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Does immigration drive down wages? What do the facts say? 

Recently, the economist David McWilliams argued the case that immigration makes a country richer.  

All his errors coincidentally bolstered the official narrative; as if the piece was written with the ambition that ‘the evidence would be found to support the claim’.

Some critics of McWillams’ piece pointed to a previous documentary made for RTÉ which seemed to contradict his current claim.

But economists, like anyone else, are entitled to change their mind if the facts contradict the perceived wisdom. Is that the case regarding immigration into Ireland?

The promotion of immigration in western societies contains a number of prongs. Each may be viewed as a strategic argument designed to address a specific concern, and each is brought forth when necessary.

Thus, the following arguments are made:

Immigration is necessary because of particular sectional labour shortfalls. It is only short-term, and of small numbers. It brings positive experiences of diversity. Immigration is a net contributor to the economy of the country. Immigration is happening whether you like it or not; there is nothing you can do about it, suck it up.

The last argument was the launchpad of David McWilliams’ argument for why nobody should question the present wave of mass immigration which is putting pressure on housing and social services such as health and schooling.

Ireland’s immigrant population will rise from its present level of 13.8%, to roughly 20% by 2050 he told us. It’s fate; it’s going to happen, so you might as well shut up and get use to it.

But that wasn’t his main argument. In this article, he was making the economic case for immigration.

The economic argument is the one that is wheeled out by the establishment economists, of which there are many examples. Insulated and ensconced within the protected walls of academia, state institutions and the media (who are frequently just an extended part of state institutions), they don’t bear any cost for being wrong.

Examples include NYT contributor, and Nobel prize recipient, Paul Krugman, who can always be trusted to make predictions that are more likely to be wrong than correct but that always uphold the “official narrative”.

In any event, the Irish Times enlisted Ireland’s favourite “economics educator” to establish institutional authority behind the economic argument for immigration: that it’s all good, and necessary for the economy.

McWilliams went straight into the “high value immigrant” fallacy – a familiar clain repeated ad nauseum by pro-immigration academics. He talks about the value of high skilled immigrants (he mentions immigrants from Asia and North America) and conflates their economic contribution with that of all immigrants.

Here, McWilliams commits the cardinal sin of not recognising the diversity of the immigrants, and assuming they are all the same. And yet the progressive editors in the IT never pulled him up on it, why was that?

McWilliams, in a conveniently leading phrasing made this argument. “We hear a lot about welfare tourism within the EU, but the facts are that immigrants’ take-up of welfare benefits is actually lower than that of the locally-born population, according to a report put forward by the European Foundation

But what the reader of this paragraph might not have noticed is that the report McWilliams quotes only talks about immigrants from within the European Union.

McWilliams is being selective in which immigrants he chooses to compare to the native Irish. This is an argument for the economic benefit of freedom of movement of European citizens, not one for mass immigration of low skilled workers from the developing world who are housed and paid by the state.

In fact, if we were to include all of the immigrants into Ireland, including those from outside the EU and those who are arriving under the guise of refugee status, we would most likely find that they cost the Irish taxpayer a lot more than they contribute in taxes.

More pertinently we would find that unregulated immigration brings the type of growth that reduces the wages of low-income earners, but increases the income of high-skills workers.

In a regression line study of wages Harvard Professor, George Borjas, found that “a 10 percent increase in the size of the skill group reduces the wage of that group by 3 to 4 percent”.

Ask a left-wing researcher to find evidence that immigration is a net good for society and that is exactly what that researcher will find, or will pretend they find. I will demonstrate this with two papers.

In 2013, the Centre for Research and Analysis of Migration at University College London (UCL) produced a working paper entitled “The Fiscal Effects of Immigration to the UK” by Christian Dustmann and Tommaso Frattini.

It received exceptionally wide coverage with the claim that “recent immigrants to the UK had made a net positive economic contribution”. The press release that accompanied the working paper’s announcement claimed that immigrants were contributing far more than they were receiving in benefits.

It claimed that immigrants had contributed a net gain of £22bn between 1995 and 2011.

However, this claim was false. It was only true if you decided to only count immigrants from the EEA and excluded the vast majority.

When the study was finally published it showed that the reality was very different than this media spin suggested. If you counted all immigration into the UK over the period, the figures told a different tale. That showed that if you included all the non-EEA migrants, they had taken £114 Billion more out of the system than they paid in taxes.

It also suggested a final figure for net contributions could potentially be as high as £159 Billion negative. That’s a cost of £159 Billion.

This news, which was a correction of a prior untruthful claim, did not make the news.

It is unclear whether this number takes account of remittances that leave the UK every year back to the country of the immigrants. That is they may be earning wages in the UK, but those wages might be being sent to their home country. Were these remittances earned or how much of them came from, or were subsidized, by welfare payments?

Another study by Harvard economist, George J. Borjas he finds that the relationship is pretty much as you would expect. He begins by pointing out that “Immigration has a more beneficial impact on growth when the immigrant flow is composed of high-skill workers.” But he adds that a continuous flow of immigrants “will permanently reduce per-capita income.”

This follows an obvious common sense conclusion that continuous flows of low skill workers depresses wages for lower income workers. So while the GDP of a country will most likely rise with an influx of immigrants, the GDP per capita will, in nearly every case, fall.

Borjas explained this with stunning clarity in a piece on Politico in which he cautioned that the whole picture in relation to immigration needed to be considered.

“[A]nyone who tells you that immigration doesn’t have any negative effects doesn’t understand how it really works. When the supply of workers goes up, the price that firms have to pay to hire workers goes down. Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent. Even after the economy has fully adjusted, those skill groups that received the most immigrants will still offer lower pay relative to those that received fewer immigrants.”

He continued: “Both low- and high-skilled natives are affected by the influx of immigrants. But because a disproportionate percentage of immigrants have few skills, it is low-skilled American workers, including many blacks and Hispanics, who have suffered most from this wage dip. The monetary loss is sizable. The typical high school dropout earns about $25,000 annually. According to census data, immigrants admitted in the past two decades lacking a high school diploma have increased the size of the low-skilled workforce by roughly 25 percent. As a result, the earnings of this particularly vulnerable group dropped by between $800 and $1,500 each year.”

Borjas used an example of a chicken processing plant in Georgia to illustrate his argument. After the factor was raided by immigration agents, 75 percent of its workforce vanished over a single weekend, he said. The factory then “placed an ad in the local newspaper announcing job openings at higher wages.”

He also makes the stunningly obvious point that “somebody’s lower wage is always somebody else’s higher profit.”

“In this case, immigration redistributes wealth from those who compete with immigrants to those who use immigrants—from the employee to the employer,” he writes.

He estimates that this wealth redistribution from native losers (employees) to native winners (employers) is “enormous, roughly a half-trillion dollars a year.”

That’s a calculation that rarely gets mentioned in the debate on the unequal distribution of wealth. Is it the case that those most loudly virtue signalling about being pro-immigration, especially from affluent areas, are benefitting the most from an influx of people? Is that the reason they so loudly despise working-class people who protest the government’s immigration policies?

One of the things the report cited by McWilliams noted, was that high value immigrants were typically overqualified for the roles they fulfilled in the economy. It is a remark that is always made about how necessary immigration is to the maintenance of services in their adoptive developed countries.

However, I fail to see how this is a moral argument in favour of immigration, for it is stripping poorer countries of their hardest working and most talented people.

For all these progressives who say the health system could not operate without nurses and doctors from the developing world; do they think that the developing world needs no doctors? Maybe Nigerians don’t ever get sick and so don’t need doctors or nurses to staff their hospitals.

And what of the exodus of Irish nurses and doctors abroad? Would many of them prefer to stay if housing wasn’t such a disaster and conditions so poor in healthcare? Is it acceptable that in healthcare, as in everywhere, we are happy to export our own people and bring in workers willing to accept sub par wages, working conditions, housing and much else because their own countries are behind Europe in development?

One of the most puzzling arguments McWilliams made was when he said: “Only 18 per cent of immigrants are not making themselves available for work, as opposed to 24.1 per cent of Irish people.”

What is this percentage a proportion of? McWilliams does not state whether these are working age people who are eligible for work or whether it was a metric of many different factors.

Does it include parents taking time off work to raise children; permanently disabled people; full time students; the retired? There are not many immigrants in Ireland who are past retirement age for instance, but many of the 24.1% of Irish people that McWilliams cited might have paid into the tax system all their lives. For now, it is unclear how he came up with that number and who it is counting.

McWilliams keeps making arguments that the arriving immigrants use less of the resources of the health services than do Irish people. This may be a correct statement but also a nonsense argument because the average age of the immigrant is much younger than that of the Irish. In short, there are very few immigrants in the age category (pensioners) who most use healthcare. This argument fails to deal with the fact that if immigrants are taking spending away from health, their presence actually adds to the problems of health care.

For instance, here is a statistic I took from the report on Intra-EU mobility that McWilliams cited. The average age of UK natives is 40 years, and the average age of EU10 immigrants in the UK is 28 years. If these are working, they are paying the way for the graying natives health care, but if they are not, they are taking services from them. The UCL study referenced abobe suggests they are taking resources from them.

So do immigrants use more welfare than natives? Citing Borjas again, we find that by household category immigrant use welfare more than natives (35.1% to 22.6%).

The contribution to GDP argument has support amongst a certain type of middle class worker who works in the cognitive sectors. In WEIRD (Western Economic Industrialised Rich Democracies) countries which have outsourced their manufacturing, there is a large proportion of the society who don’t feel their wages or their standard of living threatened by the importation of low income workers. These people only see positivity in multiculturalism and refuse to see any possible negative effects.

These are also often the type of people who turned a blind eye to the grooming (gang rape, actually) gangs of England who were nearly exclusively comprised of Pakistani men, for fear of the accusation of racism. For this type of brainwashed middle class progressive, their allegiance to the open progressive thought leaders was more important than the lives of young working class women.

It remains that the biggest issue the people of Ballymun and East Wall and Finglas have is that they have seen a large influx of men with different cultural norms into their communities, and that makes them fearful.

These movements of people didn’t happen organically in such a way that McWilliams describes the Irish influx to America in the 19th Century. The state (really you and I) is covering the cost for this, and is pushing excessive numbers into communities already under pressure. All of which brings up a far more serious and yet overlooked question:

If, as history tells us, integration left to its own development is painful, violent and disruptive (think of the Irish or the Germans in the U.S.) why are the Irish government trying to force it on working class communities at an accelerated rate? Do they want the disruption? Why would they assume that this migration pattern will be peaceful and non-disruptive and without social consequence?

The fact that they are not opening these accommodations in their own neighborhoods would indicate that they understand very well that it won’t, and yet don’t care.

Why is it that those casting working class communities as “far-right” and “racist” spend all their spare time scheming about how they will force a change on the reluctant working class? They say they can have this open and welcoming society except for this one problem; the natives who won’t cooperate.

But why would the new arrivals cooperate either?

Perhaps if the cognitive sector came under the same threat as the manual sector has endured through outsourcing and automation, they might sing a different tune.

With AI writing better articles than all the junior staff of the IT and RTÉ, and most of the senior staff (I hear Microsoft’s Bing chatbot is very funny and could easily do Ray Darcy’s job) that day might come sooner than we think.


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