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:

“`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:

 

  • 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.]

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.