Mass immigration and the growth of inequality

James Wickham looks at mass immigration and the growth of inequality and shows why it is important to link immigration to changes in an economy’s occupational structure.

The claim that immigration is economically beneficial appears to be an article of faith amongst those who consider themselves progressive. However, mere changes in total GDP often mean little in terms of the lived reality of society. Much more important is whether or not mass immigration changes the social structure and the pattern of economic inequality.

Economic inequality (in the distribution of income and wealth) has been growing in virtually every developed society. It is clear that there is no single cause, but one important driver is changes in the occupational structure. In some countries, but especially in the UK and the USA, occupational growth has polarised: there are more well-paid high-skilled jobs, there are more low-paid jobs, but there are fewer moderately well-paid secure jobs in the middle.

A growing social science research suggests that the reason for the existence of low-paid jobs has been precisely the availability of a large pool of immigrant labour. Low-paid jobs have expanded simply because there are people prepared to do them. If this labour supply did not exist and, crucially, if there was no alternative labour supply, then the jobs would not exist. The argument that immigrants are ‘needed’ to fill existing jobs takes the existing jobs and hence the occupational structure for granted; furthermore, it accepts that immigrants are the only possible source of additional labour.

In some sectors enterprises’ business model depends upon paying low wages. The transformation of agriculture in the USA and more recently in the UK has involved a shift to forms of production and even to crops that are only viable because of low wages. Employers, sometimes supported by immigration advocates, now argue that food production can only occur if there is cheap immigrant labour.

Mass immigration and new servants

Until the 1980s domestic servants were declining in numbers. Today professionals and managers expect to employ domestic labour to clean their houses, mind their children, etc. These jobs are overwhelmingly taken by immigrants who are often illegals. Intriguingly, the particular beneficiaries are women earners at the upper end of the income distribution – purchasing labour in the home enables them to devote more time to their remunerative career. Thus, one US study shows that, in areas with a high immigrant population, high income women spend more time at work than in areas where there are fewer immigrants. Such privatised domestic employment ensures that there is less pressure on men to contribute to domestic labour – and certainly reduces the demand for effective publicly funded childcare.

The new availability of low wage labour has contributed to the survival and even expansion of low technology manufacturing. One US study shows that engineering firms are likely to use less capital in production in areas with high immigrant populations. Indeed, in some areas the availability of low wage labour is facilitating technological regression – the replacement of capital by labour. Instead of driving the car to a self-service car-wash, you get the car ‘valeted’ by workers who use nothing more advanced than a bucket and mop. Away from such public view, in many European cities there is a revival of the clothing industry, based on micro-workshops using only the very simplest technologies and immigrant workers with very long hours and low pay.

This relationship between mass immigration and occupational change cannot be generalised to all periods and places. The mass European migration in the second half of the 19^th century to the USA and other areas of new settlement did not have this result, nor in fact did the mass immigration to Western Europe in the post-world war period. It is, however, clear that today those who call for ‘open borders’ – the unrestricted entry of unskilled workers into the EU – are facilitating a more polarised occupational structure, more low paid workers and greater social and economic inequality.