Arizona’s Experience and the Tale It Tells

As always, my response to the WSJ story on Arizona’s economy post-illegal-alien crackdown, as it plunged from fifth to ninth of the states with the largest illegal population is delayed. I’ve been sick, there’s this whole election thing, and I write slow. But the whole article is perfect blog bait, touching on most of my favorite issues.

In brief, the article lays out a surprisingly even-handed examination of the impact. Arizona’s economy took a hit due to the law, legal unskilled employment declined slightly, and businesses catering to immigrants took a big hit. On the other hand…and there were a lot of other hands. The article hit big when it came out, but then mostly disappeared.

While the article was good at broad outlines, I found it frustrating in parts, as the reporters accepted a number of conditions at face value.

Government data on cost of non-citizens is, er, discouraged.

pinning down exactly how much [illegal immigration] costs the state, and how much is collected from illegal immigrants through taxation, is surprisingly hard to do…. and…government spending on immigrants fell. State and local officials don’t track total spending on undocumented migrants or how many of their children attend public schools.

So, for example, when Alabama tries to figure out how many illegal immigrants are attending public schools, a federal appeals court ruled the effort unconstitutional and the state was forced to abandon the effort in a settlement, because fear of registration “significantly deters undocumented children from enrolling in and attending school”. The citizenry can’t be allowed to know the impact of federal failure because the lawbreakers might be scared. (These same parents usually sign up for the migratory education act, of course, without fear.) About 1 in 20 K-12 students isn’t a native, but we only guess based on a census every ten years.

The government refuses to collect data on immigration costs, the better to fail to provide it. The government thinks it knows better than the people–not unlike certain political parties I could name. The courts give cover, pretending that immigrants might be afraid to demand services if we collect data on the services they demand.

I would like to see a reporter push on this point. Why can’t the citizenry get a clear number of certain expenses? How many children of illegal immigrants are receiving services? What level of proof is required to prove eligibility?

Instead, the reporters tend to shrug and talk about how hard it is to get data.

The easy hiring days of yore

This comment is incredibly revealing:

[Before the Arizona law, an employer said,] “I could pull out phonebooks where I had 300 or 400 guys’ numbers” to create working crew….[Now] “you have to put out feelers, buy ads, go on Craigslist, tap job agencies, just to get a few men….Growth is based on the ability to hire.”

The contractor is annoyed because he doesn’t have a ready labor supply. Yeah, dude, welcome to normal circumstances. ‘Twas ever thus. That’s why we have HR departments. That’s why in corporate America as well as the teaching world, bosses are often reluctant to fire. Finding workers is expensive and time-consuming. Employers that have to invest time and energy in finding employees tend to be reluctant to easily fire them.

But the flood of unskilled immigration has blinded the contractor to normal hiring conditions. He’s completely unmoored by the need to put even a slight effort into finding good employees.

The constant stream of cheap labor has atrophied some employers’ hustle and distorted their understanding of real world employment conditions. They’re so spoiled that they whine about having to use ads and Craigslist. Then they complain that they can’t get natives to do the same work, not even for slightly higher pay.

How is this bad news? Employers who can’t pay enough to make the jobs they offer worthwhile should have to work to find employees. They should not to get special visas for cheaper workers eager for life in easier America—much less hire illegal workers who politicians will then refuse to deport.

Employers don’t have a right to employees any more than employees have a right to jobs. Illegal immigration has utterly wrecked the mindset of entire industries: construction, agriculture, landscaping, hotels, restaurants. No one has the right to easy, cheap labor.

And yes, in many cases it may turn out that ending illegal immigration will end a lot of jobs , as Adam Ozimek once wrote. Many employers will automate, just as Rob Knorr the jalapeno farmer chose to do.

But the story does no comparison of these employer complaints to other industries, or ask if they’d invested in efforts to build up an employee pipeline. At no point do the reporters consider whether the employers’ expectations might be unreasonable.

Nor do the reporters follow up on the fact that illegal workers are still getting jobs.

“E-Verify is a problem for us,” Mr. Castillo [an illegal alien] said. “We can work for a week. It takes that long for the paperwork. Then we’re out.”

E-Verify needs to be more of a problem.

Bye bye immigration surplus

Economic activity produced by immigrants–what economists call the “immigration surplus”–shrank because there were fewer immigrants around to buy clothing and groceries, to work and to start businesses. ….In Latino neighborhoods, sales declined at grocery stores and other businesses catering to migrants.

Other stories document the hit taken by businesses catering to Hispanics. I wonder how much of the unskilled labor employment hit was connected to jobs lost due to the “immigration surplus”? If so, wouldn’t that be inevitable? Fewer immigrant grocery stores, fewer grocery store clerks. Population decreases mean fewer jobs.

I’m sorry, but ending illegal immigration will inevitably lead to a population decline, at least at first. “My business strategy is immigrant-dependent” is not a compelling reason to give up restriction. The nifty little Mexican market that makes awesome burritos will have to rely on gringo purchases. I’ll do my part, I promise. If Western Union has to close down 90% of its offices when remittances dry up, some people are going to lose their jobs, and the stock’s going to take a hit. I understand it’s hard on the stockholders and the job holders. But they can investigate business opportunities that don’t rely on criminal disregard for employment law.

I thought the article did a good job revealing this information, but shouldn’t the article have observed that any population drop will result in lost business?

An earlier study by Sarah Bohn et. al (the researchers quoted in the piece), Lessons from the 2007 Legal Arizona Workers Act, offers up another interesting impact caused by “immigration surplus”:
wsjppistudy1

Many people assume that the lower skill workers who are affected by immigration are all white, or maybe black. But of course, many of them are Hispanic with a “skill” that white and black low skill workers lack: the ability to speak Spanish.

If employers can easily communicate with workers without translators, then job opportunities for translators are “immigration surplus”. I’m good with that, and the fact that some workers are hurt because Spanish-speaking is no longer a bonus is great news. Low-skilled Hispanics, blacks, and whites can compete on an equal basis.

Hispanic legal workers are hit not only because their legal status and bilingual abilities, but because of the restrictions themselves, something the LAWA research confirmed:

wsjppistudy2

Translated, this seems to be saying that many Hispanics are here legally, but have trouble proving it, or decide to leave because they’d rather not prove it. This argument isn’t new, but it’s also not a reason to stop enforcing employment laws.

Real-estate agent Patti Gorski says her sales records show that prices of homes owned by Spanish-speaking customers fell by 63% between 2007 and 2010….At the Maryvale Market, in an immigrant community of ranch homes, Ashok Patel says his business is down by half since 2008.

Notice the name Ashok Patel? There’s also a Vietnamese owner quoted in the 2010 article, owner of a 99 cent story, too. Arizona’s Asian immigrant population is booming–and so Asian immigrants are complaining that Arizona’s enforcement is interfering with business.

If restricting illegal immigrants makes America less attractive to potential immigrants eager to come here and exploit lawbreakers, how is that a bad thing? I would have liked to see the story mention that legal immigration growth in Arizona has continued, and what industries or areas of business they dominate.

Fewer people, cheaper rent?

Wait, did someone mention occupancy rates?

wsjppistudy3

If rental vacancies increase, don’t rents decrease?

Well, hey now. And take a look here, too: Phoenix Arizona Residential Rent and Rental Statistics . Graphs and tables, even.

Rents declined significantly during this period, probably because of the rental vacancies caused by Arizona’s law. There’s a significant point the WSJ article didn’t exactly play up.

So while low-skilled natives might not have all improved their employement prospects, many of them were able to live cheaper until they did find a job. Affordable housing for natives. What a concept.

Education. Remember education? This is a blog about education

State and local officials don’t track total spending on undocumented migrants or how many of their children attend public schools.[see what I mean about not reporting immigrant expenses?]…But the number of students enrolled in intensive English courses in Arizona public schools fell from 150,000 in 2008 to 70,000 in 2012 and has remained constant since. Schooling 80,000 fewer students would save the state roughly $350 million a year, by one measure. During that same period, annual emergency-room spending on noncitizens fell 37% to $106 million, from $167 million. And between 2010 and 2014, the annual cost to state prisons of incarcerating noncitizens convicted of felonies fell 11% to $180 million, from $202 million.

The economic factor is huge in terms of what it saves Arizona taxpayers,” primarily on reduced education costs, says Russell Pearce [the law’s sponsor].

(emphasis mine)

Look at that. Reducing immigration saves money on education. The Arizona experiment proves that reducing immigration cuts immediate education costs–and that’s without factoring in the reduced pension burden.

Despite the usual GOP rhetoric about greedy teacher unions, merit pay, and ending tenure (blissfully absent this election, did you notice?), the Republicans have signed on whole hog for all the educational extras. High standards for all, despite remedial level students. Legally mandated special education and English Language Learner services.

All services are guaranteed to all students, citizen and immigrant, legal and illegal, courtesy of the let’s-keep-it-tied-up Supreme Court and Congress. All services are costly, and have very little evidence demonstrating effectiveness. And most of all, all those services require teachers.

Few folks outside the teaching “business” really grasp that hiring teachers is the pain point, not firing them. While the teacher shortage talk may be overblown, it nonetheless exists.

Teachers require higher than average IQs (particularly for high school academics), college degrees, clean records, verbal facility and a tolerance for young folk. Teaching offers inflexible schedule, limited potential for career growth, and work that’s utterly resistant to productivity improvement. On the other hand, it offers generous (read expensive) benefits, and really great pensions. Not as good as cops, but still. It’s a huge occupation; the largest in America. Yet despite the regular pay increases and job security, feeding the great maw of K-12 education requires constant replenishment. Schools are constantly in search of teachers in most states.

States could spend a lot more on our neediest citizens if they weren’t footing the bill for remediation, English language, tutoring, free lunches, and all manner of special education services for non-citizens.

Wouldn’t it be nice if unskilled labors were a little harder to hire, and skilled teachers a little easier to find?

Here’s hoping more states undertake Arizona’s experiment.

About educationrealist


28 responses to “Arizona’s Experience and the Tale It Tells

  • Bob

    A curious thing about the article is all the straight comparisons of pre-and post bubble prices. 2007 and 2010 house prices in Arizona fell a lot for a lot of other reasons beyond this bill.

  • James Thompson

    So, undocumented persons have undocumented costs, with undocumented effects on the documented. Illuminating essay.

  • AZTeacher

    I follow your blog, and I agree with the point you have made in the past about the importance of creating opportunities for Americans who will not be able to develop advanced skills. This law resulted in a decline in legal unskilled employment, which runs counter to that goal.

    • educationrealist

      I covered that, though. If the decline in legal unskilled employment occurred because of the population decline, that’s how it rolls.

      • AZTeacher

        You did cover that. What I am saying is, if the population decline is not getting us the kind of results we want (increased employment for citizens), then the law that causes that population decline may not be in our best interest.

      • DensityDuck

        You assume that “more jobs for citizens” is the intent. But an extra 68 million dollars in the government coffers will pay for a lot of dole cards.

      • anonymousskimmer

        “will pay for a lot of dole cards.”

        Oh externalities. But will it pay for the psychological counseling needed to undo the harm of not being self-supporting? Will it continue to pay for any increases in multi-generational “on the dole” that may occur due to said psychological harm to the initial generation?

      • DensityDuck

        “will it pay for the psychological counseling needed to undo the harm of not being self-supporting?”

        The idea that guilt results from “not being self-supporting” resulting is a very white-bread notion.

    • educationrealist

      “What I am saying is, if the population decline is not getting us the kind of results we want (increased employment for citizens), then the law that causes that population decline may not be in our best interest.”

      That’s just crazy, though. “let’s bring in lots of unskilled noncitizens to have kids that will be very likely low skilled citizens, all to keep a fraction of low-skilled citizens employed by the population surplus.”

      Yeah, no, we’re good.

      Besides, over time, employers may get better at finding low-skilled employees and keeping them, as it gets harder to do.

      Worst case, though, I’d rather have fewer and pay more to invest in them, rather than keep bringing in lots more unskilled workers.

      • DensityDuck

        It’s also the case that as employees overall become more expensive, there will be fewer and fewer low-skill employees.

        As in, machines will do the repetitve and by-the-procedure tasks that low-skill employees used to do. Christ, we could automate every McDonald’s right now, if we wanted to! The technology is out there. We just don’t want to face the implications of putting every burger-flipper out of work–and automation is still not quite cheap enough to be worth doing it anyway.

      • educationrealist

        Yes, I absolutely agree that increasing the price of lower skilled labor will increase automation. But that’s exactly why we should discourage and/or deport low skilled immigration now.

      • anonymousskimmer

        Service industries are one of the few businesses in which automation does not noticeably add to ‘progress’. While humans are more mistake prone than automation, they are also more adaptable at this time. It’s a wash as to the benefit of human interaction for those who prefer that versus the detriment of human interaction for those who have issues with it.

        The only societal benefit of automation to most services is a reduction in resource expenditures (e.g. commuting), and possibly more free time for the workers if all else was held equal (which it cannot be).

      • DensityDuck

        “Service industries are one of the few businesses in which automation does not noticeably add to ‘progress’. ”

        That’s because, for now, it’s legal to pay service workers what they’re worth. If it becomes a matter of law that You Shall Pay Service Workers Twenty Dollars An Hour, you’ll be startled at how quickly robots become an effective solution.

        As in, if the robot costs less than $10,000 (twenty dollars an hour times ten hours a week times fifty weeks a year) then suddenly it’s less expensive to buy a robot. And the robot never asks for a raise, never goes on strike, never calls in sick. It will never stop. It will wade through all of you and RIP HER HEART OUT–or maybe just mop the floor, depends on programming.

  • Mark Roulo

    “…pinning down exactly how much [illegal immigration] costs the state, and how much is collected from illegal immigrants through taxation, is surprisingly hard to do…”

    But we can be very confident that illegal immigrants consume more government resources than they pay in taxes. Mostly because they tend to be poor(er) and the poor are net consumers of government services (partially because they don’t pay a ton of taxes … they can’t because they don’t have the money).

    Dan Walters at the Sacramento Bee had an October 4 2015 article (“Who pays California taxes and how much?”) where he claimed that:

    My up-to-date compilation from multiple state and local government sources reveals that Californians are shelling out almost exactly $250 billion a year in taxes, a little less than $150 billion for the state and a little more than $100 billion for thousands of local governments.

    That includes $78 billion in personal income taxes, $55 billion in property taxes, and $54 billion in state and local sales taxes. Other biggies include $10.3 billion in corporate income taxes, $6.5 billion in fuel taxes, $5.7 billion in unemployment insurance payroll taxes paid by employers, $5.4 billion in disability insurance taxes levied on workers, and $4.3 billion in truck weight fees and other vehicular levies.

    At $250 billion, California taxes average about $6,400 a year for each of the state’s 39 million residents.

    A family of four thus gets about $25K spent on it per year by various state and local agencies. Note that this includes public schooling (~$11K per year per student), police, fire, keeping bad guys in jail, paving roads, etc.

    Very few families pay $25K per year in state+local income/sales/property taxes.

    We can, if we wish, remove all but personal *state* income and sales taxes (on the assumption that corporate taxes shouldn’t count and on the assumption that property tax gets covered by the cost of rent). We still wind up with over $130B per year of taxes that must be paid by individuals. Again, a family of four’s share would be close to $13K/year.

    I do not believe (or expect) that a typical illegal alien family pays $13K/year in state income+sales tax.

    Possibly the vast bulk of the illegal alien population is single folks without kids who also don’t go to jail or collect benefits. If so, then the spending may be less than the taxes collected. But my guess is that we don’t have enough of these folks to cover the difference. $13K/year is a lot of taxes … and one kid in public school would come close to consuming all of that tax revenue (on average).

    It almost has to be true that the net cost to the state and local governments providing services to illegal immigrants exceeds the taxes that they pay.

    • AZTeacher

      The poor are net consumers of government services, but there is a difference between our native-born poor (many of whom are disabled and/or unemployed) and poor illegal immigrants (most of whom work – a lot). It is true that illegal immigrants typically don’t pay a lot in taxes, because they typically don’t make a lot of money. However, they do create wealth for their employers, and that wealth does get taxed.

  • anonymousskimmer

    “Wouldn’t it be nice if unskilled labors were a little harder to hire, and skilled teachers a little easier to find? ”

    Yes. The first is always true from a worker empowerment perspective, the second from a student’s and parent’s perspective. Though as you yourself have said, teacher skill is somewhat less important than teacher demographic similarity to students (at least among minorities).

    “pain point”

    This term irritates me to no end. How much economic churn and burn occurs due to “pleasure points”? The entire spice trade was based on pleasure – in an era when spices weren’t cheap. And everyone frickin used them, even when the spice was as simple as salt.

    Aside from that: your post is interesting, but like almost all such posts I’d like to see some actual quant models backing it. How much can we even model what removing / discouraging various forms of illegal immigration would do to our economy?

    Or, heck, even (Devil’s Advocate): If it is guaranteed that a certain percentage of people will be unemployed at a given time (U1 to U6+), is it possible to macroeconomically manipulate this to encourage that the unemployment distributes to illegal immigrants instead of legal residents? Or would such manipulations just increase the total unemployment percentage?

    • educationrealist

      I thought pain point meant the point at which someone flinched or changed behavior because of pain.

      “How much can we even model what removing / discouraging various forms of illegal immigration would do to our economy?”

      We can’t. That’s why this was so interesting. I discussed and linked the quant data that did exist.

      “is it possible to macroeconomically manipulate this to encourage that the unemployment distributes to illegal immigrants instead of legal residents? Or would such manipulations just increase the total unemployment percentage?”

      They would, I think. But in any case, why do we want illegal immigrants around to be unemployed?

      • anonymousskimmer

        In economic terms I have read that “pain point” is synonymous with a…, well here, the definition: “a problem or need a business or company aims to solve”

        “why do we want illegal immigrants around to be unemployed?”

        If it meant fewer unemployed citizens then some people would want it. Personnel reserves of last resort have been used throughout history (underclasses, women – Rosie the riveter). This is theoretically (though not practically, obviously) the reason for most work visas today.

        Ideally (from a self-empowerment point of view), what we want that pertains to other people shouldn’t matter, unless an individual’s behavior directly infringes on my personal rights (whatever those may be). And even then, the rights should be balanced as much as possible to see which is more important (I can suffer some discomfort for your absolute need, but I should not lose my need for your want). But I’m an asocial kind of guy, and ideals are simplistic and fail in the face of politics, which balances hypothetical or statistical groups against groups instead of real and complex individuals against individuals.

  • momof4

    It doesn’t get much mention, but the amount of money sent “back home” by illegal immigrants is highly significant – I wish I could remember the numbers. The government is providing services – schooling, including free meals (extra expensive because of ELL and spec ed), medical care, food stamps, perhaps other forms of welfare etc – so they can send more of their earnings out of the country.

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  • Boodles

    I lived in Scottsdale when SB 1070 was passed. Within a few weeks, though barely reported by the media, entire elementary schools in the Spanish-speaking parts of town had been emptied. Entire families — all illegal — left for friendlier places like Atlanta, Texas and New Mexico.

    The ed establishment who were unanimously opposed to the bill, and whose jobs were threatened by decreasing enrollment and shut schools had something like a gag order for teachers who had once worked or knew about these schools. Absolute silence was enforced. At one point, however, a local television station did a short piece on the school closures during which time a teacher was interviewed. Her command of English was so “challenged” that I didn’t understand a word she was saying.

    It’s a mess in Arizona.

    After watching this from afar, I’ve become a firm believer in “exporting” illegal children to their home countries, using immersion techniques for legal children, and making absolutely certain that all teachers who teach immigrant children are English native speakers.

    There are so many Spanish-speaking families in AZ that they don’t have to leave their language ghettos to have a minimalist life in America. Past immigrants scattered — not all, but most — and their children merged into the dominant society. Hispanics, not so much. They have come here in such numbers that they’re forcing the dominant, English-speaking society to adapt their customs and meet their cultural needs.

    This explains, in part, the rise of Trump. It’s not xenophobia, or some of the stupid accusations the ed establishment throws at parents, but a desire to match the rate of immigration to the rate of assimilation.

    • educationrealist

      I have an earlier piece on ending ELL support, because over half the kids getting services are natives. A third of long-term ELLs are third generation. ELL support is basically masking cognitive issues as language.

      I believe you about the schools virtually being wiped out. We’d save a lot of money in certain areas.

  • J Oliver

    “The government thinks it knows better than the people”

    Isn’t that the whole point of representative Government? We he people do not have time to delve into all this so we elect smart people we trust to do it for us.

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