Immigrants do jobs natives won’t do

One of the arguments offered by supporters of expanded immigration, particularly in the context of low-skilled immigration to the United States, is that “immigrants do jobs that natives won’t do.” This argument, in the form stated, is incorrect, or at any rate, misleading. However, it does capture a conclusion many economists reach, which some have summarized as: “immigrants do jobs that wouldn’t exist if the immigrants weren’t there to do them.”

This position has been critiqued by many who are critical of immigration. For instance, in a syndicated column titled Immigration Taboos, Thomas Sowell writes:

Immigration has joined the long list of subjects on which it is taboo to talk sense in plain English. At the heart of much confusion about immigration is the notion that we “need” immigrants — legal or illegal — to do work that Americans won’t do.

What we “need” depends on what it costs and what we are willing to pay. If I were a billionaire, I might “need” my own private jet. But I can remember a time when my family didn’t even “need” electricity.

Leaving prices out of the picture is probably the source of more fallacies in economics than any other single misconception. At current wages for low-level jobs and current levels of welfare, there are indeed many jobs that Americans will not take.

The fact that immigrants — and especially illegal immigrants — will take those jobs is the very reason the wage levels will not rise enough to attract Americans.

This is not rocket science. It is elementary supply and demand. Yet we continue to hear about the “need” for immigrants to do jobs that Americans will not do — even though these are all jobs that Americans have done for generations before mass illegal immigration became a way of life.

However, the actual economic argument is more subtle, and not so easy to ridicule. The key is to remember that prices not only affect the quantity of labor supply, but also the quantity of labor demand. If the supply curve shrinks inward because immigrants are not allowed in the labor market, then the price of labor increases, but the quantity supplied decreases, so overall, there are fewer jobs and less production. In the article Why Is Immigration Illegal Anyway?, Benjamin Powell and Art Carden say:

Immigrants tend to be either high-skilled or low-skilled; Americans tend to be more toward the middle of the skill distribution. This means that immigrants aren’t substitutes for American labor but, instead, free up American labor to do jobs where it is more productive. That’s one reason economists don’t find that immigration depresses the wages of the native-born.

As a number of economists have pointed out, immigrants don’t “do jobs Americans won’t do.” They do jobs that wouldn’t exist if the immigrants weren’t there to do them. By making life harder for a population of undocumented immigrants, the state government has ensured that future generations of Alabamians will be poorer than they would otherwise be.

A blog post by Alex Nowrasteh titled Thomas Sowell on the Economics of Immigration critiqued Sowell for one-sided presentation of the economics of immigration. Here is the relevant quote from Nowrasteh’s piece:

Issues of economic vocabulary aside, Sowell only described one possible outcome from a reduction in the supply of low-skilled immigrant farm workers: an increase in wages. The far more likely reaction is that American farmers will stop growing crops that require many workers. Without a large supply of low-skilled immigrant farm workers, labor-intensive farming would either shrink dramatically or disappear entirely.  American farmers would either grow different crops that could be profitably harvested mechanically or stop farming. American consumers would either import fruits and vegetables that require large numbers of workers from countries where those workers are abundant, or scale back their consumption of those food stuffs. Fewer workers also means fewer consumers of these agricultural goods, decreasing demand and partly offsetting some of the increase in price that would occur from a decrease in supply. Those effects would be the economically efficient outcome if increased labor scarcity was driven by changes in the free market. In this case, however, the increase in labor scarcity would come from legislation mandating such scarcity.

Insights from labor economics help explain why the American growing of fruits and vegetables would diminish if low-skilled immigration was ended. If the marginal value of the worker’s production is greater than the wage, it is profitable for a firm to hire that employee. For example, if a worker’s marginal value product (MVP) is $10 per hour, it is profitable to employ that worker at a wage of less than $10. (If MVP = wage, the employer is indifferent assuming no transaction costs). Based on the enormous range of work and welfare options open to Americans, farmers would likely have to pay wages so high to attract enough American workers that most labor-intensive agriculture would be unprofitable. Alabama provides an example.

Furthermore, it’s hard to see why it’s desirable to increase the wages of low-productivity farm workers by increasing their scarcity. Raising the wages in occupations that don’t require a high school degree is antithetical to other aspects of public policy that seek to increase the rate of high school graduation (whether or not that is a valid concern for government). There is evidence that more immigration further incentivizes Americans to actually finish high school. The government should not create a policy designed to increase wages for low-skilled farm workers that could drive relatively higher-skilled Americans into those occupations. Since educated workers have more choices in the labor market, the effect of attracting them into lower-productivity professions through changes in policy will likely diminish economic and productivity growth.

Speaking of immigration reform proponents, Sowell states, “They say Americans won’t do these jobs. These are jobs Americans have done for generations, if not centuries.” In this instance, Sowell cherry-picks his opponent’s arguments and chooses to address the ludicrous ones while ignoring those with substance. Americans sailed wind-powered ships around the world and used horses instead of cars for centuries. That, however, is not an argument that a government law should increase the scarcity of modern ships and cars. Sowell is right that Americans could do these low-skilled agriculture jobs. We could also become hunter-gatherers again. But that does not mean that we should, if cheaper and better options are available. Sowell does not say that we should exclude low-skilled immigrants but his tone and the conspicuous absence of him criticizing economically ignorant arguments from the anti-immigration-reform side are serious indications of his opinions on the issue.

Furthermore, Sowell is right that the economy would adjust to a decrease in the supply of low-skilled labor, but he fails to mention that it would do so by shrinking. The economy would likewise adjust if the American government declared that electricity was illegal or all imports were banned. Arguing that the economy would adjust to artificially created scarcity does not justify creating such scarcity through government fiat.

Immigration restrictions increase labor scarcity, especially in niches of the labor market where relatively few Americans work. The main effect of increasing labor scarcity by further restricting the supply of low-skilled immigrant workers will not be to raise the wages of Americans, thereby drawing them to pick crops; it would be to kill large portions of the agricultural sector and other portions of the economy that demand large numbers of relatively low-skilled workers to operate most efficiently and profitably.

"The Efficient, Egalitarian, Libertarian, Utilitarian Way to Double World GDP" — Bryan Caplan