The Choice

I thought that Nicholas Riccardi made a very important point in this report at the Associated Press on immigration and inflation, one that is insufficiently recognized:

The U.S. has, by some estimates, 2 million fewer immigrants than it would have if the pace had stayed the same, helping power a desperate scramble for workers in many sectors, from meatpacking to homebuilding, that is also contributing to supply shortages and price increases.

“These 2 million missing immigrants are part of the reason we have a labor shortage,” said Giovanni Peri, an economist at the University of California at Davis, who calculated the shortfall. “In the short run, we are going to adjust to these shortages in the labor market through an increase in wages and in prices.”

including this observation:

“At some point we either decide to become older and smaller or we change our immigration policy,” said Douglas Holtz-Eakin, an economist and former official in President George W. Bush’s administration who is president of the center-right American Action Forum. He acknowledged a change in immigration policy is unlikely: “The bases of both parties are so locked in.”

Ignoring the confusion between “inflation” and “price increases” reflected in the piece (inflation is when all prices increase and it is monetary in nature), I agree with the premise. I think we have a choice and it’s one we should make consciously rather than having it forced on us. If we want cheap domestically-grown lettuce and strawberries and other commodities that depend on what is ungraciously called “stoop labor”, we need to be willing to bring in more workers who are willing to work for the rock-bottom wages those jobs offer. My own view is that the numbers don’t add up.

The incremental public costs of a family of four including education, health care, safety, transportation, etc. is on average around $35,000 ($14,000 for each child plus another $7,000 for other services). Obviously, that family isn’t going to pay enough in taxes to cover their costs in services ($29,000 is two adults working full-time at the national minimum wage) and increasing the wages for that family to the point where they can pay their own way will necessarily raise the prices on those commodities to the point where they aren’t cheap anymore. As I say, the numbers don’t add up.

I think that what we need is a lot more automation which means more investment but it also means more jobs for people to build the systems and machines for that automation. I may be in the minority in thinking that would be a better future for the United States but, again, it’s a choice and one we need to make rather than having it forced on us.