Democrats have outlined three defining challenges of our time: Income Inequality, Climate Change, and Civil Rights. If they were truly interested in addressing these three issues, they need to rethink their position on immigration. Immigration alone has an order of magnitude greater impact on these issues than any current or proposed government program or policy. Democrats need to have an honest discussion on immigration, analyze the facts and data, and adopt policies that lift up all Americans.
In the first of three blogs, I will address the nexus between immigration and income inequality.
While Income Inequality focuses on the difference between the incomes of the rich and poor, it is really two separate issues. On the low end, we have tens of millions of Americans unemployed and underemployed, while wages have declined for the poor and middle class. On the high end, we have many who are super wealthy abusing the system to compound their wealth via immoral or illegal actions. Legal and illegal immigration has a considerable impact on income inequality at both ends.
Hillary Clinton called raising incomes for everyday Americans, the defining economic issue of our time. She includes on her campaign site the following graph, which shows since the mid-1960s productivity increases considerably, but wages have been flat.
It is worth noting the Immigration and Nationality Act of 1965 radically changed the U.S. immigration policies. At the point where the lines on the graph diverge, the U.S. went from issuing 250,000 visas each year to over 1 million. Today there are over 40 million legal immigrants and over 11 million illegal immigrants living in the U.S. Government data shows one in six people employed in the U.S. today is foreign-born. President Obama’s Secretary of Labor Thomas Perez stresses, “The best way to lift wages is with tighter labor markets.” FAIR analysis shows immigration reduces American wages by as much as $400 billion each year. A recent United Way study found California has the highest percentage of poor people in the U.S. with one in three not having enough income to make ends meet. While 25% of U.S. citizens lack sufficient income, the situation is worse for foreign-born (45%), non-citizens (60%), and worst for Latino, non-citizens (80%). California’s immigration policies have clearly accelerated income inequality.
To illustrate the issue for how the rich get richer, consider three competing local businesses in the same market.
- Company A employs American workers and pays them a competitive wage and benefits (including Obamacare).
- Company B uses mostly legal immigrants and guest workers, pays them minimum wage or below average wages and limited benefits.
- Company C employs mostly illegal immigrants, paying them the lowest wages, often via cash with no benefits.
The differences in labor costs can easily be 25-50% or more. That enables the owners of Companies B and C to rake in higher profits and personal income. It also enables them to undercut the prices of Company A to capture more market share. Company A over time will see their business decline and need to control labor costs or go out of business. They will stop hiring, cut hours of staff, minimize or delay raises, and ask for higher employee contributions to rising healthcare costs. This situation is not limited to the blue-collars jobs in construction, agriculture, and housekeeping, but for white-collar jobs too. Billionaire led, Fortune 100 companies from Facebook to Disney have abused H-1B visa programs to import labor at lower costs. Disney recently laid off 250 American programmers and replaced them with immigrants. What was even worse, Disney held their severance packages hostage unless they trained their replacements and prohibited them from discussing the betrayal publicly.
Senator Bernie Sanders passionately advocates, “The issue of wealth and income inequality is the great moral, economic, and political issue of our time.” He notes there is something profoundly wrong when millions of Americans work longer hours for lower wages and we have the highest childhood poverty rate of any developed country on earth. As part of his solutions, he calls for increasing the federal minimum wage from $7.25 to $15 an hour by 2020. Yet by significantly increases the wages (and thus costs) of American workers, businesses will be further incentivized to import cheaper immigrant labor.
Democrats who seek to address income inequality should ask themselves:
- With over 17 million unemployed and underemployed Americans today, does the U.S. really need 1 million new legal immigrants each year?
- Why should wealthy business owners benefit by importing cheap labor at the expense of American workers?
- Should the U.S. tighten its labor markets for a few years until American wages improve?
In the coming days I will address how immigration policy affects climate change and civil rights.
The author of this guest opinion is a federal policy analyst.