Immigration cuts salaries of Americans $2,470 a year

Article author: 
Edwin S. Rubenstein
Article publisher: 
Negative Population Growth
Article date: 
20 February 2017
Article category: 
Our American Future
Article Body: 

... Eventually the [American] frontier vanished, and American cities became overcrowded. Our physical capacity to absorb new arrivals eroded. While America’s industrial economy boomed, millions of the new jobs went to immigrants who poured into the country between 1890 and 1920. These men and women enriched our culture, but they also moved ahead of ­ and often displaced ­ native-born workers.

Immigration became a zero-sum game: the economic gains accruing to immigrants were more than offset by losses suffered by natives...

The economic impact of immigrants in the U.S. economy is greater than their overall population share would suggest. First of all, they account for a larger share of the working-age population — 15.5% in 2013 — than of the total population. Since 1996, the Labor Department has collected data on the nativity of residents of working age (16 years and older). Since that year, the foreign-born share has risen by more than 40%...

... Immigrant workers account for more than half — 54% — of workers who dropped out of high school before earning a degree. That is more than three times the foreign-born share of all employed workers. The ratios are more than of academic interest, for they imply that native-born high school dropouts will suffer commensurately higher wage losses due to immigration...

Harvard economist George Borjas has quantified the native wage loss arising from post-1965 immigration. Among his research findings:

  • Immigrants arriving between 1980 and 2000 reduced the average annual earnings of native- born men by about $1,700, or roughly 4%.
  • Among high school dropouts, who roughly correspond to the poorest tenth of the workforce, the impact was even larger ­ a 7.4% wage reduction.
  • Native-born college graduates are not immune; their income is 3.6% lower due to the two decades’ worth of competing immigrants.

In general, native incomes fall as the foreign-born share of the employment rises. Professor Borjas’ “rule of thumb”: a 10% rise in immigrant workers in a particular skill group reduces the wage of native-born workers in that group by 3.5%.

In 2014, 16.6% of all persons working in the U.S. were foreign- born. Under the Borjas rule, this means immigration has reduced the wage received by the average native worker by 5.8% (3.5% x (16.6/10.0)). This translates to an average wage loss of $2,470 per full-time native worker in 2014 ­ money unavailable to native workers due to the presence of foreign-born competitors in the workforce...

... the immigrants themselves are the major beneficiaries of immigration: they earn far more here than in their home country. U.S. employers also gain: their sales and profits grow while their labor costs fall. Some wealthy U.S. residents also gain. But most Americans do not own their own business. Most of us are not affluent. Most of us are closer to the average worker. As such, we lose ground to competing low-wage immigrants. The truth is that nations with stagnant or falling populations often enjoy higher living standards...

The formula for the immigration surplus contains another important insight: the greater the drop in native wages due to immigration, the greater the economic gain to the nation from immigration. No pain. No gain. No problem? Except that the pain from immigration resides primarily with native- born workers, while the gain rests mainly with their employers. At the end of the day, the 1965 Immigration Act may be the most regressive public policy ever enacted by the federal government...

Immigrant workers increase U.S. GDP, but the vast bulk of the gain goes to the immigrants themselves: only 2% goes to native-born Americans.

By increasing the number of workers in the economy, immigration lowers the wages of native-born workers. At the same time, however, native-born employers gain from immigration because they can now hire workers at lower wages. Native-born consumers also gain — especially the wealthy. Similarly, natives who derive most of their income from dividends, capital gains, and other non-wage income gain as immigration drives up corporate profits. Immigration’s biggest winners, then — at least among U.S. natives — are the wealthy, while its biggest losers are found disproportionately among the nation’s poor and middle-class. Clearly, immigration exacerbates the economic divide between haves and have-nots...