Last week, Julie Hotchkiss, an economist with the Federal Reserve Bank of Atlanta, presented her new study which found that illegal aliens in the workforce “exert a downward pressure on wages for other workers,” but insisted that the amount is “negligible overall.” Uncharacteristically for an academic touting her work, Hotchkiss downplayed the significance of her report. She said no one should really be concerned about the results of her study because it was based on a “fairly small sample” of illegal alien workers in Georgia (FAIR question – Why conduct a report based on what you consider to be an unrepresentative sample, and why release a report if you don’t think the results are significant?). And while there is a “negative overall impact for workers whose employers hire [illegal] workers,” on average it is “only $56 a year, but there is a lot of variation across sectors.” In some sectors, the wages of legal workers were found to be lowered by as much as $700 a year, but that was not cause for concern, at least for Hotchkiss.
I would imagine those who have had their wages lowered wouldn’t agree that the effect has been negligible. What Hotchkiss also failed to address in her presentation is that illegal immigration has heavily contributed to wage stagnation in many low-skill occupations. Blue collar workers have not seen their real wages increase since the 1970s. The stagnation of blue collar wages has been driving the increasing income inequality that gets so much attention by politicians and pundits, most of whom ignore the immigration component.
But at least Hotchkiss and the Atlanta Fed are taking a step in the right direction by acknowledging the obvious. In 2010, the San Francisco Fed published a report by Giovanni Peri, despite the fact that his work had been roundly discredited by other economists who have examined his methodology. Peri claimed that illegal immigration does not “diminish the employment opportunities of U.S.-born workers,” but instead “creates favorable conditions for all U.S. workers.”
Hotchkiss may qualify her findings by saying that the negative impacts of illegal immigration on American workers is “negligible,” but this latest study is progress nonetheless.