Jobs, Politics, andrnImmigrationrnby Virginia D. AbeinethyrnUnemployment and underemploymentrnarc trends becoming morernnoticeable as the 20th century draws to arnclose. Eighteen million new jobs wererncreated in the United States during thernexpansionary 1980’s, but, ominously,rnstructural unemployment—the seemingrnbase Icyel in our economy—was still redefinedrnupward from 4.5 percent to 5.5rnpercent of the work force. Worse, newrnjob creation fell far from this pace in thernearly 90’s and remained sluggish even asrnthe production of goods and servicesrngrew. All the while, the category of “discouragedrnworker,” describing those whornhae ceased looking for work, rises uncounted.rnThe root cause of these developmentsrnis, arguably, a rapidly growingrnpopulation. More people means morernworkers. Some few contend that thisrnbodes well for America in the long run.rnBut there is room for doubt.rnPirst, review some characteristics ofrnlabor. It is a factor of production; laborrnproductivity puts an upper limit on thernwage that can be paid without ignitingrninflation. In other respects labor is arncommodity; wages, or the price paid forrnlabor, respond to the law of supply andrndemand. Wages usually rise in a strongrneconomy. The trigger is unemploymentrnfalling to near its structural level, whichrnallows labor to command, as well as demand,rnhigher wages.rnConsider the decade and a half afterrnWorld War II. The economy boomed,rnthe labor supply did not expand, wagesrnwent up very, ‘ery fast, and the consumerrnmarket was strong. This was notrntoo inflationary, however, because productivityrnalso rose quickly, industry respondedrnto expensive labor by substitutingrnnew technology and automation,rnwhich increased productivit}’. Almostrneveryone prospered. Most peoplernthought easy times had come to stay andrneach generation would do better thanrnthe one before.rnToo soon, the worm turned. A 1987rnWall Street journal article identified arnlarge increase in the supply of labor as therncause of stagnant real wages during thern1970’s and I980’s. Baby boomers andrnwomen entering the labor force for thernfirst time were depressing wages. Whenrnthis temporary bulge was absorbed, thernstory went, real wages would rise again.rnHistorical demography supports thernpoint that a tightening labor supply stimulatesrngeneral prosperity, whereas a growingrnlabor supply damps wages. RonaldrnLee at Berkeley, studying 19th-centuryrnEngland, found that a 10 percent rise inrnthe labor supply led to a 22 percent increasernin rents (return on land or, broadly,rnreturn on capital) and to a 19 percentrndecline in wages. The picture thatrnemerges is of the polarization of societyrninto rich and poor, based largely on arnchange in the supply of labor.rnNow turn to the labor supply in thernUnited States. Is the general impressionrnthat it is growing quickly or slowly?rnSlowly? To be sure, the baby boomersrnare just about absorbed into the laborrnforce, as are the middle-aged womenrnwho entered it during the 1970’s. Inrn1987, indeed, a labor shortage, particularlyrnamong skilled workers, was predictedrnby the “executive summary” of Workforcern2000, released by the HudsonrnInstitute of Indianapolis. T’hc “executivernsummary” stated that, from 1987 torn2000, white males would account for onlyrn15 percent of new entrants into thernlabor force. Every CEO in the countryrnheard this number and kne\’ its implication;rnthe traditional source of skilled laborrnwas drying up. The gap would havernto be filled b)- women, minorities, andrnimmigrants.rnAlmost immediately, however, somernpeople noticed a mistake in the “executivernsummary.” But the word about arncorrection never really got out. The truernfraction of labor force entrants who arern(will be) white and male is nearly 32 percent.rnThe “executive summary” omittedrnthe word “net.” The intended messagernwas 15 percent more white males arernto enter the labor force than leave itrn(through attrition and retirement). Thisrnmeans that from 1987 to 2000 the economyrnand capital investment must growrnat least 15 percent to absorb just the extrarnwhite males.rnAdd to this the extra black males andrnother minorities and the extra females—rna very large change because of low femalernlabor force participation in cadicrrngenerations—and the number of newrnjobs has to expand very fast indeed justrnto keep up with the supply of youngrnAmerican workers. In fact, nearly onernmillion more young Americans enterrnthan older Americans leave the laborrnforce each year.rnHow well is the country doing with itsrngrowing supply of labor? A few sectorsrnhold surprises. One-half of young blackrnmen are unemployed, and virtually all ofrnthem are in the unskilled sector. Therncost of this unemployment (and relatedrnalienation) is significant, not onlv in therntaxes and direct private sector moneyrnthat it takes, say, to rebuild Los Angeles,rnbut also in what it means to the Americanrndream. What happened to integratingrnmost people into mainstreamrnAmerica? And will this staggering unemploymentrncreep upward into the nextrnlevels of education and skill? Maybe.rnDisappointed college graduates reportrnthat a bachelor’s degree is worth very littlernin today’s job market.rnScience magazine reports that severalrnhundred (out of fewer than 1,000) newrnPh.D.’s in mathematics in 1991 couldrnnot find jobs; they were competing withrnChinese students who had sought asylumrnand professionally established Russianrnmathematicians. Among the latter.rnScience reports, as many as 300 hadrnsought employment in the United Statesrnwithin the previous two years. As recentlyrnas March 1993, 13 percent ofrnmathematicians with Ph.D.’s were unemployed.rnEngineers are experiencing the same.rnThe 1990 Immigration Act tripled thernnumber of visas for engineers and scientists.rnThe rationale—the expectedrnskilled labor shortage—is derided as “liesrnand fraud” by the president of the AmericanrnEngineering Association (AEA);rncompanies prefer to hire foreign engineers,rnhe states, because they work forrnlower wages. The AEA is currently petitioningrnCongress to reconsider the 10rnpercent of visas set aside for skill-basedrnimmigration.rnCongress should no doubt reconsiderrnits entire legislative package concerningrnimmigration. It should certainly reconsiderrnthe effect of immigration on unskilledrnAmericans. Fully one-quarter ofrnworkers with less than a high school educationrnare immigrants; the impact onrnAmerica’s own poor and minorities (includingrnrecent immigrants who nowrnmake the United States their home) canrnhardly be overestimated. New econometricrnstudies are at last documentingrnthe job displacement and decline inrnwages resulting from current immigration.rnIn round numbers, over onernmillion immigrants, refugees, and asyleesrnenter legally each year; 90 percent ofrnthem have “family reunification”—notrnOCTOBER 1993/47rnrnrn