The Effects of Immigration and Labor Wages on the U.S. Economy

Last Updated: 10 May 2020
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The United States of America is the land of opportunity where everyone can achieve their biggest dreams. In many parts of the world, immigration and migration of people both legally and illegally shape our country’s population and the way the economy runs. Here in the U. S. , millions of illegal immigrants struggle to find a way to live just the same as the legal foreign-born individuals that abide by our laws. History of the population growth is due to immigration of foreign people to this land of opportunity.

One of the biggest fears directed towards immigrants is that Savings (income not consumed) (O’Sullivan & Sheffrin (2008) p. 332) will not equal investments because the saved income is being invested in their home countries and participating in the government public services or contributing to unemployment, low wages, high costs, and mandatory benefits or insurance. First, we need to understand the different types of immigrants in America. Legal immigrants are foreign-born people, but have citizenship.

Permanent aliens are people who legally entered into the country with permanent residency, but not citizenship. Visas issued for the legal immigrants that stay for a set time for things like education or employment experience. We also have those who come here legally to stay for a set amount of time for education or sponsored employment. On the other end the spectrum are the millions of illegal immigrants that sneak into our country hoping to find asylum and a better way of life. Immigrants have had a profound impact on creation of business, economic innovation, and market value.

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The Department of Labor expects America’s population to grow by fifty percent over the next fifty years. Plan to expect 820,000 immigrants to arrive in our country every year not counting illegals. Therefore, by the year 2050, immigration will increase our population by over eighty million people, which will account for two-thirds. According to the information gathered in the 2000 census there are around 28. 4m foreign-born citizens living in the US, which is approximately 10. 4% population. Over half of these people were Latin American, 25% Asian, 15% European and the remaining 8% from various regions.

According the census information foreign born people are more likely than natives to be concentrated in certain areas. One, half of the foreign-born people lived in a big city compared to only one quarter of the native-born people. (United States Census Bureau) Status and Employment Differences Census information also revealed many differences in the social status and economics of foreign and native-born people in the United States. The census found that foreign-born people live in families that are larger than those of the average native-born people.

In 2000, twenty-six percent of foreign-born people had families of five members or more and native-born people only had thirteen percent of families this large. Employment and Wages The unemployment rates interestingly were very similar between the males both foreign and native, but differed between women who were foreign born or native. Foreign workers were more likely than natives to be in service occupations but more native-born workers hold the managerial or professional occupations. The professional occupations were held by Central Americans or Asians, which had wages higher than everyone.

Now don’t get me wrong, the additional people brings diversity to our culture and widens the margin between the “rich” and the “poor”. Part of the reason for the concentration of immigrants in the west and south is due to the seeming migration of everyone to the so-called “sun-belt” of the United States. As immigrants come into our society today, they face a different place than immigrants of yester-year. Today’s society is “…postindustrial society. America’s good paying jobs are increasingly the preserve of an educated social class.

Entry-level and service jobs are the only jobs available for the unskilled and uneducated, whether they are old settlers or new, and the competition is often fierce for any job paying more than minimum wage” (Herson p. 482). Some people believe that Agriculture and industry could not have grown in the United States without immigrants. Today the United States is one of only a few countries that allow so many people who do not have native ties to the country to migrate here at one time. Opponents of immigration reform often suggest that if employers paid Americans workers more money, they could reduce the need for these immigrant laborers.

Many industries cannot pay more in today’s economy. Meanwhile, because these workers complement rather than compete with the American workers, immigrant workers, legal or illegal, accept the enticing lower skilled and lower paying job, which the Native American declined. A crackdown in illegal immigration in 2004 caused a shortage of workers needed to bring in the lettuce crop in the Western United States, said Powell, which he said caused a $1 billion loss for the industry as many growers had to leave their fields unharnessed.

"To hire Americans to do it, they would have had to raise wages so far, it wouldn't have been worth it for them," said Powell at the Independent Institute. "It caused less of a loss to leave the crop to rot. " As for complaints that many critics of immigration cite - demand for social and government services by immigrants - most economists believe that is outweighed by the increased economic activity, even if some specific school districts or public hospitals struggle with the costs associated serving the immigrant community.

(Isidore, 2006) The view that a minimum wage reduces employment was not always as strongly held by economist as it is today. Economist who led the field of theoretical economics during the beginning to middle half of the 20th century believed that the minimum wage could actually increase employment in certain situations, although they conceded it could lower employment in other situations. They believed that higher wages could reduce worker turnover and increase productivity.

Alternatively, increases could shock some firms into adopting better management practices, leading to gains in output and employment. Minimum wage is a contentious issue because it is debated in a wide and eclectic audience. Labor demand is a derived demand, which is when employers only hire labor in order to sell the product that their labor produces. Substitution of the production factors can increase the hiring of undocumented workers or even use less-developed countries for production. It is harder to substitute for skilled workers than unskilled or undocumented workers.

Wages are much lower in less developed and third world countries compared to the US. Countries all over the world, including all members of the OECC, maintain minimum wage laws. For many working Americans an increase in the minimum wage will make the difference between living in poverty and not. Furthermore, a higher minimum wage, a floor to ensure workers that they're getting a fair deal for their efforts, provides a foothold into the middle class for many other families who would otherwise not earn a middle class living.

The federal minimum wage does not lead to unemployment; instead, it raises the living standards of those most vulnerable in our society. As we enter the next century, it is incumbent upon our legislators to ensure that those at the lowest economic spectrum of our society receive a fair and livable wage. As a business owner, I would not want any additional costs eating away at my profits. I would highly consider outsourcing abroad and definitely hire undocumented workers. Increasing the wages to keep up with inflation and the economy can hurt us and cause unemployment to rise.

Issuing jobs to undocumented workers is not a reason for unemployment rising, jobs unavailable to citizens, or decrease in labor demand. Married to an undocumented immigrant has been difficult over the last couple of years from personal experience. Our economy would be in worse shape if we did not have the funds in our circular flow by undocumented workers. Each time he receives an increase in wage; he works harder and is more grateful to be in America. To have an accurate unemployment rate, add the undocumented laborers into the equation of labor force, because they are continuously looking.

The "unskilled" undocumented workers, as it is put in the text, pay federal/state taxes, mandatory FICA deductions for social security (which they are ineligible to receive even with a resident card at 62) and file annual income taxes as a non-resident alien. Many of their jobs were not taken away from the citizens; citizens gave up those jobs because the wage did not match the worker or the duties. For example, many of us have used the cliche “I would not touch someone else’s laundry or trash even if you paid me a million dollars”. I would be the first to admit that I could not work in the City’s sanitary department for only 8. 00 an hour.

Well that $8. 00 per hour is a “million dollars” to the undocumented worker who arrived illegally from a less-developed country. Less Developed Country Less developed countries like Mexico, proposed survival kits to illegal immigrants to protect them as they try to cross the borders. One of the biggest supporters of this idea is Mexican Government, Minister Juan Hernandez. He feels these people are heroes and that they are only boosting the United State’s economy by coming to this country. The “survival kits” would contain medicine, bandages, dehydration powder, food, water, and twenty-five condoms for men and birth control for women.

The Mexican government feels that they import AIDS into Mexico so providing condoms will help prevent illegal immigrants from getting aids and bringing it back to their families. These kits can encourage the illegal immigrants to risk their lives and many feel that giving these kits the Mexican government would be encouraging its citizens to risk their lives and break United States laws. There were recently fourteen immigrants died trying to cross the Arizona desert and four hundred perished while trying to cross the border in the year 2000. (Jeunesse, 2001)

Migrant workers are especially prevalent in the areas of the country where there is a great deal of Agriculture where workers are needed during certain seasons to aid in farm work and other duties. The National Agricultural Worker Survey defined migrant workers as those who travel seventy-five or more miles in search of work. This study also revealed that workers receive an average of five dollars an hour so they make around five thousand dollars a year because they work an average of 1,000 hours and most of the migrant workers are Hipics born in Mexico.

Eighty-two percent are men and mostly illegal or unauthorized workers that have to live in very bad conditions. Some farmers provide housing for the migrant workers. When the government tries to order better living conditions, the owners cut housing altogether so government policy seems to backfire. Some owners even rent out shabby looking houses at outrageous prices so once again the workers have to cram as many people as they can into one building so that they can afford to live. All this money is assisting our economy.

In Canada, these firms are having better luck finding skilled workers to come in and fill these positions. Some companies pay the workers as much as one thousand dollars a day to come and work here with all expenses paid. Immigration both legal and illegal has shaped our past and will continue to shape our future. Many people in this world see the United States as the place where all your dreams can come true where everyone is happy and living well. As time goes on, more and more people will leave their home countries and travel to “America” looking for that Promised Land.

As their people come into our country and live among us they shape the face of our diverse lands and well as add great deal to our population growth, which does increase our labor productivity and economy. There are still millions more people who enter our country illegally and many more try every day. Some immigrants succeeded in becoming naturalized citizens and it is obvious that there are still differences like status, living conditions, and wages of foreign-born people as compared to native-born American citizens.

Migrant workers play a major role in our agricultural economy but since a great deal of them are here illegally and come here only during work season they are often abused and taken advantage of. New laws and regulations put into effect constantly to control immigration and migration especially since 9/11. Since then there has been a newfound interest in upholding and updating these laws and regulation. All in all immigration and migration, whether it is legal or illegal changes the population growth and the makeup of a country in many ways. ?

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The Effects of Immigration and Labor Wages on the U.S. Economy. (2018, Sep 28). Retrieved from

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