Lower Wages for American Workers

June 2010

High-immigration cheerleaders claim that we need immigration for our economy. But they ignore the detrimental effect that importing workers has on American workers, particularly low-skilled natives. In a supply and demand economy like ours, the more there is of something, the less value it has. By artificially inflating the number of workers in our country, immigration lowers the value of workers, and wages are depressed. As George Washington University economics professor Robert Dunn notes, “I know business people who tell me they’re not interested in hiring Americans because the people who come from outside are cheaper. But … if there’s an unlimited supply of labor facing this country from outside, from the South or wherever, at five dollars an hour, I don’t care how fast this economy grows, the wage rate for such people is going to be five dollars an hour!”¹

The Skill Levels of Most Immigrants Are Low.

Thanks to immigration laws that favor relatives instead of skilled workers, most of the immigrants being admitted are low-skilled. Out of all the adult immigrants admitted in 2000, 69 percent had no reported profession, occupation, or job at all.² Of the immigrants that arrived between 2000 and 2007, 35.5 percent had less than a high school education, and another 24.6 percent had only a high school diploma. Immigrants admitted during 2000-07 trailed natives in rates of attaining college and advanced degrees, as well as a lower share that had attended some college.³

Claims That We Need Low-Skilled Workers Are False.

Some employers claim that they need to import low-skilled workers to compete in the world market, where wages are very low. But those employers have simply become dependent on cheap foreign labor to the detriment of American workers: “Network recruitment [of immigrants] not only excludes American workers from certain jobs; it also builds a dependency relationship between U.S. employers and Mexican sources that requires a constant infusion of new workers,” says economist Philip Martin.⁴Such a strategy for our economy is doomed to failure anyway: “The low-wage strategy may work in the short run, but in the long run it’s a loser. In the long run, we are not going to win a wage-cutting contest with the Third World,” notes economist Vernon Briggs.⁵

Besides, the United States already has plenty of low-skilled native workers. In January 2010, unskilled laborers had an unemployment rate of 13.6 percent, compared to a nationwide rate of 9.7 percent.⁶ The numbers are even higher when workers who are involuntarily working part time or have given up on finding a job due to economic conditions are considered. The inclusion of such workers brings the total underutilization of high school dropouts in the U.S. to 35 percent and 20 percent among graduates, compared to just 10 percent of college graduates.⁷

The effects are most pronounced in the cities where immigrants go. Because too much immigration keeps wages low, wage increases in low-immigration cities have been 48 percent higher than in high-immigration cities.⁸ Thus, immigration contributes to the growing disparity between the rich and the poor in this country⁹ and the shrinking of the middle class.¹⁰ But the damage is not confined to high-immigration locales. The harm is carried to other cities when poor Americans whose wages have been depressed or who have been displaced from their jobs by immigration move to low-immigration areas in search of greener pastures.¹¹

Wages Are Lowered By Competition From Immigrants.

The effect of immigration on those low-skilled Americans is profound, and the government knows it: “Undoubtedly access to lower-wage foreign workers has a depressing effect [on wages],” says former Labor Secretary Robert Reich.¹² Research suggests that 40 to 50 percent of wage-loss among low-skilled Americans between 1980 and 1994 was due to the immigration of low-skilled workers.¹³ Economist George Borjas estimates that the typical high school graduate saw his annual wage fall by $1,800 from 1980 to 2000 due to immigration, and that college graduates lost out on about $2,600 per year.¹⁴

This wage depressing effect of illegal immigrant workers was documented in 2008 by researchers working for the Federal Reserve Bank of Atlanta, who found that “average wages among documented [legal] workers are lower in industries that employ undocumented [illegal] workers and that a greater share of undocumented workers in those industries further lowers wages.”¹⁵ Immigrants introduce downward wage pressure in low-skilled occupations almost everywhere they are found — out of America’s 25 largest metropolitan areas, immigrant wages are at least 10 percent lower than native wages in 24 cities for cashiers and clerks, 23 for construction traders, 22 for cleaning and other building services, and all 25 for fabricators.¹⁶

Besides losing jobs, some native workers end up reliant on public assistance. A 1996 study estimated that 1,880,000 American workers are displaced from their jobs every year by immigration and that the cost for providing welfare and assistance to these Americans was over $15 billion a year.¹⁷

Large-Scale Immigration of Low-Skilled Workers Must Be Stopped.

In short, the mass importation of low-skilled workers through immigration damages the job market for Americans, depresses wages for low-skilled natives, and costs the taxpayer billions a year-all for the benefit of businesses that have become dependent on cheap, foreign labor. An immigration system that admits too many people, without regard to their skill levels or impact on the labor force, is to blame. We must reform the immigration laws to lower the level of annual immigration and to ensure that those immigrants who are admitted complement, not compete, with our native labor force.