MichaelCD - The Blog.

The thoughts of Michael Cadwallader. Coffee loving, history book reading, Cheshire man.

Wednesday, April 12, 2006

The Economics Of Immigration Part 2

The second article I wish to flag up, is this one from The Washington Post. The article by Alfred Tella, focuses on a number of areas which are important to the debate on immigration. I will start with this:
To say the continuing influx of low-skilled immigrants willing to work cheaply doesn't depress the wages of workers already here is to deny the basic laws of economics. To say a reduction or slowup in the numbers of illegals competing with legal residents, i.e., a smaller labor supply, wouldn't improve wages and re-employ many who have lost their jobs to illegals also doesn't square with the law of supply and demand.
And to me as a low wage earner, this is the most important part of the debate on immigration. The left were aware of this fact in the past. So, when Enoch Powell encouraged commonwealth immigration to fill gaps within the NHS. He was blocked by trade unions, who believed that the move was designed to keep wages artificially low. The obvious response to all this is that if the supply of illegals dried-up then businesses would go under:
The re-employment of legal workers at better wages would mean some marginal employers would go under. Also, some of the higher labor costs could be passed on to consumers in the form of higher prices, although such price increases would probably be small and thinly spread.
With higher labor costs, employers would have a greater incentive to invest in technology, which would lower prices and lead to higher standards of living.
It is the drive for higher productivity that has led to technological advancements in the modern world. The article continues on the same theme:
Steven Camarota, research director at the Center for Immigration Studies (CIS), looked at native workers in occupations performed by people with a high-school education or less, about 25 million workers. He estimated immigration reduces the wages of these workers more than 10 percent, with minorities suffering most. A study done by economists for the National Research Council also found immigration significantly lowered the wages of high-school dropouts.
Tella then investigates the cost to the government through welfare e.t.c.:
[....]estimated the one-year net fiscal cost of illegal immigrant households to American taxpayers at about $10 billion at the federal level alone. Illegals were estimated to pay about $16 billion in taxes and cost the government $26 billion. (About half of illegals are estimated to be paid wages off-the-books.) The largest costs were for Medicaid, food benefits, aid to schools,[....]the cost of illegal immigrant households if a law were passed to make them legal. They would qualify for a wider range of government services and would make greater use of such programs as the earned income tax credit, even though more of their earnings would be reported and taxed. Tax revenue per household would rise an estimated 77 percent, but costs would rise even more, by 118 percent. The net result would be to nearly triple the annual fiscal cost, to $29 billion.
This article has shown how the 'obvious economic benefits' of immigration, can be shown up as hollow premises.


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