Immigration, wages and education: An uneasy compromise between economics reality and political goals.

Decentralization of political decisions in democracies impairs the ability to coordinate economic policies. The crisis in European Union exemplifies the tension between desire to retain local autonomy and need for synchronizing policies in an integrated economy. The same problem exists even within nations as the power is shared between the national, regional and local governments. Even jobs that require few skills will be hard to fill if the working conditions are unattractive. In Lombardy region, the dairy industry which requires two four-hour shifts twelve hours apart was in dire shape as young Italians preferred work that leaves evenings and weekend free. The immigration of Sikhs who were willing to take those jobs saved the industry.1 Unites States has attracted refugees from Europe, skilled workers seeking jobs in its universities and industries and family members of those who legally reside here. They were given permanent resident status or citizenship under various rules. A large number from South American countries, particularly Mexico, have entered the country without valid visa. The total number of undocumented immigrants is estimated to be 11 million. There are many who argue that they have broken the law and should be asked to leave while others argue that the economy cannot take the shock of expelling them. Many of those from Mexico work in the agricultural industry where working conditions and wages are not attractive to American labor. As the eight senators who developed the Bipartisan Fr amework for Comprehensive Immigration Reform put it quite bluntly: Similarly, individuals who have been working without legal status in the United States agricultural industry have been performing very important and difficult work to maintain Americas food supply while earning subsistence wages. Due to the utmost importance in our nation maintaining the safety of its food supply, agricultural who commit to the long term stability of our nations agricultural industry will be treated differently than the rest of the undocumented population because of the role they play in ensuring that Americans have safe and secure agricultural products to sell and consume.2 The proposed policy will avoid an immediate shock to the vibrant agricultural sector by retaining those who are already in the country and allowing temporary visas for additional foreign workers depending on the tightness of labor market. It is prudent policy given that the dependency on foreign laborers was allowed to build over time. Whether a substance wage model of agriculture is sustainable in the long run is to be seen. Economic development in South American countries will reduce interest in coming to U.S. for temporary jobs and as the children of the low paid workers aspire for better paying jobs.

The United Sates has also a shortage of skilled workers. The quota for H1-B visas for skilled workers for 2013 is expected to be exhausted within weeks of it becoming available.3 The Bipartisan Framework states that the present system in inefficient and unarguably discourages innovation and economic growth. It wants to do a better job of attracting and keeping the worlds best and brightest. Every nation has benefitted by entrepreneurial foreigners who have brought to their host community a new vision and a drive to succeed. But it should not be used to avoid asking whether the country has the population and infrastructure to increase the supply of skilled persons within itself. Education is a state subject under the U.S. constitution and the local bodies that run the schools do not have the perspective of how their actions affect national policies. The schools are financed mostly by local property taxes and in poor localities where housing stock is depreciated the schools are not well funded. In addition, there is a sociological problem. Poorer areas have a predominance of single parent households and social problems like drug addiction and trade. One of the reasons given why men are falling behind women in collegiate education is the absence of male role models in the families. 4. Teachers, like sales representatives, are hard to monitor. Sales in an indicator of the efforts put by those out in the field though other factors like economic conditions in the area assigned to the person can vitiate the relation. The efforts a teacher puts in educating his class are hard to measure. There is a trend to use exams to measure class performance but text scores are influenced not only by what happens in the class but also by environment in which the student lives. As Nobel Laureate economist, James Heckman of the University of Chicago wrote in his survey of extensive research on education and human resources: Underdeveloped human potential burdens our economy and leaves us with a workforce that is could be. 5. He argues that the best investment in education is in the early years. President Obama, in his State of Union speech, proposed expansion of pre-kindergarten and early childhood education but under present budgetary conditions, it will be not get through the Congress. Moreover there is the argument that education is a state subject and its policies are best left to the states. The shortage of skilled personnel in U.S. is a problem created to a great extent by the society. U.S. has the potential to increase the supply of highly skilled individuals but is handicapped by the political structure and sociological factors. America has been a land of opportunity for many who came to its shore. But telling that to a five year old is not enough. She has to be shown not only the light at the end but the road to reach it. From the beginning of civilization this has been the goal of education. Many voluntary organizations like Boys Scouts strive to do the same. When the light is blocked or the path is obscure, is it surprising that a sizable segment of the population stays in darkness.

Footnotes:

1.
2.

http://www.nytimes.com/2011/09/08/world/europe/08iht-italy08.html?pagewanted=all

Concerned with the youth unemployment will create political unrest as in neighboring countries, Saudi Arabia has announced (mitaqat rule) that it will expel its undocumented workers and place limitations on the ration of foreign employees to citizens in private companies. The Saudi Government expects that it will create 400,000 jobs for Saudis. Whether Saudis will be willing to take up the jobs and how the process will work is yet to be seen. http://www.nytimes.com/interactive/2013/01/23/us/politics/28immigration-principles-document.html http://www.emirates247.com/business/economy-finance/saudi-says-no-plan-to-expel-foreign-workers-2011-07-051.405856
3.

http://online.wsj.com/article/SB10001424127887323916304578405082183498360.html?mod=europe_home

4.

http://www.nytimes.com/2013/03/21/business/economy/as-men-lose-economic-ground-clues-in-thefamily.html?pagewanted=all&_r=0
5.

The economics of inequality: The value of early childhood education, American Educator (Spring 2011, p.31).

Rama V. Ramachandran
http://www.visualeconomicanalysis.info/index.html Facebook: Ramanomics
Copyright 2013 Rama V. Ramachandran