Wednesday, October 26, 2016

What the National Academies study does not say

The National Academies of Sciences (NAS) recently published a mammoth, book-length study of the economic impact of immigration. It features comprehensive reviews of the existing literature as well as original analyses, with the underlying finding that immigration has both benefits and costs. How people weigh those effects determines their position on the overall issue.

For a general summary of the NAS study, I recommend George Borjas's blog series. (Borjas was my advisor in graduate school.) And for a discussion of the long-term fiscal effects, please see my piece for National Review.

Though I was pleased with the quality of the NAS study, I was displeased to see the media attribute conclusions to it that it never actually drew. Specifically, some media outlets are claiming that the study found no significant wage or employment effects on natives. I first saw this claim in an ABC News "fact check" of Donald Trump. (Regular readers already know how I feel about the fact-check movement.) Here's part of my response that I wrote for the Center for Immigration Studies:
The study's authors are very open to the idea that immigration depresses wages. For example, the fourth chapter of the study is devoted to an economic model in which immigration improves efficiency by reducing the wages of native-born workers by $494 billion. The next chapter lists nine different studies that find at least some negative wage effects, mostly on lower-skilled workers. "While many studies conclude that, economy-wide, the impact of immigration on average wages and employment is small, a high degree of consensus exists that specific groups are more vulnerable than others to inflows of new immigrants," the study says. It goes on to name prior immigrants and low-skill natives as examples of groups hardest hit. 
The "little to no negative effects" on wages is not even a quote from the study itself, but rather from a press release accompanying it. And ABC's fact-checker leaves out a crucial qualifier in that press release: "little to no negative the long term" (emphasis added). It is true that as capital adjusts over time to accommodate a new group of immigrants, wages should revert to pre-immigration levels. This is actually an assumption built into some immigration models. Efficiency gains as well as wage effects disappear in those models in the long run, leaving natives no better off than they were without immigration. But, more importantly, if we keep taking in over a million immigrants every year, then new short-run wage losses are suffered over and over, and the long run never comes! 
The National Academies study simply does not say, either literally or in spirit, that immigration has no effect on wages. Furthermore, the conceit that such a sweeping and decisive "fact" could be derived from the study's chapter-length, much-caveated review of a complex literature is implausible.
The misleading "little to negative effects" claim appears to have originated in a New York Times article about the study, though at least it offered details. After ABC News latched on, it was repeated in a Wall Street Journal review of George Borjas's new book. It's time to retire this narrative.

Friday, September 30, 2016

Video and reaction to panel event

Our panel on Monday, titled "Immigration and Less-Educated Workers," was a success. My thanks to the whole Center for Immigration Studies staff for putting on a good show. Video of my presentation is embedded below.

CIS has the rest of the videos -- including Amy Wax, Charles Murray, and Steven Camarota -- collected here.

The panel has received an unusual amount of media attention because of Charles Murray's declaration that he no longer supports low-skill immigration. National Review, The Daily Caller, Breitbart, and several other sites reported on it.

Friday, September 23, 2016

Panel event on Monday, September 26th

This Monday I'll be presenting my recent paper, "Immigrants Replace Low-Skill Natives in the Workforce," with commentary by Amy Wax and Charles Murray. Please attend. It's free, and you don't even have to register.

WHAT: Panel discussion on immigration and the crisis of labor-force dropout

WHEN: Monday, September 26, 2016, at 3:30 p.m.

WHERE: National Press Club, Bloomberg Room, 529 14th St. NW, 13th Floor, Washington, D.C.


Richwine, an independent public policy analyst and National Review contributor, will present his recent publication, “Immigrants Replace Low-Skill Natives in the Workforce.”

Murray is a political scientist and W.H. Brady Scholar at the American Enterprise Institute. He is author of, among other books, Losing Ground and Coming Apart.

Wax is a professor at the University of Pennsylvania Law School. Her work addresses issues in social welfare law and policy as well as the relationship of the family, the workplace, and labor markets.

Tuesday, September 6, 2016

New CIS report: Immigrants replace low-skill natives in the workforce

I have a new report out today for the Center for Immigration Studies. It is a numbers-heavy return to the theme of my American Conservative article from a couple of months ago. From the conclusion of the new report:
The United States has been a magnet for low-skill immigration even as low-skill natives have worked less and less. It is difficult to avoid the conclusion that immigrants replace natives in the workforce. However, note the careful choice of the word replace. The results presented in this study do not prove that immigrants push out (or displace) natives. Competition from immigrants is just one of many potential explanations for declining work among low-skill natives....
Regardless of the reasons that native-born men are not working, immigration devalues the problem. Instead of searching for ways to get natives back to work...government and business leaders have brought in immigrants to do the work instead.... Immigration restriction alone may not solve the problems endemic to the American underclass, but it restores the incentive to help.
Read the whole thing here

Saturday, July 16, 2016

More on America's immigration controversy

Another satisfying interview with Stefan Molyneux posted below! We talk about welfare use, assimilation, "Schrodinger's immigrant," the problems suffered by low-skill natives, guest worker programs, and who sets the terms of debate in Washington.

Monday, June 6, 2016

Saturday, June 4, 2016

Immigration is a band-aid

The American Conservative has published my new op-ed, "The Immigration Band-Aid," in which I discuss the connection between low-skill immigration and the native underclass. A sample:
It is often said that immigrants “do the jobs that Americans won’t do.” While there are no major immigrant-dominated jobs in the U.S.—even about half of drywall installers are native-born—the claim does contain a kernel of truth. For over 50 years, a growing percentage of native-born American men have dropped out of the labor force altogether. For these men, every available job is a job they won’t do. Rather than focus on reversing the trend of idleness among native men, American politicians and business leaders have bandaged the problem with immigrant labor. A steady supply of new immigrants means less need for low-skill native workers, and the idleness problem is left to fester.
Read the whole thing there. And stay tuned for more from me on this topic.

Friday, June 3, 2016

Updated blog list

I don't usually get a chance to mention my short pieces here on my site, so please check both my National Review and my Center for Immigration Studies pages regularly for new posts on those sites. They are linked on the "My Other Blog Posts" section on the right. There is some good material there that you may have been missing!

Sunday, May 22, 2016

New immigrant welfare analysis published

Earlier this month, the Center for Immigration Studies (CIS) published my new report on the cost of immigrant and native welfare use. The analysis was fairly involved, since it required not only averaging household costs in the Survey of Income and Program Participation, but also imputing the cost of non-cash programs and adjusting the totals to match budgetary data. The main results are shown in the table below.

The report garnered some media attention -- so much, in fact, that it briefly felt like three years ago. I've collected a few media clips below.

First, kudos to Stephen Loiaconi with the Sinclair Broadcast Group for an excellent news article on the study. In an age when many online journalists do little more than re-phrase a press release, Mr. Loiaconi truly did his homework, interviewing multiple experts on both sides of the debate and digging into the methodology in a way that no one else did. A colleague of mine noted that he was so accustomed to biased reporting on immigration that his brain could barely process such a fair article!

I reflected on some of the other reactions in a blog post for CIS.

Finally, WorldNetDaily did both a taped interview and a live interview.

Update: I found the first half of my radio interview with Bill Kelly on WRKO.

Wednesday, February 24, 2016

More on politicized science

Thanks to Stefan Molyneux for hosting a great interview. In the video below, we talk about the wage impact of immigration, diversity in higher education, and public-sector union dues. The common thread is the politicized science that plagues the discourse on these topics. Give it a watch!

P.S. – Some commenters caught me in an embarrassing slip of the tongue. I off-handedly referred to people picking “mushrooms” in the hot sun. Of course, most commercial mushrooms are grown indoors.

Friday, January 15, 2016

Public-sector compensation and compulsory union dues

Earlier this week I wrote a blog post for NR on the correlation between compulsory union dues and excessive pay in the public sector. The centerpiece of the post was a chart showing the compensation premium in each state. Unfortunately, the editors removed some of the state labels in order to squeeze the chart on to the blog. Below I've reposted the entire piece, with the full version of the chart available by clicking on it.
Public Employees May Soon Be Less Overpaid

As James Sherk, Mark Pulliam, and others have already noted here, the Supreme Court appears poised to strike down all compulsory union dues for government workers. I have no legal analysis of my own to offer, but as a policy matter it is important to point out the correlation between compulsory dues and the degree to which public employees are “overpaid.”

A couple of years ago, Andrew Biggs and I compared state workers’ total compensation – meaning wages plus benefits – with the compensation of similarly-skilled private workers. We found that most states pay their workers a premium over private-sector levels. The chart below orders the states from the largest premiums to the smallest. Union dues are compulsory for public workers in the states colored blue, while dues are not compulsory in the states colored red. (Categorizing each state by its treatment of public union dues can be tricky, but the website appears to have done the most thorough job.)

Click for a readable version.
Compulsory dues are clearly associated with larger premiums for public employment. State workers in compulsory states are paid 17.0 percent more on average than comparable private workers, while state workers in non-compulsory states are paid just 5.6 percent more. And note that Michigan and Wisconsin only recently switched to voluntary dues, so most of the impact has yet to be felt in two of the higher-paying voluntary states.
The usual caveat about correlation and causation applies, but the data are consistent with the view that union strength really does matter. When dues are compulsory, unions have more money to lobby public officials for generous pay packages. If the Supreme Court limits union funding to voluntary donations, public-employee compensation will probably still be excessive, but less so. It’s a start!

Saturday, January 9, 2016

Revisiting the Mariel boatlift

Last week I wrote a piece for Real Clear Policy detailing the new debate over the Mariel boatlift. From the intro:
Does immigration lower the wages of native workers? There is perhaps no event more often cited on this question than the "Mariel boatlift." After Fidel Castro announced in 1980 that anyone wishing to leave Cuba could do so via the port of Mariel, 125,000 Cuban immigrants came to Miami between April and September of that year. The sudden influx of workers generated an intriguing test of how immigration affects wages in one city.
Update: The Center for Immigration Studies has published an expanded version of my piece as a backgrounder.

I then appeared on Breitbart Radio ostensibly to talk about the article, but not surprisingly we talked more generally about immigration policy. (The boatlift is a dry topic, no pun intended.) Listen to the interview below, or visit the original Breitbart page here.

Sunday, January 3, 2016

Here is public pension fallacy #10

I spent a large part of my early career working on the public pension issue, especially as it relates to public-sector compensation. During that time, I encountered a number of fallacious talking points -- some transparently false, others having a surface plausibility -- which pension advocates frequently deploy.

Not actually where pension funds come from.
A few years ago I put together a paper that lists and responds to each of the fallacies. It's had some staying power. Even after my Heritage Foundation exit and subsequent inability to promote my pension work, the paper gets passed around and cited fairly often. It even appeared on the list of the top ten most-read Heritage papers for much of 2015. Here are the nine fallacies:
Fallacy 1: The average public pension payment reflects the generosity of the plan’s benefits.

Fallacy 2: The cost of a public pension plan is equal to whatever the government contributes to the pension fund each year.

Fallacy 3: Public pension plans can “assume away” risk because governments are long-lived.

Fallacy 4: Advocates of risk-adjusted discounting are merely a niche group of contrarian economists.

Fallacy 5: Critics of public pension accounting assumptions are projecting low rates of return.

Fallacy 6: The investment returns earned by a pension fund pay for most pension benefits, so taxpayers are actually charged very little.

Fallacy 7: Public pensions are not overly generous because they are simply deferred compensation.

Fallacy 8: Generous pensions are necessary because some government employees do not participate in Social Security.

Fallacy 9: Closing a public pension carries major transition costs.
Click the link above to read concise responses to each of these fallacies.

For reasons that were never clear to me, a tenth fallacy included in my manuscript did not survive the publication process. So here is the original text of what I'll now call public pension fallacy #10:
Fallacy 10: Pension payments serve as a tremendous economic stimulus.

The National Institute on Retirement Security (NIRS), a public pension advocacy group, publishes studies that purport to show the stimulus effects of pension benefits. Its latest report states that $2.37 in economic activity is generated for every dollar distributed via pension checks. The NIRS report has spawned numerous state- and local-based stimulus studies that make similar claims.

But all of these claims are empty of any policy relevance. The stimulus effects are based on the uncontroversial notion that economic activity (such as paying pension benefits) begets further economic activity. The fallacy is in ignoring what economic activity would be generated by taxpayer money if it were not diverted to pensions in the first place. As the NIRS study acknowledges, the stimulus effects it cites are the gross economic impacts of pension benefits, not taking into account the de-stimulative effects of moving employee and taxpayer money out of the economy and into the pension plans. 

If public pensions did not exist, the money otherwise used to fund them might be spent in ways that are at least as stimulative as NIRS claims pensions to be. For that reason, the stimulus studies published by NIRS tell us nothing about whether pensions are good economic policy.
For an expanded discussion, see my piece with Andrew Biggs, "Public Pension Stimulus Nonsense."

Despite regular debunkings, NIRS has continued to issue an annual report dedicated to the stimulus fallacy. Each new report uses the same methodology, with no acknowledgement of the criticism the previous one invariably gets. It's not so much research as it is propaganda.