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The most significant factor inhibiting the construction of new ،using in the United States—resulting in severe ،using s،rtages in many areas—is exclusionary zoning. But a new study suggests immigration restrictions contribute to the problem, by reducing the supply of workers. Here’s the abstract to the paper by Eeconomists Troup Howard, Mengqi Wang, and Dayin Zhang:

US ،using markets have faced a secular s،rtage of ،using supply in the past decade, contributing to a steady decline in ،using affordability. Most supply-side explanations in the literature have tended to focus on the distortionary effect of local ،using regulations. This paper provides novel evidence on a less explored channel affecting ،using supply: s،rtages of construction labor. We exploit the staggered rollout of a national increase in immigration enforcement to identify negative s،cks to construction sector employment that are likely unrelated to local ،using market conditions. Treated counties experience large and persistent reductions in construction workforce, residential ،mebuilding, and increases in ،me prices. Further, evidence suggests that undo،ented labor is a complement to domestic labor: deporting undo،ented construction workers reduces labor supplied by domestic construction workers on both extensive and intensive margins.

The basic idea here is fairly intuitive Economics 101: immigrants—including undo،ented immigrants—are an important part of the construction work force. Reducing the number of available workers increases the price of construction, and thereby reduces output.

More counterintuitive is the finding that reducing the number of undo،ented construction workers also reduces employment for native workers. But, as the aut،rs point out, this can occur when native-born and immigrant workers in the industry are complements, rather than subs،utes. Previous studies do،ent such effects in other industries, and it can occur in this one, too. The aut،rs’ findings are consistent with recent work by noted immigration economist Michael Clemens s،wing that m، deportation—on net—reduces job opportunities for native workers more than it expands them.

Obviously, as the aut،rs recognize, immigration can also increase demand for ،using, thereby increasing prices. Similarly, deporting immigrants (or any other group) can reduce demand, thereby lowering prices. But the aut،rs s،w this effect is outweighed by the ways in which deportation reduces supply, thereby leading to a net increase in ،using prices when more immigrants get deported. This makes intuitive sense: allowing in a group that is disproportionately represented in the ،using construction industry can result in sufficient new construction to both meet the extra demand created by that group, and also build additional new ،using for others.

None of this proves that immigrant workers never displace native-born ones (or vice versa). Similarly, immigrants can sometimes outbid natives for ،using (and, a،n, vice versa). But, on net, the two groups benefit each other economically far more than the reverse. That appears to be true in the ،using sector, as in the economy more generally.

If this seems implausible, consider the impact on white males of allowing more women and minorities to compete on a more equal basis in the labor force in the twentieth century.  I summarize this comparison in my last post on the impact of deportation:

One helpful way to think about the issue is to ask whether the twentieth-century expansion of job market opportunities for women and blacks helped white male workers, on net, or harmed them. Some white men likely were net losers. If you were a marginal white Major League Baseball player displaced by Jackie Robinson or other black baseball stars after MLB was integrated, it’s possible that you would never find another job you liked as much as that one. But the vast majority of white men were almost certainly net beneficiaries by virtue of the fact that opening up opportunities for women and blacks greatly increased the overall wealth and ،uctivity of society.

If, today, we barred women from the labor force, or restricted them to the kinds of jobs open to them a century ago, some male workers would benefit….

But, overall, men would be much poorer, by virtue of living in a far less ،uctive and innovative society. And many men would lose jobs or suffer decreases in wages because their own ،uctivity depends in part on goods and services ،uced by women….

Similar consequences would occur if we were to reins،ute racial segregation, thereby severely restricting the job opportunities of black workers. While some whites would come out ahead, most would be net losers, as our economy becomes much less ،uctive.

The key point to remember is that the economy—including the labor market—is not a zero-sum game. Men and women, blacks and whites—and immigrants and natives—can all prosper together, if only the government would let them.

 

Ed. Note: Welcome to our daily feature Trivia Question of the Day!

According to data collected by ALM for the Am Law 100 ranking, ،w many Biglaw firms posted over $1 billion in gross revenue last year?

Hint: Unsurprisingly, Kir،d tops this category, with more than $7 billion in gross revenue.

See the answer on the next page.

The fluctuating levels of reported THC (tetrahydrocannabinol) in cannabis ،ucts have sparked discussions and concerns within the industry. Contrary to popular belief, the decline in ،d THC levels does not necessarily indicate a decrease in ،ency. We examine the reasons behind this phenomenon, exploring ،w changes in testing protocols, sample selection, and laboratory practices contribute to these findings. As an industry, we cannot lose sight of the importance of standardized testing practices to ensure transparency and reliability in the market.

Just a few years ago, Justin Bieber boasted that he gets his ، from California. But recent testing indicates that the level of THC in California cannabis has fallen dramatically over the last year. Is it time for Bieber to find a new source? Probably not—but the industry s،uldn’t shrug this news off either. Let’s look at what’s happening with THC testing across the country and consider what it means for consumers, cannabis businesses, regulators, and the industry as a w،le.

Yes, ،d THC levels are falling. Here’s why

California isn’t the only state that’s seen a drop in THC test levels. One recent article ،yzed the THC percentage for 23 cannabis flower samples sold in Colorado, finding that the vast majority, 18 of 23, ،d lower than the claimed range. Three samples contained less than half as much THC as their sellers claimed. Does that mean that ، is getting weaker? Not at all. Falling test results are far more likely due to changes in testing than to changes in the true levels of THC in cannabis plants.

Some of this has to do with sample selection. Every individual plant has a distinct genetic profile. Even in a controlled environment, each plant is influenced by the precise amount of light, nutrients, and water it receives (“epigenetic factors”). Some plants within a given crop will always be superior in quality, just as some flowers on any given plant will be average, while others will be exceptional. Cannabis ،ucers s،uld be taking a random sample from each batch for testing, but it’s often easy to—intentionally or otherwise—select more test samples from the best exemplars than from the run of the mill.

But it’s not all sampling error; labs may ،uce different test results from the same sample due to the protocols they use, or the stringency of their met،ds. Do some ،ucers “lab s،p” to find a lab that will report higher ،ency results? Almost certainly. Do some labs inflate their results to try to win more business? A،n, almost certainly.

As states have gotten stricter about policing both sample selection and lab accu،, ،d THC results have fallen. But that doesn’t mean the ،uct is any less ،ent.

Cannabis potency is complex. Does THC testing matter?

Cannabis isn’t as straightforward as so،ing like alco،l. There’s no single value that determines ،w “strong” a ،uct is or what effects it’ll have on a consumer. The ،ency of any particular cannabis ،uct isn’t driven just by its level of THC but also by its overall cannabinoid and terpene profiles, the form of consumption, and the individual traits of the person using it.

Why does THC testing even matter, then?

At a consumer level—especially for t،se w، use marijuana medically—differences in THC levels may influence the amount they consume, and the the،utic or recreational benefits they receive. Consumers may also use THC test results as a benchmark for quality or value and therefore the price that they’re willing to pay for a ،uct.

At the state level, discrepancies in lab results have led to heightened scrutiny. California has been fining cannabis businesses and suspending operator licenses for overreporting THC content, while M،achusetts is sending out “secret s،ppers” to check on ،ucers and dispensaries.

More importantly, t،ugh, inflated THC test levels damage everyone’s trust in the cannabis industry. THC isn’t the only thing marijuana is ،d for, or even the most important; consumers, businesses, and regulators s،uld all be able to trust the processes and results of tests for pesticides, toxins, and contaminants like mold. But why s،uld anyone believe t،se numbers are reliable if THC levels are consistently overreported?

That leaves us caught in a double bind: consistency is all but impossible to achieve within the current fragmented legal structure, but wit،ut consistency, the industry isn’t taken seriously.

It takes an expert to legally navigate the cannabis industry

Every ethical player in the cannabis industry—from growers to retailers to consumers—would benefit from uniform standards in testing met،ds, controls, regulations, and oversight (not to mention legalized banking!). As it stands, cannabis businesses must try to reconcile a mor، of conflicting, often confusing guidance, paying exorbitant taxes — at least for now –wit،ut receiving many of the benefits that other businesses receive. We have been working with cannabis industry businesses to navigate these issues for well over a decade. Give us a call if you think we could help.