Immigration Economics and the Wall Street Journal:
A marriage with irreconcilable differences
31 Dec 2007 in Regulatory Economics
Policy debates about illegal immigration almost always can be illuminated by careful data collection and analysis. Sometimes, data are nice but aren't necessary because elementary economic theory is sufficient to predict the direction (if not the magnitude) of effects. Today, the Wall Street Journal editorializes that new "data tell a very different story" than the picture emerging from "[t]alk radio hosts, cable newscasters and Presidential hopefuls." We're not sure which of these claims the Journal is seeking to refute, but we can show that it has failed to achieve its objective.
In an editorial titled "Keeping Book on Immigration" (link temporarily available to nonsubscribers), the Journal claims that new data prove that three specific claims about illegal aliens are false. According to the Journal, these false claims are:
- Illegal aliens account for a disproportionate share of crime.
- Illegal aliens account for a disproportionate share of welfare expenditures.
- Illegal aliens "steal" the jobs of American citizens.
CRIME
To refute the claim that illegal aliens are disproportionately responsible for crime, the Journal limits the domain of inquiry to violent crime and excludes matters such as identity theft or identity fraud. Immigration law prohibits employers from knowingly hiring or retaining workers they know to be illegal aliens. Thus, to the extent that employers obey the law or federal authorities enforce it, economic theory predicts that illegal aliens will be predisposed to commit identity theft or fraud. Truthfully revealing one's identity invites detection, and potentially deportation.
The Journal then relies on Department of Justice statistics that are irrelevant to the question, and the conclusions reached by a pro-immigration advocacy group:
Between 1994 and 2005, the illegal immigrant population in the U.S. is estimated to have doubled to around 12 million. Yet according the Department of Justice, over that same period the violent crime rate in the U.S. declined by 34.2% and the property crime rate fell by 26.4%, reaching their lowest levels since 1973. Crime has fallen in cities with the largest immigrant populations -- such as New York, Los Angeles, Chicago and Miami -- as well as border cities like San Diego and El Paso, Texas.The cited DOJ statistics say nothing about whether immigrants, regardless of legal status, are responsible for a disproportionate share. They are useless for the purpose the Journal uses them. Claims made by an advocacy group should not be summarily rejected, but they always deserve specially rigorous review to ensure that the organization's goals and mission have not clouded its analytical judgment. But the Journal merely assumes that the group's conclusions are true.
A recent paper by the Immigration Policy Center, an advocacy group, notes that "Numerous studies by independent researchers and government commissions over the past 100 years repeatedly and consistently have found that immigrants are less likely to commit crimes or be behind bars than the native born." Today, immigrants on balance are five times less likely to be in prison than someone born here.
WELFARE
To refute this claim, the Journal cites other statistics that, even if taken at face value, don't even purport to address the claim:
Another popular belief is that immigrants come here to go on the dole. The data show that welfare caseloads have fallen as illegal immigration has risen. As Peter Wehner and Yuval Levin report in the December issue of Commentary magazine, "Since the high-water mark in 1994, the national welfare caseload has declined by 60%. Virtually every state in the union has reduced its caseload by at least a third, and some have achieved reductions of over 90%."The reductions in caseloads attributable to the 1996 federal welfare reform legislation, however large, say nothing about the proportion of cases attributable to illegal aliens, nor whether that proportion has changed. These statistics are simply irrelevant.
Apparently immigrants don't drive welfare caseloads anymore than they drive the U.S. crime rate. The authors go on to note that, "Not only have the numbers of people on welfare plunged, but, in the wake of the 1996 welfare-reform bill, overall poverty, child poverty, black child poverty and child hunger have all decreased, while employment figures for single mothers have risen."
Moreover, welfare caseloads may not be the right thing to be looking at. Welfare payments such as Temporary Assistance to Needy Familes (TANF), the successor the Aid for Families with Dependent Children (ADFC) program, comprise just one of more than 80 benefit programs providing cash or noncash aid, according to the Congressional Research Service (PDF). CRS also reports that total public assistance outlays are growing. For fiscal years 2000-2002, CRS says outlays have been $429 billion, $477 billion, and $522 billion, respectively (Table 1). Even if "the numbers of people on welfare plunged," the financial burden of public assistance has not.
More than half of the totals reported by CRS consist of subsidized medical care, which illegal aliens generally are ineligible to receive. However, children generally are exempt from these restrictions, and the U.S.-born children of illegal aliens are not illegal. Illegal aliens are eligible for medical care delivered for emergency purposes or in emergency settings. These rules create incentive for illegal aliens to seek routine medical care in emergency settings, such as the use of hospital emergency departments, but it cannot be quickly ascertained whether they have responded as theory predicts. Data reported by the Center for Disease Control's National Center for Health Statistics (PDF) does not include immigration status.
LABOR SUPPLY
With respect to the claim that illegal aliens "steal" Americans' jobs, the Journal's position is unsupported by economic theory, and like before, is based on irrelevant statistics:
For all the talk about the "invasion" of million upon million of job-consuming immigrants, the unemployment rate stands at 4.7%, and job growth continues apace. Immigrants aren't stealing jobs but filling them. The economic activity they create as consumers and entrepreneurs contributes to the overall economic growth.As long as illegal aliens are substitutes for legal workers, they increase the supply of labor in every job category in which they participate, whether that's unskilled workers in landscaping, construction or hospitality, or electrical engineering and nuclear physics. In every market where wage rates are competitively determined, increasing the supply of workers must reduce wage rates.
For the Journal's argument to be even plausible, illegal aliens cannot be lured to the United States to pursue the economic liberties enjoyed by American citizens. Rather, they must be attracted by the opportunity to labor in markets that otherwise would not exist. That's what it means if they come to America to do jobs "Americans won't do."
