The Decline in Immigration from Mexico: What It Means for the United States—Posner

In 2008 there were believed to be 7.03 million unauthorized Mexican immigrants in the United States, and by 2010 that number had fallen to 6.64 million, a drop of 390,000—6.64 percent. (I am dubious that these statistics are accurate, but doubtless there has been a significant decline in illegal Mexican immigration.) There are three possible reasons for the decline: reduction in employment opportunities in the United States, as a consequence of the severe economic downturn, involving heavy unemployment, that began with the financial crisis of September 2008; increased efforts at border control and apprehension of illegal immigrants to prevent unauthorized immigration, especially from Mexico (which is believed to be the source of nearly 60 percent of all illegal immigration to the United States); and improved employment opportunities in Mexico. The first two factors are probably the most important—especially the first. Many unauthorized Mexican immigrants were employed in the construction industry, and the economic downturn caused a tremendous surge of unemployment in that industry—a layoff of something like 600,000 construction workers, in all. But the second factor has a played a role. There has been toughened border enforcement, which has pushed up smugglers’ fees, which are paid for by the unauthorized immigrants; and so an increase in those fees discourages immigration. 

I attach less weight to the third factor—Mexico’s improved economic situation—because the improvement of the Mexican economy has been a gradual process, beginning in the 1990s. Mexico’s per capita GDP is still a third lower than that of the United States. Approximately 18 percent of Mexicans live in extreme povery, and another 47 percent in less extreme poverty, so that a total of 65 percent of the Mexican population is poor. And Mexico has a total population of 113 million. So there is an enormous pool of potential immigrants to the United States, where wages are much higher than in Mexico. 

The growing hostility to Mexican immigrants (and to immigrants in general) is understandable, though ill informed. It mainly results from the belief that immigrants “take away” jobs from Americans; a more precise formulation would be that an increase in the supply of labor, if more than proportionte to an increase in demand, will push down wages; and American workers who refuse to accept a reduction in their wages will lose their jobs to immigrants. In addition, immigrants place pressure on U.S. public services, such as public schools and emergency rooms, though unlawful immigrants are not entitled to Medicare or social security, or to many other public benefits. 

Unemployment in the United States is very high, and rising, but it is doubtful that restricting immigration would have a positive effect. Immigrant workers spend much of their income in the United States (some of it, however, they remit to relatives in their country of origin), and so increase demand for goods and services, and indirectly employment; and by reducing wage levels they reduce the cost of goods and services, a reduction that also stimulates consumption and hence production and employment, although the net effect on the economy must be small—there are not that many illegal Mexican immigrants. Weakness in consumption is a major factor in the nation’s current economic weakness, however, and there is no good reason to weaken it further by expelling or preventing entry of worker-consumers. And efforts to curtail illegal immigration are costly, without doing much for employment. Probably, therefore, restricting immigration is not a sensible policy from the standpoint of stimulating the U.S. economy. A better policy would be to increase the lawful Mexican immigration quota, since lawful immigrants are likely to be more productive workers with better educational backgrounds and to place less strain on U.S. public services.

Comments

[Alex Zhao]

Missing from this is the fact that because of the increase in Mexican war on drugs, border crime is at an all time high. As a result, the cost of traveling to the United States (not just financial, but also physical) has drastically increased.

[Jimbino]

Now would be a good time to get rid of the "family reunification" bias in granting immigration visas. These adversely affect the economy, welfare expenses and discriminate against gays, singles and the young. They also force folks into sham marriages.

Canada and New Zealand have it almost right: they favor immigration by folks who qualify by skills, education and language ability. Unfortunately, their socialist healthcare policies force them to discriminate based on age.

Amerikan workers, in any case, will have to bear a greater share of their SS and unemployment taxes, now that they won't get the free ride provided by the Mexican worker who made contributions with no hope of benefit.

[Jack]

"Many unauthorized Mexican immigrants were employed in the construction industry, and the economic downturn caused a tremendous surge of unemployment in that industry—a layoff of something like 600,000 construction workers, in all."

I wonder if this is some sort of "official" number of construction layoffs? Envelope scratchings would seem to indicate a much higher number as new home starts of 2.5 million at the frothy peak have dropped by 2 million. I'd guess there is two "man-years" of construction labor in an average or median new home. While not exactly "construction" related losses would be those in title, finance, R/E and in mfg of lumber, cement, carpet, appliances, and furniture, much of which is still mfg in the US.

If our "unemployment" or labor stats show only 600,000 I'd guess there were more invisible immigrants helping to build our homes than the numbers would indicate.

Becker is right in pointing out little if any burden from new immigrants be they legal or not.

Consider; two twenty five year old construction workers, the first cost us $100,000 to go through our school system, and very likely some public assistance costs from the number of families who are below the poverty line. The other who slipped across the border has cost nothing unless you want to prorate border patrol costs.

On the demand side? The first may be living with parents in a home he's some fair odds of inheriting someday and with a collection of consumer goods built up over time. The immigrant comes with nothing so has an immediate demand for housing, car and all else.

As consumers, they are both sort of "low quality" in that pay for building our homes is fairly low these days leaving much less with which to "go shopping" than the average. On the other hand, (economists always have two..... right?) for what they are paid, in creating a home with but two man years of labor, they've created a lot of real value and one of benefit to all new home buyers who are paying less than would be the case were wages what they should be, and which would attract more US job seekers.

I suppose a Libertarian, and perhaps even some of the "Chicago school" would at least flirt with the idea of free migration of labor as we have in the US among our states. The economic argument being that of lowering labor transaction friction as we see in the US..... if regional recessions or booms change the labor market US citizens often move to duck the unemployment or benefit from higher wages offered in the booming city or state. The result, theoretically, is a higher average std of living, and lower avg rate of unemployment.

While we aren't ready for that in North America or the Americas in general, but some of our thinking and policy should trend in that direction, and especially so with Mexico. It's NOT good to have an impoverished, nearly failed state, rife with corruption as they resort to profiting by US drug demand. With our GDP of $14 Trillion while their 113 million share only a one trillion GDP we should be able to find more win-win trading arrangements that would sop up some of their energetic young, surplus labor, and as NAFTA proponents had originally hoped bring Mexico's labor rates closer to those of the US, and with increased wealth become even a better trading partner with the US than they are today.

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[Larry Siegel]

Mexico's per capita GDP a third lower than that of the US? Last time I checked (this year), Mexico's PPP GDP per capita was $14,000 and the U.S. was $48,000.

[Multi Walled Nanotubes MWNT]

Youth go there that is illegal . But we should try to understand why they are leaving there countries . we should help the undeveloped country to develop so that there citizen might not illegally travel anywhere.

[an observer]

Posner writes:

by "reducing wage levels they reduce the cost of goods and services, a reduction that also stimulates consumption and hence production and employment"

As Observer often writes, "Distribution of income is a political question."

Here one has it in black and white---Posner supports slavery---he offers no barrier as to how far to cut wages of any one not on the Government teat. Isn't it about time that we amend the Constitution, cut his pay, and stimulate our consumption?

[NEH]

This is just a temporary decline in immigration from South of the Border. Due to the Recession/Depression there is no reason to head North when there are no jobs. Wait until the Recession/Depression ends and hiring picks up again (that is, if the Economy recovers). I've heard reports that in the Economic Enterprise Zones along the Border, that the expansion is moving along at a rate of approx. 5.5% per year. So the jobs are there, why move across the Border? At least from South to North. Even the ongoing Civil War between Mexico City and the Drug Cartels, which has resulted in 40,000 deaths this year alone, is not enough of a stimulus too make people jump. And I won't mention the CIA and FBI involvement in supplying arms to the various factions as an intelligence operation all the while the ATF is trying to cleanup illegal arms shipments...

As for illegal immigration in general. I hear that Canada, one of our NAFTA partners, has implemented a campaign to roundup approx. 10,000 illegal aliens in Toronto alone. Some of whom are probably trying to get into the U.S.. To complicate the issue, I wonder how many are trained International Terrorists or International Crime Syndicates involved in the lucrative trade of "Human Trafficing or the Slave Trade"...

U.S. and International Immigration? Yep, it's broken and needs to be brought into the 21'st Century.

[Jack]

Observer: Gotta side with Posner on this one........ he's not condoning low wages, just reporting on the obvious economics........ one of which is that of each entrant, legal or illegal, bringing nearly as much demand as they satisfy.

During the post-Bushian meltdown all the economic dials are screwed up...... but when things were more normal, one could as easily take the Fed to task for "fighting inflation" every time some low wage guy got a raise as to dump on the surplus labor of illegal entrants.

"Funny" how massive wages gains at the top don't trigger fears of "wage inflation" but any movement in the lower income ranks has to be snuffed out quick!

Unemployment in the United States is very high, and rising, but it is doubtful that restricting immigration would have a positive effect. Immigrant workers spend much of their income in the United States (some of it, however, they remit to relatives in their country of origin), and so increase demand for goods and services, and indirectly employment; and by reducing wage levels they reduce the cost of goods and services, a reduction that also stimulates consumption and hence production and employment, although the net effect on the economy must be small—there are not that many illegal Mexican immigrants. Weakness in consumption is a major factor in the nation’s current economic weakness, however, and there is no good reason to weaken it further by expelling or preventing entry of worker-consumers. And efforts to curtail illegal immigration are costly, without doing much for employment. Probably, therefore, restricting immigration is not a sensible policy from the standpoint of stimulating the U.S. economy. A better policy would be to increase the lawful Mexican immigration quota, since lawful immigrants are likely to be more productive workers with better educational backgrounds and to place less strain on U.S. public services.

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Weakness in consumption is a major factor in the nation’s current economic weakness, however, and there is no good reason to weaken it further by expelling or preventing entry of worker-consumers.

[TANSTAAFL]

In one of those occasional instances when he seems a bit out of touch with Main Street, Posner expresses the belief "that an increase in the supply of labor, if more than proportionate to an increase in demand, will push down wages; and American workers who refuse to accept a reduction in their wages will lose their jobs to immigrants."

While that is a logical analysis, a more realistic formulation is that Mexican and Central American immigrants take away jobs from Americans. Any US citizen who earned a living in the construction trades 30-35 years ago can attest to that fact of life.

Note also the irony in how Posner omits any specific region from which immigrants originate when he impugns "the belief that immigrants 'take away' jobs from Americans" as imprecise. Rather unpersuasive to criticize imprecision in such imprecise terms.

[an observer]

Jack,

You are truly clueless.

Yes or No, would it be good for you to have your wages reduced to say $1.00 a year.

Yes or No, would it be good or paid to reduce everyone's wages to $1.00 a year?

Any fool understands that reducing wages only further distorts income distribution, which is what Posner is all about.

If reducing wages is a good thing, why not reduce his?

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[Jack]

Observer -- I was TRYING to point out to you that Posner did not make a subjective comment as to "good/bad". What he DID accurately point out is that it would be a frustratingly, fruitless, and likely costly fiasco to try to "send 'em back".

As for myself...... I've posted this graph and lamented stagnant and declining wages on this board so often as to risk being a boor, but! perhaps once more as it IS a major, major reason our economy WILL continue to stagnate and "grow" at 2% or less which means A. continued 10% rates of unemployment B. Deficits on par with today's. C. even crappier wages for working folk than today to continue the downward spiral.

fhttp://lanekenworthy.net/2008/03/09/the-best-inequality-graph/

.......... should be great. IF you like "building character" as compared to any chance of retirement.

[Jim]

restricting immigration would have a positive effect. Immigrant workers spend much of their income in the United States

[James]

Weakness in consumption is a major factor in the nation’s current economic weakness, nice ponit.

[skin tag removal at home]

Lets not forget that this country was built on immigration. However a decline in numbers coming in from Mexico has to be good thing given the current economic climate.

[an observer]

Jack

Not sending "them" back is amoral (and it wouldn't be all that hard).

The people who are suffering are America's least skilled and their families, who have to compete with these illegal and unskilled workers. There are no lawyers in the bunch.

It reminds me of how we also deny the most basic of government services---protection from crime---to our least skilled and most economically stressed. America provides unbelievable services for the rich and nothing, really, for the poor.

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[Eric]

It does mean that the American economy isn't as great a shape as it has been previously. It will decline but the immigrants will never completely go away.

[Christopher Graves]

The main problems with mass immigration, whether it be legal or illegal, are that mass immigration undermines a common way of life that our social/political/economic/ legal system is rooted in, and it destroys the basis for a collective decision-making process consistent with liberty.

On the first problem, Robert Putnam and others have shown that mass immigration induces people to withdraw from public life so that civil society withers. People simply turn away from one another en mass when there are large numbers of people entering a nation who do not share the native population's ethnicity, language, heritage,& attitudes. These influences that form the basis of common folkways that provide informal means of facilitating social interactions and loyalties become obsolete. Diversity is poison to social capital.

On the second, related problem, Montesquieu, the English Whigs, and the Anti-Federalists all correctly realized that a democratic political system demands a certain degree of homogeneity to function. If people cannot find some common understanding of their collective problems coupled with a common understanding of principles of justice, then collective decision-making grinds to a halt. These theorists argued for an organic understanding of a culture and society. I am afraid that Judge Posner and Professor Becker take up a mechanistic view of human affairs. The reductionist/mechanistic model of society not only gives rise to a lack of understanding of human cooperation, but presents a threat to liberty since it treats people as interchangeable cogs in a machine that are subject to the designs and design "improvements" of central planners. Conservative objections to top-down governmental control of society center on the degrading view of the individual that the mechanistic view takes as well as the need for constant tinkering with people's lives being not only immoral but futile.

[Jack]

Observer: Sorry but have to disagree. The morality would, after all these years be less than clear. I'm familiar with some "illegals" now having teenagers on the honor roll in HS and it would not at all be clear as to spending a ton of $$$ splitting up such a fine family that has long contributed to our nation and economy.

As for "not being hard"; were it "easy" I suspect much of "it" would be done already. BTW.......... I SAW on Cspan an immigration official who knows well the amount it costs, and testified to Congress that they WERE deporting those they could AFFORD to deport. It did not seem that there were Congressmen leaping to enhance their budget just now.

While I agree most "illegals" are doing jobs of either low skill, OR in the crafts (which ARE skilled though all too many Americans tend not to appreciate the skills of those who build their homes, repair their cars and feed them in cafes ranging from the TOUGH but underpaid work of enriching fast food chains on up to the other popular franchises and fine dining.

I DO agree with your last about crime and lack of American concern for the plight of our lower income folk. Crime needs a whole NEW response........ currently we're locking folks up at ten times the rate of the civilized nations, warehousing them for useless decades, only to dump, often the same, but older person back on the streets where his record is another hurdle to add to his lack of employable skills problem.

Perhaps it would be good to stuff our chest thumping pride and find out how "they do it over there" ie locking up far fewer, for much shorter sentences and still having similar rates of property crime, along with a fifth or less of our homicide rates.

Long term? WE would be wise NOT to let Mexico become an entirely failed nation, and FIND win-win ways of utilizing their energetic, young work force. There is a whole world out there to be fed, housed, clothed and be provided with modern medicine, with a potential market of 7 billion people it's foolish of us to think of our economy and current "jobs" problems as a zero sum game -- there is work for all, and we're fairly good at organizing companies and services.......

Come to think of it, it's another wretched failure of the Bush admin...... "us-them" "axis of evil" and an uncreative, nasty, retrograde outlook pitting one "class" or people against another. This President can be, at least, another Clinton if he can shake these pit bulls with no lipstick, manners or vision off his ankles, or hang on until the coming elections send teabaggers back to worship their false god, Grover Norquist, in the "private sector" where those taking pledges other than to our Fed or State Constitutions belong.

[an observer]

Jack

You do not agree with me.

You response is the typical mealy mouth BS of the present Demo Party.

It is why we can as ass whipped in the last election and why we are going to vanish from the Earth in the next one

[Jack]

Observer? Having learned little from my patient response...... do YOU HAVE a policy to put forth?

BTW the topic is about LESSER immigration due to our being left with a tanked economy. Suggestions of "rounding 'em up" at considerable costs and social dislocation seem a bit tardy as many make the long trek back to Mexico (or many other nations of origin) as there's not even enough scraps on the bone for those hardy souls to subsist in this "richest of nations".

Fodder for future thought might include our nation being 75% dependent on consumer spending....... and new immigrants coming with next to nothing, in essence create another job.

Further? with what appears to be an unsustainable economy, w/o "growth" and higher population perhaps hand wringing over who they are and how they got here falls well short of making list of top 50 priorities?

[an observer]

Jack

The time for a patient response is long past. Too many citizens and former tax payers are sleeping in cars. The Republicans are going to win in a landslide next year bigger than in 2010. By 2013 they will be sending illegals back in freight cars, plus there will be no Fed. Gov't, no Bill of Rights, No Social Security or Med Care, I could go on, but you are in such denial you have no a clue.

Will you be happy then?

Those states who have gotten just a little tough on illegal immigrants have shown that the problem can be easily fixed. Any enforcement and they will run back South.

As for a policy, I favor using modern day bounty hunters. Why should an illegal immigrant have greater rights than someone who has skipped bond? And seeing Dawg with a new tv reality show would be great.

Last, if we enforced real laws against illegal immigration, and removed the quotas on Europe, we would have lots of young Irish, Spanish, Italian, and Greeks here, with real skills, ASAP.