Wednesday, February 23, 2005

The net effect of immigration to the United States is a drain on U.S. native workers of about $70 billion per year, according to a new study by two Columbia University professors and the Center for Immigration Studies.

The study challenges the assumption that immigration is like trade in that it is a net benefit both to the U.S. economy and immigrants’ home nations.

The authors argue that the United States has a strong technological advantage over other nations and immigrants who come to this country to work have access to that technology, making them more competitive with native workers than they otherwise would be. In addition, the fact that immigrants are not living overseas and consuming American workers’ products also hurts U.S. exports.

Together, those factors created a $68 billion net loss to native workers in 2002, according to Donald R. Davis and David E. Weinstein, both economics professors at Columbia University.

“American workers are better off competing with foreigners if the foreign workers stay in their own countries and don’t have access to American technology,” the professors concluded. “By allowing the foreign workers into the United States, Americans face competition with foreign workers equipped with American technology.”

The authors said it doesn’t matter whether the immigrants are legal or illegal. They urged further study on the matter, acknowledging there may be other direct or indirect factors not considered by their analysis.

The paper is an update of a report written in 2002 using numbers from 1998, which found a net cost of $54 billion to native workers that year. The new paper is being released today by the Center for Immigration Studies, a Washington think tank that supports stricter immigration limits.

But Jared Bernstein, a senior economist at the Economic Policy Institute, said the report, while trying to focus on the effect of technology in immigration, oversimplifies a complex issue with so many “moving parts.”

“I fear it doesn’t add much to the debate because the model is assumption driven, not fact driven,” he said, contending the calculations make assumptions that aren’t true and point to results that aren’t borne out by economic reality.

“The model assumes balanced trade — that’s a big problem we haven’t seen that in a long time,” Mr. Bernstein said.

He said if the model were true, the United States should run a trade surplus with countries that send many immigrants here, but America runs a trade deficit with Mexico.

“They’re definitely thinking creatively about the problem,” Mr. Bernstein said. “The next step should be probably injecting a bit more reality.”

President Bush has said there is a need for immigrants to perform jobs in the United States, and that companies are having problems filling some jobs with willing Americans. He has proposed both a guest-worker program to allow overseas workers and those now here illegally to fill those jobs, and an overall increase in the level of green cards issued for the level of legal permanent residence.

The annual Economic Report of the President, released last week, said that taken together, research shows immigrants have a slight net positive benefit.

“Summing up the economic benefits and costs of immigration shows that over time, the benefits of immigration exceed the costs,” the report said, though it also acknowledged that adjusting to the effects of immigration is not easy for native workers “and the adjustment period can present challenges.”

The report also found that immigration has been shown to have a small effect on wages, but particularly for those at the lower end of the wage scale — often other recent immigrants.

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