These questions are based on feelings and the pre-conceived perceptions, and thus the reason why some people are on one side or the other of this debate does not always have to do with the economic reality of these actions.
When seeking to flesh out the answers to these questions with the discipline of economics in mind, it seems that though this issue is not solely related to economics, the economic conclusions reached in answer to these questions should be the primary perspective considered when any person is making a decision on whether or not one of these sides of this debate is correct or incorrect – because the economic perspective is one that impersonalizes the debate and thus can be easier for all sides to understand and accept.
Based on economic facts and through analysis, immigrant labor in the U.S.A. has not been bad for the country historically. And, if making decisions on whether or not the rate of immigration into the U.S.A should be increased or decreased is informed by economic facts and historical data – then as of now we must conclude that the rate of immigration should remain the same, until economic facts indicate one way or other, that increasing immigration rates will either benefit U.S. citizens on average and on net, or that decreasing the rate of immigration will benefit the U.S. citizens on average or on net.
1. Labor is, the resource that consists of the physical and mental talents of individuals used in producing goods and services”(Economics, 10).
2. Producers: Producers face costs to produce. The producer looks to maximize profit while also satisfying the customer. Producers also will not continue to produce if the costs are too great, or most producers will drop out of the market leaving only a few producers to stay in business, if only a few businesses could produce at a profit. Producers must always tend to their total costs. “Total cost is the sum of fixed cost and variable cost at each level of output: TC = TFC + TVC (Economics, 161)”
3. Budget constraints are an important factor when discussing immigrant labor. Because producers do not have unlimited resources, producers must choose on what to spend capital on; thus producers face constraints and thus create and use budgets for how resources are allocated over the course of the firms existence, in short term and long term periods. Companies must consider the cost of labor, because a company will lose competitive advantage and profit if the company pays more for labor than necessary. For example, if only college educated people are in the work force, then it seems natural that companies would have to pay a higher wage for jobs that only require manual labor and do not utilize the skills that come with a college education.
Utility Maximization of Consumers
4. The Effect of Utility Maximization of Consumers on Firms: The reason why firms want to be able to competitively price as well or better than other firms is because of consumer behavior. Consumers will maximize utility as an aggregate, and in the long-run. Which is to say, if a firm is charging higher prices for the same product as that other firm produce, consumers will eventually buy the cheaper products because the utility will be the same., thus running the firm with higher price out of business. The only choice the firm with the higher price has it to match prices with other firms, or go out of business. So then, if a firm has to pay higher rates of pay for labor to produce its products than other firms, then the firm with more expensive labor will still have to match prices with firms who produce with cheaper labor costs. Thus, if firm is the only firm that pays higher rates for labor, that firm will make less or no profit, and will eventually be squeezed out of the market by other produces who do not have as high of a cost for labor.
5. Competition is “the market system that depends on competition among economic units. The basis of this competition is freedom of choice exercised in pursuit of a monetary return”(Economics, 31). Let’s also remember that firms must think of their production needs in the Short-Run and Long-Run, because firm Competition in the Short Run is the time period when not all inputs are variable, and Firm Competition in the Long Run is when all inputs are variable. Thus, if a firm gets the highest profits margins in the beginning of its existence, the firm must plan to allocate capital in a manner that will prepare it for competition in the long-run term, because other firms will charge lower prices and be able to replicate nearly any product. Thus it is wise for any firm to hire the cheapest labor at all times to maximize profits in the long-run, when inevitably competition will tighten profit margins. Thus immigrant labor is desirable if the labor pool available to the firm’s home country does not provide the best labor for the best price.
International Trade & Immigration
6. How International Trade Factors into U.S. Immigration Rates: The cost of production of the U.S. does not simply have to do with competition between U.S. firms. U.S. firms have to seek the cheapest labor costs that maximize profits in order to stay competitive with products that are produced by other countries. U.S. firms can lose profits or completely go out of business of firms do not seek to always be as competitive as possible with producing firms outside of the U.S.
How These Key Concepts Tie Together to Effect immigrants in the U.S.A
- All Economies need production because production is good for everyone overall and in the long run.
- Producers are motivated by profits for themselves, and profits are needed to stay in business in the long run.
- Producers need capital and labor to produce goods.
- Producers must gain profit from the mixture of capital and labor to stay in business.
- If labor is too expensive, Producers will use pure capital if it becomes cheaper than labor.
- Immigrants either provide high levels of expertise that firms need and is hard to find domestically, or immigrant labor is cheaper and lowers a producer's input cost which results in more profit.
- Producers have to compete with other producers for profits.
- The more profitable a producer is, the more likely it is they will dominate the market and stay in business, while driving other producers out of business.
- In the long-run of competition, all producers must take minimal profits because consumers will look for the best deals always, in the long run.
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Other Posts from Immigrants Series
Part 3. Let's Discuss Immigrants: What Data Should We Use in Discussing & Why? What do Immigrants Mean to Every U.S. Person?
Peri, Giovanni. The Effect of Immigrants on U.S. Employment and Productivity. Federal Reserve Bank San Francisco. Web. Aug. 2010. http://www.frbsf.org/economic-research/files/el2010-26.pdf
Rytina, Nancy. Baker, Bryan. Estimates of the Lawful Permanent Resident Population in the United States. Jan. 2013. Web. https://www.dhs.gov/sites/default/files/publications/ois_lpr_pe_2013_0.pdf
Singer, Audrey. Immigrant Workers in the U.S. Labor Force. Brookings Institute. Web. 2012. http://www.brookings.edu/research/papers/2012/03/15-immigrant-workers-singer - 1