CBO Report on Immigration: Impact on Jobs, Labor Force

Senate bill S. 744 is the proposed “Border Security, Economic Opportunity, and Immigration Modernization Act”. Based on an assessment by a new report from the Congressional Budget Office, the economic advisor Jared Bernstein recently wrote for the Huffington Post: "Immigration is expected to generate more costs, but even more revenues."

I've come to notice that, like most liberals, Bernstein tends to highlight the more positive aspects of the immigration bill, just as conservatives tend to emphasize the most negative aspects. I'm just going to reference what others are saying and primarily highlight what aspects of the bill are directly related to the labor force and employment.

Between health programs, entitlements and SNAP (etc.) the CBO expects spending to go up about $260 billion over the next ten years. But they estimate revenues to go up about $460 billion. The net difference, about $200 billion. The CBO says the increase in immigration would increase real GDP by 3.3% in 2023 and 5.4% in 2033.

The CBO report also says the proposed immigration bill "would significantly increase the size of the U.S. labor force [and would] increase federal revenues by $459 billion over the 2014–2023 period. That increase would stem largely from additional collections of income and payroll taxes, reflecting both an increase in the size of the U.S. labor force and changes in the legal status of some current workers."

On balance, the CBO expects new adults would participate in the labor force at a higher rate, on average, than do current adults in the United States. The CBO says in their report that enacting the proposed immigration bill "would increase the size of the labor force by about 6 million (about 3.5 percent) in 2023 and by about 9 million (about 5 percent) in 2033. Employment would increase as the labor force expanded, because the larger population would boost demand for goods and services and, in turn, the demand for labor."

I can not say I agree with the CBO's assumption that more people will automatically equal more jobs, and therefore translate into more revenue, because of a demand for more goods. People who have jobs, and have money to spend, will create the demand. It sounds to me like the CBO is putting the horse before the cart.

The CBO estimates that average wages would be 0.1% lower in 2023, because the capital/labor ratio (which boosts average wages in economic models) would fall and "because the new workers would be less skilled and have lower wages, on average, than the labor force under current law." (See my related post: IQs, H-1B Visas & the Tech Industry)

But then it's estimated that later, wages could grow by 0.5%, from 2023 to 2033. (Woe-wee! Yippee ki-yay!)

Now Hispanics represent a majority of all births in America, and last week The New York Times reported on census data that revealed that “deaths exceeded births among non-Hispanic white Americans for the first time in at least a century.” In fact, according to an Associated Press report last week, which cited government reports: “For the first time, America’s racial and ethnic minorities now make up about half of the under-5 age group.”

It's those demographics that mostly concern organizations such as ALIPAC, who say "Americans for Legal Immigration PAC has fought to not only ensure that our immigration laws are enforced, but to ensure that any type of so called immigration reform is not a concealed amnesty for the illegal aliens who have already entered our country."

Besides H-1B visas, the proposed immigration bill would also extend eligibility for E-visas for foreign investors, which are currently available only to citizens of those countries with whom the United States has treaties of commerce and navigation, and to citizens of nations with which the United States has free-trade agreements. The CBO estimates that "the increase in the U.S. population from the changes to employment-based immigration (using H-1B and J-1 visas, etc.) under the bill would total 2.4 million in 2023 and 5.1 million in 2033."

As an aside: The political economist and professor, Robert Reich, favors the current immigration bill and writes "The Democratic Party of the 1990s simply ignored its old base and became New Democrats, spearheading the North American Free Trade Act (to the chagrin of organized labor), performance standards in classrooms (resisted by teachers' unions) and welfare reform and crime control (upsetting traditional liberals)."

The CBO says the proposed immigration bill "would significantly increase the annual cap on temporary visas for highly skilled workers." As was reported by the National Journal, "Under the proposed immigration legislation the official quota of H1-B visas for high-skilled, foreign workers would nearly double the number, raising the maximum from 65,000 visas to 115,000. Additional visas would be offered in response to market demand, judged by how quickly the cap is hit. The number of H-1B visas would ultimately be capped at 300,000, regardless of demand."

I can understand granting a path to citizenship (again) to 11 million people who are already living in the U.S. --- especially if they had children born here --- because I see no good humanitarian reason for breaking families apart. But with a job market that's already over-saturated, in conjunction to high unemployment, which is already driving down wages (and not creating consumer demand), where is the logic with flooding the labor market with additional H-1B visas? Which, by the way, aren't benefiting the people south of the border near as much as those from India and Asia.

The Wall Street Journal reported that as job opportunities were fading in the United States, "many Mexicans and other Latin Americans are preparing to return to their homelands." The number of people that have immigrated to the U.S. from China and Taiwan has actually surpassed Hispanic and Latino immigration in 2012. Ironically, many of the jobs that they came here to acquire, may have already been outsourced to their own home country.

We already have too many unemployed IT workers and engineers, we don't need more to further depress the wage base. Let's put the unemployed back to work earning a living wage first, before diluting the labor pool any further. Let's bring back manufacturing to the U.S. and hire the unemployed who are already here.

The guestworker programs are only a tool for businesses to further undermine the wage base and to take advantage of an over-abundant labor pool. These visas programs are lobbied for by business groups who only have their own interests at heart, and not the interests of the American workers...or the interests of immigrants. The countless abuses of immigrant workers in the U.S. has been well documented.