President Donald Trump’s merit immigration reform will raise Americans’ income— so a large swath of the elite U.S. media is distorting a prestigious report to conceal the economic benefit from their readers.
“The merit reform’s central premise — that it would help American workers — is false,” insisted the editorial board of the New York Times, likely Lawrence Downes, adding:
It’s true that an influx of workers can cause short-term disruptions to the labor market, but the impact on the wages of native workers over a period of 10 years or more is “very small,” according to a comprehensive National Academies of Sciences, Engineering and Medicine report published last year.
“The National Academy of Sciences looked at the effect of immigration on the wages and employment of American workers,” says the Akron Beacon Journal. “ It found the impact slight or zero.”
“Overall, the [National Academies’] study found that immigration had no negative effects on wages in the long run,” said TheHill.com.
But the National Academies’ study was very clear on page 171 of its September 22 report, titled “The Economic and Fiscal Consequences of Immigration“:
Immigrant labor accounts for 16.5 percent of the total number of hours worked in the United States, which . . . implies that the current stock of immigrants lowered [Americans’] wages by 5.2 percent.
That 5.2 percent “immigration tax” caused by legal and illegal immigration adds up to $500 billion per year lost by employees because of the cheap-labor competition. The tax is the flip-side of what pro-immigration groups tout as the roughly $50 billion extra “immigration surplus” which is created by the extra immigrant workers.
The immigration tax is quietly slipped from employees’ pay-packets because workers compete wages down to get jobs in an economy where millions of Americans and immigrants — both legal and illegal — are either unemployed, underemployed or underpaid. The “tax” profits from cheap-labor are then redistributed upwards to employers and investors on Wall Street.
The merit reform’s boost to wages justifies its title, “Reforming American Immigration for Strong Employment,” or the RAISE act.
The NAS report also noted that governments transfer a huge amount of taxpayers’ funds to support poor immigrants. The aid payments are made because immigration has lowered full-time wages, and because companies can low-ball wages because they know government will also provide aid programs, such as food stamps. The taxpayers’ “fiscal costs,” according to data in the NAS report, range from $43 billion to $300 billion.
One of the report’s co-authors, Harvard professor George Borjas, summarized the NAS report:
If we then take the report’s estimates of the surplus and the fiscal burden at face value, it is self-evident that the impact of immigration on the aggregate wealth of natives is, at best, a wash. Instead, the impact of immigration is distributional. Those who compete with immigrants are effectively sending billions and billions of dollars annually to those who use immigrants.
But the NAS report hides this huge poor-to-rich immigration-tax redistribution under verbiage about an academic theory.
The theory says that investors, employers and employees — perfectly, automatically, freely and constantly — adjust their actions to match current incentives. This theory assumes that each advantage gained by one group is automatically cancelled out by reaction from the other groups — and therefore, that any economic losses caused to employees by immigration would be brief and minor because employees would react instantly and perfectly. Here’s the some of the jargon:
Theory predicts that immigration initially confers net economic benefits on the destination country economy while creating winners and losers among the native-born via changes in the wage structure and the return to capital. Resulting changes in factor prices increase the production of goods and services that use the type of labor that immigrants provide most intensively.
With time, the capital stock adjusts and eventually technology may respond as well, pushing up the demand for labor and hence wages toward their original levels. It bears noting that, if firms anticipate immigration and there is no lag in the response of capital and technology, the length of time elapsing between an immigration inflow and the “long-run” adjustment of the labor market could be very short. Either way, if the economy simply returns to a larger version of its pre-immigration state, with the same capital-labor ratio, there are no winners and losers among the native-born, but equally, no net benefit to them from immigration.
The pro-immigration majority of NAS authors then applied the theory to hide the 5.2 percent immigration tax:
However, it bears noting that it is problematic to apply the same static methodology used for small temporary inflows to measuring the impact of the entire population of immigrants, which has grown over the course of decades. Over such a long period of time, capital has had plenty of time to adjust, and so these estimates can at best be described as upper limits that exaggerate the real impact of immigration on native wages and overall incomes.
This theory — not the study’s data about the 5.2 percent immigration tax or the tax payments — is used by establishment media to claim that there is no economic impact from the annual inflow of legal immigrant labor, which delivers roughly one new legal immigrant for every four young Americans who turn 18 each year.
More fundamentally, immigration bears little blame for low wages. This point is not controversial among economists who study this issue. The National Academy of Sciences’ (NAS) literature survey on the economic effects of immigration concluded that:
When measured over a period of 10 years or more, the impact of immigration on the wages of native-born workers overall is very small. To the extent that negative impacts occur, they are most likely to be found for prior immigrants or native-born workers who have not completed high school—who are often the closest substitutes for immigrant workers with low skills.
Immigration’s long-run relative wage impact on native-born American workers is close to zero. The only potential exception by education group is high school dropouts who might face more labor market competition from immigration that would produce a maximum relative decline of about 1.7 percent from 1990 to 2010.
In the New York Daily News, Nowrasteh claimed “immigration’s impact on wages is overstated. A recent National Academy of Sciences study found that ‘the impact of immigration on the wages of native-born workers overall is very small.'”
A widely reprinted article in The New York Times let a pro-immigration advocate make the claim: “The story that ‘when labor supplies go down, wages go up’ is a cartoon,” said Michael A. Clemens, an economist at the Center for Global Development who has studied the end of the Mexican guest-worker program, which was known as the Bracero program.”
But the immigration tax on wage-earners is widely recognized by economists and by the editorial board of the Wall Street Journal, which recently wrote:
Every economist knows that employers can only raise wages as fast as productivity and profitability allow. If the cost of labor rises too much for a specific job, employers will simply cease providing the service or move production overseas. That means fewer jobs for Americans too … The solution, as ever, is a legal immigration system that is generous with visas and flexible enough to meet the demands of a growing U.S. economy.
Even the New York Times‘ article which quoted Clemens shows how farmers hired high-wage Americans to manufacture tomato-picking machines once they could not hire low-wage, stoop-labor illegals:
WASHINGTON — When the federal government banned the use of [cheap migrant] farmworkers from Mexico in 1964, California’s tomato growers did not enlist Americans to harvest the fragile crop. They replaced the lost workers with tomato-picking machines … California farmers in the 1950s and early ’60s relied on Mexican workers even though machines were already available. In 1964, 97 percent of California tomatoes were picked by hand … By 1966, 90 percent of California tomatoes were being picked by machines.
Forty years later, much of the tomato-picking business is mechanized.
More than 1,200 people have been freed from agricultural slavery rings in Florida during the last 10 to 15 years. Workers tell stories of brutal beatings, being shackled in chains at night, no regular pay for work, housing where 20 pickers share one mobile home and are each charged upwards of $200 per month in rent. Yes, per person. No shade in the fields, no breaks for meals, 10 to 12 hour workdays, seven days a week. With financial obligations and no way to escape, many tomato field workers have found themselves modern day slaves.
Another New York Times article by columnist Eduardo Porter cited another version of the migrant-tomato-pickers-vs.-American-machine-builders argument. He cited a study which “found that manufacturing plants in regions of the United States that received lots of low-skill immigrants in the 1980s and 1990s were much slower to mechanize than plants in low-immigration regions.” Porter did not even try to explain his apparent claim that Americans’ wages grow by using less high-tech manufacturing gear.
Under pre-Trump policies, the federal government annually imports 1 million legal immigrants into the United States, just as 4 million young Americans turn 18. The annual inflow has kept Americans’ wages down, and has now created a country-sized population of roughly 40 million consumers.
The federal government also annually awards roughly 1.5 million temporary work permits to foreigners, grants temporary work visas to roughly 500,000 new contract workers, such as H-1B workers, and also largely ignores the resident population of eight million employed illegal immigrants.
The current annual flood of foreign labor spikes profits and Wall Street values by cutting salaries for manual and skilled labor offered by blue-collar and white-collar employees. It also drives up real estate prices, widens wealth-gaps, reduces high-tech investment and automation, increases state and local tax burdens, hurts kids’ schools and college education, and sidelines at least 5 million marginalized Americans and their families.