Pethokoukis, Economics, U.S. Economy

Why the US might need those Mexican high-school dropouts

062613lowskill

Those jobs Americans won’t do? Maybe there aren’t enough Americans to do them.

Now it’s true that four years into a weak US economic recovery, Americans with a high school diploma or less remain unemployed at rates far above prerecession levels. So it might seem the last thing those folks need is more future competition courtesy of Washington’s ambitious immigration reform plans. Such a (superficially) plausible conclusion, however, misses how demographics, education, and social trends are sharply reducing the availability of unskilled or low-skill native workers.

In their 2012 study Luxury, Necessity, and Anachronistic Workers: Does the United States Need Unskilled Immigrant Labor?, researchers Frank Bean, Susan Brown, James Bachmeier, Zoya Gubernskaya and Christopher Smith explain that while, for instance, the 25 fastest-growing, less-skilled occupations are expected to add 500,000 jobs a year over the next decade, more than 100,000 fewer natives per year — at minimum – will be available to fill such jobs The US, they argue, needs low-skill immigrants to fill the resulting shortfall. From the study:

We argue that an important reason such workers are crucial for the country—and for most other postindustrial nations—is that a major new change has emerged in the past 30 years, namely, the reduction of both the size and the quality of the pool of natives available to carry out such work, even as the need for this kind of work is expanding. … So it seems likely that the need for less-skilled immigrant workers is going to continue.

Here’s the core of the argument:

1. The birth rate in the native-born population is now 20% below replacement level, with the size of the population ages 25 to 34 shrinking since 1980. “This means that the numbers of natives available to meet societal workforce needs are now in both relative and absolute decline, on account of diminished fertility alone.”

2. Far more natives are attending college or getting some post-high school education. The share of adults with more than a high school education has gone up from 5.3% in 1950 to nearly 60% today. As a result, there are now relatively and absolutely fewer numbers of persons with high-school degrees or less. The percentage of the adult population with less than a high school education in 1950 was 87% vs. less than 13% today.

3. The authors point to several other factors reducing the available labor pool: Low-skilled natives are a) often less likely to live where low-skilled jobs are available, b) more likely to manifest problems with alcohol and drug usage, c) more likely to suffer from poor health and physical limitations, and d) more likely to have incurred arrest, conviction, and incarceration for civil and criminal offenses.

The researchers conclude:

Thus, not only are relatively fewer low-education natives available now to hold low-skilled jobs than there were four decades ago, those who are available often do not live where the jobs are, and many are less able to work or less desirable to employers because of substance abuse, poor health, and criminal. [The evidence suggests] that this level of availability falls substantially below the level needed in the U.S. economy.

A caveat: It is possible that outsourcing and automation may unexpectedly eliminate low-skill jobs, meaning more immigrants may arrive than there will be jobs available. The authors best estimate: only a small portion — 10% or so — of the expected 25 fastest growing occupations for low-skill workers seem vulnerable to automation and outsourcing.

They could be wrong, of course. Maybe the impact of smarter machines and more capable robots means far fewer human maids and janitors and landscapers will be needed. And maybe the US economy will continue to suffer from subpar economic and job growth, though as the Congressional Budget Office recently reported, immigration itself — both high and low — can boost GDP. But a key assumption — that the US doesn’t need more low-skill immigration — by groups opposed to the immigration reform making its way through Congress might need reexamination.

 

6 thoughts on “Why the US might need those Mexican high-school dropouts

  1. I’m pretty sure that I’ll never know as much about economics as James Pethokoukis. As Bones might say, “Dang it Jim, I’m a doctor, not an economist!” But I have a question about this argument. If I understand correctly, when the supply of something is low, but the demand for that something is high, then the price for that something goes up. So why are entry-level wages so low?

  2. The overlay of HS diploma vs alien dropout does not address the reasons entry-level jobs go lacking.
    Those employing low wage workers believe that the market will not support increased wages. That means the supply of there goods is artificially high. Unskilled workers will not accept entry-level pay because the safety net is set too high. Unskilled workers will not accept entry level wages because black market wages are exceptionally higher.
    Enacting the Fairtax and de-criminalizing user quantities of illegal drugs will positively impact these factors. Re-sale of confiscated contraband at low rates would further impact the black market.
    Ending farm subsidies would get the business of farming back to farming instead of farming money.

  3. Since my parents were born in another country and my extended family lives all over the world, I used to be susceptible to the comprehensivist view: we’re all human beings, so immigration is good because it helps the human beings who immigrate. But one day about 8 years ago I read a blog post by a French immigrant, Pascal Emmanuel-Gobry, at a website called The American Scene. PEG pointed out that we are Americans and we have the right to prefer our own country’s well-being, and the well-being of our own fellow citizens to the well-being of other countries and the citizens of other countries.
    I have met plenty of American children who are not going to graduate from college. What this study argues is that they are not going to find good honest work, either. Instead they are going to live hellish lives, abusing alcohol and drugs, with poor health and physical limitations, and with criminal histories. But there’s no problem here, because we’ll just import workers from other countries.

  4. Did the Western Growers Association fund this study?

    Those Mexican high school dropouts are net tax consumers. The argument boils down to we lose money on every individual, but make it up on volume.

    • It’s well known that big business lobbies fund the AEI, they have to fundraise somehow.

      And big business loves cheap labor. Undercuts the U.S.-born workers. Helps the bottom line.

      Keep that in mind when reading a very conventional guy like Pethokoukis who hems the party(read: business bosses) line very closely.

  5. Here’s another economics question for James Pethokoukis or AEI readers. (I never took a single course in economics, so I need help.) What is the special quality possessed by high school dropouts, as compared to high school graduates? According to James Pethokoukis, nearly 60% of Americans have more than a high school education. 100% – 60% = 40%. So even if less than 13% of Americans are high school dropouts, another 27% of Americans have high school diplomas but no further education. What is it about high school graduates that renders them incapable of performing the exact same jobs as high school dropouts? What skills are lost by graduating from high school?
    If high school grads can work in the same jobs as high school dropouts, and if there are plenty of American high school grads (27% of the population), then it seems to me that the argument that we need to bring in more higher-quality high school dropouts from other countries doesn’t make any sense. Can anyone help me understand what I’m missing here?

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