What immigration brings California ~By Tom Abate, Chronicle Staff Writer

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What immigration brings California
Study evaluates the costs, benefits of a huge influx of foreign workers =Sunday, December 11, 2005
By Tom Abate, Chronicle Staff Writer

At Santiago's Body Shop in San Francisco's Mission District, the question of whether immigrants are taking jobs from native-born workers made Julio Flores bristle.

"I never took anybody's job,'' said Flores, 41, who spoke no English when he arrived from Guatemala and started sweeping floors on his way to learning the trade. "I took the jobs nobody wanted."

The debate is at the core of new report that says average wage and job growth in California have improved relative to the nation during a 15-year period in which the state has experienced a massive influx of both legal and undocumented immigrants.

At the same time, the influx has, at least in the short term, strained state and local governments, which provide education and medical services to the poorest migrants, many of whom are undocumented.

The 64-page study, "The Impact of Immigration on the California Economy," was commissioned by the California Economic Strategy Panel, whose members are appointed by the governor and legislative leaders. Its author, Stephen Levy of the Continuing Center of the California Economy, will present its findings at a informal study session in Sacramento on Thursday.

Levy characterized the report as an effort to gauge the economic and fiscal impacts of immigration. In order to do that, he stressed, it's vital to understand two facts: that 1 out of every 4 Californians, or 9.5 million people, were born outside the United States; and that 25 percent of these newcomers, or 2.4 million people, arrived here without papers.

California and the United States have been in the throes of an immigration boom that began in the 1990s and has raised the percentage of foreign-born Americans to the highest levels since the 1930s.

That's prompted a sharp debate. Have the newcomers been taking jobs, or are they fueling economic growth?

The controversy tends to focus on undocumented migrants working in low-pay, low-prestige occupations. But there is another aspect to the story, which centers in Silicon Valley, where skilled foreign professionals brought here under H-1B temporary work visas are often seen as displacing native-born engineers.

The new California report seeks to quantify migration trends since 1990 and assess their impacts at the broadest economic level. Its principal finding is that California, with its high rate of immigration, has done better than the national average over the past 15 years according to such measures as wages, job creation and unemployment.

The report noted that average wages in California have risen faster than those in the nation as a whole since 1990. In addition, job growth in the state has outpaced that of the nation since 1994. And California's unemployment rate, three percentage points above the national average in the early 1990s, has now drawn closer to the U.S. figure, measuring 5.2 percent in the most recent month versus 5 percent nationwide.

"The economy of California has withstood a giant aerospace-led recession (in the early 1990s), a gigantic tech bubble bursting and this large wave of immigration into the state," Levy said. "All the indicators of economic activity have improved relative to the nation. How can it be that immigrants have messed up the economy?"

Of course, such big-picture analysis doesn't settle the question of whether some workers, especially those in low-wage occupations, might be hurt by the flood of newcomers.

"There are always losers," Levy acknowledged. "There are probably other people who would have had these low-wage jobs or might have had higher wages in these low-wage occupations."

Researchers on the effects of immigration on wages have come to widely varying conclusions.

Pia Orrenius, an immigration economist with the Federal Reserve Bank in Dallas, said most studies indicate that, even when large numbers of immigrants join the labor pool, they have a tiny impact on local wages.

Take a job paying $10 an hour. If the number of foreign-born workers were to increase by 10 percent, the hourly wage would probably drop about 2 cents, Orrenius said.

Harvard economist George Borjas argues that labor competition from immigrants has a much larger impact on wages. To use the same example, if foreign-born workers in the $10-per-hour job category increased by 10 percent, Borjas would expect wages to be whittled back 30 cents or more.

"California is a prosperous state,'' Borjas said. "Its prosperity masks the impact. But California is less well off than it would have otherwise been without this immigration."

UC Berkeley economist David Card said the dispute over the size of the wage loss attributable to competition from immigrants proves that economists don't know enough about labor competition to settle the matter.

"The truth lies somewhere in between," said Card, who thinks it's probably closer to Orrenius' calculation. Card said his own view is that while immigration gives an economy more mouths to feed, it makes up for most of this competition by expanding the pie.

The California report also paints a portrait of the composition and work experience of the immigrant population.

It notes that 90 percent of California's immigrants come from Mexico, Latin America or Asia. Asians account for 40 percent of the state's legal arrivals and just 10 percent of the unauthorized ones. In 2004, 80 percent of the undocumented came from Mexico and Latin America.

Occupationally, 45 percent of Asian immigrants nationwide work in management or professional occupations -- a higher proportion than the 36.6 percent of native-born workers holding such jobs, according to the report.

On a nationwide basis, immigrants from Mexico or Latin America are concentrated in service, construction, transportation and material-moving occupation. The report estimates that undocumented workers account for 19 percent of U.S. farmworkers, 17 percent of janitorial providers and 12 percent of construction workers.

The most heated debate over immigration involves those who cross the border illegally. Among the immigrant population, such people tend to be the poorest, least educated and most in need of public services, whether in a classroom or a hospital emergency room.

Studies show "immigrants used more in public services than they contributed in taxes," at least in the years when they first arrived, according to the California report.

What's more, there's an imbalance in where immigrant taxes go and where services come from, particularly in the case of the undocumented, said Frank Bean, co-director of the Center for Research on Immigration, Population and Public Policy at UC Irvine.

"About two-thirds to three-quarters of the taxes they pay go the federal government'' through income and payroll withholding levies, he said. "About two-thirds to three-quarters of the costs get borne by state and local governments."

Meanwhile, at a grocery store on San Francisco's Mission Street, the experience of 40-year-old shopkeeper David Khuu illustrates the complex ways in which immigration changes lives.

Khuu was a teenager when his family fled Vietnam during the Boat People exodus in 1979. They eventually made their way to Oakland, where he studied English on the way to earning a degree in electrical engineering from UC Davis in 1990.

He worked as a project manager in electronics manufacturing in Silicon Valley until the offshoring trend drove that work abroad and he was laid off in 2002.

Now he counts himself lucky that some relatives have let him and his wife, Sandy Khuu, 35, manage a corner grocery so they can support their three children.

"America is a land of opportunity,'' he said. "It's not about taking a job or competition. Everybody's got to work hard."

The report can be found at www.labor.ca.gov/panel/impactimmcaecon.pdf.
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How many Mexicans want to migrate? Legally or illegally? Find Out.
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U.S. Immigration Reform
New law introduced to Congress. Check our website for further info.
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