Linked with George J. Borjas – USA.
Published on National Review online NRO, by George J. Borjas, June 25, 2007.
Excerpt: … Labor-market impact: A guest-worker program of at least 200,000 persons per year will inevitably have an impact on the relative wage of competing workers. And the people who will likely pay this price will be low-skill workers who will face even tougher conditions in the labor market. I realize that more than a few economists seem to have developed amnesia during the recent immigration debate, and can’t seem to remember the laws of supply and demand. And there seems to be a thriving industry to come up with excuses that will help them ignore the logical conclusion that an influx of workers are going to depress wages in the labor market — just like an increase in the supply of oil would lower gas prices. But I suspect that the amnesia and the search for far-fetched excuses will end soon after the debate is over — after all, economists cannot go on forever denying the basic laws of economics.
Costs and benefits: On net, immigration is neither a huge boon for the United States nor a huge drain. Even the “optimistic” Bush-appointed Council of Economic Advisers concludes that the benefits from immigration are around $30 billion a year — in a $13 trillion economy. This amounts to about 0.2 percent of GDP. Let me put this statistic in perspective. Consider a worker who makes $50,000 a year. Immigration benefits this person by a grand total of … $100, or less than $2 a week. Moreover, the small $30 billion gain does not account for the costs of providing social assistance to the immigrant population. A lot of wishful thinkers will say that immigrants pay more in taxes than they receive in benefits — and many immigrants surely do. But a disproportionately large number of immigrants have low skills and high participation rates in welfare programs. It is simply incorrect and not credible to argue that, on average, immigrants “pay their way” in the welfare state … (full text).