Archive for the ‘Economics’ Category

Study: Skilled immigration’s effect on employment in U.S. companies

Sunday, April 5th, 2020

“We find consistent evidence linking the hiring of young skilled immigrants to greater employment of skilled workers by the [American] firm, a greater share of the firm’s workforce being skilled, a higher share of skilled workers being immigrants, and a lower share of skilled workers being over the age of 40. Results on whether total firm size increases or not are mixed.”

From a 2015 study here.

Countries which import skilled workers

Thursday, April 2nd, 2020

Canada may have the most skilled worker – oriented immigration system of all large countries. It uses a point system.  66% of foreign born persons have more than a high school degree. Australia, also with a point system, has 54%. the U.S. has 40%; Germany, 255: and Italy, 15%.

The United States’ system is so fragmented into dozens of entry points each with loopholes that is it hard to say how many of the roughly one million green cards awarded a year are for persons with strong work skills, but 20% or less might be a rough estimate.

A major problem with a formal skills-based system: the United States needs many workers without strong formal skills.  They will be paid less. And, yes, they will need – like some 20 million American citizens who work at the bottom 25% of the wage scale – some forms of public assistance at some time.

Collapse of remittances to labor exporting countries?

Monday, March 30th, 2020

 

The COVID-19 pandemic threatens to seriously disrupt the economies of emerging nations due to a sharp decline in remittances.

According to the World Bank, an estimated $625 billion was sent by migrants to individuals in their home countries in 2017, a 7% increase from 2016, when the amount was $586 billion. That is up from $188 billion in 2005, or an average annual increase of 27% while global GPD has grown about 3% a year.

The Philippines, for instance, received in 2017 about $28 billion in remittances or over 9% of its GDP. $10 billion came from the Gulf States; $11 billion from the U.S. and $6.6 billion from four other states.

Several Latin American countries vitally depend on remittances from one country – the United States. Perhaps half of the workers from these countries in the U.S. are unauthorized and may not receive unemployment checks or the one time $1,200 payment.

 

For an overview of remittances to emerging economies, go here. For detailed historic data from the World Bank, go here and here.

Unauthorized workers excluded from $2T rescue package

Saturday, March 28th, 2020

About 8 million persons unauthorized to work in the U.S. fill jobs. Maybe 50% of them work for employers through formal payrolls, as opposed to for cash. The rescue package does not recognize either the formal payroll or the cash workers.

This means in effect that 15% of farm workers, 13% of construction workers, and 8% of hospitality workers will not benefit from the program.

We can estimate the formal payroll workers through the volume of persons working with Individual Taxpayer Identification Numbers (ITIN), plus a generous number working with some someone else’s social security number. In 2010, 3 million federal tax returns were filed with ITINs.

In 1996, the Internal Revenue Service created the ITIN to provide a way for noncitizens who earn income in the United States, including legally-present noncitizens who do not have Social Security numbers, to pay taxes on money earned in the United States while not being technically employed by a U.S employer. The vast majority are unauthorized workers.

3/29/30. Update with more information from the American Immigration Council
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Temporary farm workers and the COVID 19 crisis

Friday, March 27th, 2020

The advanced countries have increasingly depended on temporary foreign workers to pick crops. The COVID-19 crisis exposes this dramatic shift in farm labor, mainly since about 2010.

On March 18, the Feds shut down processing of temporary (H-2A) visas for farm workers, who come typically from Mexico to pick crops. The crops picked by hand, such as tomatoes and strawberries,, will be most severely affected. Yesterday (March 26) the Feds relented to pressure from the farm industry to waive some visa processing requirements in order to restore the flow of temporary workers.

In FY 2019 258,000 workers came to the U.S. on this visa. That is up from 60,000 in 2011. (Go here for the history of the H-2A program.)

In Europe, the virus shutdown imperils the flow of temporary farm workers from eastern Europe and Morocco. And the lack of farm workers is affecting eastern Europe – Poland uses 500,000 temporary workers from outside the EU for its farms, as its own workers stream into western Europe.

COVID 19’s impact re: international students

Wednesday, March 25th, 2020

The pandemic has created a severe crisis for foreign students in the U.S and for their colleges. A talented freshman from New Delhi at Grinnell College (whose parents are now in 21 day lockdown) is a case I personally know of. I personally know a Honduran high school student who is marooned in Texas.

American universities have increasing depended on foreign students to fill their classrooms and coffers. In academic year 2017 – 2018, over a million foreign students studied at American colleges, up from about 600,000 in 2005-2006.

Shutting down American campuses has severely disrupted the lives of these students, and put into question how many students will show up in the Fall of 2020. Several states are dependent on foreign students for at least 8.6% of total enrollment: CA, MA and NY. For most states 5% of college students are foreign. The bulk of the dependent colleges are public.

Several states depend on these students for at least 17% of high ed tuition. CA, IL, MA, MD, NY. The table below distributes the 50 states by their dependence on college tuition income from foreign students. There is no state with less that 5% of tuition paid by foreign students.

Immigration to America in five stories

Friday, March 20th, 2020

My grandfather arrived with little formal education and helped to build the [insert] industry.

Comment: during late 19th C – mid 20th C manufacturing employment grew by using new workers with few skills. Southern blacks were largely excluded from this workforce until the 1940s.

The rise of Silicon Valley was intimately tied to global workforce immigration of skilled engineers and scientists. American medicine has been deeply dependent on trained immigrants.

Einstein and Nobel Prize winners immigrated here.

Comment: this celebrity immigrant story remains current. Relates to perhaps 0.1% of immigrants.

In past 40 years, low skilled workers, many illegal, flooded the U.S.

Comment: Notable politically powerful industries, such as agriculture, textiles, meat processing, Trump resorts, and accounts for much of the geographic spread of low skilled immigrants since about 1980. This explains the continued successful resistance of the business community to mandatory verification of employment status.

Expected increases in demand for unskilled workers — personal aides, growing now at 5% a year — are not associated with politically powerful employers

America needs to meet its responsibilities re: global refugees

Comment: this commitment arose out of major American wars — WW2 and Vietnam. Most global refugees today arise from other circumstances (Syria, Africa, Myanmar) Central American refugees referred to as anti-American by Trump. (His 2020 State of the Union speech: border policies are “restoring the rule of law and reasserting the culture of American freedom.”)

We are a nation of immigrants.

Comment: True yesterday and today.

Germany’s persistent dependence on foreign workers

Sunday, March 8th, 2020

“Among the [German] companies we consulted, 60% currently view the shortage of skilled works as a danger to the development of their businesses. In 2010, only 16% said so,” says a 2019 report on the shortage of workers in Germany.

As the graph shows, the country has been very dependent on foreign workers for the growth in the workforce for some 50 years.

In recent years, about 250,000 workers from other EU countries have been arriving each year. (Not included are workers from outside the EU.) With total employment at 42 million, that is equivalent to the U.S. receiving over 800,000 new workers a year. New workers from immigration in the U.S. today probably are about 600,000 or less. And Germany needs more than a quarter million from outside each year.

The German parliament passed the law on the immigration of skilled workers on 7 June 2019. It enters into force on March 1st 2020 that will bring in only 25,000 skilled workers each year.

From here.

Anti-immigration in early 20th C mainly cultural in nature

Wednesday, February 26th, 2020

Marco Tabellini of Harvard Business School has studied European immigration to U.S. cities between 1910 and 1930 “I find that immigration triggered hostile political reactions, such as the election of more conservative legislators, higher support for anti-immigration legislation, and lower redistribution. Exploring the causes of natives’ backlash, I [find] that immigration increased natives’ employment, spurred industrial production, and did not generate losses even among natives working in highly exposed sectors. These findings suggest that opposition to immigration was unlikely to have economic roots. Instead, I provide evidence that natives’ political discontent was increasing in the cultural differences between immigrants and natives.

When cultural differences between immigrants and natives are large, opposition to immigration can arise even if immigrants are economically beneficial and do not create economic losers among natives. Hence, promoting the cultural assimilation of immigrants and reducing the (actual or perceived) distance between immigrants and natives may be at least as important as addressing the potential economic effects of immigration.”

Drawn from ‘Gifts of the Immigrants, Woes of the Natives: Lessons from the Age of Mass Migration’ by Marco Tabellini, published in the Review of Economic Studies in January 2020.

Mulvaney confirms labor shortages

Sunday, February 23rd, 2020

When acting White House chief of staff Mike Mulvaney said in London on February 19th that America was running out of workers and needed more immigrant workers, he was confirming both the existence of current labor shortages (also found in European countries) and our long term dependence on immigrants to supply a large share of workforce growth.

Long term trends

Male immigrants made up nearly 80 percent of the increase in the nation’s male civilian labor force between 1990 and 2001 while female immigrants contributed 30 percent of the growth in the female labor force over the same time period.

The growth of the workforce continues to depend heavily on Hispanic and Asian workers. The size of the white non-Hispanic labor force will absolutely decline from 2004 to 2024 by 4%.

After 2015 and through 2035, the native-born working age population will decline by 8.1 million, the first generation immigrant workforce will increase by 4.7 million, and the second generation immigrant workforce will increase by 13.6 million.

the state of the current labor shortages

One way to look at the issue is to compare unemployment numbers to job opening numbers. In January 2000. In January 2001 there were 1.1 unemployed persons for every job opening. During the Great Recession that rose to as high as 6.4 in July 2009. Since March 2019 it has been under 1 – fewer unemployed than job openings (in December 2019, 0.9).

Another way to look at this is the labor force participation rate. This rate has over decades been declining for various reasons. But for the 25 to 54 year old set, it has remained fairly stable for 20 years – at 84 in 2000, 81 in 2015 and back up to 83 in January 2000. Most of the gain in the workforce in the past 20 years has been for persons over 55 and that rise leveled off in about 2010.