Immigration and Labor

WHY ARE JOBS increasing, but wages falling? Mexican immigrants are changing destinations, bypassing high-cost cities on the coasts and flocking to small towns in rural America. There, they manage to find work in low-wage industries, but their greater numbers make it easier for employers to keep salaries low. "Fifteen years ago nearly 60% of Mexican immigrants worked in California," says Gordon Hanson, economics professor at the University of California at San Diego. "Today it's barely 40%." The "Mexicanization" of the U.S. job ladder's lower rungs raises important political and economic questions. Will support diminish for minimum-wage increases when most low-wage earners are immigrants who can't vote? As industries like construction, food service, lodging and landscaping grow dependent on imported labor, will they face labor shortages if border security is tightened.

But then there's this:

Harvard economist George Borjas, who is a Cuban immigrant, warns that the U.S. economy's dependence on imported labor obscures many costs. Besides the expense of assimilating immigrants, businesses may be slower to innovate if they can make do with cheap labor. Mr. Borjas cites Japan as an example of a developed economy that was forced to become more productive because of its anti-immigrant policies. Americans may delight at the Japanese mania for vending machine and other quotidian gadgets, but the economist says that shows a Japanese willingness to mechanize, in contrast to the U.S. choice to Mexicanize. "Japan chose to robotize," Mr. Borjas says. "Mexican immigration has given us a very labor-intensive economy.")