Does Congress Care about American Workers?

 

Amnesty and Higher Immigration Levels Make No Economic or Moral Sense

Mike Scruggs

     The current immigration “reform bill” before the U.S. Senate is likely to have catastrophic consequences for the United States if passed. Calling it a “reform” bill is breathtaking deception driven by greed and unscrupulous lust for political power.

     Before the misguided 1986 amnesty, an average of about 300,000 legal immigrants were admitted to the United States every year. In the last decade, we have averaged a total of one to 1.5 million legal and illegal immigrants per year. The illegal immigrants have averaged about 500,000 per year. The result is that we have about 12 million illegal immigrants here, and a total foreign-born population of 40 million, most of whom have come since 1980. At nearly 13 percent, the foreign-born portion of our population is at a record high.

     A very basic rule of economics is that a shortage of goods or labor drives prices or wages up, but that an excess supply of goods or labor drives prices or wages down.

     In 1997, the Jordan Congressional Immigration Reform Commission, after more than six years of study recommended that immigration be limited to 550,000 annually in order not to harm American workers or stress the social and cultural fabric. Because big corporations and industry associations were pressing for more low cost foreign labor, however, Congress ignored the Jordan Commission recommendations. Consequently most American workers and their families have made negligible real progress in income and standard of living since the 1970s.

     The Center for Immigration Studies has just released a paper by Harvard Labor Economist George Borjas, who is a Cuban immigrant, outlining the unfortunate effect of excess legal and illegal immigration on American workers and their families. Borjas points out that the presence of legal and illegal immigrant workers make the U.S. economy (GDP) about $1.6 trillion or 11 percent larger per year.

     GDP, however, measures bigness but not prosperity. Prosperity needs to be measured by GDP per person or household. If all of Mexico immigrated to the U.S., it would make us bigger but not necessarily more prosperous. It could, in fact, create a huge welfare, healthcare, and health insurance drag on the United States.

     Borjas’s analysis indicates that 97.8 percent of the $1.6 trillion increase rewards the immigrants themselves in the form of wages and benefits. The net surplus is only $35 billion per year, just 0.2 percent of the GDP. But this is by no means the full story.

     Borjas and his associate researchers have frequently asserted that U.S. immigration policy, especially with its politically driven emphasis on importing cheap foreign labor, amounts to a redistribution of wealth from American workers and taxpayers to immigrant workers and those who use low-cost immigrant labor. 

     Now here is the bottom line of Borjas’s findings, which are in line with standard economic models:

“The immigration surplus of $35 billion comes from reducing the wages of natives in competition with immigrants by an estimated $402 billion per year, while increasing profits or the incomes of users of immigrants by an estimated  $437 billion.”

This standard or textbook model also tells us that illegal immigrants increase GDP annually by $395 to $472 billion, producing a net surplus of $9 billion per year. This reduces the wages of native workers by $99 to $118 billion and generates a gain for illegal immigrant labor users of $107 to $128 billion per year.

     It is no wonder that lobbyists spent $1.5 billion from 2007 through 2012 to initiate or influence immigration legislation.  It worked for big agriculture and big business but not for American workers and their families. Labor Unions have ignored the needs of their own members in the hope of getting more dues money from easily organized foreign workers. Nor has the plight of American workers been championed by the mainstream media. They are more concerned with the hardships on the immigrants who are displacing American workers and driving down their wages. Even many churches are ignorantly calling for amnesty and more immigration that will hurt the poorest American workers and their families the most. One problem for American workers is that the public is terribly ignorant on how excess immigration is hurting them. They are continually misled by the reverberating propaganda of an odd combination of business lobbyists and leftist political agitators. The mainstream media offers little corrective edification.

     On the left, they know that more cheap labor eventually translates into Democrat votes from a growing big government oriented welfare constituency.  If amnesty passes, it will probably destroy the Republican Party and marginalize both economic and social conservatives to permanent political impotency. One irony of all this is that the business lobbyists who profit from amnesty and cheap foreign labor may destroy economic freedom by continuing to flood the electorate with new voters who prefer increasing government management of the economy.  

     In addition to the labor effects of excess legal and illegal immigration, taxpayers subsidize education, healthcare, law enforcement, and other costs not borne by the employers of cheap foreign labor. The lowest estimate I can find for this by fairus.org is $84 billion per year, which is by no means all-inclusive. It does not include the Heritage Foundation’s minimum $250 billion per year for Social Security and Medicare liabilities should there be an amnesty. Nor does it include the looming impact of amnesty on Obamacare. Expanding guestworkers from the already bloated army of 700,000 is pregnant with huge fiscal and native wage suppression problems.

     Amnesty and higher levels of immigration make no economic or moral sense, when 20 million Americans who want a full time job cannot find one. Where is our respect and compassion for American workers and their families?

“Therefore because you trample on the poor and you exact taxes of grain from him;…you have planted pleasant vineyards, but you shall not drink their wine.”

—Amos 5: 11.