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October 04, 2007

Britain's Immigrants: An economic profile claims that the earnings of Britain's immigrants are higher than those of the British-born - This analysis is based on flawed assumptions, argues Anthony Scholefield

Posted by Anthony Scholefield

The Institute for Public Policy Research report Britain's Immigrants: An economic profile argues that Britain's immigrants have higher average earnings than the British-born population. Anthony Scholefield - the author of Warning: Immigration Can Seriously Damage Your Wealth - shows that this analysis ignores the fact that the British immigrant population lives disproportionately in London where average earnings are substantially higher than the national average.

The Institute for Public Policy Research's (IPPR) report Britain's Immigrants: An economic profile, which formed the basis for Channel 4's Dispatches' programme, Immigrants: the inconvenient truth [1st October 2007], substantially overstates the earnings of the foreign-born. Its main conclusion is that:

on most criteria, most immigrant groups do better in economic terms, than the UK-born population ... [and] has better economic characteristics.
This is quite simply incorrect.

This is because there is a statistical flaw in the report which does not compare like-with-like. The report compares the earnings of foreign-born with the average national British-born figures instead of the relevant regional British-born figures which are a true comparison.

The IPPR comparison would only be valid if the foreign-born were distributed regionally in the UK in the same proportion as the British born. In fact, it is thought that at least half of the foreign-born live in London with the next largest group in the South East. These have much higher earnings than other regions of the UK.

Only eight per cent of the UK-born live in London and enjoy the high earnings of the London work force. It is a false comparison to compare the earnings of one group, 92 per cent of whom do not work in the high-earning London area, with other groups, 50 per cent of whom work in London.

If one followed the skewed analysis of the IPPR report one would have to conclude that the UK-born who work in London have better "economic characteristics" than the rest of the UK-born labour force. The IPPR analysis also must mean that the 50 per cent of any immigrant group who settle in London are in some way self-selected so as to have better "economic characteristics" than the other 50 per cent of the same immigrant group who live outside London.

Again, the income of each group of foreign-born depends on which percentage of the relevant group are in the high earnings areas of London and the South East. Indeed, earnings are not a particularly reliable comparison as costs of living in London are extremely high.

Comparisons of unemployment rates, social housing, occupation, income support claimants, etc. should also be done on a regional basis to show a true comparison.

A further matter is the age distribution of each group of foreign-born. Those with a greater number in the 45-65 age group are likely to have a greater number of supervisory and managerial workers and, therefore, higher incomes.

The most important flaw in the IPPR report is however how it deals with earnings comparisons.

Average (mean) weekly earnings in June 2006 according to the Labour Force Survey (the ASHE Survey) were as follows:

Weekly Earnings
London: 618.70
South East: 461.20
Yorkshire: 392.00
North West: 408.00
Wales: 388.40
North East: 380.90
U.K.: -

Yearly Earnings
London: 32,172
South East: 23,982
Yorkshire: 20,384
North West: 21,260
Wales: 20,196
North East: 19,806
U.K: 23,244

N.B. These figures are greater than those in the IPPR table which was an amalgamation of 2005/6 figures.

In Table 5.6 of the IPPR report there is a ranking of average gross income of the economically-active working age population by country of birth.

The UK-born average national income is stated by the IPPR at 21,250 p.a., with a range of incomes for the foreign-born, from the USA at No. 1 at 37,250, down to Somalis at 13,700.

The report does not tell us what the average gross income of the UK-born is in London. However, from the above ASHE figures we know the average gross income of all London workers is 32,172 in 2006.

If the IPPR figures are reworked using, for example, Nigeria-born and France-born as comparative with the UK-born and assuming eight per cent of the UK-born earn London earnings and 50 per cent of France-born and Nigeria-born earn London earnings and London earnings are 38.5 per cent above UK national rates, a preliminary rough calculation shows the following:

London Earnings: 29,866
Rest of UK Earnings: 21,334
National Average: 25,600

London Earnings: 29,516
Rest of UK Earnings: 20,531
National Average: 21,250

London Earnings: 25,199
Rest of UK Earnings: 18,001
National Average: 21,600

In other words, the UK-born go storming up the comparisons' ladder both in a comparison of London wages and Rest of UK wages. As the IPPR earnings appear to be about ten per cent below the June 2006 ASHE figures, an addition of ten per cent to all the above figures would bring the UK-born earnings to:

London: 32,467
Rest of UK: 22,584
National Earnings: 23,375

These check out against the ASHE figures quoted above.

Whereas the IPPR table lists the earnings of the Nigeria-born as higher than the UK-born, the re-worked analysis shows that they are in fact at least ten per cent less than those of the UK-born.

The conclusions of the IPPR report that the

average immigrant has better economic characteristics than the average UK-born person
are incorrect as regards gross earnings because it is not comparing like-with-like. To put it another way, the report implies that the foreign-born who settle outside London have worse economic characteristics than members of exactly the same foreign-born group who settle in London and have higher gross earnings.

Anthony Scholefield graduated from Christchurch, Oxford, in History. Later he took a degree in Economics and Statistics at London University and became a Chartered Accountant. He is the author of Warning: Immigration Can Seriously Damage Your Wealth.

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Thank you, Mr Schofield, for that demolition of the report's deceit and suggestio falsi. The pro-immigration side are not interested in facts, logic or economics: they've decided that, come hell or high water, they're going to keep the borders open. Some of them undoubtedly have malevolent intent: the inevitable trouble caused by immigration has already justified authoritarianism very much to the liking of New Labour's superannuated student radicals.

Posted by: Laotsu at October 17, 2007 06:17 PM

I have also analysed some IPPR figures and found that the impressive earnings of immigrants is all down to the high earnings of Canadian, U.S, Australian and Irish immigrants (see the above URL). We scarcely regard this lot as "immigrants" particularly the Irish (who by the way are doubly irrelevant because they are responsible for no net migration to the UK).

Average earnings per person of working age for Canadian, U.S. and Australians is 28,800, Brits and European immigrants are around 16,000 and the rest: 13,500.

Posted by: Ralph Musgrave at November 20, 2007 10:04 AM
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