WSJ: Low-Wage U.S. Jobs Get 'Mexicanized,' But There's a Price

Low-Wage U.S. Jobs Get 'Mexicanized,' But There's a Price

By JOEL MILLMAN
Staff Reporter of THE WALL STREET JOURNAL
May 2, 2005; Page A2

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According to a study being released today by the Pew Hispanic Center, a think tank in Washington, Latino workers accounted for 40% of the 2.5 million jobs created last year, despite comprising barely 15% of the U.S. work force. Even more striking, 88% of the one million new jobs filled by Latinos went to recent immigrants, mainly from Mexico. Dozens of U.S. job categories have become "Mexicanized." Today, nearly half of all plasterers and stucco masons are foreign-born Latinos, while immigrants hold at least 40% of all jobs in such occupations as garment pressers, drywall installers and ceiling-tile installers.

The surge in hiring comes at a price, the Pew report reveals -- falling wages. In 2004, Latino workers' median weekly earnings were $400, down from $411 in 2003 and $420 in 2002. "No other major group of workers has suffered a two-year decline in wages," says Rakesh Kochhar, author of the report.

Why are jobs increasing, but wages falling? Mexican immigrants are changing destinations, bypassing high-cost cities on the coasts and flocking to small towns in rural America. There, they manage to find work in low-wage industries, but their greater numbers make it easier for employers to keep salaries low.

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The "Mexicanization" of the U.S. job ladder's lower rungs raises important political and economic questions. Will support diminish for minimum-wage increases when most low-wage earners are immigrants who can't vote? As industries like construction, food service, lodging and landscaping grow dependent on imported labor, will they face labor shortages if border security is tightened. The Pew study supports the theory that immigrants are supplementing the U.S. work force, not pushing native-born Americans out of jobs... So opportunities abound for low-skilled Latino immigrants. Even where illegal immigrants do compete with native-born workers, the larger labor pool may produce more jobs overall. That is because "employers are forgoing labor-saving machinery to rely on more laborers," says Ethan Lewis of the Federal Reserve Bank of Philadelphia. "That has the effect of saving jobs."

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Harvard economist George Borjas, who is a Cuban immigrant, warns that the U.S. economy's dependence on imported labor obscures many costs. Besides the expense of assimilating immigrants, businesses may be slower to innovate if they can make do with cheap labor. Mr. Borjas cites Japan as an example of a developed economy that was forced to become more productive because of its anti-immigrant policies. Americans may delight at the Japanese mania for vending machine and other quotidian gadgets, but the economist says that shows a Japanese willingness to mechanize, in contrast to the U.S. choice to Mexicanize. "Japan chose to robotize," Mr. Borjas says. "Mexican immigration has given us a very labor-intensive economy."

Write to Joel Millman at joel.millman@wsj.com

URL for this article:
http://online.wsj.com/article/0,,SB111499066092821715,00.html

ultimate in cheap labor. Isn't that what globalization is all about? Are they crying crocodile tears or do they really worry about the lack of innovation they are writing about? (The certainly don't care about the people involved.)

where i work it has happened....