CBO says immigration bill aids investors, not wage earners

The huge inflow of new workers will force down average wages, the CBO predicted. Average wages would then increase after 2025 as the market balanced itself out, according to the prediction.

“Because the bill would increase the rate of growth of the labor force, average wages would be held down in the first decade after enactment by a reduction in the ratio of capital to labor, which would make workers less productive,” said the densely written report.

The lost wages would be felt most by the low-skill Americans, but also by the smaller population of high-skill worker who will face an influx of competition from roughly 5 million skilled immigrants, and from a changing pool of roughly 2.5 million skilled guest-workers, the CBO report said.

“The legislation would particularly increase the number of workers with lower or higher skills but would have less effect on the number of workers with average skills. … The wages of lower- and higher-skilled workers would tend to be pushed downward slightly (by less than ½ percent) relative to the wages of workers with average skills,” said the CBO report.

Bill supporters dismissed the criticism.

The immigrant low-skill workers “complement our labor force, they make it more efficient,” said Diana Furchtgott-Roth of the Manhattan Institute. Even if the gain for capital increases inequality, “what’s important is not the degree of inequality, but the ability [of Americans] to move between income groups,” she said.

Increased immigration will help that movement because it will increase the economy’s efficiency, she told The Daily Caller.

The CBO report shows that low-skill and high-skill workers may not gain as much as middle-skill workers, but “average wages across all skills increase in the long term,” said Josh Culling from Americans for Tax Reform, which is backing the immigration rewrite.

The decline in average wages is caused by the arrival of many new low-skill immigrants, not by drops in Americans’ wages, he said.

The bill’s opponents’ dismiss these defenses.

For example, said Rector, the bill authors allow low-skill workers to be imported until the unemployment rate rises to 8.5 percent.

“What they’re really saying is that we don’t give a darn about those [American] low-skill workers,” Rector said.

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