Greenspan Applies Supply and Demand to Immigration’s Impact on Wages
Writing in National Review, Heather Mac Donald notes Alan Greenspan’s comment to the National Association of Business Economics on February 25 that “You don’t have to bring up the bottom if you bring the top down.” Greenspan was referring to the nation’s growing income inequality and the proposal to raise the minimum wage to decrease inequality. And to bring the top down, Greenspan was advocating increasing skilled immigration to increase the supply of those workers, thereby decreasing demand and lowering the earnings of professional workers –something he has been advocating for years.Mac Donald noted, however, that current immigration reform efforts, i.e. S.744, not only would increase the supply of skilled workers, but also increase visas for low-skilled workers. Therefore, the effect of the increased immigration would lower earnings of both high-wage and low-wage workers, leaving both poorer but without closing the gap. Greenspan’s concept – even if there were some moral justification for deliberately reducing the wages of U.S. workers by importing more foreign workers — would not reduce inequality unless it were confined to just high-wage workers.Besides, few Americans, other than the employers of highly skilled foreign workers would likely be in favor of artificially lowering the wages of skilled workers and their tax contributions through increasing the intake of foreign workers – and certainly not most U.S. skilled workers.
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