackson Lee for having me invited.
And, Mr. Chairman, I apologize that my statement isn't ready for the record right now. That is not disdain for your comittee. It is a lack of preparation time. And I will have a statement, formal statement, for the record.
Let me just say that the National Urban League, which was founded in 1910 primarily to deal with the migration of African Americans to the northand we certainly view ourselves as the premier social service and civil rights organization in the countrypartners with various organizationsand we call it National Voicesto bring together and bridge gaps between different communities. Two of our partners, NIAF, the National Italian American Foundation, and the National Council of La Raza, present I think two different pictures of this question that is before you.
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You have heard the evidence. And, as you have mentioned, the record is just conflicting. When one looks at the cross-sectional studies of impacts of migration on citiesand certainly we at the Urban League care about such impactsthe record doesn't show evidence of a negative impact on African Americans. And I think that people are too quick to dismiss the complexity of many of these studies that have tried their best to correct for the biases that have been discussed before.
All of these studies are not cross-sectional. Some of the studies, such as Mari Enchautegi from the Urban Institute, have looked across time and across cities so that we have been able to look at wage growth as well as wage levels.
So the problem is that the record doesn't show significant negative impacts. Where we do find an impact is looking at the macro level. And there I think we can start to ask deeper questions because at the macro level, what we really, then, have in my view is a correlation. We have a correlation between immigration peaking in the 1980's and a whole set of policies and dynamics in place on the country at the same time.
I think that one could recharacterize the debate as to whether we wish in this country to have a, one might call it, stable or, I might call it, stagnant population growth, or whether we wish to invite having a faster population growth. And then the question becomes: Do we have macroeconomic policies to accommodate that?
In the final analysis, that is what all of these panels and panelists have been getting at, the issue of having had a rapid labor supply increase without a concurrent increase in aggregate demand at the national level or policies consistent with increasing aggregate demand. We have not had policies consistent with issues of distributional issues for low-skilled workers.
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In the earlier panel, you heard about the issue of permanent replacement workers during strikes, an issue that the 103rd Congress addressed on the House side at least, passing legislation that would have prevented such labor practices.
We did not increase the minimum wage during the 1980's. As a global phenomenon, we see not just in the United States but globally a movement against low-skilled workers so that whether you are talking about the United States or whether you are talking about Europe, there was a shift in employment opportunities away from low-skilled workers. and the gap in employment opportunities between low- and high-skilled workers grew.
In the African American community, it is clear that something far deeper is at work when one talks about the 1980's. The biggest gap in wages between whites and African Americans grew for college-educated African Americans. The gap between blacks and whites with equal educational attainment grew the most for blacks with college education during the 1980's. We think, at the National Urban League, that that speaks much more to a growing level of discrimination. And our concern would be that one might get too wrapped up in focusing on immigration as the primary causal factor, and the fear here gets back to the National Italian Americans who are our partners in National Voices.
One could legitimately use the same set of arguments at the turn of this century as are being spoken right here in terms of massive immigration, and its effect in terms of lowering wages. But you would have a hard time differentiating what was being said at that time about the economic conditions from a very negative attitude toward Italian immigrants and other southern European immigrants.
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And you would have that same difficulty today I think. And what we fear is that there is some spillover effect in discussing immigrants as the problem, as opposed to the broader question of trade policy, which is a discretionary policy, wage policy, which is a discretionary policy, our attitudes about labor law, which is discretionary policy, our ability to generate growth through monetary and fiscal means, which are discretionary policies.
So we think that you should think of rephrasing the question about what you see to be the proper growth path for the U.S. and then what are the macroeconomic policies that we should pursue consistent with that growth path.
We don't think that the record can show or demonstrate that the cause of growing wage gaps for low-wage workers are among immigrants. And, again, to speak to the heightened sense of how race plays within this debate in affirmative action, one should note that while a large share of these new immigrants are Hispanic, many of them are black Hispanics. And when one looks at the employment record of black Hispanics, Afro-Cubans, looks at the issue of Dominicans, looks at the issue of black Puerto Ricans, and compares those to non-black immigrants, controlling for language, controlling for national origin, you see the same sorts of racial gaps that you see when we talk about black and white native-born Americans.
So we think that there is a much more complex issue at hand when people bring forth anecdotal evidence about displacement of workers. And that more complex issue, as I said again, is reflected in a movement against African American workers, we saw during the 1980's, even among those who were the high-skilled. So this is a much more complex issue of what was taking place and a much more complex dynamic than simply low-skilled workers being, quote, unquote, ''displaced by immigrants.''
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And I personally find that it is too easy to dismiss these cross-city studies. That is where the causation should be observed. Yes, it is true that migration patterns could change, but we are talking about a massive immigration in a short amount of time. And I think it is a little optimistic to say that native-born workers responded instantly to that sort of migration pattern.
So I think the problem here is the lack of the smoking gun. And we hope that you will broaden the aspect with which one views the issue of population growth.
Mr. SMITH. Thank you, Dr. Spriggs.
STATEMENT OF MARK D. PARTRIDGE, PROFESSOR, DEPARTMENT OF ECONOMICS, ST. CLOUD STATE UNIVERSITY
Mr. PARTRIDGE. Thank you, Mr. Chairman.
It is well-documented that family income inequity has dramatically increased since the early 1970's. This is reflected in both wealthy and more skilled Americans faring better in the labor market and a corresponding relative deterioration in the labor market performance of poor and low-skilled Americans.
Economists have identified several causes of the recent inequality trend. A primary explanation is that recent technological change has favored workers with more work skills and higher education levels. A second is foreign trade. Although trade has been beneficial for most Americans, it has pressured less-skilled Americans to accept lower wages.
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With just these two factors in mind, our poorest and lowest-skilled Americans are swimming against a rather stiff labor market current. Yet, many economists also suggest that greater levels of immigration are also a factor.
For example, in the mid 1960's, when U.S. immigration restrictions were greatly relaxed, the preference was given to family reunification, not labor market skills. The change greatly shifted the composition of immigrants from having above-average to below-average skills. Economic theory suggests that this increase in supply of low-skilled workers should reduce the wages of less-skilled natives, increasing income inequality.
A simple comparison with Canada is instructive. Canada also opened up immigration in the mid 1960's but with greater emphasis on admitting immigrants with higher work skills. Yet, Canadian income inequality has only modestly increased. Nonetheless, it is difficult to disentangle immigration's effect on national-level wages because so many other factors are changing.
So early attempts to find an effect compared labor market performance in metro areas with large and small immigrant shares; for example, Los Angeles versus St. Louis. Yet, these studies found virtually no effect on native wages.
However, one problem with comparing labor market performance of metro areas is that native-born residents may migrate away from areas with high immigrant shares. If low-skilled natives are adversely affected, low-skilled natives would be especially prone to out-migrate to other parts of the nation, where their wages may be higher. This would mitigate any downward pressures in the immediate locale and disburse it over the entire nation. That is, the destinations of these less-skilled natives would also experience declines in low-skilled wages as a result of the additional labor supply.
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In this fashion, my research with State-level data finds an immigrant effect. States are large enough that many of the low-skilled native movers remain in the original State of residence such that more of the wage-depressing effects are not disbursed to the rest of the nation. This research suggests as a lower-bound estimate that about 8 percent of the average State's family income inequality increase between 1970 and 1990 can be directly attributed to a greater share of the population being newly arrived foreign immigrants.
Although this change is smaller than what economists typically attribute to factors such as technological change, this share is large enough to place immigration on the list of major contributors of greater income inequality.
The direct impacts of immigration on family income inequality are not uniformly distributed across the nation because new immigrants are not uniformly distributed. Take California and Vermont.
Between 1970 and 1990, of the 48 contiguous States, California had the sixth fastest increase in family income inequality, while Vermont only had the 36th fastest increase. Yet, 57 percent of California's above-average increase in family income inequality can be traced to an above-average change in recent immigrants, while 43 percent of Vermont's below-average increase in family income inequality can be traced to a below-average change in immigrants. Yet, there are reasons to believe that even these estimates are understated.
Even at the State level, many low-skilled natives out-migrate and fewer low-skilled native workers in-migrate in response to foreign immigration. For example, California, Florida, Illinois, New Jersey, New York, and Texas received 74 percent of the nation's immigrants in the 1990's, or about 4.9 million new immigrants. Yet, during this period, a net 3.1 million natives out-migrated from these States.
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In my research, for every one new foreign immigrant into a State, on net, about 0.7 natives leave the state. These results suggest that low-skilled wages decline even in locales with few recent immigrants. An upper-bound estimates that includes such a national migration effect is that perhaps up to 20 percent of the 1970 to 1990 increase in family income inequality is a result of greater immigration.
American society stresses the virtues of work and individual responsibility. However, low-skilled Americans have been swimming against a rather stiff labor market current. Keeping these two somewhat conflicting points in mind, one possible policy change that could help low-skilled Americans is to change the composition of immigration from being predominantly low-skilled to high-skilled. Such a change would make lesser skilled workers relatively scarcer, raising their wages. This would help spread the benefits and costs of the global economy onto a wider share of Americans.
[The prepared statement of Mr. Partridge follows:]
PREPARED STATEMENT OF MARK D. PARTRIDGE, PROFESSOR, DEPARTMENT OF ECONOMICS, ST. CLOUD STATE UNIVERSITY
Thank you Mr. Chairman and members of the subcommittee for the opportunity to discuss an issue that is of great importance to many Americans. I am Mark Partridge, a professor at St. Cloud State University in Minnesota. My expertise regards the differential performance of state and regional labor markets across the nation.
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It is well documented that household or family income inequality has dramatically increased since the early to mid 1970s. This is reflected in both wealthy and more skilled Americans faring better in the labor market and a corresponding relative deterioration in the labor market performance of poor and low-skilled Americans. Over the last twenty years, such trends easily can be detected by comparing average household income by income quintile or by comparing average earnings across educational groups.
Economists have identified several causes of the recent inequality trend. A primary explanation is that recent technological change has favored workers with more work skills and higher educational levels. A second explanation centers around increasing foreign trade and the global economy. Although foreign trade is beneficial for most Americans, it has initiated a flood of imports that intensively use foreign low-skilled labor in its production. This foreign competition has pressured less-skilled American workers to accept lower wages. With just these two factors in mind, our poorest and lowest-skilled Americans are swimming against a rather stiff current in the labor market.
ROLE OF IMMIGRATION IN INCOME INEQUALITY
In addition, many economists suggest that greater levels of international immigration have been a contributing factor to recent increases in income inequality. This argument is rather simple. In the mid 1960s, when U.S.immigration restrictions were greatly relaxed, the preference was given to family reunification, not labor market skills. The change greatly shifted the composition of immigrants from having above-average labor market skills to below-average labor market skills (primarily in terms of education). Economic theory suggests that this increase in supply of low-skilled workers should reduce the wages of low-skilled natives, increasing income inequality. In this view, a simple comparison with Canada is striking.(see footnote 21) Canada also opened up immigration in the mid 1960s, but with a greater emphasis on admitting immigrants with higher skills. Yet, Canadian income inequality has only modestly increased in recent decades. Of course, a critic of this viewpoint would be correct in pointing out that there has been a lot of other things happening in Canada and the United States.
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In general, it is exceedingly difficult to disentangle immigration's effect on U.S. national-level wages because there are so many other factors that are simultaneously changing. Thus, early attempts to disentangle an immigration effect often used sub-national data by comparing wage growth and other labor market indicators in metropolitan areas with a large share of immigrants to metropolitan areas with smaller immigrant shares (e.g., Los Angeles versus Omaha). These early studies found virtually no effect on native wages. In this manner, my own research has found that the recent immigrant population share of counties has a statistically insignificant effect on family income inequality at the county level.(see footnote 22)
One problem with comparing labor market performance of metropolitan areas with high shares of immigrants to other metropolitan areas is that native-born residents may migrate away from areas with high immigrant shares to other locales. Simply, American families locate to the place that provides the most satisfaction and highest earnings. In particular, if low-skilled natives are adversely affected, it would be expected that low-skilled natives would be especially prone to out-migrate to other parts of the nation where their wages may be higher.(see footnote 23) This would mitigate any downward wage pressures in the immediate locale and disperse its impact over the entire national economy. That is, the destinations of these less-skilled natives would also experience declines in low-skilled wages as a result of the additional labor supply. The implication is that to have a good chance of disentangling an immigrant effect, one should consider regions large enough such that the native out-migration effects are mitigated.
STATE-LEVEL EVIDENCE ON INCOME INEQUALITY AND IMMIGRATION
Page 188 PREV PAGE TOP OF DOC In this fashion, my research with state-level data finds an immigrant effect.(see footnote 24) States are large enough that many of the low-skilled native movers remain in the original state of residence, such that more of the wage depressing effects are not dispersed to the rest of the nation. Specifically, this research suggests as a lower bound estimate that about 8% of the average state's family income inequality increase between 1970 and 1990 can be directly attributed to a greater share of the population being newly arrived (within the last five years) foreign immigrants.(see footnote 25) Although this is a smaller contribution than what economists typically attribute to factors such as technological change and the decline of unions, this share is definitely large enough to place foreign immigration on the list of major contributors of the recent increase in income inequality (and it is likely greater than the effect of foreign trade).(see footnote 26)
The direct impacts of foreign immigration on family income inequality are not uniformly distributed across the nation because recent foreign immigrants are not uniformly distributed. Take California and Vermont as a couple of examples. Between 1970 and 1990, of the 48 contiguous states, California had the sixth fastest increase in family income inequality, while Vermont only had the 36th fastest increase.(see footnote 27) Yet, 57% of California's above average increase in family income inequality can be attributed to California having an above average change of the population that were recent foreign immigrants, while 43% of Vermont's below average increase in family income inequality can be attributed to Vermont having a below average change in recent immigrants.(see footnote 28)
Page 189 PREV PAGE TOP OF DOCMIGRATION BY NATIVES DUE TO IMMIGRATION
There are reasons to believe that these estimates are understated. Foremost, even at the state level, many low-skilled workers out-migrate and fewer low-skilled workers in-migrate in response to higher levels of foreign immigration. For example, Table 1 shows that California, Florida, Illinois, New Jersey, New York, and Texas have been the largest recipients of foreign immigrants in the 1990s. Together these states accounted for 4.9 million new immigrants, or about 74% of the national total. Yet, during this period, a net 3.1 million natives out-migrated from these states.
In my research, for every one new foreign immigrant into a state, there are about 0.2 fewer native in-migrants and about 0.5 more native out-migrants.(see footnote 29) As noted before, other research suggests that this response is primarily among low-skilled workers. These findings suggest that low-skilled wages decline even in locales with few recent immigrants.
As noted earlier, isolating this national low-skilled wage response is difficult. Yet, further analysis suggests that an upper bound estimate that includes this national wage effect is more than double the 8% estimate reported earlier. Or, perhaps up to 20% of the 19701990 increase in family income inequality is a result of greater foreign immigration.(see footnote 30)
Another possible effect of immigration is that it increases unemployment rates. Yet, in similar state level analysis, my research finds a modest immigration effect.(see footnote 31) Recent immigrants tend to lift average state unemployment rates by less than 0.1 percentage point, although the effect is larger in gateway states. This suggests that most of the labor market adjustment to foreign immigration is through native migration.
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American society today stresses the virtue of individual responsibility and preaches that one should lift themselves up by their own bootstrap. However, as noted before, low-skilled, predominantly minority Americans have been swimming against a rather strong labor market current. Keeping these two somewhat conflicting points in mind, one possible public-policy change that could help low-skilled Americans is to change the composition of immigration from being predominantly low skilled to being predominantly high skilled (e.g., certain types of computer programmers, doctors, engineers, professors). Such a change would make lesser skilled workers relatively scarcer in the labor market, raising their wages. In this case, greater immigration would reduce high-skilled/low-skilled wage differentials and reduce income inequality, which would help spread the negative costs of the global economy onto a wider share of Americans. Thank you for this opportunity to address you.
*The sum may not add up to the total due to rounding.
Source: U.S. Bureau of the Census.
Mr. SMITH. Okay. Thank you, Professor Partridge.
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STATEMENT OF JULIAN R. BETTS, ASSOCIATE PROFESSOR, DEPARTMENT OF ECONOMICS, UNIVERSITY OF CALIFORNIA, SAN DIEGO AND ADJUNCT FELLOW, PUBLIC POLICY INSTITUTE OF CALFORNIA
Mr. BETTS. Thank you very much for this invitation. I want to talk to you about one possible side effect of immigration. Here is the question that I will address: Have immigrant inflows discouraged natives, especially native minorities, from staying in school?
The idea here is that many immigrant students are limited English-proficient, or LEP. LEP students tend to place additional strains on schools. There are two mechanisms here: first, the additional costs of bilingual education; and, second, to the extent that LEP students are mainstreamed into regular classrooms, those classrooms become more heterogenous. And that poses quite a challenge for teachers.
If schools become less effective due to immigrant inflows, natives are more likely to get discouraged, drop out, and enter the labor market. So we can think of this as the crowding-out of natives by immigrants.
There are three published papers or forthcoming papers on this crowding-out hypothesis. First, I have a paper in which I model the probability of high school graduation for native-born blacks and Hispanics using 1980 and 1990 census data. I chose native-born blacks and Hispanics mainly because they are more likely to be in contact with immigrants and also because of published evidence that immigrants tend to compete with these groups for Title I expenditures.
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My goal here was to ask: Between 1980 and 1990, has a change in the share of immigrants in the school-aged population in the local area changed the probability of high school graduation for these two groups?
I do find evidence of crowding-out. For blacks, I estimate that the probability of high school graduation during the '80's dropped by 0.7 percent. For native-born Hispanics, the results are more dramatic. I find that the probability of high school graduation dropped by 3.7 percent for native-born Hispanics during this period.
I have done quite a few robustness tests. The results seem to be quite robust for blacks. It is very much a national phenomenon. For Hispanics, there is one important qualification. And that is that this very large effect appears to be confined almost solely to California.
There is a second paper by Caroline Hoxby, in which she tests for crowding-out, not in K through 12, but in post-secondary education. She finds some evidence that at elite colleges, there is crowding-out, almost on a one-for-one basis, between immigrants and native minorities. She finds somewhat weaker evidence for crowding-out at second-tier colleges and no evidence at bottom-tier colleges.
Finally, in a paper I co-authored with Magnus Lofstrom, we extended these two earlier papers by looking at total years of education attained, rather than simply: Did you graduate from high school or did you attend college? We also extended the earlier work by looking not simply at blacks and Hispanics but at all races.
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Two key findings. First, there is evidence of crowding-out at both levels, but the evidence appears to be much stronger at the secondary level than at the college level.
And, second and I think more important, native minorities seem to be crowded out to a much greater extent than native-born whites. Probably one reason for that is simply that native-born minorities have much greater contact with immigrants in inner city schools.
A second reason might be that native minorities have fewer financial resources on average. That makes them less likely to be able to vote with their feet when a strain is put on local resources, such as schools, by immigration.
In rather preliminary work with Robert Fairlie of UC-Santa Cruz, I am looking at the question of whether perhaps part of the explanation is that natives sometimes switch their children from public schools to private schools as a reaction to inflows of immigrants.
We do find some evidence of this between 1980 and 1990. Now, why this is relevant is that white families account for almost all of the switch from the public schools to the private schools.
So, in conclusion, I think that there is mounting evidence that immigrants have tended to crowd natives out of schools and to a lesser extent colleges.
Page 194 PREV PAGE TOP OF DOC I think it would be a mistake to be overly alarmist about these results. They are highly significant in a statistical sense. They are negative but modest apart from California for Hispanics in a policy sense. But I really think that there is genuine cause for concern here.
The real question is: In the effect of schools, how do we work together to help not only the natives in these schools but immigrants as well? And that to me is the big question.
[The prepared statement of Mr. Betts follows:]
PREPARED STATEMENT OF JULIAN R. BETTS, ASSOCIATE PROFESSOR, DEPARTMENT OF ECONOMICS, UNIVERSITY OF CALIFORNIA, SAN DIEGO AND ADJUNCT FELLOW, PUBLIC POLICY INSTITUTE OF CALFORNIA
The increasing gap between the education levels of immigrants and American natives has received intense attention from the research and policy communities over the last ten years. What does this skill gap portend for native Americans, and for immigrants themselves?
One question has received the lion's share of attention recently: do inflows of relatively unskilled immigrants depress wages among all less skilled workers in the United States? The answer to this question is not yet settled. Card (1990) studied the ''Mariel boatlift'' of Cubans to the Miami area, and found little evidence that these inflows lowered earnings for less skilled natives in the area. A spate of subsequent studies has yet to nail down a precise estimate of the direction of the impact of immigration on natives' wages but in a number of cases researchers have found evidence that immigrants drive down wages for less skilled native workers. See for example Borjas (1998).
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More recently researchers have started to ask whether immigrants affect the level of education that natives obtain. In theory, inflows of less skilled immigrants could either increase or decrease the educational attainment of natives.
Consider first the case that immigrants might reduce the level of education obtained by natives. If the effectiveness of public schools declines when the student body becomes more heterogeneous, such as when classrooms contain a mix of fluent English speakers and others who are Limited English Proficient (LEP), the entire class may make slower progress. Now, think about the choices faced by a high school student. If he or she drops out of high school, the student won't benefit from the learning that would have taken place during that school year. But on the other hand, this frees up the student's time to participate in the labor market. If large numbers of LEP students at the school create a less effective learning environment, the native student who was already right at the margin of dropping out may decide to leave school and join the work force. I call this the ''educational crowding out'' effect.
But there is a countervailing force. If large inflows of immigrants lower the wages of less skilled workers in the area, this native student may decide to stay in school due to his or her relatively weak prospects in the labor market.
So, the influence of immigration on young natives' level of education could be either negative or positive, depending on which of these two forces is the more powerful. The evidence suggests that the impact of immigrants on the earnings of less skilled natives is small. So, it seems likely that the overall influence of immigration on natives' level of education should be negative. In short, immigrants might ''crowd out'' natives from school due to the added strains placed on schools' resources. Since theory is ambiguous about the overall direction of the relation, we must take this issue to the data.
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2. SETTING THE SCENE: EDUCATIONAL ATTAINMENT AND DESTINATIONS OF RECENT IMMIGRANTS
In order to understand how immigrants might affect natives' educational attainment, it is important to understand the similarities and differences between natives and immigrants in terms of educational attainment, and the locations to which immigrants have moved.
Table 1 below, taken from Betts and Lofstrom (forthcoming), shows that on average immigrants have fewer years of schooling than natives, and that between 1980 and 1990 the gap has widened. Betts and Lofstrom also show that the main differences between the immigrant and native populations occur at the lower end of the educational distribution, where immigrants lag natives in educational attainment considerably. At the top end of the educational distribution, immigrants and natives tend to have highly similar levels of education.
The widening gap in education between natives and immigrants suggests that inflows of immigrants are likely to have the greatest effect on portions of the native population that are relatively less highly educated. Specifically, it is likely that native-born minorities are the people whose education is most affected by immigration. There are three reasons for believing this. First, families of higher income can ''vote with their feet'' if an influx of immigrants into the local area puts a strain on public services such as schooling. They can do this by moving to more affluent areas, or by enrolling their children in private schools. It follows that the main impact of immigrants on natives may be felt by American-born minorities, simply because minorities are less likely to have the financial resources to move to affluent areas or to place their children in private school. Second, within schools, minority students are more likely to be placed in classes with recent immigrants due to the grouping of students by initial achievement.(see footnote 32) That is, since minority students are more likely to be placed in classrooms with lower average achievement, they are more likely to have immigrants in their classes than are students with higher levels of achievement. Third, disadvantaged immigrant students are eligible to participate in federally financed Title I programs. The goal of this spending is to provide remedial education to disadvantaged children. In a study of school districts in Oakland, Houston, Boston and Washington, D.C., Fix and Zimmerman (1993) conclude that an influx of immigrants to each of these school districts in the 1980's did not crowd native-born students out of participation in Chapter I programs. But they do find evidence that the influx of immigrant schoolchildren during this time expanded the number of children receiving Chapter I services, which had the effect of reducing spending per pupil on remediation. This reduction in remedial spending should have been felt most strongly by minority students.(see footnote 33) For all three of these reasons, it is plausible that the effects of immigrants on educational attainment of natives should be greatest on minorities.
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A second important fact to consider is that the inflows of young immigrants have varied dramatically across states. For instance, Betts (1998) studies changes in the immigrant-to-population ratio for the age group 1925 between 1980 and 1990 by state. The unweighted average increase in this ratio across the lower 48 states and the District of Columbia was 0.017, or 1.7%. But three states (California, Texas and Nevada) and the District of Columbia witnessed increases of over 5% in the immigrant-to-population ratio between 1980 and 1990. Another eight states experienced increases of 2.55%. (These states were Arizona, Florida, Illinois, Maryland, Massachusetts, New Jersey, New York and Oregon.)
3. HAVE INFLOWS OF IMMIGRANTS INCREASED HIGH SCHOOL DROPOUT RATES OF NATIVE-BORN MINORITIES?
In Betts (1998) I test the ''educational crowding out'' hypothesis. Using 1980 and 1990 Census data I model the probability that native-born blacks and Hispanics in the age group 1925 have finished high school. I test for a relationship between the proportion of immigrants in this age group in the local area and the native's probability of graduating from high school. I conduct these analyses by measuring the immigrant-to-population ratio at the state level, and, perhaps more convincingly, at the level of the metropolitan area.
In all studies of this type it is crucial to control for other factors that might determine the young native person's decision about whether to finish high school. If some omitted trait of the state or metropolitan area is related both to native-born students' probability of graduating and to the share of immigrants in the population, then the estimated impact of immigrants on natives' educational attainment might be too high or low. Therefore, I test for a relationship between changes in natives' probability of graduating between 1980 and 1990 and changes in the share of immigrants during this period in each of the states or the 132 metro areas. In this way, I fully control for all unobserved traits of each area that are constant over time.
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In addition, I control for several other potentially confounding factors. A key examples is the socioeconomic status of the generation of older blacks and Hispanics who parented the young black and Hispanic students in my regression sample. Many researchers have found that an improvement in the socioeconomic status of parents leads to higher educational attainment among their children. Accordingly, I proxy for the socioeconomic status of the parents of young blacks and Hispanics by controlling for the income per capita and the proportion of the adult population (aged 3564) that holds a high school diploma in the relevant minority group. I also control in some models for the pupil-teacher ratio in public schools, since there is some evidence in past research that higher pupil-teacher ratios are correlated with lower educational attainment among students.(see footnote 34)
Table 2 over leaf shows the results from the analysis conducted at the state level. The first row shows the increase in the immigrant-to-population ratio in the age group 1925 between 1980 and 1990, weighted first by the number of young native blacks living in each state and second by the number of young native Hispanics living in each state. Interestingly, the increase in young native Hispanics' ''contact'' with young immigrants was much higher in this period than it was for native blacks, largely due to large inflows of immigrants to California and the large native-born Hispanic population in California. Next, I predict the drop in the probability that a native black or Hispanic would graduate from high school given the change in the immigrant-to-population ratio (198090). The results appear in line two of the table. The probability that native blacks graduated from high school is predicted to have dropped by 0.73 percentage points between 1980 and 1990. The effect on native Hispanics is somewhat larger, with a 3.67 percentage point predicted drop in the probability of graduating.
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I conduct a number of sensitivity analyses and find that these results continue to hold. Notably, when I repeated this analysis after dropping California, I found that the results for native blacks continued to hold, while the results for native Hispanics became statistically insignificant. To some extent, this is not surprising since almost 30% of native Hispanics in my sample lived in California. However, it seems that ''educational crowding out'' is a national phenomenon for blacks and a largely Californian phenomenon for Hispanics.
4. HAVE IMMIGRANTS CROWDED NATIVE-BORN MINORITIES OUT OF AMERICAN COLLEGES?
Caroline Hoxby (1998) examines whether immigrants have crowded minority natives out of postsecondary institutions in the United States. She speculates that immigrants could displace native minorities from universities and colleges in two ways. First, universities might fulfill their affirmative action goals by admitting minorities who are not American citizens. Second, to the extent that immigrant and minority native enrollees in postsecondary institutions compete for remedial resources, immigration might lessen the benefits of attending college for native minorities.
Hoxby finds evidence that immigrants crowd out native blacks and Hispanics through competition for affirmative action positions at elite universities, but not at intermediate or non-selective colleges. She also finds some evidence of crowding out through competition for remedial resources at intermediate colleges, but not at elite or non-selective colleges.
Page 200 PREV PAGE TOP OF DOC5. BROADER TESTS FOR A LINK BETWEEN IMMIGRATION AND THE EDUCATIONAL ATTAINMENT OF ALL NATIVES
Betts and Lofstrom (forthcoming) extend the work of Betts (1998) and Hoxby (1998). The paper models not simply the probability of high school graduation (as in Betts, 1998) or college attendance (as in Hoxby, 1998), but total years of schooling obtained, along with models of the probability of high school graduation, attendance at college and graduation from a four-year college program. The analysis uses Census data from 1970, 1980 and 1990. The analysis also extends the prior work by estimating models for all major racial/ethnic groups: whites, blacks, Hispanics and Asians.
Betts and Lofstrom find evidence in favor of the crowding-out hypothesis for native blacks, Hispanics, Asians and whites. The effects are meaningful. Consider the results based on the more fully specified models. An increase of 0.05 in the proportion of immigrants in the young population is predicted to lower average years of education by 0.29 year for Asians, 0.17 year for Hispanics, 0.10 year for blacks, and 0.06 year for whites.
These patterns are quite informative. Earlier I listed three reasons for why the educational attainment of native minorities was likely respond more to immigration than was the educational attainment of whites. This predicted pattern appears quite clearly in the results listed above. One of the reasons why white students' educational attainment might be less sensitive to immigration was that on average this group has greater financial resources than do minorities. As mentioned earlier, this could allow whites a greater ability to ''vote with their feet'' either by moving away from areas where school resources are strained by inflows of LEP students, or by enrolling their children in private schools. In preliminary and ongoing work with Robert Fairlie of the University of California, Santa Cruz, I am studying whether inflows of school-age immigrants in the 1980's encouraged native parents to send their children to private school. We find some evidence in favor of this hypothesis at the high school level, but not at the primary school level. White families account for almost all of the predicted shift into private schools that results from inflows of immigrants to the metropolitan area.
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Betts and Lofstrom (forthcoming) also study the tiers of the educational system at which crowding out is most apparent. Intriguingly, most of the crowding out appears to occur in grade school. There is evidence that immigrants crowd native Hispanics and native Asians out of postsecondary as well as secondary education, but only at the sub-baccalaureate level.
Even though the evidence that immigrants crowd natives out of education is stronger at the secondary level than the postsecondary level, Census data can shed no light on whether immigration causes natives who do attend postsecondary education to shift between universities. Hoxby (1998) finds evidence that at very selective and extremely selective colleges (with average SAT scores in the observed student population above 1100 and 1200 respectively), immigrants do tend to crowd out American-born minorities. Taken together with the above results based on Census data, the implication is that a rise in immigration might not necessarily prevent native minorities from attending four-year colleges, but it may diminish the quality of colleges that they do attend. This finding is extremely relevant for policy-makers, given findings by James et al. (1989) and Loury and Garman (1995) that the quality of university attended influences a student's future wages positively.
The recent work by Betts (1998), Hoxby (1998) and Betts and Lofstrom (forthcoming) suggests that inflows of immigrants to the United States in the 1980's may have diminished the educational attainment of natives by meaningful amounts. Although we now have three pieces of evidence pointing in this direction, all of the analyses to date have used indirect means to infer whether immigrants directly or indirectly dissuade natives from attending educational institutions. More direct studies at the school level would do much to confirm that crowding out occurs. More to the point, school-level (or even college-level) research might indicate educational reforms through which we might minimize these crowding-out effects.
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The existing research gives few specific policy prescriptions to legislators. Nevertheless, two general observations may be germane. Existing federal aid to school districts that provide an educational home for immigrant schoolchildren is large overall, but is rather small on a per capita basis. Congress passed the Emergency Immigrant Education Act of 1984 in a bid to provide supplemental funding to school districts that had a large fraction of immigrant students. Although the existence of this Act illustrates public recognition that additional funding is needed to cope with inflows of immigrant schoolchildren, the funding disbursed under the law makes at best a modest contribution. In the 19891990 school year, average disbursements under the Act were $62 per eligible immigrant student. (General Accounting Office, 1991) This sum is slightly more than 1% of the current expenditures per pupil in average daily attendance in public schools in that year, which totaled $4939 (National Center for Education Statistics, 1991, p. 155). A larger program directed toward immigrant schoolchildren is Title VII funding for bilingual education. In 199091 spending in this program amounted to $158.5 million, or about $70 per Limited English Proficiency student in the country. Of course, in many states, these funds are supplemented by state money to aid districts with large numbers of Limited English Proficiency students. But it is quite important that we learn more about the effectiveness of this rather limited spending, and whether a boost in funding for affected school districts would increase the educational progress not only of immigrants but of natives as well.
The geographic concentration of immigrant inflows, described in Section 2, leads to a second observation that is relevant for policy. None of the three existing studies tests for non-linear effects of immigrants, but it seems likely that the extent of educational crowding out increases more than proportionately as the immigrant-to-population ratio rises. For this reason, it makes sense for Congress to focus their funding on the most severely impacted states, and within states, on the most severely impacted school districts. These districts are mostly located in metropolitan areas that act as ''gateways'' for immigrants, such as Los Angeles, Miami and New York. Funding under the Emergency Immigrant Education Act of 1984 already concentrates on the most heavily impacted districts. This approach probably makes good sense, both for the immigrants and their native counterparts in these schools.
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Mr. SMITH. Thank you, Dr. Betts.
Professor Briggs, may I direct my first questions to you? And, by the way, I had not heard that quote that you read from President John F. Kennedy when he spoke to Yale University back in 1962, but I am going to adopt it and use it many times in the future, ''For the great enemy of the truth is'' very ''often not the lie but the myth. We enjoy the comfort of opinion without the discomfort of thought.'' I just thought that that was a very good point.
My question is this. Let me read again from your opening statement. ''The mass immigration that the United States is currently experiencing is entirely a policy-driven phenomenon. No one has a right to immigrate or to seek refuge in the United States, legally or illegally. The costs of immigration need to be taken into account as much as do the benefits when it comes to design the appropriate policy. The concerns of the losers are as relevant as those of the winners.''
How do you explain what you call this phenomenon when, in my judgment at least, the people's representatives aren't representing the people, aren't doing what we can to alleviate the pain and the harmful impacts of a policy that is now in existence, which might well be outdated and have unintended consequences?
Mr. BRIGGS. Well, I think it is the general problem of the political process; that is, that the poor, disadvantaged, low-income people, minorities in general, low-income persons of all races in general, who generally have a relatively weak voice in terms of effecting results of legislation. And I think in this case it is the low-income workers who are bearing much of the burden of immigration policy.
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Most of them don't even understand it, as do not even most Americans. I mean, any audience I speak to, one of the first question I ask them is: What is the immigration policy in the United States?
And there is usually not a single hand in the audience who raises their hand. They haven't any idea about this complex policy, how it works out, and the fact that it is a discretionary policy that we have some choice about it.
We ought to design that policy so that it really serves the national interest. And the national interest in my view today is to be congruent with the emerging labor force trends toward higher-skilled and higher education workers. Those at the bottom today are watching their jobs vanish. Yet, the supply of labor, is not decreasing at all at the bottom. And that is an undeniable fact.
Now, immigration is not the only issue, but it is certainly one of them. And I must say it is the easiest one to correct. It is a tough issue, but it is the easiest one to address. And it defies my understanding of why this is not the first item on the agenda of anyone concerned about low-income workers in the United States, immigration reform. That is not an anti-immigrant statement.
Mr. SMITH. I agree with you.
You also mentioned ''Low-skilled native-born workers lost low-skilled foreign workers' benefits. Whose interests are U.S. policy-makers supposed to protect? The myth that immigration has only benefits is perpetrated by special interest groups who have no concern for the national interest.''
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I was going to ask you about that, but you said you really don't know what the motivation there is.
Mr. BRIGGS. Well, it is not that I don't know. I know how we started down this route. It is unintended consequences. But when we went to the family unification admissions policy back in the 1960's, that was not for high moral grounds. I mean, it was done as a way of perpetuating the national origin system under a more acceptable way. It didn't work out the way the people in the Congress thought when they changed the policy.
Mr. SMITH. That is true.
Mr. BRIGGS. But also I think as this message has played out, there is a lot interest today in keeping the policy as it is by many people in the business community who like this idea of having large numbers of unskilled workers avaliable. It keeps wages low and labor market loose. And I think that is the real problem at the low-end scale of the labor market that you have got too many workers chasing too few jobs.
Mr. SMITH. Okay. Professor Briggs, thank you.
Dr. Vernez, let me ask you this question based upon this part of your testimony. ''As the share of new immigrants with a low level of education has increased, the number of jobs available to them and to their native-born counterparts has declined steadily. In 1970, 31 million jobs were filled by workers with fewer than 12 years of education compared to today's 19 million, a 40 percent decline.''
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I will have to tell you that was astounding to me. I did not know that. I had been saying that the number of low-skilled jobs, blue collar jobs, has been fixed or stagnant. It has actually been declining. As we increase the demand, we are actually reducing the supply. I thought the supply was fixed.
I know that must be the case, but
Mr. VERNEZ. That is the Federal Government statistics. That is uncontroversial.
Mr. SMITH. I am going to start using your figures in the future and no longer stay stagnant number of or fixed number of unskilled jobs and say ''declining number of unskilled.''
Mr. VERNEZ. There was someone who testified this morning on the more recent years. That has continued.
Mr. SMITH. Okay.
Mr. VERNEZ. But it has a little bit slowed down in recent years because of the rapid recovery in the last few years.
Mr. SMITH. Then you say ''Overall, we estimate that by 1990, from 130,000 to 190,000 persons had dropped out of the labor force or were unemployed because of low-skilled immigration just in California. This figure represents about three to 5 percent of all of those unemployed or out of the labor force.''
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That is an astounding number of people. Do the politicians in California know that, I wonder?
Mr. VERNEZ. Well, certainly the study has been well-disseminated. And I have testified and talked to politicians. Yes, they know it.
I think you know there are trade offs. A lot of these people are dropping out of the labor force. As I mentioned, there has been a major decline among high school dropouts in employment rate. It is very important to look at the employment rate, not unemployment rates, because people drop out of the labor force and disappear from the unemployment rates. So, to that extent, these effects have been quite large.
I want to say, of course, as I mentioned in my testimony, that immigration is not the only cause of that, that about a quarter of that decline is due to immigration and that there are other factors that may be brought up a little bit later.
Mr. SMITH. Thank you, Dr. Vernez.
Dr. Spriggs, let me go to you, if I may. It is hard to know where to start. I have lots of questions for you. Let me stop with that. And I will catch up with you on the next series of questions and recognize the congresswoman from Texas.
Ms. JACKSON LEE. This issue does generate, Mr. Chairman, a lot of questions.
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Let me, if I might, do a very pleasurable aspect of this proceeding, and that is to acknowledge and welcome one of our public servants in the State of Texas, Dr. Alma Allen, who is a member of the State Board of Education. We are delighted with her presence, but also an educator of over 30 years in the HISD school district, which speaks about 95 languages. They have managed to educate all of those youngsters and are still working very hard to do so.
Let me just ask a question. And indulge me, if you would, gentlemen, and give me a ''Yes'' or ''No'' answer. Dr. Betts, do you support affirmative action?
Mr. BETTS. Yes, I do.
Ms. JACKSON LEE. Professor Partridge?
Mr. PARTRIDGE. Yes.
Ms. JACKSON LEE. Dr. Spriggs?
Mr. SPRIGGS. Yes.
Ms. JACKSON LEE. Dr. Vernez?
Mr. VERNEZ. Yes.
Ms. JACKSON LEE. Professor Briggs?
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Mr. BRIGGS. Yes.
Ms. JACKSON LEE. Dr. Betts, is that with no qualifications? Did you oppose the initiative in California?
Mr. BETTS. Well, it depends upon the type of affirmative action. The one qualification I would have is that I believe earlier we were talking about the issue of holding universities accountable. And I really think that the issue begins far before that, in the K through 12 sector. That is where minority children are falling behind.
Ms. JACKSON LEE. So did you support the initiative to eliminate affirmative action at the higher education level?
Mr. BETTS. I am in favor of affirmative action at UC. And, as you know, that has gone away.
Ms. JACKSON LEE. Professor Partridge, do you have any qualifications on the affirmative action?
Mr. PARTRIDGE. Well, the only qualification I would have is that I think it should be strongest for in terms of education and ensuring that minorities receive equal opportunity for education. So I think it should be strongest at the pre-labor market stage.
Ms. JACKSON LEE. Would you have supported the initiative to eliminate affirmative action in California and on the Federal level?
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Mr. PARTRIDGE. No.
Ms. JACKSON LEE. Okay. Dr. Spriggs?
Mr. SPRIGGS. No, I don't know of any reservation I have about affirmative action.
Ms. JACKSON LEE. Dr. Vernez?
Mr. VERNEZ. I didn't vote for it.
Ms. JACKSON LEE. Did not vote for affirmative action?
Mr. VERNEZ. No. I voted against the initiative.
Ms. JACKSON LEE. Thank you.
Mr. BRIGGS. I have no reservation. I have written a lot about affirmative action in the past and have been a strong supporter of it. I don't support fixed quotas or anything in that line, but I have always supported the principles of affirmative action. I have always also believed that the human resource policy was the more important issue than affirmative action. The need for education and training programs and those types of focuses. But affirmative action has to be part of the picture.
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Ms. JACKSON LEE. Thank you. We have a lot that we agree on because I don't support quotas as well.
Let me direct my questions to Dr. Spriggs. And let me thank you for your presence here today. I know the many matters that you had to deal with. I appreciate that you will submit your testimony in writing at a later time. Let me also acknowledge that you direct the national Urban League's Washington Operations Office and you are responsible for planning and administrative management of the league's research and advocacy. So you are, if you will, immersed in statistics and analysis. And we appreciate your presence.
Help me, if you will, with the history of the Urban League because I think you are particularly unique, having begun at the time that African Americans were migrating. So in a sense, you know migration policies. And your relationship with the Italian American Association is of particular curiosity to me as well.
You heard my earlier comments. And you heard the gentleman's points. And the reason why I am going to focus on you is because we are outnumbered. We have got five here today in this panel with only one seemingly espousing some views that we both seem to share. I don't want to put words in your mouth. And, likewise, the earlier panel had only one that I found much agreement with on this issue.
Go back to the Italian immigrants in the early 1900's. And that red buzzer will keep us. So I will try to talk faster than I am. I usually do. And if you would, how they were treated and also if you would jump to the point that I found very fascinating, that the largest gap in income is between African Americans who are college-educated and white, if you will, individuals here.
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I am giving you three questions: the Italian American scenario; the point you made; and, if you would, respond to the point about New York. I don't know. We don't want to argue about changing mayors. Maybe that is a problem, the mayor of the City of New York. But he has made a point about that being a laboratory for showing, yes, immigrants do knock us out.
And if you would answer that point and your very good point, which may match into New York, of black immigrants, disparity being there low-skilled immigrants, others getting positionsand I am sorry for giving you all four. I think I made a mental note. But if you would? Thank you very much.
Mr. SPRIGGS. Thank you. Thank you for the opportunity to expand on what I said.
The issue I think is very similar. At this same juncture, Congress was debating this 100 years ago because the immigrants from southern Europe disproportionately had less skill than the native-born population in terms of education and training and at that time Congress debated a literacy test similar to what we are talking about here in terms of having some sort of human capital screen for allowing immigration into the U.S.
The analogy shouldn't be and isn't, lost I think on African Americans today. The use of the term ''literacy test'' at that same time was the same language being used against African Americans in the South who were native-born about whether we would get to vote. So there is some concern about language and how people approach this problem.
Page 213 PREV PAGE TOP OF DOC No one on this panel, as you just heard, opposes affirmative action. And Mr. Smith has not used any language which is xenophobic in discussing this issue. He is concerned about low-wage workers. And he is concerned about what policies would help low-wage workers.
So I am not talking about anyone in this room, but characterizing immigrants as the problem threatens creating the atmosphere parallel to that of the nineteenth century, when Italian Americans found a great deal of discrimination in trying to emigrate into this country, so much so that the census at the time recorded them as a separate race.
The concept of Italian Americans being white is really something that developed in the 1920's and 1930's. They were recorded in the census, as a separate race, Italian was listed as a race.
So this sense of inclusion, of different groups into America and I realize Dr. Briggs pointed out we have myths about how our country came to be, and certainly African Americans are more sensitive to those myths I think than anyone else, but there is some element to these myths, and there is some reality to the difficulties that Italian Americans had.
And we are grateful, as one of their partners, in looking at addressing diversity and how our country was able to absorb Italian Americans and the last big wave. And then, the question becomes the macroeconomic policies of incorporating an immigrant population.
I raised the issue of the growing gap between black and white college-educated workers during the 1980's to highlight that while people have been talking about what happened to low-wage, low-skilled African Americans that one might characterize that as being part of the growing inequality which took place at that period.
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For African Americans, something deeper was going on during the 1980's. And that is highlighted when you look at the gap that grew between college-educated blacks and whites. And that gap, I think speaks to some different dynamic, which makes us very concerned, that different dynamic being the potential for increased discrimination.
Finally, the question as to New York City. Blacks have always had twice the unemployment rates of whites since we started keeping race-specific unemployment statistics. In the 1980's, that ratio did not change. It stayed two to one. And so, again, for us, the sense it is that the bad macroeconomic policies of the 1980's, appear to us to be much more the fault since we remained at a two to one unemployment rate. The miracle of the current growth pattern isn't that we reached a record low unemployment rate for adult black males in February of 5.8 percent, lowest in the history of when we kept the statistics, as you pointed out, but that for the first time black male unemployment is less than twice that of white male unemployment.
The white male unemployment in February was 3.1 percent. So we were well below the two to one ratio. So this is well after immigration has had its chances to ravage whatever effects were going to be on the African American labor market.
I think that that speaks to what we really need to talk about, and that is: Do we have macroeconomic policies that speak to full employment? And if we do and if we will grow at a fast enough rate, then one can see why African American unemployment is at its record low, African American population to employment ratios are at a record high.
The black poverty rates among families are at a record low. They have never been lower. Black median income has never been higher than today. So with the great success that African Americans enjoy right now, and with the tremendous growth of African American income in the bottom 20 percent of the income distributionso this has been growth not just of college-educated blacks but blacks at the median and blacks in the bottom 20 percent and the lowering of our poverty rateI think it is difficult to say that it is immigration that made the '80's difficult, as opposed to macroeconomic policies that did not accommodate a faster growth rate in this country that made the problems that we observed.
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Ms. JACKSON LEE. I thank the gentleman. I thank the Chairman for his indulgence.
Mr. SMITH. Sure. Dr. Spriggs, you heard I think some of the testimony this morning. And you are probably aware of the studies that have occurred in the last couple of years.
And you have got such well-respected organizations with immigration experts. There are the RAND Corporation, the Brookings Institution, the National Academy of Sciences. These are not conservative organizations. You have other organizations that run the spectrum. And they all came to the same conclusion on the basis of, as I say, expertise and empirical kinds of studies.
In fact, you mentioned the minimum wage, that there was no minimum wage increase in the 1980's. In a minute, you can explain to me why you keep referring to the '80's and don't mention the 1990's.
If we were to change our immigration policy, change the mix that several people have suggested today, that would be the equivalent of giving the disadvantaged people in our country, everybody, a minimum wage increase.
And given the credibility of these studies, given the record that exists, why is it you are not embracing, I mean embracing to your heart, this change in policy that has been recommended that would disproportionately help black and Hispanic citizens and recent immigrants themselves?
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There has got to be something in this calculus, something in this equation that I don't understand because if it involved anything else, I think you would be embracing a change in policy, if it involved any other adverse impact on disadvantaged people.
And I am perfectly aware that the economic expansion has helped in many ways, but you have heard people testify today that unemployment is still too high. Comparatively speaking, they still, these folks in these categories still, aren't doing as well as they should. And I don't think you are saying that: Well, success is good enough. We have made improvement. So we don't need to make any more.
Why is the appearance here that a lot of people from a lot of credible organizations and institutions have ideas to help disadvantaged people in this country and you are hesitant to embrace that?
Mr. SPRIGGS. Because I think the more convincing evidence comes from the cross-city studies, which the other panelists wish to poo-poo because it is inconvenient evidence. And I think the evidence in making those cross-comparisonsand you heard Dr. Borjas explain to you that it is not just across cities but even when he goes across statesit is only when we look at the macro economy.
Mr. SMITH. Right.
Mr. SPRIGGS. And when we look at the macroeconomic level, then the 1980's, which I highlight because of the increase in immigration, are correlated with several other things that were going on at the same time.
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And no, I do not accept the current level of black poverty as something that we ought to have. I think it is a disgrace to this country that at the height of this economic recovery, that we still have a very high black poverty rate, but it is lower than it was in the 1960's, when we didn't have
Mr. SMITH. I don't dispute that.
Mr. SPRIGGS. So my
Mr. SMITH. You have answered my question. Let me ask you another one while I may.
Mr. SPRIGGS. All right.
Mr. SMITH. On your city to city, that has been discredited by several panelists today who are immigration experts, as opposed to somebody who came up with that, who in my judgment is not an immigration expert. But in your opening statement, you had this sentence, ''The mission of the Urban League movement is to help African Americans attain social and economic equality.''
Do you think that our immigration policy today helps African Americans attain social and economic equality?
Mr. SPRIGGS. I don't think that is the impediment. I do not believe that is the impediment.
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Mr. SMITH. Well, if it were the impediment, answer my question
Mr. SPRIGGS. Then I would be
Mr. SMITH [continuing]. If you will.
Mr. SPRIGGS. I would think that it would have to show in the city-by-city studies, which are more complex and I think
Mr. SMITH. You don't think the current immigration policy hurts African Americans in the United States? You don't think it prevents them from enjoying a higher wage rate or from escaping job displacement?
Mr. SPRIGGS. I think that continued discrimination in the labor market against African Americans
Mr. SMITH. That is all part of the mix, too, but what about this component that we are talking about at this hearing?
Mr. SPRIGGS. I do not think that the evidence is convincing that that is a meaningful part of it. And I think that
Mr. SMITH. You disagree with all of these studies and their conclusions?
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Mr. SPRIGGS. I think that they have been too rapid to exclude other studies that have controlled for issues of endogeneity that they have talked about, the different biases that are involved in doing cross-city studies.
There are many, many studies that they do not cite in their reports and criticize in cross-city studies. The cross-city, cross-state comparison is the one which would give one more convincing evidence that there was a causal link between discrimination
Mr. SMITH. I understand your micro
Mr. SPRIGGS. And so given all the other policies that worked against low-wage workers, which everyone else at this panel agrees with
Mr. SMITH. I know.
Mr. SPRIGGS. Vernon Briggs is the biggest defender of job-training programs there ever was.
Mr. SMITH. Right, right.
Mr. SPRIGGS. He helped created
Mr. SMITH. Those are all helpful. I don't dispute the job-training programs are going to be helpful. I don't dispute it would be helpful if we reduced racism in this country. I don't dispute any of that. But let me go back to my question. You don't think that current immigration policy adversely impacts recent immigrants and black and Hispanic Americans?
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Mr. SPRIGGS. I don't find the evidence convincing that that is a meaningful
Mr. SMITH. No. So you
Mr. SPRIGGS [continuing]. Departure for policy.
Mr. SMITH. Well, why do you have trouble answering my question?
Mr. SPRIGGS. I don't see any evidence, I do not see convincing evidence
Mr. SMITH. Okay. You are not
Mr. SPRIGGS [continuing]. That you should undergo a change in national policy. I think that that is a drastic thing to do to change national policy. I think you should have very convincing evidence. I don't think the evidence that is presented has been convincing.
Mr. SMITH. Okay. That is a fair enough statement. Just everybody else is on the other side, and it just amazes me. There is something we are not talking about, and I don't know if it has to do with power politics. I don't know what else it has to do with, but we are not talking about something over there in the corner of the room because when you have these kinds of studies by reputable organizations who have nothing else to gain but to tell the truth and to come up with these statistics and you have a bird nest on the ground as a way to try to help African American and Hispanic and recent immigrants themselves and for you to pass that up is just inexplicable in my opinion.
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Now, Professor Partridge, let me ask a couple of questions before my time is up here. And that is on Page 4 of your testimony, you say, ''perhaps up to 20 percent of the 1970 to 1990 increase in family income inequality is a result of greater foreign immigration.'' And you say that ''one possible public policy change that would help low-skilled Americans is to change the composition of immigration from being predominantly low-skilled to being predominantly high-skilled. Such a change would make lesser skilled workers relatively scarcer in the labor market, raising their wages.''
One, I think that is a possible solution. But, two, you have pointed out, as others have as well, that we can't get around this rock in the river, which is the law of supply and demand. And we can't ignore it. And we have to confront it as apparently sensitive and uncomfortable as it makes some people.
In regard to that law of supply and demand, is that what drives that 20 percent increase in the family income inequality that you were talking about?
Mr. PARTRIDGE. Well, I want to caution that 20 percent is an upper bound, but I would agree
Mr. SMITH. What is the bottom side on that?
Mr. PARTRIDGE. Eight percent.
Mr. SMITH. So it is somewhere between 8 and 20 percent?
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Mr. PARTRIDGE. Eight and 20, right.
Mr. SMITH. Okay.
Mr. PARTRIDGE. It would be conservative. And 20 percent would be the upper bound.
Mr. SMITH. Okay.
Mr. PARTRIDGE. As far as your other question, as far as supply and demand, I think that in my view, if you allow several hundred thousand predominantly low-skilled workers into the labor market every year, it is going to predominantly affect low-skilled wages relative to the higher-skilled American workers' wages. So I think supply and demand would be an excellent explanation.
Mr. SMITH. Okay. Thank you, Professor Partridge.
Gentle woman from Texas?
Ms. JACKSON LEE. Thank you very much, Mr. Chairman.
I want the audience to know that we indulge each other in our pointed questions. Though I was moved to ask the gentleman Chairman to yield, I feel that I will make my points at this time.
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First let me acknowledge, Mr. Chairman, that Dr. Spriggs is a renowned labor economist who has studied recent trends affecting African Americans. And since we have sort of nailed this hearing in sympathy of African Americans who have been violated, if you will, or impacted by immigration, I think that we should at least yield to the points that he has made on behalf of a group that he has studied long years professionally.
And I would note the organization which he represents or is associated with has been a leader on these questions, particularly dealing with migration but also dealing with collaboration with other racial groups, and emphasizing collaboration. So I would hope that we would acknowledge that.
And, then, might I add I have already noted the somewhat imbalance of point of view here, so many weighing in the other direction. There are many labor economists who disagree with Dr. Briggs. Jadis Bhagwati from Colombia and James Smith from RAND seem to think that there are different perspectives.
Let me go back again to the early immigration, the early 1900's, and note a comment from Dr. Briggs in his statement, ''If the scale of immigration were small, as it was for the 1930's to the mid 1960's, the nation could live with the myth that immigration yields only benefits.''
So again we are talking about myths. And the Chairman cited Dr. Briggs citing President Kennedy about how myths can kill us. I am the first one to acknowledge that. I acknowledge the myth that we don't need affirmative action for those who would argueand, again, not citing the Chairman at alllegislative and electoral initiatives, such as Houston, Texas that wanted to eliminate affirmative action and California. They are living in a myth. So I know myths can kill you.
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But it is interesting that I think we have a viable argument, or at least refutation, by your referral to the early 1900's. Didn't we have a massive wave of immigration, such as the Italian immigrants, who you have informed me, I didn't realize that, they were listed as Italian immigrants on the census? And, in fact, we could note that eventually those immigrants moved into society.
But that is not my point, Dr. Spriggs. As those folk were coming in, what was the condition of African Americans in the early 1900's? What was the conditionand I cite Dr. Briggs againin 1965? The foreign-born accounted for only 4.4 percent of the population, the lowest percentage since such data started being collected prior to the Civil War. What was the condition of African Americans in 1965?
My recollection, my youthful recollection, 1964 and '65, two major pieces of civil rights legislation were passed. Would you share with me our condition in the early 1900's again? And what was our condition in 1965 as it relates to our great economic status?
Mr. SPRIGGS. There is no doubt that at the turn of the century, we ran into a similar brick wall that we are running into today. We ran out of protections for Arican Americans granted by the Reconstruction. And, that end of economic progress came despite great increases in black human capital, the illiteracy rate among African Americans dropped extremely dramatically, as did the high school dropout rate during this post New Reconstruction.
So there was a huge increase in African American human capital during the latter part of the Nineteenth Century, just like there was in the 1960's. And at that time, while we were debating immigration, the South re-segregated and clamped down on the ability of African Americans to have job mobility.
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One could argue in some hypothetical different world that had not European immigrants come into the North, that these newly high-skilled Southern blacks would have made it to the North. But in that atmosphere where the country turned against European immigrants, the racial attitudes of the whole country shifted.
So it would be difficult to disentangle that and say that, ''Well, if blacks had come to New York, they would have found nirvana.'' They didn't. And that is why the National Urban League was founded. When the newly highly skilled black migrants came to New York City, that is why there was a National Urban League.
So the plight of African Americans has always been to come face-to-face with some type of discrimination. And so it is not ever clear that the discrimination is going to go away because some other group is not there, or is there.
In the 1960's, our poverty rates were tremendously high, thanks to the Civil Rights bills, thanks to the reaction of the African American community responding by getting lots of skills, by dramatically decreasing our high school dropout rate, we began to take advantage of new opportunities. Yet, our poverty rates remained high, higher in 1969 than they are today.
And so when you look at that very complex picture of our whole history and how debates that have heightened issues of race and ethnicity have harmed us in general, it makes me pause unless someone gives me concrete, irrefutable evidence that consistently you can show me the impact of immigration.
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I would just say that we had mentioned Canada as an example. Canada also had a great deal of immigration. But what did Canada do? It maintained its labor laws. It increased its minimum wage. It, in fact, strengthened its labor laws when it came to striker replacement.
And so in Canada, where labor codes maintain themselves, you did not see the big increase in wage inequality that you saw took place in the United States. So I don't think that one can find immigration as the causal factor in absence of a whole other set of policies.
Ms. JACKSON LEE. May I, then, follow up with that? As I understand what you have just completed saying, in high immigration periods in the early 1900's in the wave of European immigrants, you didn't see statistically or analytically in your research any great positive attitude toward Southern blacks with respect to lessening discrimination, with respect to massive recruitment, ''Come work for us in replacement of the Europeans. So we don't like the Europeans, but we like you''?
And, secondarily, when we had the lowest foreign immigrants in the 1960's, for example, nor did you seem to say to me that you saw any massive outreach of employers, if you will, to sort of say, ''We have got the lowest. Now you place in short of the extra boost of those civil rights laws''?
Do you hear what I am saying, low?
Mr. SPRIGGS. Yes.
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Ms. JACKSON LEE. And did you see a decided difference in how African Americans were treated with those two very unique pointed time frames? I need a ''Yes'' or ''No.'' I understand the light is on and I am sensitive to the Chairman's kindness.
Mr. SPRIGGS. The level of discrimination faced by African Americans seems to be much more constant than that, yes.
Ms. JACKSON LEE. Thank you very much.
Mr. SMITH. Thank you. Dr. Betts, I have a concluding question to ask you. I just want to
Ms. JACKSON LEE. And I have a concluding question, if you don't mind.
Mr. SMITH. Okay. Sure. The ranking member a minute ago asked you all about affirmative action. I am just curious. I will ask the question a different way. Do you think that affirmative action should be applied equally to recent immigrants, who have just been in this country perhaps a few years, who have never suffered any form of discrimination or may not have suffered any form of discrimination themselvesI am obviously talking about minorities hereor whose families have never suffered any form of discrimination and who may well be coming into this country in a professional manner with a high level of skills and education? Would you favor applying affirmative action to those individuals, too, Dr. Betts?
Page 228 PREV PAGE TOP OF DOC Mr. BETTS. I think that there is a case to be made to apply affirmative action, in particular toward black natives because of historical inequities and discrimination. I don't think there is any doubt about that.
Mr. SMITH. Thank you.
Mr. PARTRIDGE. I agree with the previous statement.
Mr. SMITH. Okay. Dr. Spriggs?
Mr. SPRIGGS. All of our affirmative action policies are for American citizens, as far as I know. And I don't think I would want to differentiate between American citizens inasmuch as affirmative action is aimed at a bias against someone's group, as opposed to the individual. It is very important to understand differences in
Mr. SMITH. You could have a group of individuals from another country who have never suffered discrimination, at least either back home or in this country. And you would still apply affirmative action to that group of individuals?
Mr. SPRIGGS. If they were an American citizen and they are Asian and someone discriminates against someone for being Asian, then I think it is necessary for us to be on guard against discrimination against an Asian, regardless of how they got there, because affirmative action addresses discrimination against the group.
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Mr. SMITH. Right.
Mr. SPRIGGS. And so you are not really picking out the underlying trait or the individual. So I would say that you would have to apply affirmative action to all American citizens and not go into a test of: You got here 2 weeks ago as an American citizen versus you have been here before.
Mr. SMITH. That answers my question. Thank you.
Mr. VERNEZ. I have struggled with that question for quite a while personally in the context of the initiative in California. I have come to the conclusion personally that it is in the long-term interest of the country to increase the college-going rate of Hispanics, regardless of whether they are recent comers or second or third generation. So, by and large, I think that affirmative action should be applied to all.
Mr. SMITH. Okay. Okay. Professor Briggs?
Mr. BRIGGS. Well, it is a tough question for me because I was in the civil rights movement back in the 1960's. I didn't join that movement for equal opportunity for people from other countries. I did it to try to redress problems in my own country that I felt very strongly about. I thought affirmative action was primarily designed to deal with the issues pertaining to black Americans.
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I have gone along with the idea of extending it to other groups, certainly all native-born groups, in the past. I guess if I were really pushed on the issue, I would say, I would prefer to have affirmative action restricted to people who are native-born U.S. citizens.
On the other hand, I am very sensitive to what Georges is saying and some of these other issues, too. But if I were pushed on it, it would seem to me that is what that movement was about. And I really wish I had a chance to respond to some of your earlier questions.
Mr. SMITH. It is a complex issue.
Mr. BRIGGS. Yes.
Mr. SMITH. And I just was curious. Thank you.
Dr. Spriggs, one last question for you. And I don't know whether you have or not. Have you conducted any independent research on original source material on immigration and its impact on low-skilled or individuals with less than a high school education in America?
Mr. SPRIGGS. No. And that is why I answered your questions in the way I did. I don't find the evidence convincing. I would find it convincing for me to try and
Mr. SMITH. I just wondered if you had any evidence of your own. It is just you don't find the others? You haven't produced anything of yourself yet?
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Mr. SPRIGGS. No. My evidence from the early part of the century is from my own work.
Mr. SMITH. Okay.
Mr. SPRIGGS. But my evidence from the current part of the century is that having read it, I don't find it convincing to make me want to enter the debate.
Mr. SMITH. One other quick question while I think about it. According to some polls that I have seen that aren't too old, a majority of African Americans would like to see immigration reduced. And a majority would also oppose having any additional folks come into the country who are in the H(1)(b) category, for example, the high-skilled category, because they fear that competition displaces them and they lose their jobs and it reduces their wages.
Are a majority of African Americans wrong in their opinion on that?
Mr. SPRIGGS. The H(1)(b) visas, as you know, I have several problems because they are for temporary workers, making them indentured servants
Mr. SMITH. Right.
Mr. SPRIGGS [continuing]. Who enjoy very few rights as American workers. It is clear that there are qualified Americans who could do the job. And I think it is clear from the record that there are people who do want to do those jobs who are currently in the country. And, rightly I think, many African Americans view the H(1)(B) visa program as an attempt to skirt the affirmative action guidelines that we have in this country.
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But I would say as a general principle, whether immigrants are the cause of black inequality, I think African Americans are entitled to be as misinformed on this issue as are other Americans.
Mr. SMITH. All right. I wouldn't call them misinformed myself. You may.
Dr. Betts, last question for you. ''The widening gap''and this is from your opening statement''in education between natives and immigrants suggests that inflows of immigrants is likely to have the greatest effect on portions of the native population that are relatively less highly educated. Specifically, it is likely that native-born minorities are the people whose education is most affected by immigration.''
This is interesting because this takes us beyond just the consequences on the jobs and wages of blue collar workers in America. It gets us to something that I consider to be awfully close to a panacea. And that is an equal education.
I guess my question here is: One, you are the first on this panel who has come at it from the point of education. And I assume, then, that that means that the greater the influx of immigrants without a high school education, that is going to limit the educational opportunities probably of everybody or is it disproportionately minorities in America?
Mr. BETTS. The evidence, in particular, the Betts and Lofstrom paper, suggests that all natives seem to be affected by this, but the effects seem to be felt disproportionately by native-born Asians and blacks and Hispanics.
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For example, in our estimates on the impact on years of education, the impact on whites was on the order of one-third as big as it was on Hispanics. I agree with you completely when you say that, really, education is at the heart of the issue. And that is true when looking at any of these wage gaps.
If you are trying to explain the wage gaps between immigrants and natives, simply accounting for differences in educational attainment between those two groups can explain over half the gap. If you also account for the fact that immigrants on average have lower returns to education, Lofstrom and I find that you can explain the entire gap.
That also is true with the native groups. You can explain virtually the entire gap between native-born Hispanics and whites in terms of the lower level of educational attainment of Hispanics.
For blacks, the results are not quite as clear in terms of education being able to explain everything. However, there is research showing that differences in test scores at the age of roughly 18 to 24 can account for many of the differences in wages between blacks and whites. And that is really why education and providing equal opportunity in education, especially before the college years, is crucial.
And that is really the main qualification I made in responding to Ms. Jackson Lee's comment. I think that an affirmative action university policy certain has a role to play. But equalizing outcomes in K to 12, that is really where we need to be focusing efforts.
Page 234 PREV PAGE TOP OF DOC Mr. SMITH. I agree. Thank you, Dr. Betts.
Did you have another question?
Ms. JACKSON LEE. I have
Mr. SMITH. The gentlewoman from Texas is recognized.
Ms. JACKSON LEE. Thank you very much.
Let me also note I sort of follow the thinking of Dr. Spriggs that because we are all here in America, we all have the same ability to receive information and get it wrong. And that means that those of us in the African American community can get information. And let me add, if I might, the comment that it serves some interests well if we remain quagmired in fighting against each other and not get to the real crux of the problem.
To Dr. Betts let me say to you that I was speaking to a Member of Congress who served as a state head of an educational system from his state before coming to Congress. He reminded me that I should stop speaking about economically disadvantaged and Hispanics and African Americans because we have a general problem of educating our young people in America, period.
We have an educational problem that we need to confront with more resources, both locally, on the Federal level, more collaborative work. So I do want to note that.
Let me also note for the recordand I have a questionthat another poll was conducted of African Americans which noted in 1973 that said that 75 percent of African Americans believe that immigrants are hard workers and deserve a chance.
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Dr. Spriggs, I want to go to the earlier point that I made. And I want to officially ask the Chairman because this has been a very good hearing. It has raised very vital points. My only criticism is that I am being outnumbered. I believe the data is more far-reaching to suggest that this is not the crux of our problem here in America and that macroeconomics is one.
I want to raise this question, Dr. Spriggs, if you can take off your hat of collaboration with corporate America for a moment. I realize the good works that you all have done together. We need to have in this hearing room or a hearing room on this issue the corporations and businesses who set, if you will, personnel policies.
If you would help me with that as it relates toI don't know if you want to look at historically what happened to the Italians, what kind of work they had. Why don't we have corporate America telling us about hiring Americans?
I happen to have supported the H(b)(1) proposal. Why? Because corporate America begged that their doors are closing. But I came back at them since it was a temporary situation: What are you doing in reaching out and training, providing opportunities for those who are already here, if you will, both immigrant and now native Americans and both those whoif they want to say they have never come from anywhere else, I think that is only native Americans. My question to you is: Is this not a problem that deals with the hiring policies, the corporate policies, the policies that impact race so dearly for many of us in America?
Mr. SPRIGGS. Yes. I think that is right. Of course, all of our board members are very aggressive in pursuing affirmative action policies.
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Ms. JACKSON LEE. We thank you for that.
Mr. SPRIGGS. So I don't think that they would want to volunteer to come in unless you wanted to hear how to do it.
Ms. JACKSON LEE. I might want to do that.
Mr. SPRIGGS. And some of them do a very good job of it. The macroeconomic record is clear during the Nineteenth Century again that there was a shift against low-wage workers. And, in fact, one could blame the massive increase in low-skilled immigrants at the time. The growth rate of the country changed, however, because of that introduction.
So, again, I think the issue is not immigration but the bigger question of what sort of growth rate appears to be optimal and should we pursue macroeconomic policies consistent with that growth rate? Should we have corporations stretched to the limit so that it is difficult, and too costly, for them to discriminate against African Americans, or anyone else, or should we have lax labor markets that allow for striker replacement, for discrimination to continue as other panelists have brought out and have complained about?
I would say that if the evidence were clear, then it should show up in the cross-city studies. Again, I think that there is this attemptthough clearly there are technical issues involved in this researchto sweep away the evidence that has more of the ability to produce the smoking gun for blaming immigration for wage inequity.
Page 237 PREV PAGE TOP OF DOC And, again, while I have not done these studies, I have certainly critiqued and been called in on panels to look at these studies as they impact on African Americans given my extensive research record in looking at trends in black/white income inequality. And I have seen many of these studies and most of them, again, not cited by the folks who are here, work again by Greg DeFreitas at Hofstra University not cited here by most of these panelists, work by Maria Enchautegi at the Urban Institute, again not cited. And these are reputable studies by reputable scientists who have addressed many of the biases and technical issues and still can't find the smoking gun that at the local labor market level where immigrants show up that there is a problem.
Ms. JACKSON LEE. Dr. Spriggs, my clock is going to run out. I thank you.
Let me go quickly to Professor Briggs because I cited this low foreign-born population in 1965. It is just a sentence in your statement.
Mr. BRIGGS. Yes.
Ms. JACKSON LEE. But being a labor economist, would you not join me in questioning business America, corporate America on some elements of this problem, of either making choices of African Americans over others, which have been brought out by Dr. Spriggs showing us the gap of income really is seen amongst educated African Americans who still can't get work in America? So would you not join me and say that we need a hearing that asks the questions of corporate America about their hiring policies?
Page 238 PREV PAGE TOP OF DOC Mr. BRIGGS. Well, you are taking my writing a little bit out of context. Let me just say very brieflyI will be very quickin 1964, I think the strategy was in place to have made a dramatic improvement in the status of black Americans in the United States. And then immigration undermined this. That is my point. In 1964
Ms. JACKSON LEE. But in 1965, Professor Briggs, we didn't have an immigration problem. And black Americans suffered. So how are you going to leap to the fact
Mr. BRIGGS. Let me just tell you.
Ms. JACKSON LEE [continuing]. That now we have high immigration and we will make it better for black Americans? Isn't it a constant that there is a problem with respect to minorities in America?
Mr. BRIGGS. There has been a problem. There is no doubt about that in 1963, '64, and '65. The Immigration Act came in '65. The tax cut came in 1964. The tax cut was designed, the macro policy, to stimulate aggregate demand. The human resource policy that Dr. Spriggs speaks out that I was deeply involved in was there to address the supply side in the Great Society programs to increase the education and training opportunities the anti-poverty programs, the vocational education reforms, the apprenticeship programs, to increase the skill training on the supply side to make up for the deficiencies that discrimination had caused in the past.
Ms. JACKSON LEE. You are right. In 1970
Page 239 PREV PAGE TOP OF DOC Mr. BRIGGS. And civil rights law was there to see to it that there would be equal opportunity. No one thought that
Ms. JACKSON LEE. In 1970
Mr. BRIGGS [continuing]. The supply of unskilled labor would dramatically increased.
Ms. JACKSON LEE. Even with those provisions, Professor Briggs, in 1970, we had to have an executive order on affirmative action because it still was not working.
I appreciate your point, but there has to be some recognition of the constant that we have with respect to minorities and employment in America.
Mr. BRIGGS. I understand that very much. I don't think you understand how much this policy of immigration has been counterproductive to accomplishing that objective, especially for those at the bottom.
I mean, I am not questioning your integrity. I am just saying I hope you will respect that I feel deeply about this issue, too. I feel deeply about that this policy is hurting low-skilled workers in the United States of all races who don't have a voice.
I don't think that the answer to this country is aggregate demand policy right this moment. I am sorry.
Page 240 PREV PAGE TOP OF DOC Ms. JACKSON LEE. I think that you can
Mr. BRIGGS. The growth rate is
Ms. JACKSON LEE. I understand the immigration policy, and I hope we will have a way to work together. But I think we are using this as an unfair hammer to squash and to pit one group against another and not really go into the solutions of what we have as serious problems in America on all groups getting a fair and equal opportunity.
Mr. BRIGGS. Well, I disagree.
Mr. SMITH. Thank you. Thank you, Dr. Briggs.
Mr. BRIGGS. My pleasure.
Mr. SMITH. I am going to pick up on what the gentle woman from Texas just said. I certainly agree that we should be looking at solutions. And we have heard some solutions suggested today. We will hear some solutions suggested in a couple of weeks as well, I suspect.
The point is that we do seek economic opportunity and we do seek a better life for everybody in this country. It is to me very clear. And I don't know. I can see, for instance, Dr. Spriggs, where you might say immigration is not the only root cause of the problem, but I don't think we can deny that it is at least a part of the problem. I happen to think it is a big chunk of the problem. And one way to solve that problem is pretty obvious and pretty easy.
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But I think that we should be talking about everybody in America. And I am still unclear in my own mind why it is when we have so many experts from across the political ethnic field recommending a clear solution that will quite possibly impact and benefit millions of Americans, we are not grabbing that. It is not going to hurt anybody else. It is going to help many Americans. And why we are not seizing that is something that I don't think has been answered.
It has certainly not divided anybody because I think we can all stand united. Whether it be black or Hispanic Americans or recent immigrants themselves, there is no racial divide there.
We are trying to help everybody in America. We are just trying to help particularly those who have been the most adversely impacted by our current immigration policies. As unintended as they were, they still in my judgment have caused a great deal of hardship and in the judgment of many others as well.
Ms. JACKSON LEE. Would the gentleman yield
Mr. SMITH. Yes, I would be happy to.
Ms. JACKSON LEE [continuing]. Just for an inquiry? Obviously we will walk out of this room arm in arm on our concern for lifting up the least of those and particularly those at the bottom of the totem pole.
I think the minority view in here since we are minority in terms of the one or two voices heard on this point is that you can make the immigration issue such an enormous wedge issue that we will be so clouded from dealing with the other very major points of difference, which is, if I might in a very polite way, we still have a problem with race in America. We still have a problem with investment in educational dollars.
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So I think we can look at data. And, just as you have it, I can probably find a mountain that says otherwise. We do think that we should have some responsible immigration policies, a country of laws and immigrants.
And I think that if we do this the way that we have done it today, we make an enormous mountain of evidence that says: This is it, folks. Run to the borders or run down to the Statue of Liberty and everywhere else because once you do this, this is end of all of our promise, Chairman. That is the only failing that I see in how we proceed.
Mr. SMITH. I know she did not imply it, but let me respond to the use of the word ''wedge.'' We are trying to do just the contrary. Nobody is dividing in a group. I am going to reiterate again we are trying to help all groups. In particular, we are trying to help certain groups that have been most adversely impacted.
If anything, this is a wonderful opportunity I think for all minorities in America to work together, whether it be African Americans or Hispanic Americans or Americans from other parts of the world.
What a wonderful opportunity to come together and change a policy that is going to help every single ethnic group who is disproportionately hurt by our current immigration policy? So I think it can be a unifying, not a dividing, issue, as it should be.
And, again, to make the pointI do not know why I need to keep making itsolutions are not mutually exclusive.
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Just because we need to continue to do more to erase racism in America, just because we need to do more in regard to job training or bettering the educational opportunities for all individuals, particularly those who have suffered in the past, that does not exclude the need to grab an opportunity that I think we have to change immigration policy if, in fact, that is going to benefit those same people. Just because we do that does not mean we cannot do the other.
I thank you all for being here, appreciate your contribution to a very, very important subject. Thanks for your patience as well. We went only about 2 hours longer than I expected. Thank you again. We stand adjourned.
Ms. JACKSON LEE. Mr. Chairman? Mr. Chairman, as you end, will we be able to take up my suggestion and discuss it on bringing some corporate leaders here to discuss this issue if you are having another hearing?
Mr. SMITH. Well, I do not know that we are having another hearing on this particular subject, but I am surprised that the gentle woman did not invite somebody to this hearing from the corporate world.
Ms. JACKSON LEE. With only two, it was very difficult, but I thank you, Mr. Chairman.
Mr. SMITH. Okay.
Page 244 PREV PAGE TOP OF DOC [Whereupon, at 2:50 p.m., the subcomitte was adjourned.]
(Footnote 1 return)
James P. Smith and Barry Edmonston, eds., The New Americans: Economic, Demographic, and Fiscal Effects of Immigration (Washington, D.C.: National Academy Press, 1997), p. 220.
(Footnote 2 return)
James P. Smith and Barry Edmonston, eds., The New Americans, p. 284.
(Footnote 3 return)
James P. Smith and Barry Edmonston, eds., The New Americans, p. 337.
(Footnote 4 return)
Robert Malloy. ''Cast Down Your Bucket Where You Are: Black Americans on Immigration.'' Center paper No. 10, Center For Immigration Studies, Washington D.C. June 1996.
(Footnote 5 return)
Vernon Briggs Jr. Mass Immigration and the National Interest. M. E Sharpe, New York 1992, p. 39.
(Footnote 6 return)
See Sidney M. Wilhelm. Who Needs The Negro? UB & US, Hampton, 1993.
(Footnote 7 return)
See David S. North. Soothing The Establishment: The Impact of Foreign-Born Scientists and Engineers on America. University Press of America, Lanham Maryland, 1995.
(Footnote 8 return)
(Footnote 9 return)
Siddharth Dube. ''India's Bitter Divide'' Chronicle of Higher Education. Vol.XLI, No. 39, June 9,1995, pp.3840.
(Footnote 10 return)
Lecon F. Bouvier and John L Martin. Foreign-Born Scientists, Engineers and Mathematicians in the United States. Washington, Center for Immigration Studies, August, 1995, p.3.
(Footnote 11 return)
Frank L Morris, '' The New Slavery : the Denial of Doctoral Opportunities to African American Students.'' Urban League Review. Vol. 16 No 3, Winter 1993.
(Footnote 12 return)
Data from the March 1998 Current Population Survey of the Census Bureau cited in Steven A. Camarota ''Immigrants in the United States-19918...'' Center for Immigration Studies back grounder, Washington DC January, 1999 P.10.
(Footnote 13 return)
(Footnote 14 return)
(Footnote 15 return)
Ibid. P. S.
(Footnote 16 return)
Rochelle Sharpe ''In Latest Recession, Only Blacks Suffered Net Employment Loss.'' Wall Street Journal September 14,1993. Pi.
(Footnote 17 return)
Jonathan Kaufman, ''Help Unwanted :Immigrants'' Businesses (''Often Refuse to Hire Black's in Inner City'' Wall Street Journal. Vol. CCXXV No. 109, June 6,
(Footnote 18 return)
(Footnote 19 return)
(Footnote 20 return)
Norman Matloff, ''Are Foreign Nationals Needed in the Computer Industry?'' Written testimony before the Subcommittee on Immigration and Claims of the Judiciary Committee of the House of Representatives, April. 1995 P. 122, 13,
(Footnote 21 return)
For example, see Card, David and Richard B. Freeman. ''Small Differences That Matter: Canada Vs. the United States.'' in Working Under Different Rules (edited by R. B. Freeman), New York: Russell Sage Foundation, 1994, pp. 189222.
(Footnote 22 return)
See Levernier, William, Mark D. Partridge, and Dan S. Rickman. ''Metropolitan-Nonmetropolitan Distinctions in the Determinants of Family Income Inequality.'' Review of Regional Studies. forthcoming; and Levernier, William, Mark D. Partridge, and Dan S. Rickman. ''Differences in Metropolitan and Nonmetropolitan U.S. Family Income Inequality: A Cross-Country Comparison.'' Journal of Urban Economics. September 1998 (44), pp. 272290.
(Footnote 23 return)
Supporting evidence is found in Borjas, George, J., Richard B. Freeman, and Lawrence F. Katz. ''How Much Do Trade and Immigration Affect Labor Market Outcomes?'' Brookings Papers on Economic Activity. 1:1997, pp. 191; and Frey, William H. ''The New White Flight.'' American Demographics. April 1994 (16), pp. 4048.
(Footnote 24 return)
Partridge, Jamie S., Mark D. Partridge, and Dan S. Rickman. ''State Patterns in Family Income Inequality: Is it More Cultural or Can State and Local Policy Affect It?'' Contemporary Economic Policy. July 1998 (15), pp. 277294; and Partridge, Mark D., William Levernier, and Dan S. Rickman. ''Trends in U.S. Income Inequality: Evidence from a Panel of States.'' Quarterly Review of Economics and Finance. Spring 1996 (36), pp. 1737.
(Footnote 25 return)
This follows from Partridge et. al's (1998) preferred coefficient estimates of columns (4) and (6) of Table 2. The measure of family income inequality used in that study is the Gini coefficient. The Gini coefficient (x 100) is approximately the percent of income that would have to be redistributed to achieve an equal distribution of income. Using 1970 and 1990 Census of Population data, it is estimated that the population share of ''recent'' foreign immigrants (within the last five years) increased by about 0.75 percentage points. Partridge et al. report that the average state Gini increased by about 0.0414 points during the period while Bureau of the Census data reports that the corresponding increase for the nation was about 0.043 points (Historical Income Tables, Table F-4<www.census.gov/ftp/pub/hhes/income/histinc>).
(Footnote 26 return)
There are other factors that should be weighed in assessing these estimates. First, our studies did not consider immigrants if they had been in the United States longer than five years. That is, we assumed that newly arrived immigrants are more likely to compete against low-skilled natives. If immigrants who have resided in the U.S. for longer than five years also disproportionately compete against low-skilled natives, our immigration estimate would be somewhat higher. However, it should be noted that one avenue that recent immigrants increase income inequality is that there are simply more low income families, which mechanically increases income inequality.
(Footnote 27 return)
Partridge et. al, 1998, Table 1.
(Footnote 28 return)
These estimates are based on the approximately 0.75 percentage point increase in the national share of the population that were recent foreign immigrants and were derived using the results reported in Partridge et al., (1998) Tables 2 and 3.
(Footnote 29 return)
Partridge, Mark D. and Dan S. Rickman. ''A Note on the Benefits to Current Residents of State Employment Growth: Is There an Industry Mix Effect on Migration.'' Journal of Regional Science. forthcoming.
(Footnote 30 return)
A national negative impact on low-skilled workers' wages would have a common effect across all states, which would have been picked up by the time period fixed effects in Partridge et. al (1996) and Partridge et. al (1998). So, when Partridge et. al (1998) omitted the time period fixed effects from their model (Table 3, col. 5), this allowed the immigration variable to pick up any immigration effects that are common to the entire nation over time. These results suggest that the immigrant effect is more than twice as large. Yet, there could be other spurious time-trend reasons why immigration and income inequality are related, suggesting that the upper-bound estimate should be interpreted with caution.
(Footnote 31 return)
Partridge, Mark D. and Dan S. Rickman. ''State Unemployment Differentials in the 1990s: Equilibrium Factors Versus Differential Employment Growth.'' Growth and Change. Summer 1997 (28) pp. 360379; and Partridge, Mark D. and Dan S. Rickman. ''The Dispersion of U.S. State Unemployment Rates: The Role of Market and Nonmarket Factors.'' Regional Studies. August (#6), 1997 (31), pp. 593606.
(Footnote 32 return)
The use of tracking to group together students who are at similar levels of achievement is a widespread practice in American public schools. Betts and Shkolnik (forthcoming), using a representative national panel of 6000 students from 1987 to 1992, find that approximately three quarters of the schools' principals reported that a formal tracking policy was used in math classes. Yet the range of mean academic achievement across classes was similar in schools which reported using tracking and those which claimed that they did not. This finding suggests that to some degree, most American schools track students, even if no formal tracking policy is in place.
(Footnote 33 return)
For instance, Fix and Zimmerman (p.49, 1993) report that in 198990 29% of Chapter I enrollees were black and 23% were Hispanic. These proportions are far larger than the proportions of blacks and Hispanics in the overall populations.
(Footnote 34 return)
See for instance Beets (1996) for the literature on how school spending affects both years of schoolings completed and students' subsequent wages. Estimates that use state to infer the level of school resources experienced by a worker while in school tend to find that schools resources positively affect both years of schooling and earnings. Studies that measure actual resources at the school attended tend to yield much weaker results.