Question

What impact could the “Wall” that Trump proposes have on wages in the USA? Why?

Answer 1

It looks like building the wall may not actually do much for American workers.

A study published on Monday by the National Bureau of Economic Research suggests that any success the Trump administration has in reducing the U.S.’s undocumented Mexican labor force won’t actually lead to more jobs or higher wages for U.S. workers.

At least that’s what happened in the past, according to the economists.

The study looked at the effects of ending the Bracero program, which were a series of agreements reached between the U.S. and Mexico concerning migrant farm labor, or braceros. The program, which ran from 1942 to 1964, extended a number of protections to the migrant laborers that were guaranteed for U.S. workers. By the time the program ended it covered nearly 500,000 seasonally employed Mexican laborers. Government officials said the roll back of those rights would improve employment and wages for domestic farm workers.

However, analyzing data both from states most directly affected by the end of the Bracero program and from states that were affected minimally, if at all, researchers found that excluding the braceros from worker protection laws didn’t have much of an affect on the labor market for domestic laborers. Farm employment and wages in the highly affected states, which lost up to a third of their seasonal laborers, were essentially the same as states that weren’t affected much by the program’s end. The braceros were not replaced in the years following their exclusion in notable numbers, whether by domestic workers, illegal Mexican labor, or authorized non-Mexican foreign workers.

Instead of ramping up hiring and boosting wages to compensate for the large, sudden drop in the labor force, employers adopted new, more efficient technologies, or changed their crop mix as a means of remaining profitable.

The study should stand as a warning for those who are cheering on Trump’s plan to spend as much as $25 billion on a Mexican boarder wall. Undocumented immigration from Mexico isn’t nearly as ubiquitous as it once was. Since 2009, there have been about 100,000 undocumented workers cross over from Mexico to the U.S., according to the Pew Research Center. That’s significantly down from the roughly 350,000 a year in the mid-2000s and more than 500,000 a year in the late 1990s. Those billions of dollars, plus the $2 billion it would likely cost a year to maintain the wall, could be better spent on other infrastructure projects or elsewhere in the economy.

And let’s not forget, forcing Mexico to “pay” for the wall via a tariff on Mexican goods would likely cause American consumers to buy less of those products, which would hurt Mexico’s economy. And if the job market starts to dry up there as a result, more Mexicans will head to the U.S. to look for employment, creating a bigger immigration problem then we have now.