> "When policy is politically polarized, you need more facts," he said.
Mmmm... It seems in the world of politics, esp. populist politics, more facts don't bring better policies. They are simply ignored, or accused of being lies pushed by the ennemies.
> "We have all the facts on this we need. We don't need any more facts. In the land of truth, my friend, the man with one fact is the king."
My friend was saying that we just need to show people the facts to change their minds. I showed him a pile of scientific studies indicating that it doesn't work. His response was "I still think it'll work"!
> Equally striking is what did not happen. Employment of low-skill American workers at losing firms did not increase. Across all firms the effect of foreign hiring on US employment was zero or positive, and in a prespecified subsample of rural firms it was significantly positive, with an elasticity of 0.61, meaning that for every one percent increase in H-2B workers there was just over half a percent increase in US workers.
> "If you don't allow firms to hire immigrant workers, they just become smaller firms," Lewis said. "They are not replaced with US workers. Instead, the output of the firm shrinks, and there are fewer total workers."
This is incredibly important. Everyone who fears immigration is going to take their job should read this and realize that fear is not only false but inverted.
> Everyone who fears immigration is going to take their job should read this and realize that fear is not only false
This is only because immigrants are willing to do jobs at wages and working conditions that locals do not accept. Employers in the Finnish berry industry were just jailed for human trafficking. Meanwhile the same companies have been loudly complaining that no Finn wants to work for them.
Sure, but there's a difference between a fear being tenuously plausible but overblown/stoked, and a fear being flatly incorrect and inverted. The former is harder to counter. The latter still has the standard problem of lies propagating faster than the truth, but it at least theoretically should be countered by the truth.
At least in theory, many people perpetuating this myth are at least nominally convinced that it must be obviously true, because the zero-sum thinking is simpler than the reality.
Of course, the other problem is people going "my anecdote beats your study", because they personally know someone who blames immigration for losing their job, and a study of people in general still lets someone go "ah, but that's not always true".
Elasticity 0.8-2.2 means there are/were cases (<1) where an increase of H2b would mean lost 20% US jobs per additional visa or do I read that wrong? I didn't read anything about average or median elasticity or how those figures are ranged in the article.
This is a topic of interest for me, and I have read a lot of the research about it over the years and like to stay informed.
I'll preface this by saying that the topic is highly contentious in economics. There is no "consensus." The main issue is that with large systems, it is impossible to isolate individual factors like immigration and their effects on other individual factors, like employment, job growth, wages, working conditions, etc.
Let's start with the article, which is narrower than you state. The study covers 472 firms in the 2021–22 H-2B lotteries. Mainly temporary/seasonal low-skill jobs such as landscaping, hospitality, and seafood processing. You cannot jump from that to “immigrants don't take American jobs”.
Further, across all firms, the estimated effect on U.S. employment was positive, but very modest and imprecise. Roughly +0.06 to +0.19 elasticity. The authors themselves say it “does not reduce, and *may* raise” U.S. employment. [Note that the highlight figure of 0.61 is only for rural firms. It is a pre-specified subgroup and the statistical test comes in at p = 0.05. It should not be presented as the result for American workers generally.] Even if the effect is mildly positive, does that negate the negative effects on wages, competition, displacements, housing prices, etc?
We should also remember that H-2B firms are a very particular sample. Employers in this programme must recruit Americans, accept qualified available U.S. applicants, and meet prevailing-wage rules. These are firms specifically seeking temporary foreign labour after going through a labour-market test. That makes extrapolating the result to the whole labour market impossible. Further, the study tells us what happened inside firms that won or lost access to H-2B workers. It doesn't by itself establish what happens to wages, competing firms, workers elsewhere, or every category of immigration.
Let's zoom out. The broader body of research is far more mixed. For example, the [National Academies concluded that immigration's long-run effect on native wages and employment overall is generally small, but found that negative effects can fall disproportionately on workers who are close substitutes, particularly previous immigrants and sometimes native high-school dropouts.](https://www.nationalacademies.org/news/new-report-assesses-t...) The [CBO found short-term downward wage pressure for some less-educated workers from recent immigration.](https://www.cbo.gov/publication/60569)
[This is one of the best and most cited longitudinal studies on immigration ever conducted.](https://docs.iza.org/dp8961.pdf) I'll summarise for you. Denmark accepted a large number of refugees between 1986 and 1998. The study tracks their progress over time, and the impact to natives. The authors found that the influx had a profound negative effect on low skilled natives. The refugees were primarily from low education backgrounds, and immediately displaced natives in jobs like driving, delivery, farming, painting, etc. This forced the natives to leave their professions and up-skill. Thankfully Denmark offers not just free higher education, but monthly allowances to those studying. Natives utilised this, and eventually moved into higher paying work. The outcome of the study is mixed, because on one hand, natives eventually ended up earning more overall, as they moved into white collar professions. On the other hand, I'm not sure they were happy to be forced to leave their chosen professions. The study doesn't evaluate life outcomes, happiness, satisfaction, or any other similar metrics.
What we can surmised from this is that an influx of low-skilled immigrants displaces low-skilled natives. They must be given intensive assistance to retrain if they are not to be harmed. In a nation like Denmark, this is less of a problem. In a nation like America, this is a very big problem. Indeed it follows what we have observed internationally, with low-skilled natives pushing back hardest against high unskilled immigration. They are worst affected by the negative externalities of immigration. And there are many studied negative externalities. I alluded to some above, and they include downward pressure on wages and working conditions, increased competition for jobs and places in universities, higher rent and property prices, higher crime (depending on the originating nation of the immigrant, their level of education, and their reason for immigrating), etc.
I will end by conceding that the U.S. does a better job of integrating immigrants than arguably any other nation on Earth. From the research, this appears to be attributable to a) high national pride and identity, allowing immigrants to assimilate into "the American way," and feeling like a member of the nation, b) poor social safety nets, forcing immigrants into work, and discouraging immigrants from entering who would prefer not to work, and c) a culture of hard work and ambition. European immigration has been far less successful, and has had profound negative effects across society.
tl;dr the poorest and least skilled tend to be the most impacted by immigration - especially low-skilled immigration. Those in white collars professions tend to be the least impacted. All economics and immigration policies carry both positive and negative outcomes. People are often very quick to point out the positive outcomes without admitting to the negative outcomes.
There are over a million legal immigrants in China, plus an unknown but sizable number of illegal immigrants, mostly from Vietnam and Myanmar. Of course this is not a huge number compared to the overall population, but it's still a sizable number of people.
They still have enough unskilled labor they can pull from the country side. They pack up the village and ship them (relocate the people) to a city in need of workers.
> The results suggest that low-skill foreign and low-skill American workers are poor substitutes for one another. The authors' estimates put the elasticity of substitution between H-2B and US workers at roughly 0.8 to 2.2, far below related studies of immigrants in low-skill work, which typically find an elasticity of 4 to 10, and nowhere near the perfect substitutability assumed in some influential studies.
I feel like the wording "low-skill" has become a technical term that doesn't mean what the word says and it makes people make assumptions they shouldn't with regards to these jobs. A lot of these so called low skill jobs require a highly specific job experience and/or productivity to simply keep pace and not drag down the rest of the team. We talk about Joel Spolsky and how a poor hire in a software development team can hurt morale but it simply isn't that big of a factor with us as it is in these so called low-skilled jobs but we aren't ready for that conversation.
Also about housing, who do you think builds all these additional housing units if we don't bring in the labor we need to build them?
> Firms that won and could hire all the foreign workers they sought saw revenue rise with an elasticity of approximately 0.20, meaning a doubling of H-2B employment raised revenue by about a fifth. Investment in equipment, vehicles, and structures responded even more strongly, with an elasticity of 1.5 to 2.1.
The "investment in equipment, vehicles, and structures" seem to be referring to Capital-labor ratio, a metric in economics that is often attributed as a good indicator of company productivity. I wonder if firms would still prefer to invest in labor force in lieu of capital, given the greater revenue multiple achieved by capital investment.
While this study pertains to US labor force, it is also salient to the Japanese economy. Here in Japan, we have a shrinking working population. Firms have responded by importing labor from abroad and investing in capital (e.g. automation). For example, convenience stores would hire foreigners, but eventually reduce headcount when they install self-serviced checkout.
The firms who do not win the visa lottery “just become smaller firms” instead of hiring market-rate labor because they still have to compete in a market against other firms who won the visa lottery and have access to below-market-rate labor.
Did the economists who ran this study miss this? Do they explain it?
Have you gotten a chance to read the paper? If not, you should consider reading it. They have explained it. It's got to do around the fact that domestic labor supply is inleastic but the foreign supply is infinitely elastic. You might want to focus on sections VI and VII for more details around their model and assumptions.
I think the interesting question then moves one level down: how well do those elasticity assumptions describe the actual H-2B labor markets in the study?
It is rather puzzling how this major contributing factor is going overlooked. It seems obvious from ground-level. Economists often talk about how expensive labor drives price increases, but don't talk about how price increases cause expensive labor.
Did you get a chance to read the paper? Did you read Section VII and footnote 51? If so, do you still believe that the article is "clamoring for more 'cheap' labor?"
And what other issues would you like to see besides housing and employment in the article?
Uh, in the housing that they build? The amount of housing we can build with cheap immigrant labor is so much more than what we can do without them.
Housing gets more expensive when immigrants are pushed out, because the cost to build rises more than the reduced demand reduces prices.
Partly true, though to a first approximation, the reason we don't build more houses isn't an issue of construction labor costs. Many places with jobs don't allow building homes.
(That's not inherently a universal problem, especially if you're talking about the entire labor market. But it's a problem in many places.)
The notion that less foreign skilled workers means more jobs for Americans has infiltrated the discourse so thoroughly that it should ring alarm bells as to the future of this nation.
It's probably the single most harmful mind virus in economics next to thinking a communism-style command economy is a good idea.
The lottery is what makes this unusually interesting. A lot of immigration/labor studies get stuck on the obvious selection problem: firms that hire immigrant workers are probably different from firms that don't in a dozen other ways.
> "When policy is politically polarized, you need more facts," he said.
Mmmm... It seems in the world of politics, esp. populist politics, more facts don't bring better policies. They are simply ignored, or accused of being lies pushed by the ennemies.
> "We have all the facts on this we need. We don't need any more facts. In the land of truth, my friend, the man with one fact is the king."
-- Linton Barwick, In The Loop (2009)
https://www.youtube.com/watch?v=PdoN1LWGgfQ
My friend was saying that we just need to show people the facts to change their minds. I showed him a pile of scientific studies indicating that it doesn't work. His response was "I still think it'll work"!
Finally a The Thick of It reference in HN.
An AUS Utopia reference would probably be more fitting though.
> Equally striking is what did not happen. Employment of low-skill American workers at losing firms did not increase. Across all firms the effect of foreign hiring on US employment was zero or positive, and in a prespecified subsample of rural firms it was significantly positive, with an elasticity of 0.61, meaning that for every one percent increase in H-2B workers there was just over half a percent increase in US workers.
> "If you don't allow firms to hire immigrant workers, they just become smaller firms," Lewis said. "They are not replaced with US workers. Instead, the output of the firm shrinks, and there are fewer total workers."
This is incredibly important. Everyone who fears immigration is going to take their job should read this and realize that fear is not only false but inverted.
> Everyone who fears immigration is going to take their job should read this and realize that fear is not only false
This is only because immigrants are willing to do jobs at wages and working conditions that locals do not accept. Employers in the Finnish berry industry were just jailed for human trafficking. Meanwhile the same companies have been loudly complaining that no Finn wants to work for them.
But would the corporarions raise salaries and improve conditions if they had literally no other choice? That is the question.
Unionization demonstrably leverages benefits out of corporations, so I'm inclined to think that immigration bans would have the same effect.
Nobody's immigration fears are data-driven, nor have they ever been.
Sure, but there's a difference between a fear being tenuously plausible but overblown/stoked, and a fear being flatly incorrect and inverted. The former is harder to counter. The latter still has the standard problem of lies propagating faster than the truth, but it at least theoretically should be countered by the truth.
At least in theory, many people perpetuating this myth are at least nominally convinced that it must be obviously true, because the zero-sum thinking is simpler than the reality.
Of course, the other problem is people going "my anecdote beats your study", because they personally know someone who blames immigration for losing their job, and a study of people in general still lets someone go "ah, but that's not always true".
Elasticity 0.8-2.2 means there are/were cases (<1) where an increase of H2b would mean lost 20% US jobs per additional visa or do I read that wrong? I didn't read anything about average or median elasticity or how those figures are ranged in the article.
This is a topic of interest for me, and I have read a lot of the research about it over the years and like to stay informed.
I'll preface this by saying that the topic is highly contentious in economics. There is no "consensus." The main issue is that with large systems, it is impossible to isolate individual factors like immigration and their effects on other individual factors, like employment, job growth, wages, working conditions, etc.
Let's start with the article, which is narrower than you state. The study covers 472 firms in the 2021–22 H-2B lotteries. Mainly temporary/seasonal low-skill jobs such as landscaping, hospitality, and seafood processing. You cannot jump from that to “immigrants don't take American jobs”.
Further, across all firms, the estimated effect on U.S. employment was positive, but very modest and imprecise. Roughly +0.06 to +0.19 elasticity. The authors themselves say it “does not reduce, and *may* raise” U.S. employment. [Note that the highlight figure of 0.61 is only for rural firms. It is a pre-specified subgroup and the statistical test comes in at p = 0.05. It should not be presented as the result for American workers generally.] Even if the effect is mildly positive, does that negate the negative effects on wages, competition, displacements, housing prices, etc?
We should also remember that H-2B firms are a very particular sample. Employers in this programme must recruit Americans, accept qualified available U.S. applicants, and meet prevailing-wage rules. These are firms specifically seeking temporary foreign labour after going through a labour-market test. That makes extrapolating the result to the whole labour market impossible. Further, the study tells us what happened inside firms that won or lost access to H-2B workers. It doesn't by itself establish what happens to wages, competing firms, workers elsewhere, or every category of immigration.
Let's zoom out. The broader body of research is far more mixed. For example, the [National Academies concluded that immigration's long-run effect on native wages and employment overall is generally small, but found that negative effects can fall disproportionately on workers who are close substitutes, particularly previous immigrants and sometimes native high-school dropouts.](https://www.nationalacademies.org/news/new-report-assesses-t...) The [CBO found short-term downward wage pressure for some less-educated workers from recent immigration.](https://www.cbo.gov/publication/60569)
[This is one of the best and most cited longitudinal studies on immigration ever conducted.](https://docs.iza.org/dp8961.pdf) I'll summarise for you. Denmark accepted a large number of refugees between 1986 and 1998. The study tracks their progress over time, and the impact to natives. The authors found that the influx had a profound negative effect on low skilled natives. The refugees were primarily from low education backgrounds, and immediately displaced natives in jobs like driving, delivery, farming, painting, etc. This forced the natives to leave their professions and up-skill. Thankfully Denmark offers not just free higher education, but monthly allowances to those studying. Natives utilised this, and eventually moved into higher paying work. The outcome of the study is mixed, because on one hand, natives eventually ended up earning more overall, as they moved into white collar professions. On the other hand, I'm not sure they were happy to be forced to leave their chosen professions. The study doesn't evaluate life outcomes, happiness, satisfaction, or any other similar metrics.
What we can surmised from this is that an influx of low-skilled immigrants displaces low-skilled natives. They must be given intensive assistance to retrain if they are not to be harmed. In a nation like Denmark, this is less of a problem. In a nation like America, this is a very big problem. Indeed it follows what we have observed internationally, with low-skilled natives pushing back hardest against high unskilled immigration. They are worst affected by the negative externalities of immigration. And there are many studied negative externalities. I alluded to some above, and they include downward pressure on wages and working conditions, increased competition for jobs and places in universities, higher rent and property prices, higher crime (depending on the originating nation of the immigrant, their level of education, and their reason for immigrating), etc.
I will end by conceding that the U.S. does a better job of integrating immigrants than arguably any other nation on Earth. From the research, this appears to be attributable to a) high national pride and identity, allowing immigrants to assimilate into "the American way," and feeling like a member of the nation, b) poor social safety nets, forcing immigrants into work, and discouraging immigrants from entering who would prefer not to work, and c) a culture of hard work and ambition. European immigration has been far less successful, and has had profound negative effects across society.
tl;dr the poorest and least skilled tend to be the most impacted by immigration - especially low-skilled immigration. Those in white collars professions tend to be the least impacted. All economics and immigration policies carry both positive and negative outcomes. People are often very quick to point out the positive outcomes without admitting to the negative outcomes.
China is really missing out!
There are over a million legal immigrants in China, plus an unknown but sizable number of illegal immigrants, mostly from Vietnam and Myanmar. Of course this is not a huge number compared to the overall population, but it's still a sizable number of people.
They still have enough unskilled labor they can pull from the country side. They pack up the village and ship them (relocate the people) to a city in need of workers.
They indeed will be in about 20 years when the impending population collapse hits
Not really. China is essentially a microcosm of capitalism playing out entirely internally.
E.g. to move to the capital permanently from outside you're basically under the same scrutiny as an immigrant on a greencard.
> The results suggest that low-skill foreign and low-skill American workers are poor substitutes for one another. The authors' estimates put the elasticity of substitution between H-2B and US workers at roughly 0.8 to 2.2, far below related studies of immigrants in low-skill work, which typically find an elasticity of 4 to 10, and nowhere near the perfect substitutability assumed in some influential studies.
I feel like the wording "low-skill" has become a technical term that doesn't mean what the word says and it makes people make assumptions they shouldn't with regards to these jobs. A lot of these so called low skill jobs require a highly specific job experience and/or productivity to simply keep pace and not drag down the rest of the team. We talk about Joel Spolsky and how a poor hire in a software development team can hurt morale but it simply isn't that big of a factor with us as it is in these so called low-skilled jobs but we aren't ready for that conversation.
Also about housing, who do you think builds all these additional housing units if we don't bring in the labor we need to build them?
> Firms that won and could hire all the foreign workers they sought saw revenue rise with an elasticity of approximately 0.20, meaning a doubling of H-2B employment raised revenue by about a fifth. Investment in equipment, vehicles, and structures responded even more strongly, with an elasticity of 1.5 to 2.1.
The "investment in equipment, vehicles, and structures" seem to be referring to Capital-labor ratio, a metric in economics that is often attributed as a good indicator of company productivity. I wonder if firms would still prefer to invest in labor force in lieu of capital, given the greater revenue multiple achieved by capital investment.
While this study pertains to US labor force, it is also salient to the Japanese economy. Here in Japan, we have a shrinking working population. Firms have responded by importing labor from abroad and investing in capital (e.g. automation). For example, convenience stores would hire foreigners, but eventually reduce headcount when they install self-serviced checkout.
The firms who do not win the visa lottery “just become smaller firms” instead of hiring market-rate labor because they still have to compete in a market against other firms who won the visa lottery and have access to below-market-rate labor.
Did the economists who ran this study miss this? Do they explain it?
Have you gotten a chance to read the paper? If not, you should consider reading it. They have explained it. It's got to do around the fact that domestic labor supply is inleastic but the foreign supply is infinitely elastic. You might want to focus on sections VI and VII for more details around their model and assumptions.
I think the interesting question then moves one level down: how well do those elasticity assumptions describe the actual H-2B labor markets in the study?
AEA leans strongly left. I wouldn't put much store in this.
"Reality has a well-known liberal bias."
> "Evidence from a US government lottery shows that restricting foreign low-skill workers shrinks businesses without creating jobs for Americans."
Proving that the issue is capitalism and its systemic need for a reserve army of labour (https://en.wikipedia.org/wiki/Reserve_army_of_labour) to pressure people to accept unfair conditions of living/work
> Cmd-F housing
> not found
Yet another chamber of commerce article clamoring for more cheap labor without addressing where all of these people are supposed to live.
It is rather puzzling how this major contributing factor is going overlooked. It seems obvious from ground-level. Economists often talk about how expensive labor drives price increases, but don't talk about how price increases cause expensive labor.
Did you get a chance to read the paper? Did you read Section VII and footnote 51? If so, do you still believe that the article is "clamoring for more 'cheap' labor?"
And what other issues would you like to see besides housing and employment in the article?
Uh, in the housing that they build? The amount of housing we can build with cheap immigrant labor is so much more than what we can do without them. Housing gets more expensive when immigrants are pushed out, because the cost to build rises more than the reduced demand reduces prices.
Partly true, though to a first approximation, the reason we don't build more houses isn't an issue of construction labor costs. Many places with jobs don't allow building homes.
(That's not inherently a universal problem, especially if you're talking about the entire labor market. But it's a problem in many places.)
The notion that less foreign skilled workers means more jobs for Americans has infiltrated the discourse so thoroughly that it should ring alarm bells as to the future of this nation.
It's probably the single most harmful mind virus in economics next to thinking a communism-style command economy is a good idea.
The lottery is what makes this unusually interesting. A lot of immigration/labor studies get stuck on the obvious selection problem: firms that hire immigrant workers are probably different from firms that don't in a dozen other ways.