Most Americans are worse off today than at the start of the millennium. Median household income declined for an unprecedented fifth straight year in 2004, the poverty rate rose, and health insurance coverage declined, according to the Census Bureau's latest report card on the nation's economic well-being released on August 30th.
The union-funded Economic Policy Institute offers the conventional explanation:
"The main factor explaining this significant ongoing decline in household income appears to be ongoing weakness in the job market, especially regarding real annual earnings, which fell significantly for both men (-2.3 percent) and women (-1.0 percent)…"
"Although the job market expanded consistently in 2004....the addition was not faster than the growth in households and not enough to absorb the labor market slack left over from the longest jobless recovery on record."
But the question, of course, is: why this "growth in households" etc.? The answer leads us to the unmentionable factor exacerbating many unfortunate contemporary trends: immigration.
Needless to say, you will not find this question or answer in the Main Stream Media—nor, apparently, in the publications of an institute that claims to defend the interests of "working people." (Ask EPI why not.)
To get the truth, you have to read VDARE.COM!
Let's look at each issue in turn.
Income: Compare the growth in real median income for various foreign and native households in 2004: (Table 1)
This pattern is exactly what one would expect if U.S. employers preferred the newest immigrants—i.e., non-citizens—to native minorities, whites, and previous—i.e., naturalized – immigrant workers.
Although recent immigrants may be poorly educated, lacking even the limited skills of earlier immigrant groups, they are willing to work for far less, lowering incomes of unskilled natives as well as immigrants.
Poverty: Overall, the poverty rate increased to 12.7 percent, from 12.5 percent in 2003. Once again, natives and foreign-born individuals moved in different directions: (Table 2)
Health Insurance: the fraction of foreign born persons without health insurance declined in 2004, according to the Census Bureau report, while the uninsured rate increased among natives.
Historically, income and poverty rates fluctuate with the business cycle. But not in 2004, when robust job creation and GDP growth failed to lift living standards. The best explanation: immigration has finally severed the link between economic growth and living standards.
The foreign-born share of the U.S. labor force rose to a record 15 percent in 2004 from 14.4 percent in 2003. As recently as 1990 less than 10 percent of the labor force was foreign born. (Table 3)
A study by Professor George Borjas finds that each 10 percent rise in the U.S. labor force due to immigration reduces wages of native born workers by about 3.5 percent. At this displacement rate, immigrant workers would have lowered native wages by 5.3 percent (3.5 percent X 15/10) in 2004 and 5.0 percent (3.5 percent X 14.4/10) in 2003.
This implies that more than half of the decline in native income last year was due to immigration.
These are averages. Among natives without a high school education, the impact will be larger. Similarly, the negative effect of immigrants on black workers will be greater than average, because they are in direct competition.
Immigration enthusiasts to the contrary, there was always a tipping point at which the impact of immigration on the living standards of native-born Americans would start to show up seriously in the data.
Looks like we reached that point in 2004.
Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants in Indianapolis.