Power Line

The Fox Butterfield Effect Notices Immigration and Wages

Many readers will be familiar with the notorious “Fox Butterfield effect,” after the typically clueless New York Times journalist who wondered why crime was falling even though the number of inmates in prisons was going up. As they saying goes, there’s no fixing certain kinds of stupid (and note that the Butterfield Effect about crime is now Democratic Party orthodoxy). I think the Butterfield Effect can be better generalized than its cousin, the Butterfly Effect (“A butterfly beats its wings in Indonesia and a hurricane results in Florida”), as follows: The Butterfield Effect is when a New York Times journalist bleats his wings in the Grey Lady and a hurricane of confusion reigns in newsrooms throughout the land.

Anyway, The Economist is having its own Fox Butterfield moment just now about immigration, with a story last week entitled “Immigration to America Is Down; Wages Are Up. Are the Two Related?

In both 2018 and 2019 nominal wages rose by more than 3%, the fastest growth since before the recession a decade ago. Americans at the bottom of the labour market are doing especially well. In the past year the wages of those without a high-school diploma have risen by nearly 10%. Intriguingly, this has come as America has turned considerably less friendly to immigrants, who are assumed by many to steal jobs from natives and lower the wages of less-educated folk. . .

There are nonetheless scraps of evidence that some workers are benefiting from America’s growing antipathy to immigrants. Gordon Hanson of Harvard University suggests that if the impact of reduced low-skill migration is showing up anywhere, it will be in three particular occupations: housekeepers, building-and-grounds maintenance workers, and drywall installers. These occupations rely heavily on immigrant labour and the services they provide cannot be traded internationally. Average wages in those occupations are rising considerably faster than wages in other low-paid jobs, according to calculations by The Economist.

Intriguing evidence also shows up geographically. According to research by William Frey of the Brookings Institution, a think-tank, five big metro areas saw absolute declines in their foreign-born populations in 2010-18. Wages in those areas are now rising by 5% a year, according to our calculations. . .

Of course, like their Butterfield model, the rest of the story labors mightily to take it all back, ending with this:

As America ages, it will need a lot more people willing to work in health care. Study after study finds a positive association between immigration and long-run economic growth—and therefore, ultimately, the living standards of all Americans. The Trump administration’s immigration restrictionism may achieve a temporary boost in wages of the low-paid now, but at a cost to the country’s future prosperity.

Well, at least we should give The Economist a participation trophy for trying.

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