In previous columns, we have outlined the role immigration plays in diminishing the economic prospects of American-born workers. Using the analysis developed by Harvard economist George Borjas, for example, we calculated the average wage loss of native-born workers at 4.9 per cent, or $2,600 per year, due to the immigrant presence. [National Data, October 21,2003]
Lower wages do mean higher profits for native owners of capital—businesses and well-to-do Americans who derive most of their income from dividends, capital gains, and other returns to capital. It's one reason for the increasingly skewed income distribution in the U.S.
Borjas has now refined his analysis, focusing on the income lost by natives with different levels of education, age, and race. [George Borjas, "Increasing the Supply of Labor Through Immigration," CIS Backgrounder, May 2004.]
He finds that while the immigrant influx of the 1980s and 1990s lowered wages of most native workers, the biggest hits were taken by those at the top and the bottom of the education distribution: [Table 1]
Less well known are the differences within each education level. Immigrants, for example, make up nearly half of all high school dropouts with 10 to 20 years of experience, but only 30 percent of those with less than 5 years experience. As a result, native dropouts with 10 to 20 years of work experience (roughly the time when marriage and children are most likely) suffer the largest percentage wage loss due to immigration— about 12.5 per cent.
The biggest losers: native-born Hispanics and Blacks, because their education and experience profiles are closest to those of immigrants:
Borjas also concludes that Mexican immigrants accounted for virtually all of the immigration-related wage reduction suffered by low-skilled native workers—and none of the immigrant-related wage impact on college graduates.
If immigrants were really needed to "do jobs that natives do not want to do" there would be no discernable impact on native wages. That's clearly not the case.
What about the likely impact of the Bush Administration's proposed temporary guest worker program? Borjas foresees that it "will generate higher earnings losses for workers, and will lead to an even greater redistribution of wealth from labor to those who buy and use immigrant products."
Hmmm! Who would want that?
[Number fans click here for tables.]
Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants in Indianapolis.