Immigration Legislation and Unemployment

At least some of the backers of the Senate’s Gang of Eight amnesty and mass immigration bill seem to have bought the line that the legislation would be an economic stimulus. The Congressional Budget Office (CBO) analysis of the bill projected that enactment would generate additional tax revenues resulting in a $197 billion reduction in the federal deficit during the first decade. This finding was touted by the White House and Senate leadership as a seal of approval on the legislation.But, that rosy forecast disappears when the details are examined. Most of the increased revenue in the CBO analysis results from increased flows to the Social Security Trust fund. Under amnesty, illegal aliens would be issued valid Social Security numbers. Both they and their employers would begin paying into the system. In addition, a large influx of new workers who enter would enter our labor force under the bill, either as immigrants or as guest workers would contribute to a temporary boon to the trust fund. That is funding that is not considered available for general budget programs.However, whether the newly legalized workers and new immigrants would benefit the economy would depend on whether they can find productive jobs. That issue is questionable in light of the CBO’s estimate that one of the effects of the legislation would be to increase unemployment and lower wages. The CBO’s report on “The Economic Impact of S.744…” states on p.4, “…temporary imbalances in the skills and occupations demanded and supplied in the labor market, as well as other factors, would cause the unemployment rate to be slightly higher for several years than projected under current law.”But, the current situation is already dismal. Neil Irwin, writing in the Washington Post on the current state of the economy, provides statistical analysis that shows unemployment is still much higher than it was in 2008 before the recession. There are more than three unemployed job-seekers for every available job. And the share of the workforce that is employed remains much lower that it was in 2008. Irwin’s data are the following:

• Unemployment – The number of unemployed job-seekers per job opening was less than 2:1 from 2005 to 2008 when it began to zoom – reaching a level of 6.7 job-seekers per available jobs in July 2008. The level has since fallen, but it remains above 3:1 (3.1 in April 2013).
• Employment – The employment-to-population ratio (aged 16 and older) was just below 63% until 2008. Then it rapidly fell to below 59% by mid-2009. It has not recovered and stood at 58.6% in May 2013.

Friday’s report from the Labor Department reveals that unemployment was back up to 7.6 percent in June.With current labor market conditions remaining seriously depressed, it would be the height of irresponsibility for Congress to ignore the warning of the CBO. Adopting the proposed amnesty and increased immigration provisions of S.744 would further harm job prospects for already suffering Americans.