REDUCE ILLEGAL IMMIGRATIONIllegal immigration increases the size of the American labor force, putting downward pressure on wages. Further downward pressure is placed on wages due to the fact that many illegal immigrants will work for less than American workers.
There are 143 million people employed in the United States. Of these, 7 million are illegal immigrants. Illegal immigrant workers have a
definite wage-suppressing effect due to their large numbers. Most take jobs Americans
do want, but not at the low wages illegal immigrants will accept.
Economist
George Borjas estimates that immigration suppresses average American wages 4% annually, or about $1700 per year. This results in a loss of aggregate labor/consumer income of approximately $240 billion per year. This is $240 billion less per year that American consumers have to spend creating the aggregate demand necessary to keep our economy running.
To put this aggregate wage loss into perspective, GDP growth in 2005 was approximately $350 billion dollars. Consumer spending drives out economy. It creates the demand necessary to spur production. The $240 billion loss in aggregate labor/consumer income reduces that demand for production, further reducing the demand for workers to provide that production, further reducing revenue from sales of that production.
The only solution to the illegal immigration problem is to
prosecute employers for hiring illegal immigrants. Policy designed to reduce illegal immigration needs to
start with prosecution of employers. It's the most effective way to stem the flow, and it's the
only policy that will work.
By hiring illegal immigrants, employers create the magnet for them to illegally immigrate. Without such a magnet, there would be NO illegal immigration problem. Illegal immigrants don't come here to collect welfare or re-unite with their families. They come here to work because the pay is higher here, and because there are many employers that are willing to ignore the law and hire them illegally to avoid hiring Americans a higher wage. Thus employers can pay
less than the market rate for labor, yet still sell their products
at the market rate for those goods.
7 million illegal immigrant workers are one of the biggest factors keeping real wages down. The addition of 7 million illegal workers, willing to work for less, will always bring wages down.
Some view illegal immigration as a social, cultural, or even racial issue. But it's much more. The real issue is economics. It's a labor supply and demand issue. It's a wealth distribution issue. It allows illegal employers to increase profits at the expense of lowering worker wages and income.
Cheap labor does
not reduce the price of goods. It simply reduces the cost (to the employer) of producing those goods. But the producer sells those goods at what the market will pay. And the price of those goods is determined
exclusively by what consumers are willing to pay, not by what it costs the producer to provide those goods. Reducing labor costs by hiring illegal immigrants does
not reduce the price of goods. It simply increases the illegal employer's profit margin.
Consumer demand determines the price of goods, not the cost of production. And without a reduction in consumer demand, goods will be sold at the same price, even if producing the goods costs nothing whatsoever.
Don't be fooled by Corporate America's false claim about cheaper labor causes lower prices. The only thing that lowers prices is lower consumer demand. And if there actually
is any price reduction from cheap labor costs, its because those labor cost reductions are at the expense of American workers, causing American workers to have less money to spend, resulting in a reduction in demand from their reduced spending power.
Certainly prices would decline if all American workers were replaced by cheap foreign workers or illegal immigrants. But that price decline would be from reduced American labor/consumer income, not from reduced production costs. Producers and retailers sell goods for as high a price as they can obtain. That price has almost nothing to do with production costs, and everything to do with consumer spending power and demand.
Replacement of American workers with cheaper labor has been one of many scourges of the Bush presidency. Production costs have been lowered by replacing American workers with illegal immigrants, H1B visa holders, and foreign slave labor in 3rd world countries. This trend needs to stop. And the first place to start is within our own borders, with the employers who are illegally hiring.