Commentary: Reduce foreign competition to boost North Carolina wages

Commentary: Reduce foreign competition to boost North Carolina wages
April 13
14:00 2017

Bill Kniegge

Guest Columnist

For black North Carolinians, the Great Recession never ended. From 2009 to 2014, black residents’ incomes plummeted 21 percent in Winston-Salem, 17 percent in Raleigh, and 15 percent in Charlotte and Greensboro.

North Carolinians of other races aren’t faring much better. In 2015, the average North Carolina household earned $400 less than it did in 2009, after adjusting for inflation.

Wages are stagnant or declining because blue-collar North Carolinians face excessive competition from foreign labor. By striking fairer trade deals and lowering immigration, elected leaders could tighten the labor market. Employers would have to boost wages to attract workers.

Many companies have shipped jobs overseas to take advantage of cheaper labor. From 2001 to 2011, America lost 3.2 million jobs to China alone.  North Carolina – a former powerhouse in textile manufacturing – has suffered more from outsourcing than any other state, according to the Labor Department.

To add insult to injury, many employers pass over local workers in favor of cheaper immigrant laborers.

In Charlotte, the construction firm that built Bank of America’s corporate center specifically sought out foreign workers – including illegal ones –according to Owen Furuseth, a geography professor at University of North Carolina-Charlotte. Furuseth explains how these immigrant workers “called their brother, they called their cousin, they called their family members back in Mexico” to encourage them to come work in the area.

Illegal workers now comprise 5 percent of North Carolina’s labor force – the 12th-highest share in the nation.

Business leaders have justified hiring foreign workers by arguing that they can’t find enough blue-collar Americans to do the job.

The facts don’t support such claims. Overall, wages in Charlotte and Raleigh are on par with the national average, and in Durham, they’re 18 percent higher. But construction workers in Charlotte earn 20 percent less than the national average construction wage. In Raleigh, these laborers earn 18 percent less.  And in Durham, 19 percent less.

If there was really a shortfall of available blue-collar laborers, employers would have been forced to raise wages.

The “labor shortage” is nothing more than a corporate myth used to justify hiring cheaper immigrant labor instead of giving local American workers a chance.

Excess competition drives down wages. Harvard economist George Borjas calculated that foreign workers depress Americans’ wages by over $400 billion each year. Minority workers bear the brunt of this competition. Borjas warns that when immigration boosts the size of a particular skill-group –those with only high-school diplomas, for instance – by 10 percent, black men’s earnings drop 2.5 percent and their employment rate declines nearly 6 percent.

So what’s the solution? Implementing trade deals and tax policies that discourage outsourcing would be a good start. Requiring businesses to use E-Verify, an online system that instantly checks whether new hires are authorized to work in the United States, would stop illegal employment and tighten labor markets virtually overnight.

North Carolina’s Congressional delegation could also reform the immigration system to prioritize admission for highly-skilled foreign professionals, like doctors, while downsizing or eliminating guest worker programs that depress wages for blue-collar workers.

North Carolina’s professional class is prospering. But the state’s blue-collar workers are still waiting for the economic recovery to reach them. It’s time to limit excess competition for jobs and allow wages to rise naturally.

Bill Kniegge is an army veteran and a small business owner in Charlotte.

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