The economic effects of immigration policy.

March 31, 2011 6:45 AM

"When undocumented workers are taken out of the economy, the jobs they support through their labor, consumption, and tax payments disappear as well."

A joint report from The Center for American Progress and The Immigration Policy Center calculates the striking costs for trying to remove undocumented immigrants from Arizona. Although S.B. 1070 has not been fully implemented in AZ, were it to be, it would: decrease employment by 17%; result in the loss of ~600k jobs; reduce state tax revenue by 10%; and, shrink the state economy by ~$49 billion. Intro and summary (pdf). Full report (pdf).
posted by OmieWise (74 comments total)

States' Rights also includes the right to fuck yourself into bankruptcy and oblivion. I see no reason why we should get in their way.
posted by spicynuts at 6:49 AM on March 31, 2011 [13 favorites]

Related: It’s absurd for the country to be simultaneously suffering from an illegal immigration problem and a population growth shortfall.
posted by T.D. Strange at 6:51 AM on March 31, 2011 [3 favorites]

I don't think this is lost on the politicians who push for tighter border controls and more restrictions on "illegal immigrants". A good chunk of the economic benefit that the US gets from "illegal immigrants" requires that they remain undocumented and illegal. If you can make the local population hate them or fear them, then you can pass laws to keep them out of schools, and then you can ensure that you always have a pliant and willing workforce. Plus, the harder you make it to get into the country, and the more dangerous you make it, the more frightened these workers remain, and the more willing they are to do whatever they are told. Brilliant, in a sick way, really.

It would be great, however, if more of the general population came to understand the economic benefit they receive from undocumented workers. Then they may be less willing to support these harsh restrictions, less willing to waste money on border-fences, less likely to form / suppor Minutemen-borderwatch groups, and come to see undocumented workers for what they really are: human beings, just like the rest of us.

I think it's a great way to frame the argument though, and to repeat to death: undocumented workers provide a net economic benefit.
posted by molecicco at 6:59 AM on March 31, 2011 [24 favorites]

Oh come on, I'm sure the corporations will quit dodging taxes and it will all even out. I mean, what's more American and patriotic than big business?
posted by Godspeed.You!Black.Emperor.Penguin at 7:08 AM on March 31, 2011

States' Rights also includes the right to fuck yourself into bankruptcy and oblivion. I see no reason why we should get in their way.

Except that this isn't an intellectual exercise. Many people are suffering and will continue to suffer from Arizona's choices. Many of those people (most?) did not choose either the ends or the means that are harming them.
posted by OmieWise at 7:08 AM on March 31, 2011 [9 favorites]

I wish I believed that immigration policies like SB 1070 were motivated by economics, but it's good to have someone shoot down the argument that they are.
posted by padraigin at 7:09 AM on March 31, 2011 [1 favorite]

I mean, what's more American and patriotic than big business?

Racism.
posted by T.D. Strange at 7:11 AM on March 31, 2011 [17 favorites]

> ...the loss of ~600k jobs... shrink the state economy by ~$49 billion

That's $82,000 per job. Not bad for outlawing people who make sub-minimum wages.
posted by ardgedee at 7:13 AM on March 31, 2011 [1 favorite]

Except that this isn't an intellectual exercise. Many people are suffering and will continue to suffer from Arizona's choices. Many of those people (most?) did not choose either the ends or the means that are harming them.

Precisely. Because it has been an intellectual exercise to try to argue against these policies. People who support this stuff will not get it via intellectual exercise. They will ONLY get it through pain. Or when the pain they inflict comes back around in the form of violence or some other kind of unpleasantness that hits them directly in the gut.
posted by spicynuts at 7:23 AM on March 31, 2011

They will ONLY get it through pain

I dunno if that's the only way. I think it is pretty commonly held amongst the anti-immigration group that "illegals" are a net cost and generally make things worse. If you have hard data that says, "no, look, it is a net economic benefit", then that might change the way people feel.

Then, further, you have a lot of people who are worried that undocumented workers are driving down the price of labour and making things worse economically for the working class. And that, actually, could be kind of true --- if native US residents were willing to do the same jobs, which they are not. And in any case, they should be directing any anger they have at the employers, and not the workers. One is in a power position, the other is not.
posted by molecicco at 7:41 AM on March 31, 2011 [2 favorites]

If you have hard data that says, "no, look, it is a net economic benefit", then that might change the way people feel.


I think you are clearly more forgiving and optimistic than I. To my mind, this entire thing is motivated by racism and fear of losing power, not by any economic data. But I hope you are correct.
posted by spicynuts at 7:52 AM on March 31, 2011 [1 favorite]

decrease employment by 17%

Which tells me that these companies are paying undocumented workers 83% of what they otherwise would have to pay. And given one of the big reasons for hiring illegals is to avoid paying SS and other employee taxes, this is a no-win for the state. (ie: keep them == no taxes due to dodging, ship them == no taxes due to no worker)
posted by Old'n'Busted at 7:54 AM on March 31, 2011

If you have hard data that says, "no, look, it is a net economic benefit", then that might change the way people feel.

Ha. You mean hard data like a Hawaiian Certificate of Live Birth? Or historical climate records? Or fossil records supporting evolution? When it comes to public opinion, emotional arguments trump factual arguments for a sizable percentage of the populous.

In the words of Homer Simpson, "Facts are meaningless. You can use facts to prove anything that's even remotely true."
posted by fings at 7:54 AM on March 31, 2011 [25 favorites]

ardgedee writes "That's $82,000 per job. Not bad for outlawing people who make sub-minimum wages."

Shows how heavy the exploitation is.
posted by Mitheral at 7:55 AM on March 31, 2011

That's $82,000 per job. Not bad for outlawing people who make sub-minimum wages.

That's not how economics works. If I work a job and make $100 from someone out of state, and then I spend that $100 at a resturant, that's $200 of economic activity. If they pay their employees and local suppliers 80% of their income (vs. 20% for taxes and outside suppliers) that's $280. Those employees pay more and it goes up to $360, and so on. So one person making $20k/year can have a GDP effect of $80k/year. It depends on how long it takes for people to spend the money, how much they save, etc.

When you look at the national, rather then state level even more money stays in 'the system'

So if you remove the illegal immigrants, it's not just their employers who suffer, but also landlords, bar owners, restaurant owners and all other people who own businesses that serve undocumented clientele.

I read about small town somewhere that tried to get rid of their 'illegals' and it basically destroyed their economy.
posted by delmoi at 8:13 AM on March 31, 2011 [9 favorites]

Which tells me that these companies are paying undocumented workers 83% of what they otherwise would have to pay. And given one of the big reasons for hiring illegals is to avoid paying SS and other employee taxes, this is a no-win for the state. (ie: keep them == no taxes due to dodging, ship them == no taxes due to no worker)

States don't collect much in income tax from low-income earners either way. They don't collect any from SS. But they do collect money from sales and property taxes, which illegal immigrants do pay (if indirectly through rent)
posted by delmoi at 8:15 AM on March 31, 2011

That's $82,000 per job. Not bad for outlawing people who make sub-minimum wages.

My guess is that they calculate that based on the ripple effect of employment, where each job created or destroyed winds up creating or destroying three additional jobs (if I remember the rule of thumb correctly).
posted by adamrice at 8:16 AM on March 31, 2011 [1 favorite]

There is a complete tone-deafness among the state's right wingers about the economics of this. They point to the illegal population as the source of all our financial woes. Case in point: We recently had a few CEO-types give a talk here to Jan Brewer and others about the state's education system. They all said it sucks. They can't get enough qualified workers in the state. This includes for certain jobs that don't even require college. They also said, "look, you're not going to draw any good jobs to this state until you can turn out graduates who can fill them." It's what people have been saying for the last two decades. Same as it ever was.

...aaaaaand Russell Pearce tells them that the schools are fine, it's just that we have so many kids who don't speak English as a first language. So yeah, the hate and racism is just going to continue, and the immigrants will be scapegoated for everything. Same as it ever was.
posted by azpenguin at 8:24 AM on March 31, 2011 [2 favorites]

Better to be poor and have someone to hate than accept the "other" is a doctrine that has a long history of being acceptable to Republicans and Confederates.
posted by orthogonality at 8:25 AM on March 31, 2011 [2 favorites]

If conservative implementations are enacted around the country the poor will be hit hardest, creating a large class that could easily and willingly replace the migrant workers at their same wages.
posted by JJ86 at 8:25 AM on March 31, 2011 [3 favorites]

I read about small town somewhere that tried to get rid of their 'illegals' and it basically destroyed their economy.

[citation needed]

Seriously. This would be a useful factoid if it could be backed up with actual references.
posted by Talez at 8:25 AM on March 31, 2011

I read about small town somewhere that tried to get rid of their 'illegals' and it basically destroyed their economy.

[citation needed]

Seriously. This would be a useful factoid if it could be backed up with actual references.

Agreed. Sounds like great documentary material.
posted by molecicco at 8:29 AM on March 31, 2011

[citation needed]
Riverside, NJ. 1, 2.
posted by fings at 8:33 AM on March 31, 2011 [4 favorites]

He's likely talking about Hazleton, PA. Their law was declared unconstitutional, so I don't know if it's a good test case.
posted by electroboy at 8:34 AM on March 31, 2011 [1 favorite]

> If I work a job and make $100 from someone out of state, and then I spend that $100 at a resturant, that's $200 of economic activity.

I had that in mind, to be honest.

If you pay $100 to somebody who already earns more than they need, they're not going to spend it; it's going to sit in an investment account that's as likely as not to be out of state.

If you pay $100 to somebody who is living at a sub-subsistence level, that money goes straight back into the local economy, underground or otherwise, because that money is necessary to their immediate needs for food, clothing and shelter.
posted by ardgedee at 8:35 AM on March 31, 2011 [1 favorite]

Hm, from the USA Today article

Since Hazleton, a city of 22,000, approved its law a year ago, about 100 localities have proposed similar ordinances, says the American Civil Liberties Union, which sued Hazleton. Forty have been enacted.

So it's possible it could've been any number of places.
posted by electroboy at 8:36 AM on March 31, 2011

To what extent is the reliance on undocumented labor entangled with issues surrounding wage and tax laws? It sounds like an enormous chunk of our economy is dependent on completely ignoring these laws. What does it say about our country that we enact these protections, but then systematically disobey them?
posted by Sticherbeast at 8:37 AM on March 31, 2011

Fings already has it, it was Riverside, NJ.

Oh, man. That NYTimes article reads like a prose version of the "let's blow up the moon" sketch from Mr. Show.
posted by Sticherbeast at 8:39 AM on March 31, 2011

Although S.B. 1070 has not been fully implemented in AZ, were it to be, it would: decrease employment by 17%; result in the loss of ~600k jobs; reduce state tax revenue by 10%; and, shrink the state economy by ~$49 billion.

Don't worry guys, the conservatives have already thought of an answer. They're going to solve the labor shortage by outlawing abortion.
posted by ultraviolet catastrophe at 8:39 AM on March 31, 2011 [1 favorite]

ardgedee wrote: "That's $82,000 per job. Not bad for outlawing people who make sub-minimum wages."

Many of those undocumented Mexicans make more money than I do. Not hourly, but they make more than half what I do hourly and work twice as many hours as I do. At least that's how it was in the land of corporate chicken.
posted by wierdo at 8:40 AM on March 31, 2011

Related: It’s absurd for the country to be simultaneously suffering from an illegal immigration problem and a population growth shortfall.

It's not particularly absurd - cheap food relies on cheap labor. This isn't a population question, it's a money question. It's not that Americans can't or won't do these jobs, it's that American agricultural companies aren't willing to hire people with the legal standing to sue them for abusive labor practices, and Americans aren't actually willing to pay the higher food costs that result.
posted by mhoye at 8:43 AM on March 31, 2011 [3 favorites]

A brief precis of the Riverside, NJ issue is actually covered on page 8 of the linked report, as is the methodology that lead to their estimates of economic harm. The report is less that 20 pages long. It isn't hard to read.

What happens when the immigrants leave?
The tale of Riverside, New Jersey
This small, working-class town on the banks of the Delaware River across from Philadelphia is a cautionary tale in the debate going on in Arizona about immigration reform.

Over the past decade, a renewed demand for construction workers created an influx of undocumented immigrants primarily from Brazil into the New Jersey city. From 2000 to 2005 the small town of 7,911 residents experienced an influx of an estimated 5,000 immigrants.

In July 2006 the town adopted the “Riverside Township Illegal Immigration Relief Act,” an ordinance that imposed heavy fines and possible jail sentences or revocation of business licenses for employers who hired undocumented immigrants and landlords who rented to them. The ordinance went further, penalizing for-profit enterprises who “aid or abet” undocumented immigrants anywhere in the United States such as franchised restaurants.

Though never enforced, the ordinance proved to be economically, legally, and socially devastating. Feeling unwelcome and persecuted, 75 percent of Riverside’s immigrant population moved away, resulting in 45 percent of businesses being boarded up just as they had been before the immigrants arrived.

The loss of tax revenue was compounded by $82,000 in legal fees—the cost of defending the ordinance in court against two lawsuits. The costs put such a large strain on the town that services such as road projects or repairs to the town hall were delayed or prevented.

The ordinance was rescinded in 2007 but the damage had been done. The renewed prosperity and vibrancy of the town was lost and Riverside became a shell of a town with a bad reputation.

posted by OmieWise at 8:43 AM on March 31, 2011 [11 favorites]

I keep expecting the rampant conservatives in Arizona particularly around Phoenix-Scottsdale to begin dying off but the influx of new elderly residents into the region must be above replacement rate. Even then there has to be an understanding that eventually Arizona will become majority minority and the current policies to demonize latinos is going to lead to a significant shift in the electorate within the next 10-20 years.

I think Phoenix-Scottsdale will continue to be conservative as hell (think Orange County, California) but instead of Tucson being the island of relative liberalism I wonder if Phoenix will be the island of conservatism.
posted by vuron at 8:45 AM on March 31, 2011

They're going to solve the labor shortage by outlawing abortion.

Didn't some other country already try that? Albania maybe? IIRC, it caused a huge jump in the crime rate 18-years or so down the line and a some huge maternal death rats.
posted by VTX at 8:47 AM on March 31, 2011

Maternal Death Rats sounds like exactly what this country needs.
posted by spicynuts at 8:48 AM on March 31, 2011 [4 favorites]

Maternal Death Rats is my third-favorite WASP album.
posted by Sticherbeast at 8:48 AM on March 31, 2011 [7 favorites]

“The business district is fairly vacant now, but it’s not the legitimate businesses that are gone,” he said. “It’s all the ones that were supporting the illegal immigrants, or, as I like to call them, the criminal aliens.”

Wow. Just Wow.
posted by Mitheral at 8:52 AM on March 31, 2011 [1 favorite]

Ugh, I can't tell you how wrongheaded I find the phrase "population growth shortfall".
posted by adamdschneider at 8:52 AM on March 31, 2011 [2 favorites]

FYI, Joey Vento is the owner of Geno's Steaks, which features this sign. The last (and only) time I was there, the employees were wearing Fry Mumia t-shirts.
posted by electroboy at 8:56 AM on March 31, 2011

What does it say about our country that we enact these protections, but then systematically disobey them?

That we each think we're special and our special circumstances mean we don't have to obey a law we don't agree with.
posted by rtha at 9:00 AM on March 31, 2011

That we each think we're special and our special circumstances mean we don't have to obey a law we don't agree with.

Better yet, we think that we're special and that our special circumstances mean that we can disobey laws that we do agree with.
posted by Stagger Lee at 9:02 AM on March 31, 2011 [1 favorite]

*maternal death rates.
posted by VTX at 9:05 AM on March 31, 2011

How college changed my mind: Speech Communications class. I was, at the time, fairly conservative. Not stupidly so, but that's how I was raised.

Was going to give a speech in class about illegal immigration, it's effects, costs, and what not. Doing the research (this was pre-internet) I found article after article after article showing the economic benefits to the state, and how they far outweighed the costs.

The cool thing was that I got to give a speech about my epiphany. This was a significant turning point for me. Stupid university, turning good kids into liberals.
posted by Xoebe at 9:21 AM on March 31, 2011 [12 favorites]

Didn't some other country already try that? Albania maybe?

You might be thinking of Romania. Old man Ceausescu had a hard on for more workers, and since nobody in their right mind at the time would ever emigrate to Romania, he brilliantly decided the state should take ownership of every woman's womb, because Romania just wanted to be a big, happy family. Hilarity ensues. Or not.

>Ugh, I can't tell you how wrongheaded I find the phrase "population growth shortfall".

Give it a try.
posted by 2N2222 at 9:23 AM on March 31, 2011

I do not like that Arizona is called AZ.
posted by Astro Zombie at 9:25 AM on March 31, 2011 [3 favorites]

awwww AZ, we would hold it against you :)
posted by liza at 9:26 AM on March 31, 2011

You might be thinking of Romania.

That's it! Thank you. As I recall, it didn't work out well at all. Something about high rats.
posted by VTX at 9:33 AM on March 31, 2011 [1 favorite]

I have come to the conclusion that the right wing is comprised of horrifically broken people. People who are incapable of compassion, of logical thinking, of community. People who, in short, loathe everyone else.

Of course, this population has always existed. But now that normal people can't be arsed to vote, while the haters do, they've been able to get their creepy society-destroying miscreants into power.

Woe is us.
posted by five fresh fish at 9:37 AM on March 31, 2011 [3 favorites]

Don't worry guys, the conservatives have already thought of an answer. They're going to solve the labor shortage by outlawing abortion.

I have a different solution: if we simply deport all baby boomers to Canada, we won't need near the medical staff in the US. The medical staffs can be our laborers. Even better, they'll get free health care up in Canada! AMIRITE?
posted by Mister Fabulous at 9:44 AM on March 31, 2011 [1 favorite]

I think most conservatives are not broken people, but fearful people. Fearful of many things and just waiting for a more powerful personality to come along and harness that fear.
posted by dave78981 at 9:45 AM on March 31, 2011 [3 favorites]

> I have come to the conclusion that the right wing is comprised of horrifically broken
> people. People who are incapable of compassion, of logical thinking, of community.
> People who, in short, loathe everyone else.

Eh, mostly they're just uninformed, poorly educated, and prejudiced.
posted by goethean at 9:45 AM on March 31, 2011 [1 favorite]

From it's inception America has benefited greatly from under and non paid labor. Indeed I would argue that our current model of capitalism depends and relies upon it.
posted by edgeways at 9:45 AM on March 31, 2011 [5 favorites]

People who, in short, loathe everyone else.

You are misunderstanding. Perhaps the 30 to 40 people at the top of the power structure like the Kochs do, but the the vast body politic of the conservatives act this way due to basic human fear. Fear that they will not be able to support themselves, maintain a lifestyle, have a retirement, etc. It's primal and it's permanent. Limited resources mean insecurity. Insecurity manifests itself quite frequently as fear. Fear then looks for rationalization and finds the 'other'.
posted by spicynuts at 9:46 AM on March 31, 2011 [1 favorite]

From fings Riverside, NJ. 1 link:

"Some residents who backed the ban last year were reluctant to discuss their stance now, though they uniformly blamed outsiders for misrepresenting their motives. By and large, they said the ordinance was a success because it drove out illegal immigrants, even if it hurt the town’s economy."

Even in defeat, it's always the other guy who's actually at fault. They may be rethinking their laws against illegals, but it appears that they've learned nothing.
posted by quin at 9:49 AM on March 31, 2011 [1 favorite]

You people aren't getting it yet. If Mexico was a land of poor white born again Christians we would be implementing free high speed rail service twixt there and here.
posted by notreally at 9:52 AM on March 31, 2011 [2 favorites]

You people aren't getting it yet. If Mexico was a land of poor white born again Christians we would be implementing free high speed rail service twixt there and here.

Really? I expect the one to twixt here and Canada to open momentarily then, yeah?
posted by spicynuts at 10:09 AM on March 31, 2011 [3 favorites]

I think the modern conservative movement as composed of the following groups:

Monied Group- These are the individuals responsible for setting up the think tanks and funding conservative candidates and lobbying like crazy. These guys actually have a huge amount of money at stake and because it's a huge amount of money they are playing to win. They are not stupid and while they aren't particularly community minded are more using the modern conservative movement as a means to and ends. Some maybe even the majority often seem to be at least somewhat socially liberal.

Elected Group- These guys want to join the monied group but the while the monied group has the resources to get elected don't have the votes to get elected. In order to get elected they have to get people to vote against their economic self-interest and side with the monied group. Some are true believers but many use their rhetoric as a way of ingratiating themselves with the monied group while still maintaining an emotional connection with the rank and file. Many are actually quite smart (but not universally so) and many tend to adopt remarkably liberal attitudes that they reserve for private company.

The Conservative Electorate- Some are motivated by specific issues of the Conservative platform (single issue voters) but many are motivated by fear, uncertainty and even jealousy and envy. Many have seen the economic security that previous generations had as disappearing and are swayed by conservative rhetoric that someone else is stealing their jobs. Others see a decline in their traditional level of privilege as a loss of power and autonomy. Finally some seem to think that if they simply try hard enough they might actually enter the monied group and thus it would be nice if they didn't have to pay taxes on that future, hypothetical fortune.

Some are uneducated, but most are simply uninformed or more likely misinformed. In many cases the Monied and Elected groups have framed everything into a zero-sum game. Thus if someone else is getting ahead then consequently someone (namely the white conservative) is getting screwed.

Liberal rhetoric about social justice and giving everyone a hand up or a social safety net often fall on deaf ears because they are used to thinking about things in such a zero-sum manner. If it's not a tangible benefit to them or their close circle (family and friends) it either has no value or it's actively disadvantaging them. If liberals could reframe more of their agenda items not so much in a "this benefits everyone" manner or "this is designed to overcome generations of social injustice" manner and focus more on how this legislation specifically benefits the voter then I think it would be possible to peal away votes from the conservative block but it's difficult because it's so much easier to sell demonizing rhetoric rather than try to actually educate the electorate.
posted by vuron at 10:09 AM on March 31, 2011 [5 favorites]

"By and large, they said the ordinance was a success because it drove out illegal immigrants, even if it hurt the town’s economy."

Lost in the frenzy of ridding themselves from those criminal aliens, is the idea that criminal activity is criminal because it causes harm to person and property. When it causes increased prosperity for nearly, if not all involved, and no actual harm to other persons or property, the law becomes not only obsolete, but counterproductive. And enforcing it becomes an exercise in officiousness for its own sake, something big-government hating conservatives hate, right? Well, maybe not so much when the offenders have dark skin and speak funny languages. In that case, big government immigration and workplace enforcement is just what America needs to stay American.
posted by 2N2222 at 10:24 AM on March 31, 2011 [1 favorite]

When it causes increased prosperity for nearly, if not all involved, and no actual harm to other persons or property, the law becomes not only obsolete, but counterproductive. And enforcing it becomes an exercise in officiousness for its own sake, something big-government hating conservatives hate, right?

Yes, but the flip side of this is that undocumented workers are appealing for employers because it's easier to violate employment, labor, and tax laws with them. You're still left with those laws that people don't want to follow, and if you're from that area, even if you yourself obey those laws and think that they're a good idea, your existence such as it is in that area's economy is dependent on people violating those laws.

Remember that YouTube video some years back of a bunch of students who went to a highway and all obeyed the speed limit, all in a row across the lanes? And it screwed up traffic and a lot of people thought they were dicks? For better and for worse, it's kind of like that. The current furore over illegal immigrants is deeply connected with laws that are consistently disobeyed.
posted by Sticherbeast at 10:31 AM on March 31, 2011 [1 favorite]

And given one of the big reasons for hiring illegals is to avoid paying SS and other employee taxes, this is a no-win for the state.

Lots of undocumented workers use fake SS numbers, and collect a paycheck that has SS and Medicare withholding (Social Security is not actually a tax). This all goes into an "earning suspense file", which at this point has accrued about 2bn. over the last 20 years.
posted by oneirodynia at 10:53 AM on March 31, 2011 [4 favorites]

Lots of undocumented workers use fake SS numbers, and collect a paycheck that has SS and Medicare withholding (Social Security is not actually a tax).

Yep. When I used to work in construction we had workers that would quit one week and come back the next with a different SSN. They were paying all their taxes, without ever getting the benefits associated with them.
posted by electroboy at 11:07 AM on March 31, 2011 [2 favorites]

This isn't a population question, it's a money question.

It really is a population question though, in more ways than one. Now it's also a money question, in that if all illegal immigrants were to magically disappear tomorrow, prices for many goods and services would go, not least food. But that picture is complicated by a probable short-term price dip which would occur while supply adjusts to reduced demand. Since most people are unable to look much past the short term in economic matters, this has been a winning argument for restrictionists these many years. I'm very very happy about this IPC report, because I've been making the argument about the economic benefits of increased consumption for a long time and now I can just cite this study instead.

So, why is it a population problem? I'll start with (yet another) link to this Social Security Advisory Board issue brief which outlines the problem: the baby boomers are retiring. Postwar families were affluent and well-educated by historical standards, and were having an average of 2.5-3 children. Their entrance into the workforce in the 60s coincided with strong demand, both because of the USA's military and economic dominance after WW2 and the ongoing totalitarian challenge posed by the USSR. Among many other changes during that period came legal guarantees of access to contraception, legal abortion, and an expansion of the economic options for women - as pretty much anyone on MeFi is likely aware.

The economic cost of these changes, though, is being felt acutely now because the ratio between retirees and those who have entered the workforce behind them has fallen significantly. Boomers had fewer children than their parents, and thanks to their educational and economic edge, medical science has improved significantly over the last few decades so retirees can expect to live longer after retirement than their parents did. Not only is someone who retires today likely to be drawing on social security and possibly a pension for longer, but the cost of their medical care has increased quite a bit too; fortunately that is largely paid for by Medicare.

All of this must be paid for by taxes on those who are working, but there are fewer of them relative to the number of retired people who must be supported. Up to now the ratio of workers to retirees has been about 5:1 - that is, there are 5 people whose payroll and income taxes underwrite the cost of retirement benefits and medical care. Over the next 20 years, starting right now, that ratio will change to about 3:1 - happily it flattens out after 2030. Social security gets the headline because it's a transfer payment, but medical costs are the real problem. Of course, a big part of that problem is the growth in economic rent-seeking as clinicians, drug manufacturers, and care facilities keep raising their prices. Some of that is exploitation and may be mitigated by changes in policy - but they have socialized healthcare in many European countries and their costs are rising significantly too. End-of-life treatment tends to be more expensive anyway; we know relatively little about age-related diseases because people used to die at a much younger age until relatively recently; although we may collect damages from the sugary food industry as we did from the tobacco industry, obesity/diabetes has become an epidemic and is very very expensive to treat; and when it comes to drugs and research we have picked most of the low-hanging fruit. Developing new treatments is an expensive and risky business - pharma companies often struggle with huge losses in between making bumper profits. Computer genome sequencing looks set to substantially enhance medicine over the coming decades, but right now it's slow and relatively expensive. Technologists hope to be able to sequence a human genome in under an hour by the end of this decade, but sequencing a person's genome gives you 750mb of coded data of which we currently understand something like 0.01%. Late-life medical care is not going to be cheap any time soon. At best, costs will increase slower.

The fact remains that there will be about 70m retirees in the US by 2030, vs about 40m now (source: census data). So even if supply increased automatically to meet demand, inflation were banished, and all prices were frozen, we would still be looking at a ~75% increase in costs just because of the demographic changes. You can raise caps on payroll taxes, adjust the top rate of tax, reduce military spending and do various kinds of redistribution, but it still represents a massive, massive increase in mandatory government spending. Although the economy as a whole (using GDP as a proxy) has grown more than federal outlays, GDP is not profit and a large amount of it must go towards servicing both public and private debt.

Republicans would like to cut spending to make this problem go away, while Democrats would like to tax the wealthy to make the problem go away; both parties are essentially relying on Keynesian economics and just have different approaches to the basic concept of bringing the debt back under control. The moderates in both parties are right about the fundamentals. We should spend a bit less as a nation and allocate what we do spend more efficiently, we should tax high earners a bit more so as to mitigate income inequality, and we could probably get consensus for doing both if we simplified our budget and tax systems to be easier, more predictable, and more understandable for the general public. that said, the partisans in both parties are deluded: cutting public spending to the minimum is about as smart as cutting off your feet to save money on shoes, while jacking taxes to maximum is about as smart as putting a second pair of shoes on your hands and clomping about on all fours. Although various different approaches worked during the past, trying to apply those without taking account of the very different economic conditions that existed at the same time is foolish.

The bottom line is that we need more people in the labor force, and the good news is that the USA is actually underpopulated compared to other developed countries. Our population growth has been slowing even though the population itself has increased, and the same trend holds true in Central & South America, SE Asia, and South Asia (to a lesser degree), which are the main sources of migration. Expanding the labor force addresses our major demographic changes without going to self-destructive economic extremes, and our demographic curve and the resultant quantity of labor demanded will be flattening out right about the same time that feeder countries are hitting the end of their current labor surplus.
posted by anigbrowl at 11:31 AM on March 31, 2011 [8 favorites]

Exactly. Thus the more illegals we can bring or encourage to get to the US, the better off we will be ...or do I misread what is being said here?
posted by Postroad at 11:42 AM on March 31, 2011

anigbrowl's analysis is interesting, but I'm curious about whether the general approach of using immigration to resolve the problems that baby boomers have created (by failing to save for their retirement both individually and collectively), essentially renders those booms and increases permanent. At some point, isn't that unsustainable? At some point, for example, in Japan, don't you have to ask what size of population a country or planet can sustain?
posted by idb at 11:57 AM on March 31, 2011 [1 favorite]

The current furore over illegal immigrants is deeply connected with laws that are consistently disobeyed.

Part of the reason these laws are consistently disobeyed is that they regulate activity and state of being that really don't cause harm.

Opponents like pull out the canard, "I'm not against immigration, I'm against illegal immigration". This is a little like saying, "I'm not against pot smoking, I'm just against illegal pot smoking." If the problem with the activity is indeed its legality, rather than any theoretical harm, why do opponents never advocate changing the law to make illegal immigration and immigrants legal? Instead, the solution is always deportation, employer sanctions, and worse.

Exactly. Thus the more illegals we can bring or encourage to get to the US, the better off we will be

Well, kinda, yeah. Not only do Americans get to utilize the labor, illegal immigrants also get to benefit from the work. The key idea here is that supply be allowed to satisfy demand. The illegal immigrant labor market is probably the most free market existing in the US. And contrary to popular perception, it doesn't seem to contribute to negative externalities like crime or welfare abuse. If anything, it may help keep welfare programs afloat by income withholdings that can never be claimed.

It isn't clear how much of this advantage would be lost if immigration were greatly liberalized. It does seem clear that a much freer immigration policy would greatly discourage illegal immigration, once again, if legality was the real concern.

At some point, isn't that unsustainable? At some point, for example, in Japan, don't you have to ask what size of population a country or planet can sustain?

Framing it this way completely misses the reason immigration, even illegal immigration is such a boon. And points to the reason immigration policy in the US is such a mess. Instead of a free labor market able to utilize immigrant labor, the US has a protectionist labor market, which puts a cap on the number of immigrants allowed. A number that reflects political sensibilities, not economic market based sensibilities. We have a policy that, at best, lags behind the actual demands of the labor market. And this is pretty much for the skilled labor market. Policy generally doesn't allow any immigration for unskilled laborers. Yet the labor market for unskilled labor is bounded only by the overall economic slowdown.

When the host country cannot sustain its population, people migrate out. When a host country has surplus of opportunity, people migrate in. Unsustainability happens when governments decide to regulate that migration, harming not only the migrants who might enjoy increased prosperity in a country that needs labor, but also the host country wanting to utilize it's wealth.
posted by 2N2222 at 12:25 PM on March 31, 2011 [3 favorites]

Exactly. Thus the more illegals we can bring or encourage to get to the US, the better off we will be ...or do I misread what is being said here?
... Uhm, couldn't this be solved by getting more legal immigrants, the FN-fleeing wars / not highly-educated kind? I'm missing something here, clearly. What would happen if immigration rules changed to favor manual labor people for possibility in getting green cards? They'd stick around, have kids, pay rent, do work, etc.
posted by dabitch at 12:40 PM on March 31, 2011

II

So I said it's a population issue in more ways than one - the other ways refer to how nativists/restrictionists think about population. This section, with apologies to Hobbes, will be nasty, brutish, and short.

Back in the 60s again, some people were alarmed by the trends of world population - most famously Paul Ehrlich, who wrote a book called 'The Population Bomb.' It was the old Malthusian fear of too many mouths and not enough food, but with photographic evidence from space that there really is no more free land and other planets are way too far and uninhabitable to make up for that.

Some people who were worried about population simultaneously considered that birth rates in Europe and America were falling, and the obvious outcome was going to be fewer and fewer white people surrounded by more and more brown people. Some of that fear is plain old racism, but mixed in with it was an entirely genuine worry that living standards in the developed world would inevitably fall faster than standards in the developing world would rise, and that maybe the developed world had hit 'peak abundance' and everything was just going inevitably downhill from here due to the inexorable math. One of these was biologist Garrett Hardin, who wrote a very famous paper called The Tragedy of the Commons which had a huge influence on the modern environmental movement and on the world world of economics. Less well-known is that Hardin believed race was linked to intelligence and that affirmative action was tantamount to ethnic suicide; some have suggested he was a closet supporter of eugenics. His theories about the commons have been disputed by many economists (previously on MeFi); he strikes me as someone more misguided than malicious, but that's a side issue.

Anyway, back when all these ideas were coming out, they had a huge influence on a Michigan opthalmologist called John Tanton. A conservationist and early member of the Sierra Club, he became convinced that the world was going to be overrun by people breeding out of control, and the only sensible solution was for the USA to take advantage of its geographic and economic power to ride out the coming storm. He urged his fellow board members at the Sierra Club to put population at the top of the ecological agenda and lobby for a complete halt to US immigration. This approach was too extreme for other members and after a couple of years he was ejected from the leadership of that organization.

But he was still convinced that rampant global population growth was the real problem facing the US, and that a halt to immigration was the only rational response, and that it was his duty to sound the alarm no matter what it took. An intelligent and persuasive man, he set about raising funds and lobbying politicians, press and public to get his message out. The Southern Poverty Law center has documented his progress extensively, alleging that he took funding or had friendly relations with groups promoting eugenics, white nationalism, and far-right ideologies. Tanton has consistently disputed or denied their research; you can look it up for yourself and draw your own conclusions. I don't link to the SPLC or Tanton's own websites here because I don't want to be directly involved in their long-running slanging match.

What is not disputed, though, is that Tanton has either launched, funded, or sits on the board of all the following organizations: Population-Environment Balance, the Social Contract Press, Federation for American Immigration Reform, US English, Center for Immigration Studies, Californians for Population Stabilization, American Immigration Control Foundation, American Patrol, Pro English, US Inc., California Coalition for Immigration Reform, Numbers USA, the Immigration Reform Law Institute, ProjectUSA, Progressives for Immigration Reform, and a couple others that I can't remember right now. Indirectly (through other board members on these organizations or complicated funding chains), Tanton is loosely connected with and quoted approvingly by almost every group that lobbies or campaigns for harsher immigration laws and tighter restrictions on immigration. He has, arguably, built a whole political movement around this one core issue. Of course, he hasn't done this alone; there are many people who share his views and who have simply exerted their efforts in the same direction. And virtually all of these different lobbying organizations are nonprofits, funded by donations. The number of different groups and the amount of funding that they receive is a reflection of how many Americans believe it's time to get tough on illegal immigration and fix the problem once and for all...at least, so they say.


As it affects policy, my view is that this is largely (though not exclusively) a GOP issue. A sizeable chunk of the party and its voter base is intent on sealing the borders, ejecting everyone living or working in the US illegally, and generally turning back the demographic clock. Unsurprisingly most of them are social conservatives. On the other hand, there's fiscally Republicans who are honestly worried about debt and spending obligations, and who believe in a fairly deregulated labor market. Some of these people want the leverage of legal sanctions so they can hire undocumented workers for cheap, but this is quite a small group. Most business-minded republicans that I've met are more in favor of open borders and don't want the administrative headaches of trying to verify everyone's employment status or nightmares about getting raided by the INS. They're perfectly happy to pay prevailing wages and taxes as long as the labor market is competitive and the economy is doing OK.

The social conservatives/restrictionists don't like the open borders crowd at all, and the open borders crowd are embarrassed about being in the same party with them and worried about not being able to win elections in the future, but neither of them can see eye-to-eye with the left and neither group is big enough to win elections on its own, so they're locked in this sick alliance to fend off the Democrats. The Democrats mean well and in my opinion often do a much better job of governance, but have their own political challenges (largely unrelated, but I'd sum it up as an over-reliance on bureaucracy and industrial policy, and a love-hate relationship with technology).
posted by anigbrowl at 12:44 PM on March 31, 2011 [4 favorites]

Exactly. Thus the more illegals we can bring or encourage to get to the US, the better off we will be ...or do I misread what is being said here?

Afraid so. It's not 'more illegals,' just 'more workers.' Without writing another epic post (which would have to be many times longer than the above to do it justice), immigration law is set up in such a way that getting permission to live and work in the US is very slow and expensive for almost everyone, and losing that permission and becoming subject to deportation is incredibly easy.

So when people ask 'why don't people in Mexico immigrate legally instead of just sneaking across the border,' the answer is that unless you are very well qualified or famous in your field, work for a wealthy business, or have an immediate family member who is a US citizen, you would typically need to wait for years to get a work permit. If you don't have excellent connections, then you're handing over a lot of money in application fees for an uncertain outcome at some uncertain date in the future. You can get in as a visitor more easily, or slip across the border without permission which isn't exactly easy but isn't too challenging either. If you're young and don't see any prospects in Mexico, then this may seem fairly rational. But if you've ever broken any of the rules (and there are many, and they're completely different from criminal law), it's almost impossible to legally put things right, and leaving the US with less than 100% perfect immigration status can result in a 10-year ban on re-entry.

So basically I'm suggesting legalizing people who are already here (and who could be more productive if they were allowed to fully participate in the economy) and making it much easier for people to both enter and leave the US for economic reasons, because the US needs workers. The existing setup is costing the country a lot of money for enforcement, while impeding economic activity that could be creating jobs and bringing in much more tax revenue.

anigbrowl's analysis is interesting, but I'm curious about whether the general approach of using immigration to resolve the problems that baby boomers have created (by failing to save for their retirement both individually and collectively), essentially renders those booms and increases permanent. At some point, isn't that unsustainable? At some point, for example, in Japan, don't you have to ask what size of population a country or planet can sustain?

Saving is part of the problem to be sure, but not the whole problem. Sustainability-wise, it's not a permanent situation because fertility is falling in most of the developing world at the same time the domestic economies in those countries are growing significantly. Fertility is falling slowest in Africa but Africa is nearer to Europe, where there are even greater labor shortages on the horizon.

Basically, in 20-30 years most boomers will have passed away and the demographics in the US will have flattened out. Immigrants tend to have more children than people born here a generation ago, but not that many more, and the trend is going downwards both here an in most source countries. By mid-century it looks like global population growth will have peaked and then go into gentle decline, and the current imbalances of labor and capital markets will have evened out substantially as well.

Japan's population has been falling for a while. They actually pay some people to go and live in the countryside now to ensure smaller villages don't turn into ghost towns. Also, there's a reason that they're so into robots; there aren't enough young people to look after the increasing number of old people. China has a somewhat similar problem on the horizon.
posted by anigbrowl at 1:16 PM on March 31, 2011 [1 favorite]

Related: It’s absurd for the country to be simultaneously suffering from an illegal immigration problem and a population growth shortfall.

I really question the argument that there are not enough people in this country already.

http://research.stlouisfed.org/fred2/series/UNRATE

And that's with $1.4T+ annual federal deficits, and more unsustainable spending/low tax levels at the state and local level.

People are needed when available wealth-creating activities (aka "jobs") are going unfilled.

With 5 job seekers per job now, this isn't really the case.

People say Japan is screwed with their demographics, but I don't think so. Old people don't consume a much as young people, especially since how locked-down Japan's medical sector is WRT profit margins.
posted by mokuba at 5:10 PM on March 31, 2011

there aren't enough young people to look after the increasing number of old people

Japan's baby boom was a lot shorter than ours. Their population pyramid shows just single 5-year cohort that's peaked at 60-64.

The US pyramid shows the boom extending down to the 45-49 cohort, a much thicker wave.

I lack the data and time to analyze it, but it wouldn't surprise me to see things play out much better in Japan than here over the next 30 years.

As for importing labor, China's wages are still Y2000/month +/-, $14/day. A Chinese factory worker works all day for what it costs a US laborer to clock in basically.
posted by mokuba at 5:21 PM on March 31, 2011

but I'm curious about whether the general approach of using immigration to resolve the problems that baby boomers have created (by failing to save for their retirement both individually and collectively), essentially renders those booms and increases permanent.

There really is no such thing as "savings" in a modern monetary economy, only flows, since we no longer maintain several years of consumables on hand to tide us over bad harvests or the destruction suffered from invading armies.

Japan is called a "nation of savers" but their gov't debt to GDP is over 200% -- "nation of debtors" if you ask me.

To support the baby boomers our economy will have modify itself to supply what they demand. Medical care is foremost, and everyone knows Medicare is the elephant in the room here that must be shrunk down to size (ie the profit margins are going to kill us), but of course the politics of the thing are most dubious ("Don't Touch My Medicare!").

At some point, isn't that unsustainable? At some point, for example, in Japan, don't you have to ask what size of population a country or planet can sustain?

What we have here is the "lump of labor fallacy (-fallacy)". The dominant economic school says we need more labor! Left-leaners say we need more jobs -- I lean left on this, as this nation is fantastically productive and very wealthy, but the flows are just too top-heavy. Reduce the rake of economic rents that the top 10% class of rent-seekers and guild members are taking and things will be much more sustainable here.

But macroeconomics is in fact "hard". Nobody really knows how things are going to turn out this century.
posted by mokuba at 5:42 PM on March 31, 2011 [1 favorite]

Part of the reason these laws are consistently disobeyed is that they regulate activity and state of being that really don't cause harm.

Opponents like pull out the canard, "I'm not against immigration, I'm against illegal immigration". This is a little like saying, "I'm not against pot smoking, I'm just against illegal pot smoking." If the problem with the activity is indeed its legality, rather than any theoretical harm, why do opponents never advocate changing the law to make illegal immigration and immigrants legal? Instead, the solution is always deportation, employer sanctions, and worse.

I think you missed my point. The furore over illegal immigration is tied not only with immigration laws, but, even more trickily, with employment and tax law. Undocumented workers are appealing to employers because it's easier to pay them below the minimum wage and to otherwise ignore important employment and tax laws. Merely relaxing immigration law would not get rid of this issue, as many employers will always want people to work 65 hours a week for $4/hr without paying all of the appropriate taxes. It's an issue similar to the problems with outsourcing and overseas production.
posted by Sticherbeast at 10:36 AM on April 1, 2011 [2 favorites]

I appreciate the pointer to the "lump of labor" fallacy, but I'm not really making an argument about labor or the workforce, at least I don't think so. I also am fairly sure I understand that we're talking about flows, since current workers pay for current retirees, but in terms of the baby boomers, can we make an argument that, for example, when Bush was elected and cut taxes instead of reducing the deficit, baby boomers were having their cake now, leaving their kids with the burden in the future. I guess, if it had "worked" and the economy had taken off, I couldn't make that argument, but no serious economist could think it would have worked.

Secondly, on the population argument, if you have a baby boom, it will work itself out eventually, right? If, however, you increase immigration of younger people to work, be taxed, and take care of the boomers as they get old, aren't you making that boom permanent as the immigrants have kids and the trend continues?

I also recognize that inequality is a massive part of this picture.
posted by idb at 11:58 AM on April 1, 2011 [1 favorite]

I can't load the pdf, but when the link was first posted it did open once for me and scanning it briefly I noticed that it did not seem to contain the word "remittance" during a brief search of it. If so, this report is possibly ignoring the entire subject of remittances, or sending money home, in its calculations, which would invalidate the whole thing. Again, the link is not loading for me so I won't comment further.
posted by Brian B. at 3:01 PM on April 1, 2011 [1 favorite]