Immigration Lifts Wages, Report Says
Thursday, June 21, 2007
Immigration has a positive impact on the U.S. economy and boosts wages for the vast majority of native workers, though there are "small negative effects" on the earnings of the least-skilled Americans, according to a report the White House issued yesterday.
The report, a review of economic research prepared by the president's Council of Economic Advisers, concludes that foreign-born workers have accounted for about half of labor force growth in the past decade, fueling overall economic output, creating jobs and increasing earnings for native-born workers by as much as $80 billion a year.
Immigrants and their children also have a "modest positive influence" on government spending, the report says, contributing about $80,000 more per person in tax dollars over the long run than they claim in government benefits and services.
The report directly challenges attacks on President Bush's proposal to overhaul immigration laws. His measure would link beefed-up border security and a crackdown on employers who hire illegal immigrants to provisions granting legal status to the 12 million illegal immigrants already in the country. It would also create a guest-worker program sought by business and shift the emphasis of immigration policy from family ties to job skills and education.
Nearly defeated in the Senate two weeks ago, the bill was given new life late last week and is now the focus of intense lobbying campaigns by the White House and business groups, as well as by immigration opponents from across the political spectrum.
Democratic opponents argue that the measure would hurt American workers. It would "flood the U.S. job market with millions of workers who will compete, at low wages, for jobs Americans are now doing," driving "down American wages and living standards," Sen. Byron L. Dorgan (D-N.D.) wrote this month in the National Review.
Conservative opponents argue that the bill would amount to amnesty for undeserving lawbreakers who they say tend to be low-skilled, uneducated and a drain on government resources. In a report published last month, Heritage Foundation senior research fellow Robert Rector argues that, far from contributing to public coffers, low-skilled immigrant households cost taxpayers $89 billion more each year than they pay in taxes.
The rosier scenario in the White House report averages the cost of immigrants and their descendants over 300 years, Rector said. "It takes 300 years of subsequent earnings to make up for the first and second generation," he said.
Edward P. Lazear, chairman of the Council of Economic Advisers, acknowledged that the estimate covers several generations but said the bulk of the cost is recovered quickly. He said Rector's research is flawed because it lacks a "multi-year context" and focuses solely on low-skilled households that would be barred from receiving "the vast majority of welfare benefits" under the president's proposal.
"The report is pointing out what we think is obvious and standard economics," Lazear said. "But what is mainstream and standard and accepted by the economics community doesn't necessarily mean policymakers or the general public understands it."
Foreign-born workers make up 15 percent of the U.S. labor force, with large concentrations at the top and bottom of the education scale, the report says. For example, immigrants make up 36 percent of workers who lack a high-school diploma and 41 percent of scientists with doctoral degrees.
As a group, immigrants earn 77 cents on the dollar compared with native workers, though that gap largely disappears among college graduates.
More than 90 percent of native workers benefit from the influx of low-wage labor because immigrants take jobs that complement higher-paid native workers rather than competing with them, according to the report. For example, Lazear said, immigrant roofers lower costs for contractors and home-builders, creating jobs for plumbers and electricians and lowering the price of houses for consumers.
The losers are native workers who compete directly with immigrants in certain job categories, though the impact on their earnings is small compared with other factors, such as technological advances, globalization and minimum wage levels, said Giovanni Peri, an economics professor at the University of California at Davis.
"There's this aversion to immigration, but people should be much more averse to computers," Peri said. "They are much more responsible for the bad effects" on U.S. workers.