You have heard the globalists say that we all benefit from open borders and immigration; meanwhile national populists such as Ann Coulter argue that even legal immigration hurts American wages through competition. Who’s right? Is immigration a gain or loss? And for whom?
The Data
The “America first” crowd has some powerful statistics on their side. Breitbart recently reported that the immigration expert Dr. Steven Camarota has aggregated data showing that there is no labor shortage in H-2B visa (temporary non-agricultural) occupations. Fields in which immigrants have been allowed to enter America in large numbers have experienced falling wage development, indicating that immigration is driving down the wages. These include cooks, security guards, janitors, construction workers, and various service occupations.
According to a report by the Federal Association of Scientists, the average American experienced little to no real wage increase from 1979 to 2016. Almost all the increase was gobbled up by the top 10% of earners, who experienced a 34% wage hike over the period.
The data becomes even more interesting when we break it down by various groups, and one fact stands out like a sore thumb. Overall, women gained by far the most, and the average man experienced a 6% wage loss. The bottom 10% of men experienced a 14.6% fall in wages. Men, especially those in the lower classes, have been the biggest losers in the last three decades. So much for patriarchy.
Another important group difference is between those with higher education compared to those with only a high school diploma or less. Almost all the wage losses came in the low-skilled group of people. The lower half of the bell curve was hit the hardest.
Analysis
The data suggests that something has depressed and lowered the wages of most Americans. Some of that trend is surely due to immigration, as the H-2B data shows. More surprising is the gender difference. This suggests that increased female participation in the workforce, possibly in combination with intense affirmative action, has depressed the wages of men.
But given that the wages have risen starkly everywhere in the world, except in the American working class, globalism probably plays a significant role. It’s no wonder that the richest in America love globalism because they have largely benefitted from it. Not so much Joe the Plumber.
A solution?
So how can we fix this? Will stopping the flow of immigrants help? The surprising answer is: not as much as you would believe. Consider Gupta, the software engineer from India. If you could choose whether he works in an outsourcing company in Mumbai, or somewhere in the U.S., which option would be most beneficial for America? In both cases, he will compete with Americans, but if he lives in the U.S., he will spend much of his income here rather than in the Indian economy. Surprisingly, it might be better for Americans if he could work in America.
Thus, unless you want to stop all global trade, which most recognize is a bad idea, immigration does not depress salaries as much as you think. What then is the problem? The main issue is that most of the benefit of globalism goes to the top earners. They are sufficiently educated and well-connected to stay insulated from global competition.
Overall, America’s economy has been lackluster because it is growing ever more bureaucratic and is continually being engineered to benefit the wealthiest. It is no longer the land of the free and ordinary workers are paying the price. America is, sadly, not a good place to do business anymore. This is the root cause of falling wages.
Globalism is the reason that top earners have been able to become wealthier while America has become less competitive. The wealthiest are not only insulated from competition, but also from the increasingly socialist policies and red tape. They do this by investing in China while keeping the best jobs for themselves, which cannot easily be replicated by emerging economies. They win; you pay the price.
The long-term solution is, therefore, to cut bureaucracy and taxes, especially for small businesses, so that more jobs will be created for middle America. Get rid of illegal immigration, and make sure that most of the immigrants who come to America compete with the high earners.
