Friday, January 27, 2017

Undocumented Immigrants Don't Steal Jobs -- They Create Them

Stuart K. Hayashi

Do you enjoy taking photographs with your mobile phone? I don’t, because I don’t have a mobile phone with that capability -- I’m low-tech that way. But if you love doing that with your phone, you should thank an illegal alien -- he is the one who invented that capability for a phone. His name is Philippe Kahn. He came to the USA legally from France but then he overstayed his visa. Upon becoming a multimillionaire in Silicon Valley from his inventions, he spent a fortune on legal fees to handle the immigration bureaucracy. He eventually got to the stay in the USA, much to our benefit. Anyone else with less money wouldn’t have been so fortunate.

Of course, “immigration skeptics” laugh off that example; Kahn doesn’t fit the stereotype. The undocumented immigrants who are most feared are the ones who come from poor countries. When Western Europeans fret about immigrants, they usually worry about Middle Easterners and Africans. Those groups are feared in the USA, too, but the group causing the biggest concern is Latinos. Therefore, let’s take a look at Latino immigrants.

Race to the Bottom?
The stereotype usually goes as follows: because they are impoverished, Latino immigrants decide to work in the United States for very low pay in “sweatshops” or in vineyards. Allegedly, they try to out-compete native-born workers by promising to work for a lower wage, and they thereby bid down the wages for everyone in a “race to the bottom.” This allows low-paid immigrants to be stuck in poverty forever.

This should sound familiar, because this is actually a Marxist argument. Karl Marx and Friedrich Engels proclaimed that the capitalist class would always keep the proletariat in poverty. Vladimir Ilyich Lenin said that to stop domestic workers from benefiting from an increase in the number of units produced in factories, the capitalists would have to export the units overseas. From the late 1990s to the first decade of the twenty-first century, the political Left -- which was then most commonly associated with “anti-globalism” -- said that greedy multinational corporations make foreign direct investments in poor Asian countries. Again, they said, the poor Asians try to compete against one another by trying to underbid one another in terms of the wages they accept. This ignites a “race to the bottom” that traps Asians in permanent poverty. Of course, that is not what happened. When Mattel invested in factories in Taiwan to manufacture Barbie dolls, the Taiwanese factory personnel initially worked for low pay. Those factory workers saved their money and were able to have their children trained for other professions. As Taiwan liberalized politically, it commensurately expanded in business operations and the Taiwanese have risen to First World affluence.

Even with the welfare state in existence, similar phenomena have occurred with immigrant populations in the United States. Those who invoke the “race to the bottom” argument proclaim that when immigration causes a long-term increase in the population, that commensurately increases the supply of potential laborers competing for work. That increase in the supply of laborers competing for work is supposed to bid down wages. Here is what those commentators overlook: every potential worker is also a consumer. Every immigrant worker needs food, clothing, and shelter: he or she works precisely to obtain the money with which he or she will pay for these amenities. The increase in the supply of potential laborers at businesses is therefore met by a commensurate increase in demand for amenities that must be supplied by other businesses. To supply the amenities that the immigrant laborers demand, those other businesses must hire more staff. Hence, as immigrants increase the supply of available laborers, those same immigrants increase the demand for labor as well, thereby bidding wages back up. That is what happened from April to October 1980 when Cuban refugees made a mass migration to Florida, increasing the working population of Miami by 7 percent in a matter of months. Economists noticed no discernible long-term change in unemployment or in wage rates.

Not Job-Stealers But Job Creators
The assumption that all immigrants from poor countries remain migrant farm workers their whole lives is a false one. The New York Times spotlighted the fact that many of the families that arrived in the USA from Mexico during World War II saved their money and eventually came to own vineyards similar to the ones they once worked on. Writing for the Matador Network, Amanda Machado is able to name ten such families in Napa Valley.

Consider Carlos Castro and Jose Wilfredo Flores, both of whom entered the USA illegally after fleeing civil wars in El Salvador. Flores founded W Concrete, which brought in $6.6 million in the fiscal year of 2011. Carlos Castro started Todos Supermarket, which earned $18 million in 2012. The fact that Castro and Flores immigrated to the USA is what resulted in a substantial increase in demand for the labor or native-born Americans -- they needed to hire staff to operate. These undocumented immigrants are job creators.

To expand operations and hire new employees to man those operations, firms need capital. Such capital is provided by the likes of Julissa Arce, who, at age eleven, migrated from Mexico to San Antonio, Texas illegally with her family. She eventually became a vice president at a well-known investment bank. Those are three reasons for the alt-right to dislike her: (1) she came to the USA undocumented (2) from Mexico, and (3) earned a position at Goldman Sachs.

Ambitious in America
Also think of Cristian Arcega and the three other undocumented immigrant students on his team from Carl Hayden High School who, in 2004, beat MIT in a competition to build a robot that would most efficiently operate underwater in salvage missions. This was recorded in the documentary Underwater Dreams and dramatized in the motion picture Spare Parts.

We should also think of Alfredo Quinones-Hinojosa. As a young man, he climbed over a fence from Mexico to the USA illegally. His first years in the USA were consistent with that of the stereotype: he was a low-paid migrant farm worker. However, as with the Taiwanese factory workers in the 1970s, he saved his money. He sent himself to medical school. He is presently one of the world’s foremost brain surgeons, saving the lives of native-born Americans.

Immigrants from poor countries are not doomed to poverty and failure -- there are many other success stories. And we would have still more success stories about them if not for the present red tape restricting immigration from poor nations.

Peaceful immigration is a noble enterprise. To deny free immigration is to deny free enterprise.

On September 18, 2017, I replaced the infographic about immigrant laborers increasing demand for laborers. Previously I mentioned that Ethan G. Lewis's paper argued this point. However, the team of Orn Bodvarsson made a whole paper that examined that point more specifically. Hence, I updated the infographic citing the Orn Bodvarsson et al. paper as the go-to paper on this.  I previously misspelled Julissa Arce's name as "Acre."  On January 20, 2018, I corrected this misspelling