Harvard economist George Borjas, in an attempt at creating more light than heat on the issue of immigration in an op-ed at Politico, states the problems succinctly:
Wage trends over the past half-century suggest that a 10 percent increase in the number of workers with a particular set of skills probably lowers the wage of that group by at least 3 percent.
In other words, the increase in the number of around 20 million in the number of low-skill workers has decreased the wages of the other 60 million low-skill workers by roughly 10%. That means for someone earning $20,000 per year the effective wage implications of the significant number of low-skill immigrants that have entered the country is a loss of about $2,000—a serious loss for people in that income group.
Low-skill workers aren’t the only ones affected. About 25% of medical doctors in the U. S. are foreign-born, meaning that immigration has lowered native-born physicians’ incomes by about 10%. The same is true in information technology and other areas in which large number of foreign-born workers have been brought into the country.
There have been wealth effects, too:
The total wealth redistribution from the native losers to the native winners is enormous, roughly a half-trillion dollars a year.
That immigration is a major factor in the increase of income inequality in the U. S. over the last 40 years is obvious.
There are also cost effects:
Immigrants receive government assistance at higher rates than natives. The higher cost of all the services provided to immigrants and the lower taxes they pay (because they have lower earnings) inevitably implies that on a year-to-year basis immigration creates a fiscal hole of at least $50 billion—a burden that falls on the native population.
He’s probably understating that fiscal hole. Direct services to immigrants aren’t the only costs they impose; more people use more sewers, more roads, more emergency services, and so on and those costs aren’t reckoned in his calculation of the costs of immigration.
However, in my view the most significant contribution of Dr. Borjas’s op-ed is this observation:
But we’re worrying about the wrong things, with policy fights focused on how many and which immigrants to accept, and not enough on how to mitigate the harm they create along the way.
and he offers an example of how that might be accomplished:
Similarly, Bill Gates claims that Microsoft creates four new jobs for every H-1B visa granted; if true, firms like Microsoft should be willing to pay many thousands of dollars for each of those coveted visas. Those funds could be used to compensate and retrain the affected natives in the high-tech industry.
Sadly, I think he’s being overly optimistic. In IT for example there is no need for the additional workers. If there were you would expect wages to be rising in the sector which they are not. The income transfers from losers (American workers) to winners (him) are the purpose of Mr. Gates’s support for increased immigration of IT workers.
Stated another way do you think that the top .1% of income earners would cheerfully accept a tax increase of $500 billion per year? Which is what it would take to remediate just the wealth effects of immigration. Would they grudgingly accept it? Would they accept a tax increase of $400 billion a year? They’d still be $100 billion per year in the black. I think the answers to all of those questions are “no”.
