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Sunday, July 26, 2009

Greeley Nativists, Immigration Reform, and Higher Prices

It is good to see the Obama administration wading into the cesspool called immigration. Otherwise known as the Gangs of New York Sewer Waters. Although I prefer to call it the Nativist's United in the United States--but that's another story.

The reforms Obama is setting forth, below from the Los Angeles Times Article, make pragmatic sense. Obama, in my opinion, strategically attempts to put the emphasis for regulation of illegal workers back on corporate affairs while giving some power, or perhaps dignity, back to the individual. Hence the individual becomes the political unit with more political power than business.

In my world that is called a democracy. A republic of individuals making decisions rather than corporations making decisions for the widgets it needs to keep living.

Yet it is a tricky subject politically. So many citizens are driven into a frenzy with the idea that "these people" take "their jobs". In fact supply and demand dictate the labor market. Workers are the supply and employers have control of the demand (and the hiring). Government policies regulate a market. Fighting a market war based on focusing on supply rather than demand is futile. Although it does keep more police and authority types employed.

Keeping those strapping prime-age bucks twenty-to-forty dedicated to upholding the law and paid well isn't a stupid strategy. Even if it is not the most economically efficient. Rather related to idiotic laws on marijuana but not quite the same.

The demand for drugs remains constant, regardless of price and supply, so suppliers are driven to take larger risks to meet demand for higher prices. In the labor market the supply of willing low-wage workers in this country has diminished as per capita income has risen yet demand has increased as the economy expanded during the 90's and early 2000's. In my view Illegal workers, as long as social, economic, and political conditions are poor in their homeland are going to do whatever it takes to feed their families and change their circumstances. Risking a couple of weeks where death is a good possibility crossing the lengthy border is better odds than trying to overthrow a corrupt government where millions die. The few illegals absent of any color, except white, have much less hardship and are seemingly pursued less diligently by law enforcement and the general public. This is likely due in part, my assumption, to the fact they escape profiling and often have high skills that will eventually land them a Visa, except for the criminals. This is the high end of illegal immigration. (See The Economic Logic of Illegal Immigration by Gordon M. Hanson overview cited at the end of this article). The other glaring, likely, reason is political brownie narcissistic points for local, state, and national politicians willing to mislead, twist, and cherry-pick the public misperceptions hatreds for exploitation in reelection bids.

Then again the consumer demand for the lowest price point possible helps to drive this entire market scenario. Employers in some industries, unwillingly to compete by making steady good leadership choices, investments in technology, and other improvements, still turn to widgetized labor (the unskilled illegal immigrant) for the lowest price and to offset bad planning projections for quick growth. Illegal labor is much easier to manage (fewer executives or trained supervisors required) than legal workers who have access to authority systems. Illegals are cheap and they work hard without many complaints.

One in four immigrants was employed in professional occupations and one in five was employed in service occupations in 2004. In comparison, one in three native-born workers was employed in professional occupations and one in seven was employed in service occupations.7 Immigrant workers comprise 14.3% of the U.S. workforce and were a significant proportion of the workforce in these occupations in 2003: farming, fishing, and forestry (39.7%), building and grounds maintenance (29%), production (21.7%), construction and extraction (21.5%), and food preparation and serving (20%).8 Foreign-born full-time workers earn 76 cents for every dollar earned by a full-time native worker.9

Employers create the demand regardless of the limitations on supply. It is easier than competing on quality terms and organizational practices. It's a short run cost effective gain to drive more profit and increase more investment capital--thinking in the long run that more capital will pull the employer out of the cycle. Yet the train light at the end of that long dark tunnel never goes away because the company retains a workforce with shoddy business practices and the businesses that build good practices will almost always be in the lead.

However the Obama's willingness to promote unified online records of private citizens without making clear whether or not Congress is going to update the decrepit privacy laws in this country makes me nervous. Currently the Administration is open about going after the consolidation of medical records. It is also known that police departments are entering into their database of prisoner records any record of any person arrested--whether they are proven innocent, released, or not. It is also known that most of our "in the air" conversations are being routed through just a few central points and the data is ripe for being harvested in some Chenesque basement. If your child is picked up for a curfew violation where do those records go and what can they be used for? Enquiring minds want to know. The Online-employment program is another huge slippery slope. Great idea on the surface but flawed underneath for the big brother opportunities it opens up. And jumpin' Jimminy Crickets--they are working to make it mandatory to tag our cows and other animals with electronic ID chips these days. Where will it end?

My most horrific vision is of a single small microchip embedded in my right wrist. But okay I may be getting a little extreme here. I hope.

Certainly it is a double-edge argument. Personally I do not feel threatened by illegal immigrants. I do feel threatened by criminal activity beyond the arm of accountability--that includes illegals with criminal history, financiers, bankers, Tim Geitner and, in general, politicians. I grew up in a farming agricultural community and other than the illegal immigrants poor driving skills the community understood and acknowledged the benefits these people offered to the labor market on a cyclic basis.

Even with employment of possible qualified native workers, there would have been a shortage of 500,000 workers in 13 occupational categories during the 1990s without non-citizen workers. These categories included: miscellaneous agricultural workers (shortage of 108,392 workers), maids and housekeeping cleaners, sewing machine operators, grounds maintenance workers, construction laborers, other production workers, cooks, painters, construction and maintenance, janitors and building cleaners, butchers and meat, poultry, fish processing workers, other metal workers and plastic workers, packers and packagers (hand), and packaging and filing machine operators and tenders. 6
At the same time I like to feel safer in my community too. I'd like to know that my hospital has the same information as my doctor if I have an emergency. I'd like to know that rich people like Michael Jackson have as much difficulty getting a hold of their drugs with pseudonyms as my neighbor Spike. There are obvious benefits in efficiency and cost to the taxpayer. Again jumping back across the ping-pong net to the privacy advocate's side, as we experienced in the Bush/Cheney nightmare, the disregard for, and the blatant manipulation of existing laws must be remedied. We also need some assurance that it cannot happen again.

Yet, to date, that I know of, the Obama Administration has not openly courted the revision of existing privacy laws with the exception to back off the obvious misuse of existing legal loopholes.

I'll have to do more research on the topic of privacy though. Immigration on the other hand is an endless hole. The labor market doesn't adapt quickly enough to some market changes to keep up. Immigrant workers fill that gap and always will. And, our politicians, will always respond to the emotional outcry of Nativists. It is called job security. By designing policy to limit immigration and then shredding the real reform before it becomes law or denying enough funds to enforce the law--the voters are happy, business is happy, and the pol is re-elected. It is a win/win/win/lose deck of cards. Only the immigrant workers lose.

There have always been Nativists just as there have always been immigrant labor pools. Where do you think the Irish went they had all those famines? The Italians in the 20's? These groups have always been an easy powerless escape goat for politicians and underachievers to point at to deflect attention from their own shortcomings upon.

Before the email arguments start pouring in--yes I understand the economy is in recession. And I understand it looks like a jobless recovery. Yet already illegal immigration is falling off and rolling back--the labor market demand shrinks for all labor including immigrant labor. Let me ask you--Is your teen planning on going out and picking tomatoes to earn enough money for college or to help save the family mortgage? When your son or daughter gets out in that field do you really want them in the middle of pesticide alley? Or perhaps you really want your mate to pick up the slack by taking that second job at JBS Swift?

The employer accountability is a good thing but I am not naive enough to think there will not be any consequences. Higher wages and better working conditions will have to be made to accommodate legal workers. That means higher operation costs (unless the company is willing to cut executive pay or product quality to compensate). Then again there is always the China factor solution to contend with...

Higher prices are on the way--you asked for it--you got it.

But at least this Obama policy makes a little more sense than just politics as usual.

I have a visitor coming in October who may be able to help guide me a bit more on the topic of privacy. I'll revisit it then.

Obama setting the priorities on immigration - Los Angeles Times
The recent administrative changes include:

* New guidelines directing immigration agents to target employers who hire illegal immigrants rather than simply arresting undocumented employees.

* A requirement that all local police agencies deputized to check immigration status and turn criminals over for possible deportation sign new agreements pledging to focus on those who pose a risk to public safety.

* The implementation of a rule that requires federal contractors to use E-Verify, an online employment-verification program.

* The expansion of a program that uses government databases during the booking process to find illegal immigrants in the nation's jails.

Napolitano is expected to address immigration detention next. Administration officials said top experts are looking at all detention facilities, private and public, to see whether they are efficiently, safely and effectively operated. U.S. Immigration and Customs Enforcement, which oversees the detention centers, has been heavily criticized for providing inadequate medical care and for violating detainees' due process.

From the Bernard and Irene Schwartz Series on American Competiveness. The Economic Logic of Illegal Immigration by Gordon M. Hanson. It is a Google Book online.

This Council Special Report addresses the economic logic of the current high levels of illegal immigration. The aim is not to provide a comprehensive review of all the issues involved in immigration, particularly those related to homeland security. Rather, it is to examine the costs, benefits, incentives, and disincentives of illegal immigration within the boundaries of economic analysis. From a purely economic perspective, the optimal immigration policy would admit individuals whose skills are in shortest supply and whose tax contributions, net of the cost of public services they receive, are as large as possible. Admitting immigrants in scarce occupations would yield the greatest increase in U.S. incomes, regardless of the skill level of those immigrants. In the United States, scarce workers would include not only highly education individuals, such as the sofware programmers and engineers employed by rapidly expanding technology industries, but also low-skilled workers in construction, food preparation, and cleaning services, for which the supply of U.S. native labor has been falling, In either case, the national labor market for these workers is tight, in the sense that U.S. wages for these occupations are high relative to wages abroad.... This analysis concludes that there is little evidence that legal immigration is economically preferable to illegal immigration. In fact, illegal immigration responds to market forces in ways that legal immigration does not. Illegal migrants tend to arrive in larger numbers when the U.S. economy is booming (relative to Mexico and the Central American countries that are the source of most illegal immigration to the United States) and move to regions where job growth is strong. Legal immigration, in contrast, is subject to arbitrary selection criteria and bureaucratic delays, which tend to disassociate legal inflows from U.S. labor-market conditions.

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