Let’s explode some myths about immigration – Ananish Chaudhuri. 

Those who suggest immigrants are a net drain on the economy are trying to sell “alternative facts”. 

There is no denying the rise of Donald Trump and his nativist “America First” stance have become a vehicle for expressing such sentiments.

American researchers have shown that there was a sharp increase in anti-Muslim hate crimes in the days following a speech by Donald Trump, then a candidate, calling for a “total and complete shutdown of Muslims entering the United States.”

There is an ill-wind blowing and it is unlikely that New Zealand will remain immune.

Here are some real facts and figures to counter the often-touted arguments against immigration; about how immigrants are a drain on the economy; how they take jobs away from hard-working blue collar workers; how they fail to assimilate and do irreparable damage to our “culture”.

Are immigrants a drain on the economy?

An easy way of checking this is to calculate the “fiscal impact” of migrants on average. Essentially this means how much does an average immigrant pay in taxes and how much does he or she receive in return in the form of public education, access to healthcare, superannuation, welfare benefits and so on?

According to a 2013 report compiled by Business and Economic Research Ltd (BERL) for the Department of Labour, in that year the net contribution of immigrants to the New Zealand economy was positive and totalled $2,912 million. That is, immigrants contributed that much more than the value of the services they received.

This effect is equivalent to $2653 per migrant. In comparison, the New Zealand-born population in 2013 had a total net fiscal impact of $540m; the equivalent of $172 per NZ-born person.

The fiscal impact is positive for all sub-groups; it is highest for those coming from Europe and North America, followed in turn by Asians, UK and Ireland, Australians and Pacific Islanders. But the fiscal impact of each of those sub-groups exceeds that of the native-born.

Do immigrants displace native workers?

Yes, to an extent. But it is important to remember the total number of jobs is not fixed. The arrival of immigrants increases the national pie and in turn creates new jobs.

However, economists are beginning to realise that there is a powerful new force driving blue-collar wages downwards, independent of inward migration.

Eduardo Porter, writing in the New York Times, points out there is a radical reorganisation of the workplace under way from the outsourcing of many tasks, including running the cafeteria, building maintenance and security, to low-margin, low-wage subcontractors.

This is playing a big role in keeping wages down and increasing income inequality, much more so than globalisation can account for.

Many employers now are looking to outsource non-core tasks, thereby avoiding difficulties like unions as well as workplace entitlements and regulations of employing workers directly.

Porter writes: “These days the receptionist at the front desk is unlikely to work for the hotel. The truck driver may not work for the delivery company, nor the nurse for the hospital.”

Much of the evidence that we have here comes from the US. A recent study by two leading economists, Lawrence Katz of Harvard and Alan Krueger of Princeton, concluded that independent contractors and various types of temporary workers together accounted for 94 per cent of employment growth in the past 10 years.

Many of these jobs are poorly paid. A recent study found outsourcing imposed a wage penalty of up to 7 per cent for janitors and up to 24 per cent for security guards.

This kind of outsourcing increases the slice of national income going to corporations and shareholders at the expense of the workers independent of any effect of immigration.

Do immigrants fail to assimilate?

It is my view that arguments about assimilation are usually a cover for an aversion to ethnic diversity. Consequently, it is difficult to provide a cogent counter-argument.

If immigrants confined themselves to their own little communities, as is sometimes the case, particularly in larger economies, this could potentially be an issue. But, typically, this would be true for at most one generation.

Immigrants are typically young with children and those children go to local schools, so by the second generation assimilation is well under way.

There is no doubt that while immigration increases the size of the national pie, it does create winners and losers. For workers suffering from stagnating wages, the sense of displacement and disillusionment is real.

But, the bottom-line is clear: The net gain to society from immigration outweighs the losses and, therefore, there must be ways of providing a safety net for displaced workers in a way that makes all of us better off.

In the meantime and leaving cultural arguments aside, those who suggest immigrants are a net drain on society in economic terms are purveying “alternative facts” that should not be part of informed discussion.

NZ Herald

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s