Immigration reform: lower wages, more unemployment, and lots more illegal aliens
While the chattering class was swooning over the Congressional Budget Office’s projection that the Gang of Eight immigration reform would reduce the deficit by some $700 billion over the next 20 years, much less attention was paid to the conclusions that it would also reduce the average wages of American workers, increase unemployment, and do very little to reduce the flow of illegal immigrants.
To be precise, on the latter point, the CBO said illegal immigration would be reduced by only 25 percent by the Gang of Eight bill. That should be something of a deal-breaker all by itself, shouldn’t it? It’s not exactly “comprehensive” immigration reform if the flow of illegals is reduced by such a paltry amount. It’s hard to see how we wouldn’t end up with another amnesty battle in a few years.
That’s how Senator John Cornyn (R-TX) saw the situation:
“The CBO confirms what I and other conservatives have been saying throughout this debate: this bill as written repeats the same mistakes made in the past and will not solve the problem of illegal immigration.
“The border security rhetoric from Washington has been tough, but the results have been pathetic. The reality on the ground in Texas and in other border states has been quite different.
“If we’re ever going to push immigration reform across the finish line, which I want to do, we need to guarantee results, and my amendment does that.”
As for the lower wages and higher unemployment rates, Matt Boyle at Breitbart News cites the relevant passages in the CBO report:
On page seven of the analysis, the CBO and JCT conclude that the “Gang of Eight” bill would drive down American workers’ wages. “Taking into account all of those flows of new immigrants, CBO and JCT expect that a greater number of immigrants with lower skills than with higher skills would be added to the workforce, slightly pushing down the average wage for the labor force as a whole, other things being equal,” the report reads.
On the same page, the CBO and JCT analysis found that illegal immigrants who would receive amnesty, or legalized status, would see a spike in their income while Americans’ incomes dropped. “However, CBO and JCT expect that currently unauthorized workers who would obtain legal status under S. 744 would see an increase in their average wages,” it reads.
Similarly, a bullet point on page nine shows that CBO and JCT believe that demand for workers would “dampen,” meaning it would be harder for Americans to find jobs if the bill passed. “Although the average wage would be lower than under current law over the first dozen years, the minimum wage would keep the wages of some less skilled workers from falling, dampening businesses’ demand for those workers,” the analysis states.
The conclusion about “the average wage for the labor force as a whole” is disturbing, because such a movement in the average wage for an immense workforce means that wages for the people in direct competition with the legalized aliens are probably going to drop a lot. We aren’t talking about legalizing a large number of high-skilled workers to compete for six-figure jobs.
What we’ll end up with is a large number of jobs falling to the minimum wage level – and they’ll be part-time jobs to boot, given the way ObamaCare has been transforming lower-skilled permanent jobs into part-time positions over the last few years. A flood of job-seekers in those sectors of the economy will make jobs harder to find, as the other alarming conclusion of the CBO noted, since the minimum wage prices lower-tier labor above its actual value. This is particularly a problem when businesses are cutting prices to keep sales up in a flat-line economy. It all boils down to supply and demand – the immutable rule of the universe that politicians never stop pretending they can override.
This is all rather difficult to square with the CBO’s contention that amnesty would lead to deficit reduction. Low-income workers from any demographic background tend to be net tax consumers. (This was a key element of the Heritage Foundation’s recent estimate of amnesty costs. In their introduction, they noted that households headed by people who lack a high-school degree tend to receive about $46,000 in government benefits, but pay only $11,000 in taxes.) Driving average wages down, and unemployment up, doesn’t sound like a winning formula for increasing government revenue.
One of the great failures of Obamanomics is the assumption that jobs are created when people spend money, so showering people with money will lead to spending frenzies and job creation. That’s why Democrats in the Obama years have been overheard claiming unemployment insurance is a powerful job-creation stimulus. You may have noticed it hasn’t been working out that way. One reason is that it matters what sort of things people buy with their money. The pursuit of basic necessities, such as food, doesn’t generate a lot of high-paying career positions. To put it bluntly, a large influx of low-skill, low-income workers will have demands that can be met with low-skill, low-income jobs. The rising cost of labor has prompted employers to eliminate many of those jobs and make do with fewer human employees.
Why should the American people be interested in legislation that lowers wages and increases unemployment, while doing very little to address the problem they really care about? It’s really odd that anyone portrayed this CBO report as good news for the Gang of Eight bill.