, ,

Immigration, Labor Markets and the Impoverished

Immigration policy and reform have been on the minds of many policymakers for years, not only in the United States, but also, particularly, in Western Europe. The issue is of increasing importance for a variety of reasons, both economic and social. The impact of immigration on populations and nations is significant, but hard to decipher. The impoverished around the world can see both benefits and disadvantages to the phenomenon of immigration across borders.

In the United States, millions of undocumented immigrants live the United States to find work and pursue a better life, often fleeing violence and instability. Europe has also experienced its fair share of immigration troubles, with 137,000 immigrants crossing the Mediterranean Sea in search of a better life in only 6 months last year. Hundreds of the same immigrants died attempting the journey. These massive quantities of immigrants crossing borders without documentation have posed problems for the countries receiving these people in a variety of ways. In addition, immigration through proper channels can often exacerbate problems posed by undocumented immigrants. First, many of these new residents will join the labor market, and second, the social and cultural differences can create tensions within the populace. So, what does immigration mean for the countries being left behind, and for their inhabitants?

One of the primary dilemmas when discussing immigration is the job market. What happens to the labor market when illegal or legal immigration occurs? The answer is: it’s complicated. The effects of immigration on a country’s labor market is highly dependent on the policies in place, the enforcement of such policies and the context.

Take, for example, a law in Alabama that would have given police more power to find undocumented immigrants and punish their hypothetical employers; immediately, much of the illegal labor fled the state. This was hailed as a victory by some people, but the law exposed fundamental flaws in the labor system. The jobs being done by immigrants were low-wage with questionable working conditions. They usually involved manual labor that Americans either simply did not want to do, or would not do due to the working conditions and pay—which were caused by a lack of proper regulation in these industries. Much of the agriculture and food industry remains this way, with the majority of the population turning a blind eye to the unfair practices taking place. In the case of Alabama, Americans barely attempted to take these jobs, despite unemployment in the region being very high. A study from the National Bureau of Economic Research showed that there was a 3.2% decrease in wages directly associated with large-scale immigration. A possible explanation is that immigrants are generally more likely to accept lower wages than native workers, which draws the price for labor downwards with the increased demand and lower price-setting.

In other cases, such as those involving legal immigration with visas, such as H-1B, immigrants end up in more direct competition with native workers for more highly-skilled jobs. The H-1B visas in the United States are very important, providing high levels of talent from across the globe—from both developed and developing nations. The problem is that, in many cases, companies prefer to hire H-1B visa holders because they are usually more willing to accept lower wages, similar to the problem with lower-skilled jobs.

Immigration can also be a cause of social unrest. It is not uncommon for immigrant populations to be framed as the root of a host of problems, ranging from economic ones, to social and moral ones. It has been done in the past, and is undergoing resurgence in Europe, as right-wing political movements shower blame and prejudice on the expanding Middle Eastern and North African populations in the continent. The cultural divide of language and customs can also instigate potential xenophobic behaviors against immigrant populations.

What does this all mean for the poor? Immigrants frequently work low-wage jobs, but these low wages in developed countries often go much further to families in developing nations. Remittances—money sent back to one’s native state—have been found to have a significant impact on the levels of poverty in developing nations. A study by the Center for Immigration Studies also found that in the 2000s, immigration to the United States did not cause increased poverty in the United States. These two studies taken together suggests that poverty can be alleviated with immigration, because immigration can be reduced abroad while not increasing poverty in the new home nation. In fact, there are even some who argue that borders should be open and immigration should not be restricted as a way to help significantly reduce poverty.

Immigration is a difficult issue with which to grapple on any level. It can invoke powerful emotions of fear, pain, anger or happiness from immigrants, or those who feel personally affected by its consequences. The economics of immigration are complicated, and the literature seems to be incomplete in its conclusions. However, it seems that immigration can help the poor by allowing some people abroad to lead better lives and support themselves, while also helping to support their families at home. Unfortunately, the poor can also fall victim to trafficking and bad working conditions. Globally, large-scale migrations of people can be expected to increase due to climate change, and it is important that more effort goes into understanding how to best handle influxes of immigrants.

Martin Yim

Sources: New York Times 1, Bloomberg, New York Times 2, National Bureau of Economic Research, Social Science Research Council, UC Davis
Photo: Immigrant Document Solutions