County Attorney Andrew Thomas, George Borjas, and getting the report you pay for...
Harvard economics prof George Borjas, raking it in at $625 per hour...
You get what you pay for, and County Attorney Candy "Lil' Joe" Thomas definitely got what he paid for with our money when he hired Harvard economist George Borjas to analyze the possible effects of the new employer sanctions law. Borjas himself admits that he was paid $625 per hour to pen a report for Candy entitled, "Labor Market Consequences of Unauthorized Aliens in Arizona." It's a report Candy's submitted as an affidavit to the court as part of his defense in the ongoing legal wrangling over the law.
Candy summarized Borjas's findings to the MCAO's Illegal Immigration Journal, a Web site for which County taxpayers foot the bill:
The analysis by Dr. Borjas, one of the nation's leading authorities on the effects of illegal immigration on the American economy, demonstrates that enforcement of the employer-sanctions law will help to protect and potentially increase wages in Arizona, especially among lower-skilled workers. Dr. Borjas reports that the employment of unauthorized workers has depressed wages in Arizona by nearly $1.4 billion, and has reduced the earnings of low-skilled authorized workers in Arizona by 4.7%.
What Candy doesn't tell you is that Borjas is a known quantity, a labor economist with a definite slant on immigration, that slant being that Mexican immigration is depressing the wages of poorer Americans. Borjas states in the beginning of his report that, "I charge a standard hourly rate for work in this matter. My standard billing rate is $625 per hour. Payment is not contingent on my opinion expressed, or on the outcome of this case." (Emphasis mine.)
On the other hand, Candy did not hire Borjas at $625 an hour to have the Harvard don tell him that the new employer sanctions law will negatively impact AZ's economy. But Arizona Employers for Immigration Reform (AZEIR) pointed out last week in a press release that Borjas had a slightly different take on the employer sanctions law before Candy filed his $625/hr report with the court. On Borjas' blog, he had this to say in December in a post titled "The Arizona Experiment":
It doesn't take a doctorate in nuclear physics to deduce that GDP will fall when the labor force shrinks. But a more relevant question is: what happens to per-capita GDP? If one takes economic theory seriously (and if the aggregate production function in Arizona has constant returns) one would expect no change in per-capita income as a result of this newly found enthusiasm for employer sanctions.
Now if that ain't a contradiction, then Jamie Lynn Spears ain't preggers and Amy Winehouse doesn't need therapy. AZEIR hired its own academic Giovanni Peri at the cut rate of $250 per hour (hey, a prof from UC-Davis is cheaper than one from Harvard). Peri surveyed the academic literature, and found that Borjas was on his own in his conclusions:
Of the empirical studies I analyzed that look at the impact of immigration using state and city data Borjas (2006) is the only one that finds a clear negative and significant effect on both average wages and on low-skilled natives.
In fact, Peri found that most studies point to an overall positive from immigration:
Most of the articles using regional data find small and statistically insignificant effect of immigration on employment (many even find a positive effect), a negative effect on relative wages (immigrant inflow benefits highly educated workers more than less educated workers) and a positive effect on average wages for all workers.
This may seem counterintuitive. But Peri addresses this notion, stating that,
While wage gains as consequence of immigration may sound odd to noneconomists it is very natural and economically sound that when the supply of one type (skill) of workers increases firms will increase demand (and wages) of other types of workers and expand production. At the same time specialization opportunities arise potentially increasing productivity and wages.
Naysayers will claim Peri is as biased as Borjas, except for the fact that Peri's report is essentially sampling the available academic literature and drawing a conclusion from it: i.e., that Borjas's conclusions are in opposition to the prevailing view. Also, Peri's $250/hr. ain't costing us jack, nor is AZEIR's Web site, unlike the very biased anti-illegal immigration journal run by the MCAO.
What I find interesting is that both Borjas and Peri are generally discussing what immigration as a whole does to wages, with Borjas taking an extra stab at assessing the impact of an unauthorized workforce. Indeed, Borjas himself says:
These theoretical arguments do not distinguish between the impact of authorized and unauthorized aliens. In principle, this distinction may not matter because it is the increase in the size of the workforce—regardless of whether it is authorized or not—that introduces the economic pressures in the labor market.
The distinction certainly matters in the Arizona context. Nativists like to argue that they are for legal immigration, and only oppose illegal immigration. The reality is that they oppose all immigration. In fact, if the nativists had their way, they'd run off most of the foreign-born population and try to whittle Arizona down to some sort of lily white backwater where the crackers rule and the brown folk live in fear. This is the reality of what they want, and what pols like Candy and Russell Pearce are fighting for. (In Candy's case, this is despite the fact his wife is Hispanic.)
Ultimately, they will lose. They are running counter to the tide of history. America has always been and always will be a land of immigrants. And while there have been reactions to immigration over time, such as the revivification of the KKK in the '20s, or the re-rise of the nativists now, such reactions are doomed to whither and die. Peri and Borjas are the perfect examples of the triumph of immigration. Though they are on opposite sides of the debate in their rarified academic settings, they are both "foreign-born" workers: Borjas was born in Havana, Cuba and emigrated to the U.S. in 1962; Peri was born in Perugia, Italy, and is an Italian national who maintains permanent residence in the U.S.
(You can read the entire Peri report here.)
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