Saturday, January 28, 2006

O'Reilly on O'Reilly

I normally agree with Bill O'Reilly's presentation of most conservative issues but immigration from Mexico and secure borders is one issue I have considerable disagreement with. Most conservative talk show hosts including Michael Savage portray illegal immigration in the starkest terms, linking it to everything from higher crime rates, disrespect for the rule of law and increased costs to the taxpayers. While this is certainly true to some extent, it is important to think about the other side of this issue. There is an enormous amount of economic growth and profitability in the housing and agricultural industries based on the lower cost of labor provided by immigrants. More importantly most economists and politicians do not understand the cost dynamics associated with what I call the "velocity of work." In short, the velocity of work is inversely or proportionally opposite to the number of rules and regulations that slow down the speed at which work may be accomplished. More on this in a bit.

According to the Bureau of Labor Statistics, for example, 48 percent of all job openings, some 27 million positions between 2002 and 2012 are expected to be held by workers who have a high school diploma or less. The vast number of these positions will not be sought by native Americans. Note that in the 1990s the number of Mexican workers grew by 2.9 million persons, a 123 percent increase in this segment of the labor force. In contrast, the overall number of American workers only grew by 13 percent in the same period.

There is a deeper issue underlying illegal immigration and that is reduced labor costs to employers and the increased velocity of doing business without paperwork. Note that the outsourcing of call centers abroad mirrors the dynamics of hiring illegal aliens. Every business looks to cut its costs and self righteous posturing about the loss of American jobs is absurd without the Federal government taking steps to provide additional tax relief and incentives to employers. The velocity of work is an important index that to my mind has not been properly studied. If a contractor needs work done today to make a profit that will not wait until tomorrow, then it is far easier to go down to the local temporary labor pool where illegals congregate (usually a large supermarket or high volume retail outlet) and pick your workers and get the job done without having to do the paperwork of getting an employee from a temporary job bank or worse having to set up a full time employee with benefits.

In summary, given that illegal aliens increase the velocity of business by providing an unbureacratized labor force sensitive to free market dynamics, why not just welcome anyone who can get here? Under this scenario, three requirements would make this a fair proposition. All visitors would have to register as aliens and would be required to acquire a working knowledge of English within a specific time period prior to acquiring citizenship or face expulsion and heavy fines. Such "guests" would not be allowed to vote or receive any public services while under resident alien status.

I moved to Phoenix ten years ago and purchased a four bedroom, two story home on one third of an acre with a swimming pool and three car garage for 150,000. This affordable and wonderful home would not have been possible without the low cost of illegal immigrant labor. This is one of the many hidden benefits of illegal immigration. Illegal immigration is a complex issue but it one that can be faced with a proper understanding of economic dynamics.

No comments: