Tuesday, October 1, 2019

Our Strength And Our Prosperity Depend On Our Diversity: Reality Or Ideology?

Economic growth is driven by increases in productivity and labor.  However, not all labor is the same.  Some is low-skilled, low-valued-added, while other labor is high-skilled, high-value-added.  It makes a big difference in the rate of growth if the increase in labor is low-skilled or high-skilled.

The data below show the changing racial and ethnic demographics of the United States by decade, 1940-2020, in percent.  The far-right column shows the annual average rate of economic growth for each decade beginning with the year in the first column.

Racial and Ethnic Demographics of the United States, 1940-2060
Percent
Average
Annual
Growth
Year
White
Hispanic
Black
Asian
Mixed
By Decade
1940
88.3
1.5
9.8
0.2
6.0
1950
87.5
2.1
10.0
0.2
4.4
1960
85.4
3.2
10.5
0.5
4.5
1970
83.5
4.4
11.1
0.8
3.3
1980
79.8
6.4
11.7
1.5
3.1
1990
75.6
9.0
12.1
2.9
3.4
2000
69.1
12.5
12.3
3.8
2.4
1.8
2010
63.7
18.3
12.6
4.9
2.9
2.3
2020
59.7
19.1
13.4
5.9
2.9


Two numbers immediately pop out.  One is the increase in the share of Hispanics (Mexicans, Central Americans, South Americans, and some Caribbean islanders)  The other is the decade average declining rate of growth.  Correlation is not causation.  But the data make it hard to argue that large numbers of Hispanic immigrants, whether legal or illegal, increase the rate of growth.

Could we argue the counterfactual, that the rate of growth would be lower still without large-scale Hispanic immigration?  No.  Studies show that first generation Hispanic immigrants in America are disproportionately low-skilled.

It’s hard to go a day without hearing an economist say that the United States needs both kinds of immigrants.  High-skilled immigrants help drive innovation, while low-skilled immigrants do the jobs Americans don’t want to do.  But wanting low-skilled immigrants is not the same thing as needing them.  Let middle-income and upper-income households mow their own lawns and do their own household chores.  Let agriculture invest in automation and mechanization instead of relying on low-cost, backbreaking immigrant labor.  (E.g., Australia).  Let industry continue to invest in automation.  Let the middle class pay a bit more to eat out, or stay in a hotel, or pay more for other services that use low-cost labor.  Importing low-cost labor for the economic comfort of middle- and upper-income households does not have any moral basis, while it simultaneously increases the income gap between the top 10% and the bottom third of the income scale, which has become an issue of national concern.

The implication for immigration policy is clear.  Our strength and our prosperity benefit from high-skilled immigrants.  We should also increase the skills of resident Americans!

Politics and economics often conflict.  The Democrat Party wants more low-skilled immigrants, who vote Democrat when they become citizens.  Try a thought experiment.  If the vast majority of Hispanic immigrants voted Republican, would the clamor for low-skilled immigrants continue or decline?  Be honest.