The fever pitched argument over a southern border wall generally comes down to a few repeated assertions from both sides.
The “pro-wall” pitch is usually that it will reduce crime and lower the estimated nine-digit social welfare expense of caring for illegal immigrants. Meanwhile on the other side, the “anti-wall” contingent typically argues that it would be ineffective in slowing illegal immigration and that its construction-cost would be prohibitive. There has been so much hyperbole from both sides in this quarrel it’s hard to know what is true. But stepping back for a moment from the heated rhetoric, there’s another case to be made for limiting the influx of illegal immigrants.
The primary reason for most immigration — both legal and illegal — is economic. People come to the United States seeking a better life, which means jobs that pay more than the below-poverty wages earned in their home countries. And most immigrants, lacking legal documentation, can only find employment in the lowest tier of the workforce — competing for jobs against the most vulnerable American workers.
Low-skilled jobs paying at or near the minimum wage are typically filled by workers having only a high school diploma at best. These are disproportionately held by Hispanics and African-Americans. Add to this mix roughly a 25 increase increase in the labor pool from illegal immigration and the result is reduced wages and increased unemployment for American citizens, native-born and legal immigrants alike. Harvard Kennedy School economist George J. Borjas estimates that for every 10 percent increase in the supply of labor, wages decline by at least 3 percent. The effect of this on the low-skilled workforce means a reduction in annual earnings in the neighborhood of $800 to $1,500 — the difference between existence and poverty for millions of vulnerable people.
To be sure, there are economists on the other side that argue mass immigration — both legal and illegal — is good for the economy. On a national level that may be true since lower wages result in lower consumer prices and also an increased GDP. However, that argument ignores illegal immigration’s effect on low-skilled workers’ income and employment. Even liberal economist Larry Summers agrees that what’s needed is “an approach where it is understood that countries are expected to pursue their citizens’ economic welfare as a primary objective, but where their ability to harm the interests of citizens elsewhere is circumscribed.”
Indeed, looked at from this perspective, the left should be clamoring for a wall, or any other way to curb illegal immigration. The groups they seek to help the most, the economically disadvantaged and minorities, are the ones most harmed by allowing (even encouraging) illegal border crossings to continue.
But outside of increasing wages and lowering unemployment among the low-skilled workforce, there is another current economic hot button of angst that is ignored when defending illegal immigration. It causes income inequality and creates a wealth transfer from low- to high-income individuals.
When increases in the labor pool suppress or reduce the wages that firms pay their workers, profits increase. And naturally those profits flow to the owners of those firms, be they individuals or public shareholders. Essentially, those higher profits are the result of workers subsidizing them by working for lower wages. This is the centerpiece of the Marxian theory of “surplus value” — workers are paid less than the value of their production and the owners of firms profit from it. Where is the outrage over immigration causing this massive wealth transfer and widening the income and wealth gap?
Regardless of all the other arguments for and against immigration reform, shouldn’t everyone agree that helping the lowest earners and the least skilled of our labor pool is an important goal? Absent a glut of low-skilled workers from outside the United States, the seemingly always present outcry for an increase in the minimum wage wouldn’t be necessary because the market would raise wages on its own. A wall may or may not be the answer, but certainly some way of curbing illegal immigration would benefit millions of American workers who are barely getting by.
• Kevin Cochrane teaches business and economics at Colorado Mesa University, and is a permanent visiting professor of economics at The University of International Relations in Beijing.
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