Immigrants’ houses and lost jobs: the myths

Nigel Farage’s claim on the leaders’ debate last week — that we need to build a house every seven minutes to house immigrants — bugged me for several days, until I looked into it.

It turns out it’s kind of true, but filtered through the, er, truth kaleidoscope, of a politician. It’s depressing how politicians of all parties spout figures as fact, knowing that most people are too lazy to look them up.

The facts are these.

The Confederation of British Industries believes Britain needs to build 240,000 houses a year to keep up with population growth. That’s total growth, from a body that represents the building industries.

There are 525,600 minutes a year, which means that the CBI believes one house should be built every two minutes.

The Office for National Statistic (ONS) gives a net migration of 298,000 for 2014. Assuming a household of four people**, those people need 74,500 homes — and this would appear to be the one house every seven minutes that Mr Farage refers to.

This needs to be set against the one house every two minutes we need in total, and ONS figure is all migrants, from footballers and bankers to East European labourers. (To save you working it out, using the CBI recommendation, immigration accounts for 30% of new homes needed).

But the figures don’t account for East Europeans coming over and living 23 to a room in rented squalor, or — a lesser number — for people who come over and go and live with family.

Referring to the former: the Joseph Roundtree Foundation says that 75% of recent migrants live in rented accommodation — that would be 223,500 people, using the ONS figure for net migration. Rented accommodation, by definition, exists, so they don’t want new homes.

That leaves 74,500 immigrants wanting private homes (either for themselves or the people whose houses they buy). Divide by four to get the total number of families and you get migrants needing only 18,600 homes which is 7% of the CBI total.

That’s one house every 28 minutes for migrants, a lot less than Mr Farage’s figure. It’s a crude sum but then so’s Mr Farage’s, so it’s only fair.

And even using the 70k-houses-for-migrants figure, we still need 165,500 houses, or a house every three minutes in total.

** I aired this on Facebook and someone questioned the average family size of four people: the average household in the UK is 2.3 people. But (i) Mr Farage’s figure seems based on a four person household and (ii) the 2.3 average includes pensioners and widow(er)s, who are less likely to want new houses but reduce the average household size, particularly with an ageing population. The UK has a higher percentage of households with three or more children than three-quarters of European Union countries.

***

Sticking with immigration, the facts are hard to pin down, and politicians bend the stats to suit.

To give it some context, I recently heard an interview with American Adam Davidson, an economist and founder of US podcast Planet Money.

He was discussing whether poorly paid immigrants take local jobs, a common complaint both here and in the US.

He said there was “zero debate” among economists that high-skilled migrants — people with degrees — helped the country, and generated wealth.

Turning to unskilled immigrants (eg Mexicans legging it over the border), he said there was a “slight debate”.

He said nearly all economists agree that, long-term, these unskilled workers make Americans better off. The debate centres on whether they hit the income of low-skilled Americans, mainly African American males in inner cities. The most pessimistic put this at $1,000 dollars – unskilled Mexicans cost high school drop-outs in deprived areas about $1,000 a year. This is highly debated, and most economists believe that the unskilled migrants have no effect or a small one, much less than $1,000.

One case study is south Florida, in 1980: 120,000 Cubans landed in a short space of time and 45,000 of these were working age, representing about 7% of that city’s working population.

Economists found this flood of cheap workers had no impact on wages (again, there was some disagreement) but said Mr Davidson: “If you don’t see big effects, you’re probably talking about minor effects”. In other words, the fact that the economists argue about the fine detail means there probably was no big effect.

He said immigrants complemented native workers, not substituted them (in the same way as an iPhone is a substitute to a Samsung but a complement to headphones).

He said immigrants often worked alongside native born workers. He’d studied construction sites in Brooklyn, often seeing two or three native-born skilled Americans owning the company, employing cheap migrants to do the grunt work.

But they weren’t taking local jobs: having cheap labour made contracts cheaper, which made the work more affordable for more people, and so the pie got bigger — more people could afford to use builders and there was more work all round.
Mr Davidson said immigrants were a net burden locally (using health and education services) but a net benefit nationally, as working family members paid tax.

Concluded Mr Davidson: “Immigration is essential. Take away the immigrants and we are in real, real trouble -— look at Japan, they are in profound trouble.”

As Mr Davidson pointed out, America can be very under-populated — Alaska and Montana are among the least densely populated areas in the world — but it’s probably a fair bet that we’d see a similar picture here.

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