Immigration Not Only Displaces American Workers—It Also Reduces Incomes

There have been heartening signs recently that immigrant displacement of American workers has finally penetrated MSM consciousness. But immigrants don’t merely take jobs Americans can do—they also have another effect: competing down the incomes of those Americans who are still employed.

Back in 1964, Nobel laureate Paul Samuelson wrote in his famous textbook Economics:

After World War I, laws were passed severely limiting immigration. Only a trickle of immigrants has been admitted since then…By keeping supply down, immigration policy tends to keep wages high.

As Professor Samuelson was then willing to say, in a competitive labor market immigrant workers will lower the wages of native-born American workers. No surprise there: If his Economics textbook taught us anything, it is that an increase in supply of any commodity will reduce its price...

The consensus among economists is that immigration’s major impact is distributional: it lowers the wages of native-born workers and raises the income of their employers and other upper-income natives who derive a disproportionate share of income from capital gains, stock options, and other unearned income derived from higher profits.

The difference between what the winners win and the losers lose is called the immigration surplus. It measures the net income gain accruing to native-born Americans as a result of immigration.

In a 2013 paper, Harvard economist George Borjas estimated the immigration surplus to about $35 billion – a mere 0.24% of GDP. Immigration and the American Worker, CIS, April 2013.

This modest surplus is the difference between an enormous $437 billion gain accruing to employers and a slightly less enormous $402 billion wage loss suffered by native-born workers...

A decade ago Borjas quantified the native wage loss arising from immigration. Among his research findings:

• Immigrants arriving between 1980 and 2000 reduced the average annual earnings of native-born American men by about $1,700 or roughly 4%.
• Among high school dropouts, who roughly correspond to the poorest tenth of the workforce, the impact was even larger – a 7.4% wage reduction.
• Wage losses of native-born Blacks and Hispanics are significantly larger than whites because a much larger share of those minorities directly compete with immigrants.
• Native-born American college graduates are not immune; their income is 3.6% lower due to the two decades worth of competing immigrants.

[Increasing the Supply of Labor Through Immigration: Measuring the Impact on Native-born Workers, CIS Backgrounder, April 2004

More recently (in 2013) Borjas reviewed the wage impact of immigrants who entered the country between 1990 and 2010. He found that this cohort had reduced the annual earnings of American workers by $1,396—a 2.5% reduction.

After four years of economic recovery, the income gains are still overwhelmingly tilted toward the upper end of the income distribution...

Most jobs created in this recovery have gone to immigrants. And those native-born Americans lucky enough to have jobs also face stagnant wages, in part because of competition from low-wage immigrants..Immigration has always increased U.S. poverty rates. Today native-born Americans are the ones being pushed into poverty by the foreign influx.