Another Benefit of Immigrant Workers: Shock Absorption

In continuing to address the chicken-and-egg question of jobs and population, it seems that Mexican-born workers are quick to relocate to greener pastures.
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In continuing to address the chicken-and-egg question of jobs and population, it seems that Mexican-born workers are quick to relocate to greener pastures.
Migrant workers pick green beans in a field. (PHOTO: MIKELEDRAY/SHUTTERSTOCK)

Migrant workers pick green beans in a field. (PHOTO: MIKELEDRAY/SHUTTERSTOCK)

Writing for this website last week, Jim Russell asked, "Do Jobs Follow People or Do People Follow Jobs?" Citing a new book by economic geographer Michael Storper, Russell gives an answer (but maybe not the answer) that people follow jobs.

A new working paper from the National Bureau of Economic Research comes down strongly on the side of people following jobs, but I’d wager the large population it’s looking at isn't the same “talent” Storper and Russell first think about. It’s the low-wage Mexican-born workforce in the United States, workers present both legally and illegally. According to economists Brian C. Cadena and Brian K. Kovak, this particular low-skilled population, in contrast to U.S.-born low-skilled workers, is among the most active in the nation in moving to find better work—even more so than the presumed champions, high-skilled and well-educated native workers (a la Storper):

For example, among highly skilled (some college or more) native men a 10 percentage point larger decline in local employment from 2006 to 2010 led to a 5.3 percentage point decline in the local population, compared with no measurable supply response among less skilled (high school degree or less) natives. In sharp contrast, less skilled Mexican-born men responded even more strongly than highly skilled natives, with a 10 percentage point larger employment decline driving a 7.6 percentage point larger decline in population.

The Brians also determined that having a large Mexican-born workforce in your metro area offers a benefit to more permanent residents. The foreigners act as a sort of “shock absorber”—as jobs start to disappear they move to greener pastures, which creates less competition in an already diminishing pool. This feature is not seen in cities with few Mexican-born workers. How much shock can they absorb? “The reallocation of Mexican immigrants across cities weakens the relationship between local demand shocks and local employment rates among natives by roughly 40 percent.” Keep in mind that this benefit doesn’t make the local labor conditions “good,” just less bad.

It’s just as well someone benefits from their mobility. As Pia M. Orrenius and Madeline Zavodny pointed out three years ago, the shortest end of a shortening stick is handed to low-skills and minority workers, especially Mexican immigrants, during economic downturns.

Given that “migrant laborers” is an often used if overly broad brush that paints Mexican-born workers, their “demand-sensitive migration” probably isn’t totally surprising. But it should be. Cadena and Kovak note that overall, this population moves only “modestly” more often than less-skilled natives during good times. But, as we’ve seen, they are “much more likely” to migrate for labor reasons (or might it be that few people migrate into job deserts?). This finding was true independent of likely explanations like age, education, family structure, and home ownership

It’s important to note that this migration to greater opportunity included traveling to different U.S. cities—most studies of migrants misses this internal ebb and flow—or back to an economically robust Mexico. One of the collateral repercussions of a “secure” border is how it traps immigrants in the north who’d just as soon return south.

The authors looked at the period of 2006 to 2010—the Great Recession—when migration from Mexico and points further south was trailing off. And that was an important component of their findings—that internal migration remains active even when it’s not fueled by newly arriving immigrants. Cadena and Kovak call it “geographic arbitrage” that continues to “grease the wheels of the labor market” without introducing new players.

Several reasons are posited for Mexican workers' willingness to relocate. In contrast to native-born low-skilled workers, who when they do move tend to stay in the same state, immigrants don’t have a built-in “home bias” to where they may be currently living. They left another country, and initially at least home is nowhere to be found in the U.S. Even more fundamentally, the authors write, this population has already “self-selected” for mobility.

Foreign workers, especially those without documents, generally aren’t eligible for safety-net social programs like unemployment, and that helps spur them toward better opportunities, too. Plus, many came north to make a (relative) bundle and then go home, and so (sometimes literally) make hay while the sun shines.

If you’ve followed much of the current immigration reform debate, lots of cries for more immigrant labor come from agriculturalists hurting for their accustomed pool of Mexican workers. This paper doesn’t address rural needs, and instead looks at the 97 largest U.S. metropolitan areas. The authors also stress that their findings are keyed to a period when wages were stagnant, and aren’t necessarily claiming that their observations would hold true during periods with a greater demand for workers or flexible wages.

Nonetheless, Cadena and Kovak see this inherent fungibility and the shock absorption it offers as worthy of consideration in crafting future policy about immigration and migrant workers.