The NYT magazine had a pretty good piece summing up the state of the academic debate on the impact of immigration on the labor market. I have two quick observations. The piece, like the literature, largely ignores the impact of immigration on housing costs. This is important, because housing is a large chunk of people's expenditures, especially those of low wage workers, who are the focus of the discussion. Examining wages across cities and regions provides little insight if we don't adjust for differences in housing costs, since housing accounts for close to 40 percent of the consumption of low income families. A casual glance at the data suggests that there is a real issue here. Certainly housing costs have risen far more rapidly in cities with heavy concentrations of immigrants (e.g. San Diego, Los Angeles, Miami) than those with few immigrants (e.g. Cleveland, St. Louis, Detroit). Second, the article is rather cavalier in its treatment of high end immigration. The author notes in passing that if the country was flooded with immigrant writers then he would get lower pay for his gigs. Well, we could design the policy that way. The article is debating the appropriateness of having less educated workers subjected to more competition from people from the developing world and largely concludes that the benefits to more educated workers are sufficiently large, that the less-skilled should be willing to bear the cost. Needless to say, if a less-skilled worker got the opportunity to write a piece for the NYT magazine, he/she would come to the same conclusion about opening the doors to more high-skilled immigrants. The article implicitly accepts the idea that writers and other high end workers will never be subjected to the same international competition as low end workers because they have so much political power. This is quite likely true, but let's be clear about the role of power in this story.
--Dean Baker
