Time to dispel some economic myths

Quite a few dubious economic theses are floating around Washington these days. Such myths often affect public thinking and possibly alter economic policy.

Here are four myths worth addressing:

Myth No. 1: The Social Security system faces a severe crisis.

If you define "crisis" as something that may happen decades in the future, perhaps it is.

The Social Security Administration says that the system will not be able to pay full benefits to retirees starting in 2041. Those reduced benefits, however, will have greater purchasing power than what retirees get today. The Congressional Budget Office says this "crisis" point won't be reached until 2052. The most optimistic projection of the Social Security Administration itself sees no crisis ahead at all - and that cheerful forecast of the system's revenues and expenses has proved mostly right in recent decades.

Most projections of economic affairs far into the future are suspect. A former chief economist of Citibank kept a collection of long-term projections of the economy. Usually the forecasts sounded silly five or 10 years down the road.

Myth No. 2: Immigrants, legal or illegal, take the hard jobs that native-born Americans won't do.

Nonsense, says Dean Baker, co-director of the Center for Economic and Policy Research (CEPR) in Washington. If business paid them enough, he argues, native-born Americans would do the work many less-educated immigrants do.

In fact, US citizens fill most dirty or dangerous jobs that pay well - unionized coal miners, city sewer workers, and risky lumberjack jobs, for example.

Low-paying jobs that are mostly filled by immigrants include farm and yard workers, building custodians, and meatpackers. In the 1970s and earlier, slaughterhouse workers were primarily US citizens. But since then, the pay and benefits have declined enormously in real terms. Managers, seeking low-cost labor to boost profits, now hire many immigrants.

If wages in jobs now dominated by immigrants were raised, say from $6.50 an hour to perhaps $12 or $15, some jobs and business activities "would be priced out of the market," Mr. Baker notes. More householders would rake their own leaves. More vegetables might be grown in Mexico or Chile.

But certain jobs couldn't flee the country. Janitors living in El Salvador can't clean a Boston building. Transportation difficulties and costs would probably hinder putting a meatpacking plant in Mexico.

As it is, the inflow of immigrants in the past five years - half of them illegal - has been the highest in history, according to Steven Camarota, research director at the Center for Immigration Studies in Washington.

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