Effects of Immigration on Wages
Apart from legal immigrants holding jobs in almost all industries of the United States, there are ten to twenty million illegal immigrants holding approximately twelve to fifteen million jobs in the country. In other words, illegal immigrants represent around eight percent of the U. S. work force today. Between four to six million jobs held by illegal immigrants are serving the underground economy. The United States is foregoing around thirty five billion dollars each year in income tax collections because of such jobs.
What is more, the government of the United States does not seem to be taking very strict action against illegal immigrants and their means of livelihood as it is understood to be hooked on inexpensive, illegal labor, while deferring costs of the provision of public services to them (Justich and Ng 2005, p. 2). Of course, domestic workers of the United States do not agree with this stance of the government.
After all, increasing supplies of immigrant workers lower the real wages of native-born workers if immigrant workers are not highly skilled enough to inspire domestic workers to attain necessary skills to compete so as to increase their wages. Undoubtedly, illegal immigrants are contributing tremendously to the economy of the United States. These people often take up less-skilled jobs, and their wages are lower than those of the U. S-born laborers.
Furthermore, studies have shown that when the United States tightens border control thereby making it more difficult than before for illegal immigrants to enter the country, the economic growth of the nation turns into economic sluggishness. As an example, a drop in the number of illegal immigrants from Mexico in early 2001 coincided with the onset of a recession in March 2001 (Orrenius 2004). Research has also revealed that between the year 2000 and 2005, employment of U. S workers between the ages, 16-34, was drastically reduced, even as the number of legal and illegal immigrants in the nation dramatically increased.
The total number of native-born males and females between the ages, 16-34, also rose during this period. However, these native-born individuals could not find jobs, seeing that the immigrants had taken up jobs in the United States by the millions (Howell 2007). Thus, immigration seems to have a negative impact on the U. S. worker when he or she cannot find employment. Immigrants are known to settle for lower wages, so therefore companies across the United States cut costs and raise revenues by hiring foreign-born workers. Immigrant workers from developing countries continue to be attracted to the United States.
Settling for low wages in the U. S. is completely acceptable to them, seeing that wage levels in their own countries are typically lower than the lowest wage rate in the country still referred to as the superpower in the twenty first century. By coming to the United States in great numbers, thereby increasing the supply of labor, undocumented immigrants reduce the real wage rate in the U. S. in any case. This reduces opportunities for native-born workers to find jobs that would satisfy them in terms of earnings. The legal immigrant worker, on the other hand, is welcomed by the U. S. economy on the basis of his or her superior skills.
The U. S. continues to naturalize skilled foreign-born individuals who are expected to contribute to economic growth (Messerli 2008). Domestic workers that do not learn the skills that the legal immigrant worker possesses are at a loss in the face of this immigration flow. After all, native-born workers would have to settle for low paying jobs if they do not possess the skills that the immigrant worker had learned before entering the United States. Studies have further shown a drastic reduction in recent years in the number of African Americans who were previously performing low skilled jobs.
Because undocumented immigrants demand lower wages than the native-born population of the United States – both white as well as African – all native-born workers of the U. S. seem to be equally affected by immigration (Belsie). Furthermore, the native-born U. S. worker must now face two different types of competition. As mentioned previously, the U. S. worker must learn the skills that the foreign-born workers have learned in their home countries in order to hold higher paying jobs. Secondly, the U. S. worker is presently compelled to demand a wage rate that is lower than the wage rate demanded by immigrants.
All those who are willing to be paid as little as possible are bound to get jobs. The U. S. worker is therefore forced to choose between a life of unemployment and employment that pays little. Of course, the foreign-born worker is at least partly responsible for controlling inflation by demanding low wages. The U. S. worker may benefit from low inflation induced by the demand for lower wages made by the illegal immigrant. All the same, by making a large number of U. S. workers lose their jobs, immigration is expected to raise the poverty level in the United States.
The most significantly affected persons in this scenario would be the U. S. workers, of course. Nevertheless, the government of the United States continues to believe that since native-born workers are not available in sufficient numbers in a variety of industries, e. g. farming, immigrants are a blessing for the economy. Moreover, the government claims that domestic workers and foreign workers do not truly compete. This is because the native-born worker is generally unwilling to perform many kinds of work, e. g. farm work, even if he or she is offered higher wages (Johnson 2006).
Domestic workers have greater opportunities to find satisfying work, so therefore they tend to apply for prestigious as well as stable and less strenuous jobs as opposed to farming (Kind of Work 2004). Thus, many have claimed that foreign workers, especially from low wage countries, are indispensable to the farming community of the United States (Johnson). Without these workers, consumer prices in the United States would rise, forcing the nation to increase its exports of agricultural products and close down the domestic farming industry in the end.
Despite the claim of the government that the foreign-born worker does not threaten the employment of the native-born worker, statistics reveal that 1. 7 million young native-born workers lost their jobs at a time when the country allowed in 4. 1 million new immigrants – both legal as well as illegal (Entrants Hurt 2006). Thus, the impact of immigration on the native-born worker seems to be substantial enough to call for policy change. Hipic immigrants – both legal and illegal – are known to be taking up jobs previously held by African Americans (Belsie).
All native-born workers of the United States seem to be equally affected by the onrush of immigrants in recent years. Perhaps, therefore, it is time for the government to consider the negative aspects of immigration on the U. S. economy to boot. At present, the immigrants are known to be aiding the U. S. economy. However, the economy is bound to reach a point where it will not be possible for the U. S. industry to continue lowering wages. Besides, poverty faced by the U. S. worker as he loses his or her job to a foreign worker is an issue that would have to be addressed. The government would have to increase its spending on the U.
S. workers in that case. As it is, spending in the United States has been high enough to create a huge budget deficit. By allowing more foreigners to live and work in the nation, the U. S. is not expected to reduce its spending. Rather, the government needs to apply stringent rules to reduce the number of illegal immigrants at present and in future. If the U. S. government decides to tackle the problem of illegal immigration in the present, the U. S. worker who has lost his or her job to a foreign worker would regain employment. The standards of living of U. S. workers can be maintained at decent levels thus.
Furthermore, although the U. S. economy is said to be hooked on inexpensive labor at present, it is bound to achieve a balance in wages as a result of a new policy on immigration that reduces the number of illegal immigrants in particular. As far as legal immigrants are concerned, their presence in the nation is bound to increase the skills of the U. S. workers, as the latter are presented with competing workers from foreign nations who were admitted into the U. S. on the basis of their superior skills. These workers are irreplaceable as they increase efficiency of U. S. workers.
Once the United States has managed to raise the level of skills as well as efficiency of the native-born workers, the government may decide to reduce the number of legal immigrants too. This would provide further assistance to the U. S. worker, while helping to reduce spending and the budget deficit of the United States. Most importantly, the native-born worker of the United States would be able to earn higher wages if this happens, not only because he or she would have acquired more skills and increased in efficiency through competition with immigrants, but also because there would be fewer immigrants to compete with.
Thus, immigration both lowers and increases wages, depending on whether immigrants are legal or undocumented. REFERENCES Belsie, L, ‘Effects of Immigration on African-American Employment and Incarceration’ article in National Bureau of Economic Research available at http://www. nber. org/cgi- bin/printit? uri=/digest/may07/w12518. html. Entrants Hurt 2006: ‘Entrants Hurt Low-Skill Men, Study Shows’ article in The Arizona Daily Star (28 Nov 2006) available at http://www. jobbankusa. com/News/Employment/entrants_hurt_low-skill_men. html. Howell, DR 2007, ‘Do Surges in Less-Skilled Immigration Have Important Wage Effects?
’ article in Border Battles (8 Mar 2007) available at http://borderbattles. ssrc. org/Howell/. Johnson, B 2006, ‘The Need for a Fundamental Rethinking of Immigration Policy’ article in Immigration Policy Center (12 Jul 2006) available at http://immigration. server263. com/index. php? content=t20060712. Justich, R, and Ng, B 2005, ‘The Underground Labor Force is Rising to the Surface’ article in Bear Stearns Asset Management (3 Jan 2005) available at http://www. bearstearns. com/bscportal/pdfs/underground. pdf. Kind of Work 2004: ‘What Kind of Work Do Immigrants Do?
’ article in Migration Policy Institute (21 Jan 2004) available at http://www. migrationpolicy. org/pubs/Foreign%20Born%20Occup%20and%20Industry%20in%20the%20US. pdf. Orrenius, PM 2004, ‘U. S. Immigration and Economic Growth: Putting Policy on Hold’ article in Southwest Economy (Nov-Dec 2004), Issue 6, available at http://www. dallasfed. org/research/swe/2003/swe0306a. html. Messerli, J 2008, ‘Should America Maintain/Increase the Level of Legal Immigration’ article in Balanced Politics (8 Nov 2008) available at http://www. balancedpolitics. org/immigration. htm.