October 21, 2003
Immigration Policy Costing American Workers
$2,600 A Year
A reader recently wrote us:
“Imagine my tremendous
consternation at being caught, even after having read Alien
Nation, by this dinner line:
“‘Our economy is better off with
immigrants. They do the jobs nobody
else wants to
do.’
“No, I said to the last part. They
just underbid.
“But I couldn't address the first
part, maybe because it's so large and unsubstantiated a claim. I
just mentioned such things as: the shutdown of public
hospitals in Los Angeles, welfare, crime, etc.
“Do you know of anyone with a
statistical answer to the challenge, ‘America is better off
economically with the immigrants’?”
Statistical answer: surprisingly, this is actually one of the
best-established findings in immigration economics—albeit the least
publicized.
The 1995 findings of Harvard economist George
Borjas [George Borjas, “The Economic Benefits from Immigration,”
Journal of Economic Perspectives, Spring
1995.]were confirmed by the National Research Council’s 1997
report The
New Americans: essentially all the increase in Gross
Domestic product [GDP] brought about by immigration is captured by
the immigrants themselves, in the form of wages.
Virtually no benefit accrues to native-born Americans.
(And once transfer payments like welfare, education and
healthcare are factored in, immigration becomes a net cost—for
example, over $1,000 in annual extra taxes per native-born
household in California. Americans are financing their own
dispossession).
Even less publicized: the Borjas model reveals the true economic
consequence of immigration: a massive redistribution of wealth
within the American native-born community—basically, from labor to capital,
because of immigration’s impact on wages.
The key variable: the rate at which native-born wages fall as the
total number of workers rises—the so-called “price elasticity” of
labor. Borjas estimates that each 10% increase in immigrant workers
reduces native wages by about 3.5%. About 14% of employed workers in
2002 were immigrants. So the reduction in native wages attributable
to immigrants that year was approximately 4.9% (35% of 14%).
As our reader told his dinner companions, it’s true that
immigrants don’t do work Americans won’t do—they just do it for
less.
But, more importantly, immigrants do indeed do one dirty job:
make it easier for Americans to exploit each other.
I’ve recalculated this immigration impact on the basis of the
latest government data. This is how it came out:
Remember, these are averages. Unskilled native workers lose far
more than the 4.9% average wage loss. Black Americans in particular
are big losers. But recent research shows that even college
graduates, once thought immune to immigrant competition, face wage
reductions. [See: George Borjas, “The Labor Demand Curve is
Downward Sloping: Reexamining the Impact of Immigration in the Labor
Market,” NBER,
June 2003.]
There are far fewer owners of
capital than there are workers in the U.S. The economic benefits
of immigration are concentrated in the elite. The losses widely
dispersed among ordinary
Americans.
That’s why the politics of immigration are so difficult—and why
you’ve only seen this finding, although it’s the consensus among
academic economists, reported in VDARE.COM.
[Number fans click here for table.]
Edwin S. Rubenstein (email him) is President of
ESR Research Economic
Consultants in
Indianapolis.
