Does Immigration Without A Strong Minimum Wage Increase Inequality?
There has been strong debate over whether immigration helps increase income inequality by increasing labor supply so that those hiring workers, especially when job creation is still wavering, can afford to pay less.
To know whether this actually happens or not is difficult because there are so many moving pieces to the question. For example, earlier this year an analysis of H1-B hiring records suggested that median salaries of foreign high tech workers at some of the biggest tech companies — Amazon, Apple, Facebook, Google, and Microsoft — had topped $100,000 and were still on the rise. That sounds great, but to really know what that meant you’d need the median salaries by job category of native workers in the same companies to compare. If higher, then the continued influx of engineers could drive down, or at least slow the growth of, overall salaries.
In this Sept. 18, 2015 image made from video released by the Frio County Sheriff’s Department, immigrants exit a truck after law enforcement officers unlocked the rear doors in Moore, Texas. On Wednesday, Oct. 7, 2015, a federal grand jury indicted Drew Christopher Potter, 33, on charges of smuggling the 39 Central Americans. (Frio County Sherrif’s Department via AP)
On the other end of the spectrum are people with a high school or lesser education who are making far lower sums. Some broader studies have suggested that immigration accounted for only 5 percent of the increase in U.S. wage inequality between 1980 and 2000. That said this is old data from a time when outsourcing, or job emigration, was still quickly growing. In addition, the analysis was by David Card, an economist at the University of California, Berkeley who generally argues that immigration has no impact on wealth inequality.
A new study from Harvard’s George Borjas, an economist on the other side of the debate, suggests that evidence from around the Mariel boat lift (1980s) shows how immigration can put the most at-risk people into greater economic danger.
According to Borjas, 60 percent of the Marielitos were high school dropouts and low in skills:
A reappraisal of the Mariel evidence, specifically examining the evolution of wages in the low-skill group most likely to be affected, quickly overturns the finding that Mariel did not affect Miami’s wage structure. 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 relative wage of the least educated Miamians was substantial (10 to 30 percent), implying an elasticity of wages with respect to the number of workers between -0.5 and -1.5.
It’s not to say that if you allow immigrants into the country that wages will necessarily drop. One might say that immigrants often take jobs that citizens reject. But do natives turn down opportunities for being beneath them or because the wages have been depressed that they know making a good living becomes next to impossible?
There are no absolute answers in sight, of course, but it seems reasonable that in lower-paying, lower-skilled jobs, increased availability of workers could help employers continue to keep wages low. That would become an argument for a higher minimum wage. If large enough, people might not need as much government aid and social safety programs would not become a way to underwrite businesses by effectively enabling low pay.
The standard minimum wage in America is, according to a report by the National Conference of State Legislature in July 1st, 2015, the federal minimum wage at 7 dollars and 25 cents per hour (7.25). That being said, many states have higher, or substantially higher minimum wage in their state or region. But, what if you were in a state that the federal minimum was law? That equates to $232 dollars per week, and $928 per month. Now, if you are living at home or sharing rent in an apartment, this maybe suitable...Or is it?
ReplyDeleteAt the age of eighteen, still in high school, I was required to pay rent in the amount of $181.00 per month. Needless to say, and in time, I left home. If I was going to pay rent, then I will have a say on my life and what it means. Now, I know this is 180 degrees from many cultures, such as my wife's and other close friends, and others. But, that's why this is my view. I'm writing this as me...I, hope that's...Ok...
Wouldn't you say it’s especially difficult if you are a single parent; or married and a spouse/partner off work? Could you imagine when an $825 rent comes due and you can’t make it because what they took out in taxes, unemployment insurance, Medicare, and the host of others. My rent is $825.00, and I have a phone, and internet, and groceries to buy, and a car to afford, and car insurance to be legal, and no health insurance… isn’t covered, so that’s another expense I would have to pay for.
Imagine if I made 7.25 an hour, as a single person, and wanted to start my life. What hardships would one encounter if they had the same expenses as I do?
Could be devastating? Or is that the reality check we need, that life SHOULD be simpler?
Like "immigration jobs", the offers are usually non-negotiable.
What if the family is large? What if you live as Candido once did, in an apartment with many others? You thought waiting in line for a bathroom at the movies was an inconvenience? Ha Ha! Well, just wait!
I’ve been there, just tiptoes from being in school and also living on the streets. I spent two quarters here at CSUB, sleeping in my car at night by the river walk, using the gym in the morning to prepare for classes. Maybe that's because I'm a student, committed to the core. But, so are those that come to this country, they would sleep in a car without hesitation. If, not hassled, and could work, I'm sure they would take many meager accommodations. Heck, I think I would as well.
Yes, it didn't answer the minimum wage questions and immigration...but maybe that's something without an answer?
I don't know...but I'd hope there is a solution.
It means, in an already stressed economic puzzle, pieces not accounted for, like immigrants, make it difficult to estimate a true minimum wage. A majority of jobs that cater to immigrants wouldn’t state the impact they have on the company as a whole because they could go to jail, especially in the central states of America.
But, if we discuss a minimum wage, federally, by state, or county; we must look at the consequences and the impact of social programs. As in Washington, where the minimum wage was raised, people on public aid reached a level where they were disqualified. These were non-immigrants.
In the big picture, a question that asks, if immigrants can affect the minimum wage? - I say yes, on certain careers and at a certain maximum numbers of illegals.
Yet, since the minimum wage is a national debate, I see limited effect that illegals could have. If an effect is felt, it would be on a local scale, say construction cost, or even in high-tech where the majority of company are global and can re-assign employees in different areas, the employer will, even unconsciously, put the employees in the grossest (largest) earnings market if they can counter the loop holes for taxes.
Can immigration upset the minimum wage? I sure hope it does, because I don’t wish anything at 7.25 an hour or less for anyone.
Yes I definitely see a relationship between minimum wage and immigration because the majority of immigrants come to the United States and work minimum wage jobs due to their lack of education and connections in the country. They don’t know many people to write them a recommendation letter or to inform them on how this country works. Therefore this diminishes their opportunities to get a good job. The minimum wage topic is a very controversial topic because even if the minimum wage for hard labor such as agriculture and construction was to increase everything in the economy also increases such as food, water and electricity. So it’s a cycle that will never stop unless the minimum wage goes up and the necessities stay the same price.
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