How the Flip Immigration Flip-Flops Flop

And more from this week...

*** Before we dive in, some late-breaking news: President-elect Trump has announced his intention to nominate Rep. Lori Chavez-DeRemer as Secretary of Labor. She has strong support from the Teamsters and is “a genuinely pro-labor Republican,” per New York Times labor reporter Noam Scheiber. This is an earthquake in the politics and policy of labor, and something I’ll be covering in much more depth, but for now there’s not much to read beyond the tweets. That said, not a bad time to go back and take a look at where it all started—with the American Compass “statement on a conservative future for the American labor movement,” published in September 2020 and featuring J.D. Vance and Marco Rubio among the signers.***

For today, our topic is immigration and your one thing to read is this morning’s New York Times feature, “Why Trump Allies Say Immigration Hurts American Workers.”

This is a classic of the genre and provides a great guide to reading the impending tsunami of immigration policy coverage. The immigration issue, more than any other, works like a strange drug on the technocracy. So adept at constructing pretextual win-win rationales for whatever their preferences might be, the experts and commentators become badly disoriented upon encountering the intractable disconnect between the economic reality of welcoming low-wage migrant labor and their ideological commitment to it.

Much hijinks ensues.

The harm done by high levels of migration into low-wage segments of the labor market, to those Americans already attempting to earn a living in those same segments, used to be well understood and entirely uncontroversial. This was the conclusion of academic research dating back to the 1960s. It was the conclusion of a bipartisan commission convened by President Clinton in the 1990s. It was a point of agreement between Senators Bernie Sanders (I-VT) and Jeff Sessions (R-AL).

But over the past fifteen years, as progressives abandoned their traditional interest in the well-being of low-wage workers for a commitment to radical identity politics and open borders (sorry, “non-enforcement”), a new literature conveniently emerged to make the case that in fact flooding a market with low-wage workers would be good for low-wage workers.

There were two theories here: First, migrants would be consumers as well as producers, so they could boost demand for work as rapidly as they supplied it. Second, as more migrant workers took jobs in meat-packing plants, prospective American meat-packing workers could take jobs as accountants instead. You think I’m joking, but this is how the Times explains it:

Why could that be? Immigrants don’t just add labor to an economy; they also add demand for goods and services, which creates jobs for other people. Also, those coming illegally tend to have low levels of education. The jobs they do, like working in meatpacking plants, allow more native-born workers to move into positions as supervisors, salespeople and accountants.

To be clear, hardly anyone actually believed any of this. My favorite example of the phenomenon is Washington Post coverage of the first Trump administration’s stepped-up enforcement, under many migrant workers were returning to Mexico: “More returnees means lower wages for everybody in blue-collar industries such as construction and automobile manufacturing, where competition for jobs is likely to increase, economists say.” So much for the transition to careers in accounting. Only for purposes of keeping our own borders open were we supposed to put laws of supply and demand to the side.

This fever has broken, somewhat, thanks to the Biden administration’s dual border and inflation crises. Having grown accustomed to deploying any economic argument at hand to serve their agenda, progressive activists and their friends in the corporate lobby turned on a dime. (And yes, the irony that they are fulfilling the U.S. Chamber of Commerce’s cheap-labor fantasies when they advocate for more migrant labor is entirely lost on the activists.) Out went the argument that migrant labor won’t suppress wages, migrants are consumers too, and so on and so forth. In came the argument that migrant labor will suppress wages, which was exactly what we needed to solve our labor “shortage” and bring inflation down.

With inflation back down and an enforcement-minded Trump administration en route, an effort is underway to flop on the flip—never mind what we were all saying the past few years, we must have been temporarily possessed. But this flip flop on the flip is a flop. The farce is hardly even being delivered with a straight face at this point. A particularly embarrassing effort in The Atlantic captures the dynamic well:

The simple Econ 101 story turned out to have a blind spot: Immigrants aren’t just workers who compete for jobs; they are also consumers who buy things. They therefore increase not only the supply of labor, which reduces wages, but also the demand for it, which raises them. In the end, the two forces appear to cancel each other out. (The same logic explains why commentators who suggest that immigration is a helpful inflation-fighting tool are probably wrong. I have made a version of this mistake myself.)

Points for… honesty, about the dishonesty, I guess?

The good news is that the labor market impacts of uncontrolled migration are finally coming back into focus and this is where the Times story is notable. It does a good job acknowledging and presenting the economic argument for enforcing immigration law and restricting entry into the labor market’s low end. It also acknowledges that most economic studies do find a negative effect on native wages.

Serious economists are beginning to speak up too. “More than many economists, I think Vance's argument that unauthorized migration may have (through reduced tightness & wages) lowered male non-college labor force participation to be plausible,” said UMass’s Arin Dube today. “Not necessarily right. But plausible.”

Note also the study du jour cited for the argument’s other side. “A paper published this spring, whose authors included Giovanni Peri, an economist at the University of California, Davis, found that immigration had a positive impact on U.S. workers,” reports the Times, linking to “Immigration's Effect on US Wages and Employment Redux.” Awkwardly, this report is not about illegal migrant labor of the kind a Trump administration might act against, or even about effects of low-wage labor at all. It looks at overall immigration levels, and in fact finds that in recent decades those levels have been skewed toward more educated, higher-wage immigrants. It has, in other words, nothing whatsoever to say about the issue on which the Times is purporting to report. That gives a useful indication of the strength of that position.

The story concludes on a particularly sour note, questioning whether immigration restriction would “create more opportunities for the approximately five million men between the ages of 25 and 54 who would be working if employment rates remained at the peak reached in 1953.” Immigrants aren’t the problem, says the Times, because “among working-age men without a college degree who are not working, a majority cite poor health or a disability as the reason, and some cite mental health issues. Some of that probably stems from substance abuse. Injuries sustained from physical jobs and chronic conditions play a role as well.”

Richard Reeves, president of the American Institute for Boys and Men, has the closing comment. “Reeves doesn’t think that removing millions of immigrants from the labor force will on its own draw substantial numbers of less-educated native-born men back in. ‘There are huge issues with their employability,’ Dr. Reeves said. ‘It’s not like, by getting rid of the other guys, suddenly employers will say, Oh, great, here’s this reserve army of labor sitting there, raring to go.’”

That is, um, exactly what employers will say. When labor markets get tight enough, it’s exactly what happens. This is why we like market forces!

Here’s the New York Times, in 2019: “The tight job market is continuing to pull in workers from the sidelines.” Here’s the New York Times, in 2019, again: “In a Tight Labor Market, a Disability May Not Be a Barrier.” What were employers doing? “They are making new accommodations to open up jobs to people with disabilities. They are dropping educational requirements, waiving criminal background checks and offering training to prospective workers who lack necessary skills.”

As I wrote in Jobs Americans Would Do, my favorite essay unpacking all this:

Capitalism works when capital in pursuit of profit must find ways to expand output with the labor present, and when it must share the rising proceeds of that joint project. These conditions are more likely to hold, and will hold more strongly, when workers act as the limiting reagent in the production process. Business leaders will always chafe at this constraint and insist they need more labor, emphasizing the additional production they could unleash. The pleas must fall on deaf ears.

THIS WEEK AT AMERICAN COMPASS

The New Republican: “Put a map of Trump’s gains in 2016 over an ethnic heritage map of the United States and it’s clear that he gained most in areas where the descendants of the 1880-1920 immigrant classes lived,” writes EPPC’s Henry Olsen. “The voters in the areas where the grandchildren of those Italian, Polish, Slovakian, Finnish, and Swedish immigrants lived swung overnight from Democratic to Republican.”

It’s Still The Economy, Stupid: “Did the timeless economic wisdom take an election cycle off?” asks American Compass’s Drew Holden. “How did Harris run on such a seemingly strong economy and lose so thoroughly?”

Breaking the State’s Sports-Betting Addiction: “There is one item that should unite working-class conservatives, classical liberals, and yes, even the progressive Left,” suggests Cardus’s Brian Dijkema. “That item is reducing the tax on the working poor, or, as it’s otherwise known, sports betting.”

Addressing the College Credibility Crisis: “A plurality of working-class voters see ‘degree requirements for jobs that don’t need them’ as the largest barrier to people like them getting a good job today,” explains PPI’s Bruno Manno. “Unsurprisingly, more than half (56%) said that forgiving student debt is unfair ‘to the majority of Americans who don’t get college degrees and will increase costs for students and taxpayers alike over the long term.’”

And, on the American Compass Podcast this week, our coalition director Duncan Braid joins me to discuss his collaboration with dozens of American Compass members to create Back to Work: An Executive Blueprint to Strengthen Families, Communities, and Industry.

WHAT ELSE SHOULD YOU BE READING?

Re: Recovering Bases… Ivana Greco in The American Conservative on “J.D.’s Mom!”

The death toll of the opioid epidemic has become an important measure of American social and economic decay—in my own work, I frequently cite the reality that the United States is now losing people to drug abuse at the same rate Russia lost people to alcohol abuse in the decade after the USSR’s collapse. But far less attention goes to doing anything about it, either in policy or the culture. Here, Greco nicely highlights the importance of hope for people struggling with addiction, and the opportunity for a Trump-Vance administration to lean into helping.

Re: Call of Duty… the Wall Street Journal goes Inside Big Tech’s Bid to Sink the Online Kid Safety Bill

We’ve done a lot of work at American Compass on the Kids Online Safety Act, and have had a front-row seat to the absurd and at times obscene maneuvering by Big Tech companies trying to fight it off. Yes, they really are out there simultaneously trying to scare conservatives off of supporting kids with “talk about how they fear antiabortion positions could be censored” while also trying to scare progressives off with “focus on LGBTQ expression, amplifying worries that officials could censor queer youth.”

BONUS LINK: Our Chris Griswold wrote an excellent piece for Newsweek last year, going chapter and verse through the bad arguments against the bill.

Re: Poison Ivy… David Brooks narrates How the Ivy League Broke America

This is a very long read, but it has to be, to cover and synthesize the broad range of related topics. Two criticisms I have, or at least questions I would raise for further discussion, are:

(1) What is an Ivy League for? Any society has an elite, and a set of institutions like the Ivy League might in fact make sense as a way for producing and preparing one. The problem comes when the institutions start doing a bad job with the preparing, and the participants have no interest in conducting themselves responsibly.

(2) Is our modern, dysfunctional Ivy League (and education system broadly) upstream or downstream of our globalized, financialized economy? We’ve placed an enormous premium on a narrow set of skills—conveniently, the set that our irresponsible elite has in spades—while all other aptitudes are commoditized and their value driven toward zero in pursuit of “growth” and “consumer welfare.” Presumably the relationship is symbiotic and one we need to attack from both ends. But the recognition that one can build a better career in the trades than with a typical bachelor’s degree is doing more to cut higher education down to size than any amount of reconceiving the meritocracy.

Re: Military-Industrial Complexity… a useful paper on Using Economic Complexity Theory To Inform Industrial Policy in Advanced Economies: Application to the United States

I don’t dump a lot of academic papers on you, but this one is really neat, quantifying notions of comparative advantage and showing how free trade with China led to the collapse of U.S. strength in precisely the areas where we purportedly had comparative advantage.

The fact that two largely different sets of frontier goods reflect the same declining overall trend in [revealed comparative advantage] reinforces the conclusion that U.S. manufacturing capabilities have diminished. A possible explanation for this trend is the offshoring of U.S. production in the first decade of the century, when manufacturing employment fell by one-third, nearly 6 million jobs. … This seems counterintuitive because one might expect the quest for cheap labor to favor the offshoring of commodities, which are not advanced goods. But perhaps there is a deeper mechanism at work. One plausible hypothesis is “erosion of the industrial commons,” a phrase coined by Pisano and Shih (2009) to reflect the collective capabilities (e.g., labor, capital, energy, services, infrastructure) from which geographically concentrated industries (e.g., aerospace, autos, chemicals, medical devices) draw.

Enjoy the weekend!