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.
