Illegal Immigration Isn’t the Cause of All of California’s Problems

(Bloomberg Opinion) -- California is home to some of the most affluent, successful metropolitan areas in the U.S., and also some of the poorest, most troubled ones. The former tend to be on the coast, the latter inland. This divide has been apparent for quite a while, and the reasons for it are many and complex.

When I wrote a column earlier this week discussing this gap in the context of unemployment rates (despite a generally prospering state economy, 10 of the 19 U.S. metropolitan areas with unemployment rates of 5.5 percent or higher are in inland California), I heard from more than few readers who thought I had gone out of my way to avoid naming the likeliest culprit: illegal immigration. I actually didn’t discuss causes much in my column at all — they are, as I’ve just said, surely many and complex, and I didn’t want to spend 5,000 words inconclusively weighing them. But I had linked to an essay by historian Victor Davis Hanson that seemed to finger illegal immigration as the chief cause of California’s ills, and I had called it “hyperbole,” so fair enough: Can illegal immigration explain the economic problems of inland California?

Some of them, surely. Hanson writes that, of the 50 states, California has the second-highest share of adult residents without a high school diploma. Actually, according to 2017 data from the Census Bureau, it’s now No. 1, at 16.7 percent. It is fair to conjecture that this is driven by illegal immigration. The share of U.S.-born adult Californians who haven’t finished high school is, at 7.6 percent, well below the national average, but the share of non-citizen immigrant adults without high school degrees is a whopping 43.6 percent. California has tons of highly educated immigrants, too — in fact, foreign-born Californians are only slightly less likely to have graduate or professional degrees than U.S.-born state residents are — but those tend to be naturalized citizens or have work permits. Education levels are especially low in the state’s inland metropolitan areas. In metro Visalia-Porterville, for example, 31.4 percent of adults 25 and older surveyed from 2013 through 2017 hadn’t completed high school, and 72 percent of foreign-born, non-citizen adults hadn’t.

Beyond that, though, things start to get complicated. Metro Visalia-Porterville, aka Tulare County (the nation’s No. 2 agricultural county, and my home in 1988 and 1989), appears to have fewer undocumented immigrants as a share of the overall population (8 percent) than metropolitan San Jose (9.8 percent), according to estimates of 2013 county unauthorized-immigrant populations by the Public Policy Institute of California. Yet metro San Jose’s unemployment rate is just 2.4 percent, and in general these estimates show low-unemployment coastal metropolitan areas to have the same or higher percentages of undocumented immigrants as high-unemployment inland ones.

Also generally true is that non-citizen immigrants in the U.S. are much more likely to be in the labor force and have jobs than the native-born and have a similar unemployment rate (3.5 percent for non-citizen immigrants to 3.4 percent for the native-born in 2017). We don’t know exactly what the numbers are for undocumented immigrants, but the evidence here and in the preceding paragraph would seem to indicate that their presence doesn’t automatically translate into higher unemployment.

The absence of undocumented immigrants doesn’t automatically translate into lower unemployment, either. A couple of readers pointed out that the U.S. metropolitan areas with the lowest unemployment rates in November (of which there was a list in my column) are almost all in states with few undocumented immigrants. But the states with the highest unemployment rates (Alaska, West Virginia, Louisiana and Mississippi were the top four as of November) all also have low unauthorized-immigrant populations, according to Pew Research Center estimates.

The states with the highest numbers of undocumented immigrants as a share of population in 2014, according to those estimates, were Nevada (7 percent), Texas (6.1 percent) and California (6 percent). That Texas and California score so similarly on this metric is another indication that it is not all-determining. The two states, which together account for an estimated 36 percent of unauthorized immigrants in the U.S., both have high percentages of adults without high school degrees, with Texas coming in second to California at 16.4 percent. They have also been among the great success stories of the current economic expansion, with payroll employment up 21.6 percent in California and 23.7 percent in Texas since the beginning of 2010, compared with 15.5 percent nationwide. Beyond that, they are very different places, with divergent histories and geographies and political arrangements and economic challenges and opportunities. Which would seem to indicate that California’s particular predicament is not all about illegal immigration.

None of this is meant as a defense of illegal immigration. Allowing people to enter, stay in and work in the U.S. without permission is unfair to would-be immigrants who follow the rules; encourages flows of less-educated immigrants who generally bring fewer economic benefits than better-educated, legal ones do; may depress wages for some American workers; and is generally just shoddy policy. The best solution to it, though, may involve allowing more legal immigration, and in the meantime, it’s a huge stretch to blame the unauthorized immigrants who are here for most or even many of the ills that plague the country — among them the long-running economic divide between California’s coastal and inland metropolitan areas.

To be a bit more topical about it, it is an even huger stretch to depict current illegal immigration flows as a national emergency calling for immediate radical action from Washington. Most indications are that net inflows of unauthorized immigrants turned negative a decade ago, the result of tougher immigration enforcement and changing economic conditions in the U.S. and Mexico. The strongest evidence for the argument that illegal immigration is behind some of inland California’s woes may well be that those woes have lessened since the number of unauthorized immigrants in the state peaked in 2007. Unemployment rates in several Central Valley metropolitan areas have hit record lows this year (with the record going back to 1990), while inland per capita incomes have been rising relative to the national average.

Those incomes have still been falling relative to incomes in metropolitan San Jose and San Francisco, though. California’s coastal-inland economic divide is a stubborn thing, and its causes (and possible solutions) go way beyond illegal immigration. 

I used five-year Census data here because otherwise the error margins can get pretty huge for smaller metropolitan areas.

Tulare County was No. 1 from 2013 through 2015, but trailed neighboring Kern County in gross agricultural production in 2016 and 2017.

A big reason for this is that 64.2 percent of non-citizen immigrants in the U.S. were in the prime working years of 25 through 54 in 2017, while only 36.6 percent of native-born Americans were.

I state this so tentatively because the evidence really is pretty mixed, and as my Bloomberg Opinion colleague Noah Smith pointed out last year (in response to some remarks by none other than Victor Davis Hanson), the heyday of illegal immigration into the U.S. in the 1990s and 2000s coincided with stronger real wage gains than we've seen over the past decade.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”

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