National Data | 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:
“No, I said to the last part. They just underbid.
“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:
- Net economic gain from the immigrant presence to native-born Americans, before transfer payments: just 0.2 percent of GDP (that is, two-tenth of one percent!) in today`s 10.4 trillion economy — that comes to a mere $84 per native-born American.
- Native-born capital-owners` gain as a result of immigration: about 3.1% of GDP, or $323.8 billion. This goes to employers and, for example, upper-income owners of stocks and employers of servants.
- Native-born workers` loss as a result of immigration: about 2.9% of GDP —$302.9 billion in a $10.4 trillion economy, or a remarkable $2,578 for each native-born worker every year.
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.]
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.]