Douglas Holtz-Eakin, one of the chief promoters of the Senate’s Gang of Eight plan, recently took to the Corner to dispute my concerns over how the Senate bill would negatively impact Americans’ wages. Mr. Holtz-Eakin’s argument is contrary to both common sense and the best available academic evidence.
Politico reported this week that “Big Business, Senate Republicans and Democrats backing immigration reform have a target in their crosshairs: House Republicans.”
Why is the business lobby so eager to pass the Senate bill? Is it because they believe its large influx of low-skill workers will increase wages or reduce them? The question answers itself.
But let’s look at the CBO report. CBO concluded that average wages would decline for the next dozen years, while unemployment would increase. This is not in dispute. But Mr. Holtz-Eakin says not to worry, the decline, he alleges, will only be “20 cents a day.” First of all, it’s a bad sign when even the supporters of the bill have been reduced to arguing about the degree to which it will reduce wages. Wages today are lower than they were in 1999 and Americans have been through a prolonged recession — we need wages to go up, not to flatten or fall even further.
As to how much they will go down, Mr. Holtz-Eakin’s figure of 20 cents a day represents a drastic misrepresentation of the CBO report (which itself substantially understates the harmful impact that the Senate bill will have on workers). To arrive at his 20-cents figure, he assumes an equivalent wage reduction across the board. In his own words, Holtz-Eakin explains that his calculation “includes the salaries of the future Lloyd Blankfiens, Lebron Jameses, and Justin Biebers, as well as middle-class workers. . . .That means wage and salary earnings per worker will be $74,556 on average. These are the earnings that will be reduced 0.1 percent. . . . About 20 cents a day.”
Averaging all of these salaries together is of course very misleading. The typical salary for a U.S. worker is nowhere close to $74,556. And the wage effects of the immigration bill will be highly varied — Goldman Sachs CEO Lloyd Blankfien is likely to see his take-home pay increased while a low-income U.S. citizen will experience a much, much steeper reduction than 0.1 percent. Under the bizarre methodology that Holtz-Eakin employs, Mark Zuckerberg could increase his earnings by $1 million and 1,000 workers could see their wages fall by $1,000 in a year — and the average overall wage would be unchanged.
But this is not just a theoretical exercise: Dr. George Borjas of Harvard has found that high levels of immigration are already hurting workers. The average yearly income decrease over the past five decades has been 3.2 percent, with native workers losing $402 billion in income annually to immigrant workers. At the same time, businesses who employ immigrant labor see their profits increase by $437 billion per year. In a separate study, Dr. Borjas showed that the average native-born worker has his or her wages reduced by $140 per month as a result of high levels of immigrant labor.
Holtz-Eakin also avoids the question of unemployment. A recent Center for Immigration Studies report observed that 1.3 million fewer native-born Americans have jobs today than in 2000, even though the native-born working-age population has increased by more than 16 million. Meanwhile, 5.3 million more immigrants found jobs over that time, with the size of the working-age immigrant population growing by around 9 million. The immigration bill will dramatically worsen, not improve, this trend. There is a reason why people earning under $30,000 prefer, by a 3-to-1 margin, a reduction in total immigration to an increase.
Polls show the GOP lost the last election because we failed to connect with lower-income Americans. Republicans lost this vote by a record margin. So the GOP needs to do some soul-searching. We can either follow the Norquist and Holtz-Eakin example and try to lecture struggling Americans that we’re only going to marginally reduce their wages and only slightly increase their unemployment, or we can give voice to these struggling Americans of all backgrounds and articulate a rational immigration policy that promotes upward mobility, economic assimilation, and rising wages.”
— Jeff Sessions represents Alabama in the United States Senate.