Bernie Sanders on the effects of low-skilled immigration

Bernie Sanders, one of the contenders for the Democratic nomination in the US presidential race, has a mixed record on the issue of immigration. He voted against the 2007 Comprehensive Immigration Reform Act, and has voted against guest worker schemes, yet he voted for the 2013 Border Security, Economic Opportunity, and Immigration Modernization Act, and claims to support a path to citizenship for illegal immigrants. In fact, the anti-immigration organisation NumbersUSA gives him an F– grade.

Nevertheless, some of his rhetoric on the subject of immigration is more reminiscent of a conservative Republican than a progressive Democrat. And indeed, it has earned him praise from no less an anti-immigration activist than Roy Beck––the founder of NumbersUSA––who said, "I think in his gut he believes his obligation as president would be to the workers of America, not to the workers of the world". Below are a selection of Bernie's statements on the effects of low-skilled immigration. (All quotes are taken from the linked articles.)  

My concern about the bill that I voted against was that there was too much emphasis on bringing low-wage workers into this country. 

There is a reason that Wall Street likes immigration reform. What I think they’re interested in is seeing a process by which we can bring low-wage labor into this county. 

What they are talking about is completely opening up the border. That was the question, should we have a completely open border, so that anybody can come into the United States of America. If that were to happen, which I strongly disagree with, there is no question in my mind that that was substantially lower wages in this country. 

When you have 36 percent of Hispanic kids in this country who can’t find jobs, and you bring a lot of unskilled workers into this country, what do you think happens to that 36 percent of kids who are today unemployed? Fifty-one percent of African-American kids? I don’t think there’s any presidential candidate, none, who thinks we should open up the borders. 

If poverty is increasing and if wages are going down, I don’t know why we need millions of people to be coming into this country as guest workers who will work for lower wages than American workers and drive waged down even lower than they are now. 

It does not make a lot of sense to me to bring hundreds of thousands of those workers into this country to work for minimum wage and compete with Americans kids. 

Open borders? No, that’s a Koch brothers proposal. That’s a right-wing proposal that essentially says there is no United States. 

It would make everybody in America poorer––you're doing away with the concept of a nation state, and I don't think there's any country in the world that believes in that. If you believe in a nation state or in a country called the United States or UK or Denmark or any other country, you have an obligation in my view to do everything we can to help poor people. 

What right-wing people in this country would love is an open-border policy. Bring in all kinds of people, work for $2 or $3 an hour, that would be great for them. I don't believe in that. I think we have to raise wages in this country, I think we have to do everything we can to create millions of jobs. 

You know what youth unemployment is in the United States of America today? If you're a white high school graduate, it's 33 percent, Hispanic 36 percent, African American 51 percent. You think we should open the borders and bring in a lot of low-wage workers, or do you think maybe we should try to get jobs for those kids?

Progressive cities are more segregated

The Brookings Institution just published a report on black-white segregation in major US cities. The chart below plots a segregation index, taken from the Brookings report, against a conservatism index, taken from the paper by Tausanovitch and Warshaw (2014). The value of the segregation index is equal to the fraction of blacks that would have to move neighbourhoods in order to match the distribution of whites. The conservatism index is based on aggregation of opinion poll data from different US cities. 

The Pearson correlation is r = –.46 (p = 0.002). This remains unchanged when controlling for the fraction black: β = –.46 (p = 0.001). Regular readers may recall a previous post reporting that the black/white incarceration rate ratio tends to be higher in Northern states. Other evidence indicates that progressive cities tend to be less affordable, exhibit higher income inequality, and have greater black-white inequality. In all these cases, of course, it is not precisely obvious which way causality is running. More restrictive planning regulations in progressive cities might be one culprit. 

Survey of economists on the minimum wage

In November of 2015, the University of New Hampshire Survey Centre conducted a survey of economists on the minimum wage. The survey was conducted on behalf of the Employment Policies Institute––a right-wing think tank. However, 59% of those who responded identified as Democrat, with 34% identifying as Independent and only 7% identifying as Republican. 166 economists answered the survey in total, corresponding to a response rate of 30%.

The first major finding was that 60% of economists in the sample favoured some increase to the federal minimum wage. The chart below plots the distribution of responses to the question, "Currently the federal minimum wage is $7.25 per hour, do you support or oppose raising the federal minimum wage at all?"

The second major finding was that nearly 75% of economists in the sample opposed raising the federal minimum wage to $15/hour, as advocated by politicians such as Bernie Sanders. The chart below plots the distribution of responses to the question, "Currently the federal minimum wage is $7.25 per hour, do you support or oppose raising the federal minimum wage to $15 per hour?"

In fact, the average minimum wage preferred by economists in the sample was $9.59/hour. Respondents were about evenly divided over whether a $15/hour minimum wage would increase or decrease the poverty rate. But the vast majority agreed that it would have a negative effect on employment, and that it would make it harder for small firms to stay in business. 

Party closeness among Christian denominations in the UK

My last post plotted party closeness for major religious groups in the UK, using data from the 2014 wave of Understanding Society. The chart blow plots party closeness for the major Christian denominations, along with party closeness for the general population. Respondents who did not specify a denomination were ignored. 

The most interesting result is that Anglicans (Church of England) are considerably more likely than the general population to support the Tories, whereas Catholics are considerably more likely to support Labour. Adherents to the Church of Scotland are somewhat less likely to support either party. Methodists and Baptists are slightly more likely to support the Tories. And adherents to the United Reform Church are much more likely to support the Tories (though n < 100 in this case).

Religion and party closeness in the UK

In the 2014 wave of Understanding Society, respondents were asked, "Which political party are you closest to?" The chart below plots the distribution of responses across Labour, the Conservatives and other parties, separately for the general population and each major religious group. It should be noted that, although I applied sampling weights, the percentages are probably slightly off. In this sample, 43% are closest to Labour, and only 36% are closest to the Tories, whereas in the last General Election, the Tories won 37% of the vote and Labour only 30%. It should also be noted that the sample sizes for Buddhists and Jews are very low (n < 100). 

Nevertheless, it is instructive to examine the differences between the various religious groups. Christians and Jews are slightly more likely than the general population to support the Tories. Buddhists are slightly less likely to support Labour, and much less likely to support the Tories. Hindus are somewhat more likely to support Labour. And Muslims and Sikhs are massively more likely to support Labour. A full 83% of Muslims and 86% of Sikhs say they are closest to Labour, which is 40+ percentage points higher than the fraction in the general population. One important caveat is that some recent surveys have suggested that Tory support among Hindus and Sikhs increased appreciably at the last election. 

Migration and the minimum wage

Few policies generate as much disagreement among economists as the minimum wage. In 2014 for example, two petitions relating to the US federal minimum wage were published online: one proposing an increase in the minimum wage, which was signed by around 600 economists, and another opposing any increase, which was signed by approximately 500 economists. Supporters of the minimum wage claim that it shores up the wages of the lowest paid workers, whilst having little distortionary impact on the labour market. Detractors retort that it is a poorly targeted anti-poverty measure, which exerts sizeable distortionary effects on employers hiring, pay and investment decisions. 

For many years there was a near consensus among economists that the minimum wage reduces employment among low-skilled workers. The argument is quite simple: in a competitive labour market, workers get paid the marginal product of their labour; the marginal product of some workers’ labour may be lower than an arbitrarily defined minimum wage; it is not profitable for employers to pay workers more than the marginal product of their labour; since employers seek to maximise profits, they will not hire workers whose marginal product is less than the minimum wage. As the progressive economist Paul Krugman, who now favours raising the minimum wage, said in 1998:

So what are the effects of increasing minimum wages? Any Econ 101 student can tell you the answer: The higher wage reduces the quantity of labor demanded, and hence leads to unemployment.

In the same article, Krugman went on to note that “this theoretical prediction has, however, been hard to confirm with actual data”. And indeed, many economists’ reading of the literature now seems to be that any disemployment effects from the minimum wage are negligible. For example, in 2009, Doucouliagos and Stanley conducted a meta-analysis of over 60 different studies, and found that the most precisely estimated elasticities of the minimum wage clustered around zero. In a 2013 poll of the IGM Economic Experts panel, very few of the 34 economists who responded disagreed with the statement, "the distortionary costs of raising the federal minimum wage to $9 per hour and indexing it to inflation are sufficiently small compared with the benefits to low-skilled workers who can find employment that this would be a desirable policy." It should be noted, of course, that other economists, such as Neumark and Wascher, as well as Meer and West, have mustered considerable evidence to the contrary. 

There could be several reasons why many (though by no means all) studies have unearthed relatively small disemployment effects from the minimum wage. First, most markets for low-skilled labour are monopsonistic, meaning that prior to minimum wage increases workers were actually getting paid less than the competitive wage. Second, employers respond to an increase in the minimum wage by: cutting hours, trimming fringe benefits, reducing the wages of higher-paid employees, raising prices, lowering employee turnover, encouraging employees to work harder, or simply tolerating lower profits. Third, the lowest-skilled workers who are put out of work by the minimum wage subsequently sort into jurisdictions with lower minimum wages.

This third possibility was recently investigated by two economists, Martin and Termos, in a paper published in the journal Economics Letters. Using data from the US, they examined whether workers tend to move from areas where the minimum wage is comparatively high to areas where it is comparatively low, holding other things (such as distance, relative incomes and relative housing costs) equal. They found that the difference in minimum wages between two areas is a significant predictor of the volume of migration from the area with the higher minimum wage to the area with the lower one. Moreover, the effect they observed was significant for low-skilled workers, but not for high-skilled workers. This is consistent with the out-migration being due to a difference in minimum wages rather than to some factor affecting the entire distribution of workers (e.g., a local economic slump), given that the vast majority of high-skilled are paid more than the minimum wage. The authors conclude by noting:

Under competitive labor markets, a higher minimum wage will reduce the demand for low-skilled labor. The most reasonable explanation of our result is therefore that workers preferentially move to locations where the demand for their labor is highest.

They go on to point out the implication of their findings for public policy:

Since cross-country emigration is more difficult than migration between states or cities, increases in the federal minimum wage will have a stronger negative effect on low-skilled employment rates than we might expect from experiments with local minimum wages.

Citizens of richer EU countries are less sanguine about free movement

In a previous post, I showed that EU citizens are much more sanguine about richer non-EU countries joining the EU (e.g., Switzerland) than they are about poorer non-EU countries joining (e.g., Macedonia). One possible explanation is that EU workers believe, correctly or incorrectly, that immigrants from poorer non-EU countries would be more likely to compete with them in the labour market. If this explanation were true, one would expect citizens of richer EU countries to be less sanguine about free movement generally.    

In many waves of the Eurobarometer survey, respondents have been asked the following question:

Which of the following do you think is the most positive result of the EU: peace among the member states; the free movement of people, goods and services; the Euro; student exchange programmes; the common agricultural policy; the economic power of the EU; the political and diplomatic influence of the EU; the level of social welfare; other; none?

The charts below plot, for spring 2014 and spring 2015 respectively, log of GDP per capita against the percentage of respondents who believe free movement is the most positive result of the EU. (GDP data, taken from the World Bank, are for 2013.)

In both cases, the correlation is moderate and negative: citizens of richer EU countries are less sanguine about free movement than their counterparts from poorer EU countries. The correlation for the left-hand chart is r = –.55 (p = 0.003), while the correlation for the right-hand chart is r = –.66 (p < 0.001). Luxembourg was excluded because it is an outlier on GDP per capita, meaning that its inclusion obscured the pattern on the charts. Nonetheless, the correlations with Luxembourg included are approximately identical: r = –.55 (p = 0.002) for the left-hand chart, and r = –.64 (p < 0.001) for the right-hand chart.

It is of course possible, however, that these results derive simple from the fact that citizens of richer EU countries consider some other result of the EU more positive than free movement (e.g., peace among the member states), and so by definition, fewer of them were available to say that free movement was the most positive.