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June 05, 2004
Economic Impact of Mass Immigration Worse than We Thought
In previous
columns, we have outlined the role immigration plays in
diminishing the economic prospects of
American-born workers. Using the analysis developed
by Harvard economist
George Borjas, for example, we calculated the
average wage loss of native-born workers at 4.9 per
cent, or $2,600 per year, due to the immigrant
presence. [National Data,
October 21,2003]
Lower wages
do mean higher profits for native owners of capital—businesses
and
well-to-do Americans who derive most of their income
from dividends, capital gains, and other returns to
capital. It’s one reason for the increasingly
skewed income distribution in the U.S.
Borjas has
now refined his analysis, focusing on the income lost by
natives with different levels of education, age, and
race. [George Borjas, “Increasing
the Supply of Labor Through Immigration,” CIS
Backgrounder, May 2004.]
He finds that while
the immigrant influx of the 1980s and 1990s lowered
wages of most
native workers, the biggest hits were taken by those
at the top and the bottom of the education distribution:
[Table 1]
 | By contrast, high school graduates and workers
with some college lost a mere 2 percent. Phooey! |
Less well known are the
differences within each education level. Immigrants, for
example, make up nearly half of all
high school dropouts with 10 to 20 years of
experience, but only 30 percent of those with less than
5 years experience. As a result, native dropouts with 10
to 20 years of work experience (roughly the time when
marriage and children are most likely) suffer the
largest percentage wage loss due to immigration— about
12.5 per cent.
The biggest losers:
native-born Hispanics and Blacks, because their
education and experience profiles are closest to those
of immigrants:
Borjas also concludes
that
Mexican immigrants accounted for virtually all
of the immigration-related wage reduction suffered
by low-skilled native workers—and none of the
immigrant-related wage impact on
college graduates.
If immigrants were
really needed to
“do jobs that natives do
not want to do”
there would be no discernable impact on native wages.
That’s clearly not the case.
What about the likely impact of the Bush
Administration’s
proposed temporary
guest worker program? Borjas foresees that it
“will generate higher earnings losses for workers, and
will lead to an even greater redistribution of wealth
from labor to those who buy and use immigrant products.”
Hmmm!
Who would want that?
[Number fans
click here for tables.]
Edwin S. Rubenstein (email
him) is President of
ESR Research Economic Consultants in Indianapolis. |
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