The Senate’s pending immigration bill would boost investors’ and owners’ share of the economy for at least twenty years, and shrink some Americans’ wages and salaries for at least 10 years, according to a report from the Congressional Budget Office.
“The rate of return on capital would be higher [than on labor] under the legislation than under current law throughout the next two decades,” says the report, titled “The Economic Impact of S. 744.”
The higher rate of return would also push up the interest rates paid by American taxpayers for the federal government’s $17 trillion debt, the report says.
Populist conservatives who oppose the immigration bill, and some progressives who back the bill, also have long bemoaned the declining percentage of new wealth earned via blue-collar wages and professionals’ salaries.
President Barack Obama strongly backs the immigration rewrite, but has complained about the trend.
“In all countries around the world, you’re seeing growing inequality, and so we have to find ways to make sure that ladders of opportunity exist for those at the bottom, and that profits and increased productivity all does not just benefit those at the top,” Obama told a German audience in Berlin.
Last September, those worries were buttressed by a report from the Federal Reserve Bank of Cleveland, which showed that labor’s share of income has dropped by roughly 10 points since the early 2000s.
In turn, the share of income earned via capital has increased by the same percentage.
The federal Bureau of Economic Affairs estimates that labor’s share fell from roughly 67 percent to 58.2 percent.
The Bureau of Labor Statistics estimates the share fell from 75 percent in 1979 to 67 percent in 2007.
The result of this economic shift is that economic inequality widened, according to the authors of the reserve’s report, Margaret Jacobson and Filippo Occhino.
But once the economy recovers, the widening gap “will be reversed as the recovery continues … [and] the labor share will pick up and converge to its long-run trend value,” says the September report.
The pending bill will roughly double the inflow of immigrants over the next 20 years to roughly 46 million, or about 1 immigrant for every 7 Americans.
At least 85 percent of the immigrants will be low-skilled, and will not pay enough in taxes to cover the cost of routine government benefits, said Robert Rector, a budget analyst at the Heritage Foundation.
“It is very difficult to imagine that those households could pay enough in taxes to pay for their benefits,” he told reporters Wednesday.