Immigrants play a vital role in the economic well-being of Kern County. They provide innovation and work hours, altering the labor and products market in numerous ways. This article attempts to unmask the economic impacts of immigrants in Kern County, using a variety of research conducted over several decades, as well as the copious amounts of data available to us.
As of the most recent data, Kern County is comprised of 882,176 persons, with roughly 344,626 individuals employed in the labor force. Nearly 40,000 individuals are employed in farming and agriculture, almost 25,000 in resource extraction and construction, nearly 14,000 in cleaning and maintenance, nearly 14,000 in materials moving, and almost 20,000 involved in the food service sector.
0geographical location, this seems to correspond to the demographics of the foreign-born population in Kern County.
The Migration Policy Institute estimates that there are 75,000 unauthorized immigrants living in Kern County, which means that nearly 1 in 12 individuals in Kern County count as unauthorized to be in this country. Nearly half of these individuals are between the ages of 25 to 44, and over 70 percent have been in the United States for at least 10 years. This highlights an important fact about the population; they play an incredibly active role in the labor market in Kern County.
Legal immigrants comprise about 100,000 additional residents in Kern County, meaning that nearly 1 in 5 residents in Kern County are classified as foreign born. Again, nearly all of these residents are between the ages of 25 and 54, indicating that they play a disproportionately large role in Kern County’s labor market.
In fact, roughly 56 percent of all foreign-born individuals are employed in the labor market. This is contrasted to about 40 percent of all individuals employed in Kern County in total (including both native-born and foreign-born individuals). Again, this is in part due to the demographics of those who choose to come, indicating that many individuals who choose to migrate to Kern County come to work.
Among those who are of working age (18 to 65), out of the 382,900 working-age native-born individuals, about 244,000 are employed, imputing a labor force participation of about 64 percent for native-born workers. The numbers are 149,200 and 100,000 for foreign-born individuals, imputing a prime-age labor force participation rate of about 67 percent, acquired from the American Community Survey.
These numbers indicate that immigrants are an important driver of the Kern County economy, as about 1 in 3 workers in Kern County are considered foreign-born. We now need to investigate the impacts that these workers have on the economy in Kern County. In 2017, construction laborers earned $17.45 per hour on average, food preparation and service workers earned $12.46 per hour on average, cleaning and maintenance workers earned $14.77 per hour on average, materials moving earned $18.78 per hour on average, and farmworkers earned $10.89 per hour on average. This means that, in terms of labor income, about 75 percent of the foreign-born individuals earn about $2,014,376,000 in 2017, meaning that all foreign-born workers earn about $3,234,296,000.
Contrast this to total labor income in Kern County of about $16.8 billion. This indicates that foreign-born individuals in Kern County contribute about 19 percent of all labor income in Kern County. In fact, this indicates that immigrants contribute about 10 percent of Kern County’s GDP annually. Though this is disproportionately small to their size in the labor force, this is largely attributed to the blue-collar nature of their work and the fact that average wages for blue-collar workers tend to be small in Kern County.
Think about it this way: Every hour, between 8 and 5, immigrants are contributing nearly $1.5 million toward Kern County’s GDP.
Nationally, George Borjas has found that foreign-born workers are complements and work with native-born workers, as well as technology. At their current levels, immigrants provide net economic benefits (benefits minus costs) of $7 billion to $25 billion annually. In Kern County, this would amount to annual benefits from immigration of about $28 million to $101 million. This indicates that there would be sizable benefits to the business community, in terms of increased profits and increase in consumer retention from lowered prices, imposed by immigration.
Importantly, Borjas has found that the impact of immigrants on native wages is small. He examines the causes for these findings and determines that new immigrants tend to replace older immigrants rather than native-born workers, largely because new immigrants tend to move into occupations that are largely staffed by existing (older) immigrants. He also finds that native-born workers are much more mobile and are able to move to cities with less immigration (and less labor market competition) in response to an influx of immigrants into an area.
In Kern County, per the most recent data available, there was an increase of 7,459 working-age immigrants from 2014 to 2015. Using the average wage in Kern County (roughly $23 per hour), this means that native wages will have fallen between $0.36 and $0.43 per hour, solely because of the increase in labor market competition facing Kern County workers. Extrapolating this to the native-born workforce, this means that total labor incomes in Kern County will have fallen by about $25 million for workers annually (again, contrast this to the $1.5 million per work hour contribution of immigrants), but note that this is a wage decrease, rather than unemployment. This amounts to an average income loss, per native-born employed household, of $102 annually.
How can we explain that there are positive net benefits to immigration in Kern County?
Businesses benefit in Kern County by being able to lower prices of goods produced using the now relatively cheaper labor available in Kern County. This can not only offset the small loss in purchasing power for native-workers being paid a lower wage, but can also improve the economic outcomes for those who have seen no wage decrease. The average worker who faces a wage decline from immigrant competition sees an annual salary decrease of about $102. With the increase in immigration from 2014 to 2015, P Cortes has found that prices that firms can charge for the products will decrease by about 1 percent for immigrant-intensive products.
This corresponds to cost savings for your average Kern County worker of $2 per month in maintenance fees (totaling about $24 per year) and annual savings on the grocery bills of about $104. This means that, even with labor incomes falling by $102, for two types of goods (food and maintenance), workers are able to reap net benefits and see an increase in their relative position.
This piece exposes only a fraction of the labor-market benefits and costs to immigration. It does not explore the costs of business compliance, the cost of tax evasion, the benefits of innovation that immigrants bring or the benefits of having an incredibly multicultural county. But it begins to explore the necessity of crafting smart immigration policy that benefits our county. Immigrants play an incredibly vital role here in Kern County and eliminating even a small fraction of them would depress economic activity considerably.
Richard Gearhart is an assistant professor of economics at California State University, Bakersfield, and managing editor of the Kern Economic Journal, a publication that tracks and analyzes local economic trends and data.