New analysis reveals that one of the signature studies relied upon by open border enthusiasts— which claims that immigration does not affect wages— has been debunked.
Prior to this new analysis, the study was a seminal tool in the arsenal of advocates for expansive immigration policies. The new analysis by Harvard professor George Borjas finds that— consistent with economic theory— immigration does, in fact, have a negative impact on wages of American workers. The Wall Street Journal and Business Week have described Borjas as “America’s leading immigration economist”.
The original 25-year-old study relied upon by immigration expansionists was carried out by Berkley economist David Card and analyzed the impact of tens of thousands of Cuban immigrants from the Mariel boatlift who came to Miami in 1980. In his 1990 study, Card wrote that the “Mariel influx appears to have had virtually no effect on the wages or unemployment rates of less-skilled workers.”
As public policy analyst Jason Richwine has explained, to this day Card’s Mariel boatlift study continues to be the go-to analysis used by open borders advocates—thus underscoring the importance of Borjas’s new analysis debunking it. In a recent piece in RealClear Policy, Richwine writes:
The Card study is ubiquitous in immigration advocacy, garnering citations in seemingly every case for loosening the borders. It is ‘the single greatest bit of evidence’ that immigration does not harm native wages, according to Adam Davidson in a recent piece for the New York Times Magazine. Davidson argues that, based on the Mariel experience, the U.S. can take in 11 million immigrants per year without negative effects. And why stop at 11 million? In making a recent argument for open borders, Vox’s Dylan Matthews cited the boatlift as his first piece of evidence that immigration has a “neutral or positive” effect on native workers.
Borjas’s new analysis makes clear that Card’s original findings are almost certainly wrong and that immigration did reduce wages for natives in competition with immigrants. Borjas explains that Card’s study failed to appropriately examine how the Marielitos impacted the wages of the pre-existing workers, who– due to similar skill levels– were put in direct competition with the new influx of workers. Borjas writes:
Any credible attempt to measure the impact must carefully match the skills of the immigrants with the skills of the pre-existing workforce… The analysis of the available microdata using this new perspective provides a very different picture of what happened after Mariel. As is well known, the Marielitos were disproportionately low-skill; around 60 percent were high school dropouts and only 10 percent were college graduates. At the time, about a quarter of Miami’s pre-existing workers lacked a high school diploma. As a result, even though the Mariel supply shock increased the number of workers in Miami by 8 percent, it increased the number of high school dropouts by almost 20 percent. The unbalanced nature of this supply shock obviously suggests that we should look at what happened to the wage of high school dropouts in Miami before and after Mariel. Remarkably, this trivial comparison was not made in Card’s (1990) study and, to the best of my knowledge, has not yet been conducted.
Contrary to Card’s claim, Borjas found that:
By focusing on this very specific skill group, the finding that the Mariel supply shock did not have any consequences for pre-existing workers immediately disappears. In fact, the absolute wage of high school dropouts in Miami dropped dramatically, as did the wage of high school dropouts relative to that of either high school graduates or college graduates. The drop in the low-skill wage between 1979 and 1985 was substantial, perhaps as much as 30 percent.
Shortly after Borjas released his new findings, UC Davis’s Giovanni Peri, the favorite economist of open-border advocates, and his colleague Vasil Yasenov, put out their own paper examining Borjas’ analysis in the hopes of redeeming the original Card study. The two write: “We think the final goal of the economic profession should be to agree that, even using the more current econometric methods, we do not find any significant evidence of a negative wage and employment effect of the Miami boatlift and move to analyze other cases…”
As Borjas points out, this declaration is “revealing.” Borjas writes: “I do not usually think of economists as having a ‘final goal’ that is anything other than a careful and systematic evaluation of the evidence. [Peri and Yasenov’s] declaration that the ‘final goal of the economic profession should be to agree that… do not find any significant evidence of a negative wage and employment effect’ is, at best, peculiar.”
Indeed, as Borjas has pointed out, Peri and Yasenov make a number of “questionable assumptions” and “dubious data manipulations” in their effort to save Card’s study. For example, Peri and Yasenov classify high school juniors and seniors as “high school drop outs” [Peri’s term].
Borjas told Breitbart News exclusively, “This is not the first time that Peri has conducted this particular and very weird data manipulation. Coincidentally, each time that he does this, the empirical evidence that immigration has a wage impact conveniently disappears.”
Most blatantly, Peri misclassifies all high school students who have yet to graduate as ‘high school dropouts’ [Peri’s term] simply because they don’t have that piece of paper in their hands yet… in my view, including high school students as part of the ‘low skill workforce’ makes no sense whatsoever and is a really egregious conceptual error—an error that anyone with a teenager at home can easily understand and appreciate. In fact, the error should force any reasonable person to wonder how and why anyone would think that your teenage son/daughter who is a junior in high school is a high school dropout. Because this is the second time that this error appears in Peri’s work, it emphasizes the fact that it’s wise to look at what people—and, in particular, Peri—actually do before one uses their ‘findings’ as evidence of anything.
What perhaps is most remarkable about open borders advocates’ attempts to cling to their claim that immigration does not negatively impact wages is that many of the most vocal advocates of large-scale migration in Congress– such as House Speaker Paul Ryan– have been quite open in their declarations that more immigration will help keep wages lower.
For instance, in a 2013 National Journal story prominently featured on Ryan’s website entitled, “Paul Ryan: Immigrants Bring Labor to Our Economy So Jobs Can Get Done,” Ryan details how immigration helps keep wages lower.
The Journal writes, “If Republicans want to grow the economy, what better way, [Ryan] asks, than to bring 11 million new workers into the country under a more structured system to perform high-skilled jobs, plug labor shortages, and stay off welfare rolls?”
Ryan told the Journal that the case for more low-skilled workers is specifically that they help keep wages low:
[They] bring labor to our economy so jobs can get done. The dairy farmers in western Wisconsin are having a hard time finding anyone to help them produce their products, which are mostly cheese. If they can’t find workers, then they can’t produce, and we’ll end up importing. The flip side of the argument is: Just raise wages enough to attract people. But you raise wages too much in certain industries, then you’ll get rid of those industries, and we’ll just have to import.
“Ryan’s argument about low wages being good for the country is very strange,” said the Center for Immigration Studies’ Director of Research, Steve Camarota. “First, wages for agricultural workers constitute only a tiny share of the price for food, so even if we let wages rise a good deal for such workers by reducing immigration, it would have almost no impact on the price of food. Second, keeping wages low may be good for some employers, but not taxpayers. By design, low wage workers pay relatively little in taxes, but tend to use a lot in public services. For example, 77% of working households headed by an immigrant without a high school education use welfare. Employers may not see these costs, but they are very real for taxpayers. When we look at the impact on American workers or American taxpayers, it’s extremely hard to argue that bringing in low-skilled workers makes sense.”