G.L.Piggy [at] gmail.com
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President Obama’s semi-amnesty measure has provoked lots of response. Matt Yglesias and Jim Pethokoukis, to name a couple, argue that when immigrants gain jobs, US natives gain jobs too. The labor they provide complements jobs for US natives.
One example used by Yglesias is the restaurant kitchen where largely Latino staff makes it possible for waiters, bartenders, sommeliers, and restauranteurs to have jobs. Pethokoukis cites research from his own American Enterprise Institute which finds that for every 100 H-2B (lower-skilled, non-agriculture work) jobs added, 464 US natives gain jobs. The argument is that US natives won’t do work such as home building which means that home builders and their higher-level support staff won’t have jobs either. But, as usual, this is an issue with the question “at what price?” attached to it. Americans would be willing to work these jobs if wages weren’t tamped down by an influx of immigrant labor supply. But businesses want to have lower overhead and labor costs in order to capture a bigger portion of consumers’ pocketbooks. Perhaps this is the problem.
The two big industries in question – food service and home-building/construction: we are now experiencing hangovers in both of these industries. And these hangovers are in part fueled by very low wages. As a nation, we consumed too much housing and we’re consuming too much food. What we need in both cases is not lower prices. We could stand higher prices, and it would be to our benefit.
At CNN, a restauranteur from Oxford, Mississippi, weighs in on immigrations’ impact on his industry:
I can not survive without the Latino segment of the workforce in Oxford, Mississippi. I employ a tremendous number of people who do extremely unglamorous work. We pay them well and take care of them as well as we can. I have trouble getting American-born workers to even apply for those positions when we advertise, much less show up.
The restauranteur assumes that his business is worth keeping alive. As if we don’t have enough restaurants as it is. His argument would probably be “well, consumers want more restaurants”. But I’d respond that they want more restaurants when cost structure is low versus when cost structure is high. But just looking at the physical frames of the American public, we don’t *need* more restaurants. Not all restaurants would go away if prices rose across the board. Some would fall off and this would allow American consumers to either spend money on other goods or perhaps to save.
And entrepreneurial restauranteurs are generally smart people. When the business becomes arbitrarily marginally viable, it sucks entrepreneurs from other industry. These businesses that otherwise wouldn’t be profitable without labor supply shocks become profitable and we get “too many” of them.