Immigration Is Bad And Good For American Workers
George J. Borjas, an economist who's studied immigration, explains what he's found in his research at Politico -- basically that immigration helps and hurts Americans, but different groups of Americans are helped versus hurt:
Both low- and high-skilled natives are affected by the influx of immigrants. But because a disproportionate percentage of immigrants have few skills, it is low-skilled American workers, including many blacks and Hispanics, who have suffered most from this wage dip. The monetary loss is sizable. The typical high school dropout earns about $25,000 annually. According to census data, immigrants admitted in the past two decades lacking a high school diploma have increased the size of the low-skilled workforce by roughly 25 percent. As a result, the earnings of this particularly vulnerable group dropped by between $800 and $1,500 each year.We don't need to rely on complex statistical calculations to see the harm being done to some workers. Simply look at how employers have reacted. A decade ago, Crider Inc., a chicken processing plant in Georgia, was raided by immigration agents, and 75 percent of its workforce vanished over a single weekend. Shortly after, Crider placed an ad in the local newspaper announcing job openings at higher wages. Similarly, the flood of recent news reports on abuse of the H-1B visa program shows that firms will quickly dismiss their current tech workforce when they find cheaper immigrant workers.
But that's only one side of the story. Somebody's lower wage is always somebody else's higher profit. In this case, immigration redistributes wealth from those who compete with immigrants to those who use immigrants--from the employee to the employer. And the additional profits are so large that the economic pie accruing to all natives actually grows. I estimate the current "immigration surplus"--the net increase in the total wealth of the native population--to be about$50 billion annually. But behind that calculation is a much larger shift from one group of Americans to another: The total wealth redistribution from the native losers to the native winners is enormous, roughly a half-trillion dollars a year. Immigrants, too, gain substantially; their total earnings far exceed what their income would have been had they not migrated.
When we look at the overall value of immigration, there's one more complicating factor: Immigrants receive government assistance at higher rates than natives. The higher cost of all the services provided to immigrants and the lower taxes they pay (because they have lower earnings) inevitably implies that on a year-to-year basis immigration creates a fiscal hole of at least $50 billion--a burden that falls on the native population.
Here's how welfare plays out, financially.
What does it all add up to? The fiscal burden offsets the gain from the $50 billion immigration surplus, so it's not too farfetched to conclude that immigration has barely affected the total wealth of natives at all. Instead, it has changed how the pie is split, with the losers--the workers who compete with immigrants, many of those being low-skilled Americans--sending a roughly $500 billion check annually to the winners. Those winners are primarily their employers. And the immigrants themselves come out ahead, too. Put bluntly, immigration turns out to be just another income redistribution program.Once we understand immigration this way, it's clear why the issue splits Americans--why many low-skilled native workers are taking one side, and why immigrants and businesses are taking another. Our immigration policy--any immigration policy--is ultimately not just a statement about how much we care about immigrants, but how much we care about one particular group of natives over another.
Is there a potential immigration policy that considers the well-being of all native Americans? Maybe so. It's not a ban on immigrants, or even on low-skilled immigrants. High-skilled immigration really can make America wealthier. The steady influx of legal immigrants also produces more taxpayers, who can assist financially as the native population ages.
His upcoming book, We Wanted Workers: Unraveling the Immigration Narrative.







The steady influx of legal immigrants also produces more taxpayers, who can assist financially as the native population ages.
That doesn't make sense. The only people getting rich from this are business owners who make greater profits by employing cheaper labor, and those profits aren't subject to payroll taxes. Everyone else just ends up earning less, which in turn yields lower payroll taxes.
I chuckle when people say the Boomers didn't have enough children to support Social Security. Their children are more numerous than they are - the problem is they don't make any money.
Pirate Jo at September 16, 2016 2:56 PM
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