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Obama's Amnesty Plan is Bad for the Economy

Hardly covered in the news has been Obama's recent decision to execute a case-by-case review of over 300,000 illegal immigrants and grant amnesty to those who appear to be "low-priority offenders." I add that it was hardly covered by the news because its impact on the United States may become profoundly harmful to the economy and the average American worker.

The harm won't come directly from those granted amnesty; it will come from the implications of providing amnesty.

According to the Heritage Foundation, "In 1980, illegal immigration in the United States was far from the overwhelming challenge it is today. It was only after the 1986 immigration reform bill, which provided amnesty to more than three million illegal aliens, that an ever increasing surge of people entering the U.S. illegally began." In another article, Heritage Foundation states, "...the 1986 amnesty helped to triple the number of illegal immigrants from 1986 to 2006." 

Granting amnesty to any number of illegal immigrants sends some important messages to all potential illegal immigrants. Most importantly, it sends the message that United States doesn't take its immigration laws seriously. From this, potential immigrants conclude that the best way to enter the country is illegally because they'll receive all of the same benefits eventually and they'll get here much more quickly. Any type of amnesty that the United States grants will encourage more illegal immigration by sending these messages. The impacts of this may be disastrous.

The first impact of more illegal immigration is lower wages. Illegal Immigration lowers wages in two ways.

First, the presence of more illegal immigrants in the labor market increases the supply of workers for businesses. Because of this higher supply, businesses can pay workers less. According to George Borjas, Harvard Professor of Economics and Social Policy, "Economic theory predicts that increasing the supply of labor in this way will reduce earnings for natives in competition with immigrants...Statistical analysis shows that when immigration increases the supply of workers in a skill category, the earnings of native-born workers in that same category fall...Any sizable increase in the number of immigrants will inevitably lower wages for some American workers."

The second reason illegal immigration lowers wages is because illegal immigrants are willing to work for less money and thus depress wages. According to the Federation for American Immigration Reform, "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...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. 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. 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.”

As we can see, illegal immigrants lower wages in two distinct ways. At a time of such a high income-gap, which Obama and Democrats frequently complain about, Obama’s amnesty plan would expand this gap by lowering wages for the working class of America.

Equally as disastrous as the lowering of wages, more illegal immigration would mean an even more overcrowded labor market. Obama supports a plan that will mean even fewer jobs for Americans at a time of over 9% unemployment.

There are a couple common responses to this argument—all invalid. The main response is that illegal immigrants take jobs Americans won’t want and that businesses need low-wage workers to compete internationally. This is untrue. According to the Federation for American Immigration Reform, “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.4 Such 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. 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.” As we can see, it’s untrue that using low-wage illegal immigrants is a good long-run economic strategy and it’s also untrue that we need illegal immigrants to take some of the low-skill jobs that Americans won’t take.

At a time when the unemployment rate for unskilled American workers is around 13%, Obama’s plan will encourage more illegal immigrants to come and compete for jobs. Obama’s plan will increase the supply of workers when there’s already an enormous shortage of jobs.

The labor market is like a scale that has to balance supply and demand. Obama’s plan is like adding more weight to the heavy side of a scale that just needs to be balanced. Moreover, when the scale becomes even more off-balance, businesses pay their workers even less, hurting the American working class in a time of need. This amnesty is simply unaffordable in the midst of this economic crisis. 


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