Krugman vs. Krugman
New York Times columnist tries to memory-hole his prior views on immigration
Michael LindFebruary 19, 2024
Tablet / Archive
“Immigrants Make America Stronger and Richer” is the headline of a Feb. 5 column by New York Times columnist Paul Krugman. Krugman lends his prestige as a Nobel Prize-winning economist to the assertion of partisan Democrats that mass unskilled immigration of the kind encouraged by the Biden administration is entirely beneficial to America: “So this seems like a good time to point out that negative views of the economics of immigration are all wrong.”
Thus writes Paul Krugman in 2024. Here, however, is the same Krugman in his New York Times column on March 27, 2006: “But a review of serious, nonpartisan research reveals some uncomfortable facts about the economics of modern immigration, and immigration from Mexico in particular.”
Today’s Krugman: “Did those foreign-born workers take jobs away from Americans—in particular, native-born Americans? No.”
Krugman again in 2006, when both immigration and the immigrant share of the U.S. labor force was much lower: “Second, while immigration may have raised overall income slightly, many of the worst-off native-born Americans are hurt by immigration—especially immigration from Mexico. Because Mexican immigrants have much less education than the average U.S. worker, they increase the supply of less-skilled labor, driving down the wages of the worst-paid Americans.”
The soundness of Krugman’s 2006 views on labor economics and immigration has not diminished. What has changed since, however, is the political environment. In 2024, what Krugman said 18 years ago now counts as white nationalist, nativist bigotry, and economic illiteracy.
Hence in 2024, Krugman claims that not a single job in the last few years that might have gone to a worker born in the U.S. or naturalized earlier has been taken by an immigrant: “The native-born labor force declined slightly over the past four years, reflecting an aging population, while we added three million foreign-born workers … The unemployment rate among native-born workers averaged just under 3.7 percent in 2023 ...”
But, as Krugman in 2006 would have understood, this argument is plainly absurd, because all jobs are not interchangeable. It is quite possible that unemployment as a whole has gone down, while the influx of both legal and illegal immigrants has crowded out other workers who compete with them in specific low-wage industries like agriculture, construction, housecleaning, fast food, and retail. Moreover, the major problem is not the one-for-one replacement of natives and naturalized immigrants by new immigrants in particular jobs, but the fact that rapidly enlarging the labor pool in a particular sector can weaken or destroy the bargaining power of workers in that sector—native and immigrant alike.
My authority for this statement? Why, it’s Paul Krugman in 2006: “That’s why it’s intellectually dishonest to say, as President Bush does, that immigrants do ‘jobs that Americans will not do.’ The willingness of Americans to do a job depends on how much that job pays—and the reason some jobs pay too little to attract native-born Americans is competition from poorly paid immigrants.”
Krugman 2024, however, thinks Krugman 2006 was wrong.
Today’s Krugman cites unnamed “research literature on the economic impact of immigration” which allegedly finds that “immigrant workers often turn out to be complementary to the native-born work force.” The research literature to which Krugman gestures includes unrealistic studies like those of the economist Giovanni Peri, who claims, on the basis of dubious mathematical models and data from large regions, that all immigrants magically complement existing workers instead of competing with them. In 1997, however, an expert panel of the National Research Council of the National Academy of Sciences concluded that competition with unskilled immigrants was the cause of nearly half of the decline in wages between 1980 and 1994 for native-born high school dropouts, who were disproportionately Black and Hispanic.
The National Academy of Sciences study also estimated that the annual economywide benefit from immigration would be a mere $10 billion—in other words, less than 1% of America’s 1997 GDP of $8.6 trillion. Way back in 2006, Paul Krugman agreed that the benefits to the U.S. economy of mass low-skilled immigration were negligible: “First, the net benefits to the U.S. economy from immigration, aside from the large gains to the immigrants themselves, are small. Realistic estimates suggest that immigration since 1980 has raised the total income of native-born Americans by no more than a fraction of 1 percent.”
The most relevant studies of the economic effects of immigration on workers are those that focus on specific industries. The union-weakening, wage-depressing, native-displacing effects of mass unskilled immigration have been well-documented in the case of janitors, construction workers, and meatpackers.
In the case of meatpacking, industry experts (Krugman is not one) acknowledge that immigration has enabled employers to pay low wages, as an alternative to raising wages and benefits to attract citizen-workers. The authors of a 2022 study in the Journal of the Agricultural and Applied Economics Association conclude: “The results indicate that higher wages along with additional nonwage benefits would have expanded the labor supply”—in the absence of expanded immigration.
Krugman 2024 also justifies the guest worker programs lobbied for by U.S. tech, agribusiness, and other business lobbies, claiming that “immigrant workers often turn out to be complementary to the native-born work force, bringing different skills that, in effect, help avoid supply bottlenecks and allow faster job creation. Silicon Valley, for instance, hires a lot of foreign-born engineers because they bring something additional to the table; the same is true for workers in many less-glamorous occupations.”
Really? Between 1980 and 2010, chiefly as a result of the massive expansion of the H-1B program, the number of American computer science jobs held by foreign-born workers exploded from 7.1% to 27.8%. In 2021, 74.1% of the 407,071 H-1B visas issued to specialty foreign workers by the U.S. went to nationals from India. The overwhelming share of young Indian men among H-1Bs reflects not any extraordinary skills that they alone possess but rather their willingness to work for lower wages and benefits than their American counterparts, as well as the accidental importance of Indian labor contractors or “body shops” as suppliers of indentured servants to U.S. companies beginning in the 1990s.
The U.S. Department of Labor sets four H-1B wage levels, based on the median wage of other workers in the same occupation and region, with the help of survey data from the Occupational Employment Statistics survey by the Bureau of Labor Statistics (BLS). As Daniel Costa and Ron Hira point out in a 2020 study, the Department of Labor sets the two lowest wage levels for H-1Bs well below the local median wage. “Not surprisingly,” Costa and Hira write, “three-fifths of all H-1B jobs were certified at the two lowest prevailing wage levels in 2019.”
This finding bears some attention. If H-1Bs are all geniuses with unique and valuable skills that both American workers and immigrants with green cards lack, then why are tech firms and their contractors so determined to pay most of their H-1Bs the very lowest wages permissible under U.S. law? Costa and Hira point to corporate savings on wages: “Wage-level data make clear that most H-1B employers—but especially the biggest users, by nature of the sheer volume of workers they employ—are taking advantage of a flawed H-1B prevailing wage rule to underpay their workers relative to market wage standards, resulting in major savings in labor costs for companies that use the H-1B.”
Krugman 2024 to the contrary, the H-1B program has nothing to do with any lack of skills among American workers. Rather it is an example of labor arbitrage by employers who prefer to employ nonunion foreign indentured servants without voting rights and many legal rights over Americans who would demand higher wages and better treatment. Disney and other companies have even forced their American employees to train the H-1Bs brought in to replace them. If H-1B guest workers have unique skills that American workers lack, why do they need to be trained for their jobs by the American workers they are replacing?
On this issue, Krugman has performed an intellectual somersault. In 2006, Krugman sternly denounced exploitative guest-worker programs like H-1B: “Meanwhile, Mr. Bush’s plan for a ‘guest worker’ program is clearly designed by and for corporate interests, who’d love to have a low-wage work force that couldn’t vote. Not only is it deeply un-American; it does nothing to reduce the adverse effect of immigration on wages.” Expanding guest worker programs, Krugman 2006 warned, “could create a permanent underclass of disenfranchised workers.”
Why the shift? Well, if Krugman wrote that in the political climate of 2024, he would be denounced in the overwhelmingly Democratic prestige media as a racist, xenophobic Trumper who is ignorant of economics.
In fact, nothing has changed in the field of labor economics over the last two decades to refute the views that Paul Krugman held about immigration in 2006. What has changed is the class composition of America’s two major parties. In 2006, Sens. Barack Obama and Hillary Clinton voted to erect massive fences along the U.S.-Mexican border. A decade earlier, in 1996, Democratic President Bill Clinton signed the Illegal Immigration Reform and Immigrant Responsibility Act, which expanded the list of offenses to be punished by deportation. Clinton had appointed the U.S. Commission on Immigration Reform, chaired by Black liberal former U.S. Rep. Barbara Jordan, which called for cracking down on illegal immigration, punishing employers of illegal immigrants, and drastically slashing legal immigration numbers in order to protect American workers, including former immigrants, from unfair competition. All of these measures and policies were denounced at the time by Republican libertarians and U.S. business lobbies, for all the reasons that Krugman 2006 made clear.
Within the last generation, however, the Democratic Party has lost the allegiance of most white working-class voters, along with a growing share of working-class Black and Hispanic voters. Meanwhile it has become the home of affluent, educated whites, a dwindling number of nonwhites, and most immigrants, along with many large corporations and the billionaires who profit from them.
Just as Republicans favored wage-suppressing mass immigration when they were the party of the affluent, college-educated overclass, today’s elitist Democrats now favor a never-ending stream of immigrant workers with little or no bargaining power for their constituents—like Silicon Valley donors whose firms depend on exploiting H-1B indentured servants, and urban professionals whose two-income lifestyle depends on a bountiful supply of cheap nannies, maids, restaurant workers, and Uber drivers.
Krugman’s authority depends on the perception that he is a principled expert on economics who follows the evidence where it leads him. If Krugman was completely wrong about the economics of immigration in 2006, this raises the question of whether he has been similarly wrong about other major economic issues throughout his career. Conversely, if he changes his economic views periodically in consonance with the rise and fall of interest groups in the Democratic Party hierarchy, he is a Nobel Prize-winning economist who believes that the truths his discipline has to offer are less significant than the work of being a partisan Democratic opinion columnist.
You have seen the evidence. You decide.
