Effect of Immigration on Low-Income American Workers

According to Camarota (2006) There are 10 million non-immigrant American workers without a high school diploma, 8% of the non-immigrant workforce.  Between 2000 and 2005, 34% of new immigrants had less than a high school diploma and those people compete for jobs with less-educated Americans.  Camarota estimates that this competition depresses the wages of people in occupations requiring little education (one fifth of all U.S. jobs) by more than 10%.  George Borjas, a Harvard economist, estimates that between 1980 and 2000, the wages of non-immigrant men without a high school diploma were reduced 7.4% by immigration (Borjas, 2004).  These are already the poorest, most economically vulnerable Americans, many of them minority members, and they also suffer increased unemployment as a result of the influx of unskilled immigrants.

Since the 1965 immigration act we have flooded our country with unskilled Third World labor.  During a period when demand for unskilled labor has decreased,  businessmen have used those immigrants, legal and illegal, to displace Americans, and particularly black Americans, from the workforce.  Borjas et al., (2006) found that from 1960 to 2000, the employment rate for non-immigrant black men fell from 90% to 76%, and for those with less than a high school diploma, from 89% to 56%.  We know the social tragedy that has resulted.  Black people were not the only victims.  For non-immigrant white men without a high school diploma employment dropped from 94% to 76%.  Borjas estimates that 20 to 40% of the increase in unemployment among these non-immigrant Americans results from immigration, with the highest percentages pertaining to less-skilled black men.

For low-skill American workers, the labor market is very much a zero sum game in which immigrants, legal and illegal, take many of the scarce jobs Americans would otherwise have.  Enforcement of immigration laws can ameliorate some of that harm by at least reducing the impact of illegal immigration.  Enforcement  imposes hardships on those who are caught, admittedly otherwise decent, hardworking people, but it allows other decent, hardworking people to provide for their families and recover their dignity.  Smithfield Packing is a very large meat packing plant in North Carolina, where federal workplace enforcement led to the departure of 1500 Hispanic employees.  Before, the plant’s workforce had been only 20% black, 2 years later it was 80% black, and the workers recently won union recognition (New York Times 12/13/08).  A similar story was played out at Howard Industries, a manufacturer of heavy electrical equipment in Laurel, Mississippi (Associated Press, 2009). These are not pleasant or high paying jobs, but there are Americans of all races who need and value them.

The meatpacking industry clearly illustrates the deleterious effect of an almost unlimited supply of unskilled immigrant workers.   After a troubled early history,  the industry had come to pay middle-class wages and to offer safe and humane working conditions.  Then, starting in the 1970s, the industry started to replace well-paid, often union workforces, with immigrant workers, first legal immigrants and now illegal immigrants, at much lower wages (Roy Beck, 1996).  In 1980, meatpacking plants paid average wages of $22.31/hr (inflation-adjusted 2007 dollars).  In 2007, average wages in the industry had fallen to $11.81, approximately half of what they had once been (Chicago Tribune 12/5/08).  The Democratic party, which used to be the champion of the poorest American workers, has thrown them to the wolves.  And, many Americans who work with their hands have been driven from the middle class into poverty.   It’s a sad thing to see.

REFERENCES

Camarota,  Steven A., 2006.  Immigration’s Impact on American Workers.  Testimony Prepared for the House Judiciary Committee, August 29, 2006. http://www.cis.org/articles/2006/sactestimony082906.html

Borjas, G.J., 2004.  Increasing the Supply of Labor Through Immigration: Measuring the Impact on Native-born Workers. Center for Immigration Studies. http://www.cis.org/articles/2004/back504.html

Borjas, G.J, Grogger, J and Hanson, G.H., 2006,  Immigration and African-American employment opportunities: the response of wages, employment, and incarceration to labor supply shocks. National Bureau of Economic Research, working paper 12518 http://www.nber.org/papers/w12518

New York Times, 12/13/2008 Steven Greenhouse. After 15 Years North Carolina Plant Unionizes. http://www.nytimes.com/2008/12/13/us/13smithfield.html?_r=1&pagewanted=print

Associated Press, 2009.  January, 24, 2009.  Immigration raid spotlights rift of have-nots. http://www.msnbc.msn.com/id/28816336/

Beck, Roy, 1996. The Case Against Immigration: The moral, economic, social, and environmental reasons for reducing U.S. immigration back to traditional levels, chap. 6. W.W. Norton and Co., New York.

Chicago Tribune, 12/5/08 Henry C. Jackson. Raids could force meatpackers to raise worker pay http://archives.chicagotribune.com/2008/dec/05/news/chi-ap-ia-slaughterhouseeco

Effect of Continuing High Immigration During the Recession

Steven A. Camarota (Camarota, 2004) of the Center for Immigration Studies examined the period 2000 to 2004, the last recession and recovery.  During the recovery, often characterized as  jobless, there was actually significant job creation.  The number of adult immigrants holding jobs increased, from 2000 to 2004, by 2.3 million, and half of those are estimated to have been illegal immigrants.  However, in the same period the number of non-immigrant Americans holding jobs fell by 0.5 million, the number of unemployed non-immigrant Americans increased by 2.3 million, and 4 million non-immigrants left the work force, i.e. they were no longer employed or seeking employment.  During the recession there were large job losses for non-immigrants, and very few for immigrants, however, unemployment increased even for immigrants, because immigration rates remained high.  As the economy recovered, a large percentage of the jobs created were filled by immigrants rather than by unemployed non-immigrants.  Employers used the recession to get rid of their well-paid American workforce and in the recovery they replaced them with a cheaper immigrant workforce.  The same thing is likely to happen in the current, much more severe recession.

REFERENCE

Camarota, 2004. “A Jobless Recover? Immigrant Gains and Native Losses,” by Steven A. Camarota of the Center for Immigration Studies http://www.cis.org/articles/2004/back1104.html

The High Cost of Cheap Immigrant Labor

Whenever it is suggested that illegal immigrants return to their home countries or that the massive influx of unskilled legal immigrants be halted, it is always claimed, for the benefit of conservatives and the greedy, that these generally very poor, hard working immigrants benefit us by contributing to our economy.  But, I am a scientist and I expect to see quantifiable assertions backed up by numbers, and this is an important issue because it bears on our standard of living and quality of life.  So, What do the numbers tell us?  Robert Rector and Christine Kim (2007 published a study evaluating the tax costs and contributions in 2004 of non-diploma immigrant households, meaning those headed by an individual who has not completed high school.  Sixty percent of these immigrants are legal, 40% are illegal, and there are 15.9 million people in these households.  Rector and Kim found that in 2004 the average non-diploma immigrant household had a total income of $28,890.  From this, they paid taxes of $10,573 to all levels of government, directly and also indirectly, through purchases, landlords or as taxes paid by their employers.  However, the average non-diploma immigrant household received taxpayer supplied benefits of $30,160.  That means the household was being subsidized to the tune of $19,587 a year out of the pockets of other taxpayers.

In order to calculate only the actual fiscal and economic impact of the presence of these non-diploma immigrants, the $30,160 of calculated taxpayer supplied benefits included only direct benefits to them such as education, welfare and other public assistance, and their share of expenses that increase with population, such as the cost of roads and law enforcement.  It does not include what would be their fair share of the cost of such enormous government expenses as defense, research, and interest on the national debt.  Rector and Kim also point out that these immigrants will not save Social Security and Medicare for us, because they consume more government benefits than they pay for with taxes, throughout their lives.

The huge direct tax subsidy to non-diploma immigrants is alarming, but after all they are “contributing to the economy.”  Let’s look at how their contribution to the economy compares with what they receive from it.  In economic terms, the total of goods and services that a household provides to the economy is reasonably estimated as the income earned by the members of the household, plus the profit they contribute to the businesses that employ them, plus taxes paid by the employer on behalf of employees.  These include taxes for unemployment insurance, workers compensation, and the employer’s share of Social Security and Medicare taxes.  In 2004 corporate profits in the U.S. were 22% of total wages and salaries (Center on Budget and Policy Priorities) , and it is reasonably assumed that the labor of workers provides 70% of those profits.  With those percentages, the immigrant household would contribute profits of $4449 to its employers and the economy.  If we add that to the household income of $28,890 and the applicable employer paid taxes of $1943, the household’s total contribution of goods and services to the economy is $35,282.

But, what about  the goods and services received by the household from the economy?  This includes the $30,160 in household benefits from the government, plus the household’s income of $28,890.  From this is subtracted $7757, which is the total in taxes that the household pays directly or indirectly (as through purchases) from its income.  The grand total of goods and services received is $51,293.  So, they are consuming $51,293 in goods and services, but contributing only $35,282.  Because we are an affluent nation that provides roads, schools, parks, police protection and some medical care to all of our people, the average non-diploma immigrant household actually consumes $16,011 more each year than it produces.  The household incomes do not include employer-supplied health insurance or retirement plans, but since these would be added to both what the household produces and what it receives, they do not affect the $16,011 difference. There is no question that these immigrants are hard working people, but in economic terms they are effectively here as benefit recipients, not as workers.  Although they make the total economy (GDP) larger, which is what politicians and the media celebrate, they actually make the rest of us poorer by consuming more than they produce.  We are paying for their free lunch.

Don’t these unpleasant numbers apply also to low-income workers among native-born Americans?  They do, but it is a matter of fairness and mutual responsibility to ensure that all of our fellow citizens share equally in our benefits and have a decent standard of living.  And, those Americans suffer a triple burden imposed by non-diploma immigrants.  In addition to the expense of supporting them financially that we all share, cheap immigrant labor depresses the wages of all Americans who choose to make an honest  living with their hands.  Also, as I will show in another post, this immigrant job competition results in massive unemployment among the less educated.

We now receive about 1.1 million legal (Department of Homeland Security, 2008) and an average of 500,000 illegal immigrants per year  (Camarota, 2007).  Of  immigrants arriving from 2000 to 2007, 35% have less than a high school education (Camarota, 2007).  That translates into more than half a million poorly educated immigrants a year. Would Americans willingly import  that number of non-diploma foreign workers (legally and illegally) if they realized that we will all have to subsidize them with our taxes for the rest of their lives, with the only significant benefit to Americans going to the tiny percentage who directly employ them?  Cheap immigrant labor is not necessary or even good for our economy, it is an extravagant luxury.

But, while we are summing things up, perhaps we should consider the humanitarian benefit of our policies.  This is difficult to quantify, but for what we spend to maintain one immigrant in a state of poverty in our high-cost nation we could lift up a whole village in his homeland with programs for schools, medical care and nutrition for children. If people are hungry you can feel good by taking a random few to lunch at the Ritz-Carlton, or you can do good by contributing to a soup kitchen where they live.  Are we really helping the poor of those countries or just taking a little political heat off their ruling elites by running a high stakes lottery for their citizens?   We need to examine our immigration policies in the light of the facts.

REFERENCES

Rector, Robert. and Kim, Christine, 2007. The Fiscal Cost of Low-Skill Immigrants to the U.S. Taxpayer. Heritage Special Report, SR-14.  The Heritage Foundation. http://www.heritage.org/research/immigration/sr14.cfm

Center on Budget and Policy Priorities.  Share of National Income Going to Wages and Salaries at Record Low in 2006, http://www.cbpp.org/8-31-06inc.htm

Department of Homeland Security. Yearbook of Immigration Statistics: 2008. Table 1: Persons Obtaining Legal Permanent Resident Status: Fiscal Years 1820 to 2008. http://www.dhs.gov/ximgtn/statistics/publications/LPR08.shtm

Camarota, 2007. “Immigrants in the United States, 2007: A Profile of America’s Foreign-Born Population,” by Steven A. Camarota of the Center for Immigration Studies. http://www.cis.org/immigrants_profile_2007

Immigration Driving Population Increase

Under the current immigration law and enforcement regime, the United States is experiencing a higher rate of immigration, legal plus illegal, than ever before, and it is driving a large increase in population. In 2005 our population was 296 million. Passel and Cohn (2008) forecast an increase to 438 million in 2050 (the Census Bureau (2008) predicts 439 million).  Of the 48% increase from 2005 to 2050, 82% will be due to immigrants who arrive during that period and the descendants of those immigrants.  And, our increasingly crowded nation is already the third most populous on earth.

Even though people sense that current immigration rates are high, we naturally assume that they must be much smaller as a fraction of total population than in the other major immigration wave in the late 19^th and early 20^th Centuries. However, even on a fractional basis, current immigration rates are approaching the earlier figures, and the results are the same.  Census figures (Passel and Cohn , 2008) show that in 1890, 14.8% of the U.S. population was foreign born, the largest percentage in our history.  In  1970 it was only 4.7%, but by 2007 it had risen to 12.6% (Camarota, 2007), the highest it’s been in 80 years, and it’s still increasing. Passel and Cohn (2008) project that under current trends the previous high percentage of foreign born will be exceeded in 2023, and it will be 19% in 2050.

It is tempting to see our rapid population increase as an inevitable result of world population growth, but that too is a misconception.  The Population Reference Bureau (2008) reports that from 2008 to 2050 the U.S. population will grow by 44%.  Canada, which accepts many immigrants, albeit more selectively, will grow by 26%.  Latin America and the Caribbean, with generally higher birth rates than ours, will grow by 35%.  The population of Mexico will grow only 22%, by virtue of continuing emigration to the United States.  The population of Europe will actually decrease by 7% and Japan by 25%.  The populations of China and Russia, our only credible potential military adversaries, will change by +8% and -22%, respectively. The world is not driving our population increase, nor are security concerns.

Immigration rates and enforcement of immigration law are entirely at the discretion of Congress and the President, and significant and repeated changes have been made since 1965.  In the early 1960s, and for many decades before, we received 300,000 or fewer immigrants per year, almost all legal (Camarota, 2007).  Now we receive about 1.1 million legal (Department of Homeland Security, 2008) and an average of 500,000 illegal immigrants per year  (Camarota, 2007).

Since the change in immigration law in 1965, most immigrants have come from Third World countries, and thus have minority status on arrival. Through some very convoluted logic this has made it politically incorrect to discuss reduction of immigration rates or even to suggest that they should not be increased.  Liberal doctrine now requires us to place the interests of foreign nationals above the interests of American citizens.  Business Republicans side with the liberals in order to provide cheap labor for their wealthy clients.  The environmental movement, which had long advocated population stabilization, has found it politically expedient to abandon the issue.

We need a common sense discussion of immigration that places the interests of the American people above ethnic politics, business desires, and ethereal fantasies of  a borderless world.  We need to consider immigration policy more rationally and broadly; and soon.  Even if immigration were reduced immediately to more traditional levels, rapid population growth would continue for decades.   A report by the National Research Council (1997) found that had there been no immigration after 1995, U.S. population would have peaked at 310 million in 2040, then slowly declined.  Our population will reach 310 million in 2010 (U.S. Census Bureau, 6/15/09).

REFERENCES

Jeffrey S. Passel and D’Vera Cohn, February 11, 2008. U.S. Population Projections: 2005-2050. Pew Hispanic Center, Pew Research Center, www.pewresearch.org.  You should be able to access the report at http://pewresearch.org/pubs/729/united-states-population-projection or go to the web site, click ‘publications index’, then ‘reports’ then scroll down by date

Census Bureau, 2008. Press Release for 2008 Population Press Release for 2008 Population Projections,Aug. 14, 2008,http://www.census.gov/Press-Release/www/releases/archives/population/012496.html

Camarota, 2007. “Immigrants in the United States, 2007: A Profile of America’s Foreign-Born Population,” by Steven A. Camarota of the Center for Immigration Studies. http://www.cis.org/immigrants_profile_2007

Population Reference Bureau, 2008 World Population Data Sheet     http://www.prb.org/pdf08/08WPDS_Eng.pdf.

Department of Homeland Security. Yearbook of Immigration Statistics: 2008. Table 1: Persons Obtaining Legal Permanent Resident Status: Fiscal Years 1820 to 2008. http://www.dhs.gov/ximgtn/statistics/publications/LPR08.shtm

National Research Council, 1997, The New Americans: Economic, Demographic and Fiscal   Effects of Immigration. J.P. Smith and B. Edmonston (eds.), p. 95

U.S. Census Bureau 6/15/09. Home page http://www.census.gov/ gives current U.S. population as 306.7 million.  Our population currently grows about 1%/yr., at which rate it will reach 310 million in 2010.