THE split among congressional Republicans over whether to reduce legal immigration left the decision to minority-party Democrats. The choice of which Republican faction to back should not have been difficult, because the GOP rift is in essence about whether to promote a loose-labor or tight-labor economy.
The more abundant "populist Republicans" have been voting for the remarkably pro-labor action of reducing the importation of foreign workers. If they had gotten the support of only a third of the Democrats in the House last week, they would have tipped the balance against the "corporationist Republicans," who want to guarantee US corporations continued access to the current unprecedented flow of foreign workers. But on the key amendment, most Democrats voted with the "corporationists."
Americans are not at all uncertain about which faction they prefer. Amid nationwide anxiety about stagnant or declining wages, corporate-downsizing, and ever-sharper income disparity, opinion polls repeatedly reveal overwhelming voter support for immigration cuts far larger than the ones being fought over in Washington. Americans desire a return to the tight-labor and low-immigration conditions that helped feed the phenomenal midcentury growth and rising prosperity of the middle class.
A recent Roper poll found that 70 percent of the public favors slashing legal immigration from the roughly 1 million immigrants a year of the 1990s to below 300,000. That number is not historically low. During the 40 years prior to 1965, we took in 178,000 a year. Immigration from 1776 to 1965 averaged 230,000, about the level advocated by Republican Pat Buchanan in what most commentators consider an extreme position. But Roper found that 54 percent want the numbers even lower - below 100,000. Meanwhile, Congress balks over timid legislation that would take several years just to get the flow down to below 600,000.
One would expect the Democrats to challenge populist Republicans for the title of wage-earners' champions by advocating even-deeper cuts in two categories: (1) skilled immigrants, whose numbers are wreaking havoc among American engineers, scientists, physicians, and PhDs; and (2) members of previous immigrants' extended families, primarily lower-skilled workers who exacerbate the poor job markets for lower-skilled Americans.
But Democrats have been slow to take a stand for tightening the labor supply. They may not realize what they lose by ceding the issue to Mr. Buchanan, or they don't want to risk alienating Democratic-leaning ethnic organizations that desire high immigration to enlarge their political power. But the Democrats may also have lost confidence in the value of tight labor markets.
Much recent work by economists suggests that tight labor markets are good for workers of all skill levels and for the economy as a whole. Berkeley economist Paul Romer explains that per capita investment tends to drop during loose labor conditions. That is a key ingredient in determining whether per capita output - and thus wages - can increase. Mr. Romer found that throughout US history the growth of per capita output has declined when the growth in number of workers, from high immigration or fertility, went up. Studies by Harvard's Jeffrey Williamson have found that during periods of high immigration, the country experienced its highest degrees of wage disparity - similar to that of today.
Economist Harry Oshima found that when immigration was restricted in the mid-1910s and the mid-1920s, the resulting tight-labor conditions forced employers to raise pay. That induced employers to press for advances in mechanization. Growth in output per worker hour was phenomenal, making it possible to raise wages still further. In this cycle of productivity and wage gains the US became a middle-class nation.
The drastic reduction in immigration and lowered birth rate, according to Peter Lindert of the University of California-Davis, accounted for approximately one-third of the historic closing of the income gap during the early-to-middle part of this century, in which workers' incomes grew much closer to those of the upper class. While union power gets a lot of credit, Lindert concludes they got that power because of tight labor conditions. Loose labor conditions have not been the only contributors to the slower productivity growth and depressed wages of the last two decades. But economists Williamson and Timothy Hatton say that all mainstream economic models predict that migration will tend to lower wages where immigrants settle.
A Bureau of Labor Statistics report this year concluded that immigration of low-skill workers was responsible for roughly half the decline in real wages for native-born high school dropouts during the 1980s. Harvard's George Borjas calculates that high immigration during the 1980s helped facilitate a massive redistribution of wealth - more than $100 billion a year - from American workers to the upper class.
One would not expect Democrats to join in continuing the perverse Robin Hood scheme of radically high immigration that takes from middle-class workers and gives to the country's most affluent. But that is what most are doing by abandoning the populist Republicans in a first step toward restoring the worker-friendly conditions of a tight labor market.