New Study: Immigration Redistributes Income from Poor U.S. Workers

Nation's top immigration economist finds tiny overall benefit comes from reducing wages of native-born competitors

WASHINGTON, DC (April 9, 2013) – Borjas, recognized by Business Week and the Wall Street Journal as “America’s leading immigration economist”, calculates that the wages of native-born workers in competition with immigrants (legal and illegal) are reduced by $402 billion per year.

This reduction in wages is offset by an increase in profits or wages of those who use immigrant labor of $437 billion. The resulting negligible "immigration surplus" represents two tenths of one percent of GDP. It is most often the least-educated and poorest American workers competing with immigrants who suffer the most from immigration.

Illegal immigration, specifically, creates an even smaller benefit to the overall economy – six one-hundredths of one percent – which comes from the same source: lowering the wages of less-educated American workers.

The report, “Immigration and the American Worker: A Review of the Academic Literature”, is published by the Center for Immigration Studies and is online here. It does not address the fiscal impact of immigration (taxes paid minus costs created for government), which is a separate question from the labor market effect.

Dr. Steven Camarota, Director of Research of the Center for immigration Studies, comments, “Professor Borjas's findings on the magnitude of the immigration-driven reduction in wages for less-skilled American workers is disturbing. I hope those formulating immigration policy in Washington will consider the effects on our poorest countrymen of amnesty for illegal immigrants and further increases in legal immigration.”

More detail on the report's findings:

 *  The presence of immigrants (legal and illegal) in the labor market makes the U.S. economy (GDP) an estimated 11 percent larger ($1.6 trillion) each year. This “contribution” to the aggregate economy, however, does not measure the net benefit to the native-born population.

 *  Of the $1.6 trillion increase in GDP, 97.8 percent goes to the immigrants themselves in the form of wages and benefits; the remainder constitutes the “immigration surplus” – the benefit accruing to the native-born population.

 * The estimate benefit to the native-born from immigration (legal and illegal) is equal to $35 billion a year – or about 0.2 percent of the total GDP in the United States.

 * The immigration surplus is generated by reducing the wages of native-born in competition with immigrants by an estimated $402 billion a year.  However, the profits of business owners and other workers are estimated to increase an estimated $437 billion.

 * For this benefit to exist, some American workers must suffer lower wages.  The best research indicates that workers with less than a high school education lose the most.

 * Those without a high school diploma make up a modest share of the workforce. However, they are among the poorest Americans. Moreover, the children of these workers account for one-fourth of the children of the native-born working poor.

 *  Illegal immigration has increased GDP by an estimated $395 to $472 billion a year. As before, this “contribution” to the economy does not measure the net benefit to natives.

 *  The immigration surplus or benefit to natives created by illegal immigrants is estimated at around $9 billion a year or 0.06 percent of GDP – six one-hundredths of 1 percent.

 *  Although the net benefits to natives from illegal immigrants are small, there is a sizable redistribution effect. Illegal immigration reduces the wage of native workers by an estimated $99 to $118 billion a year, and generates a gain for businesses and other users of illegal immigrant labor of $107 to $128 billion.

 *  The above estimates for illegal immigrants are generated by the presence of additional workers in the labor market, not their legal status.

 *  Looking at immigration from 1990 to 2010 indicates that the average annual earnings of American workers were reduced by $1,396 in the short run.

 *  The same type of education/age comparison used to measure the wage impact shows that a 10 percent increase in the size of a skill group reduced the fraction of native-born blacks in that group holding a job by 5.1 percentage points.

The above is a press release from from Center for Immigration Studies. 1522 K St. NW, Suite 820,  Washington, DC 20005, (202) 466-8185 fax: (202) 466-8076.  Email: center@cis.org. Contact: Steven Camarota, 202-466-8185, sac@cis.org

The Center for Immigration Studies is an independent research institution which examines the impact of immigration on the United States.  The Center for Immigration Studies is not affiliated with any other organization





Reject Gang of 8 Immigration Reform Deal

A bi-partisan group of Senators, known as the Gang of 8, have put together a framework for the immigration reform that supposedly America is waiting for.

Provisions of the agreement have been widely leaked and, from what I see, these Senators should return to the drawing board.

If we are going to tackle immigration reform, there should be agreement at the outset on what objectives should be achieved. In my view, there should be three. It should enhance the freedom, fairness, and security of the nation. If not, why bother?

The Gang of 8 proposal makes no gains on any of these fronts, and on at least one – fairness–makes a bad situation even worse.

It seems to be the way of Washington these days to take issues that are huge and complex, devise comprehensive mega-reforms--too massive for any single person to read or grasp, and pass new law that exchanges one set of problems for different even bigger ones.

We just finished going through this with reforms of our financial services system and our health care system. Now we’re about to do the same with immigration.

It’s not smart to think that in one new law we can secure our border, deal with 11 million illegals now in the country, devise a new way of allowing skilled labor to enter the country, and devise a way for employing unskilled foreign labor.

But Washington is trying to do it all and it seems that another legislative disaster is waiting to happen.

A purported achievement of the Gang of 8 is an agreement between big business and unions regarding the hiring of unskilled foreign labor.

As our nation buckles under the load of excessive government, the proposal here is to give Washington even more power and build yet another new government bureaucracy.

The plan calls for a new Bureau of Immigration and Labor Market Research. And why yet another new bureaucracy at a time of trillion dollar deficits and cancelled White House tours for students?

Quotas, which can be adjusted over time and market conditions, will be set for how many visas will be permitted for unskilled foreign labor. We’ll need a new army of bureaucrats sitting in Washington to study and report on conditions of different labor markets.

The quota starts at 20,000 and can reach, over time, a ceiling of 200,000. At its peak, illegal immigration was around 500,000 per year. So in boom times, even at full quota, we could still have illegals sneaking over the border.

Government bureaucrats not only will determine how many can be hired, but also what they can be paid.

In this case, “prevailing wage.” “Prevailing wage” is a defining provision of the Davis Bacon Act, passed in 1931 to keep unskilled black labor from competing with union workers – at the time uniformly white – on federally funded projects.

“Prevailing wages” are generally union wages and assure that taxpayers pay top dollar for government construction projects. Now, in the name of immigration reform, the “prevailing wage” standard is brought, for the first time, to the private sector.

Which gets to the fairness issue. Employment set asides designated for unskilled foreign workers, with wage levels set by government, is nothing but a stick in the eye to competing low wage workers in the American market.

It so happens that today these would be black workers. At 13.8%, black unemployment now is almost double the national average. But according to analysis done by Remaking Debate (remakingdebate.org), unemployment among young black men with no high school diploma is 51.6 percent. Unemployment among all black men and women with no high school degree is 30 percent.

The Gang of 8 immigration reform proposal is a non-starter. We must reject any reform that doesn’t make our nation freer, fairer, and more secure.

SOURCE