A Memo to LA Times: Immigration Reduces the Deficit

[AlphaCentauri]

There is really no debate any more among serious economists and social scientists on both the left and the right about the basic fact that immigration has been and continues to be good for the American economy and Americans in general. In June 2006, more than 500 economists of varying political perspectives, including five Nobel Prize winners, signed a letter to President Bush and Members of Congress declaring as a consensus among economists that immigrants are a positive force in America. Even George Borjas, the leading economist who is still a critic of immigration, admits that the net benefits are around $7 billion a year.

http://warrenreports.tpmcafe.com/blog/shawn_fremstad/2006/aug/03/memo_to_la_times_immigration_reduces_the_deficit

[Artdyst]

1. Isn't that sort of like so-called trickle down economics?

That $7 billion a year had better do some trickling down, and do it quick, because more and more people are looking at immigration is one aspect of the over-population problem, and it's hard to see how more and more immigration can possibly be a good thing for most Americans.

[newyawker99]

2. Hi Artdyst!!

Welcome to DU!! :toast:

[treestar]

3. The illegal Mexicans should thank the Israelis

When I first joined DU, they were "ruining" this nation, "stealing jobs" and "invading." Now they are barely noticed. All that crisis they caused about two months ago is like totally forgotten!!!!!!

Just shows how we allow the MSM to pull our chains.

[unlawflcombatnt]

4. Illegal Immigration Suppresses Wages

In fact, the report says that immigration suppresses American wages. Furthermore, it also states that illegal immigrants send a significant amount of money out of the United States back to their own country. In case someone can't figure this out, this is money that is not spent in this country and does not help the American economy.

Below are quotes from this so-called "letter."
"Similarly, the signers also acknowledge that "immigration of low- skilled workers may have lowered wages of domestic low-skilled workers,...""

"Immigration is the greatest anti-poverty program ever conceived. Not just because the immigrants are much better off but also because they send billions of dollars of their own money back to their home countries -- a form of truly effective foreign aid..."

Economist George Borjas, in his 2004 article, put immigrant-induced wage suppression at 4% annually, or about $1700/year. There's no question whatsoever that massive illegal immigration suppresses American wages. It does so in 3 distinct ways.

1. Illegal immigrants, as a whole, are willing to work for less. As a result, employers pay them less than they would pay American workers for the same jobs. In order for Americans to work at the same job, they must accept lower wages than they would have otherwise, in order to remain "competitive" with the illegal immigrants who've replaced them.

2. Illegal immigrants increase the labor force size, thus increasing the "supply" of labor. Increasing the supply of labor has the same effect as increasing the supply of any consumer good. It reduces the "price" of labor, which means it reduces wages. Illegal immigrants are currently employed in 7 million of America's 143 million jobs. There are a total of 150 million workers considered to be "participating" in our labor force. The subtraction of the 7 million illegal workers would reduce this number to 143 million participating workers. The effect of such a "supply" reduction would be to INCREASE the "price" of labor by basic supply & demand effect. Again, the increase in "price" of labor equates to an increase in wages.

3. As a result of the above 2 wage-suppressing effects, illegal immigration suppresses total aggregate labor income. Labor economist George Borjas puts the annual wage suppression at 4%, or $1700/worker. Multiplying that $1700/worker losss times 143 million workers gives a total loss of $243 billion dollars annually. That reduces potential consumer spending by $243 billion/year. The reduction in consumer spending reduces demand for production, and the demand for workers to provide that production. The result of this reduced demand for labor is a further reduction in wages.

Just 1 of the above 3 would reduce wages by itself. All 3 together suppress wages even further. Again, the Borjas estimate of wage suppression from the immigration that occurred between 1980 and 2000 is $1700/worker/year, or 4% per year.

Borjas' study can be found at
Borjas:Immigraion-Induced Wage Suppression

Anyone who thinks that wage suppression is "good" for this country is either a Republican or has a brain tumor.

unlawflcombatnt

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