The biggest problem created by uncontrolled illegal immigration is wage suppression. According to economics professor George Borjas, immigration reduces the average annual earnings of U.S.-born men by an estimated $1,700, or roughly 4%. (See Yahoo News story: Illegal Workers Have Mixed Impact.) If that reduction is applied to the roughly 135 million employed Americans, that reduces aggregate annual worker income by $230 billion, or $0.23 trillion. That's roughly 2% of our $12 trillion GDP. That's a loss in consumer spending of $230 billion (less taxes). Given that our entire GDP growth in 2005 was $384 billion, this is a significant amount. Considering that consumer spending is approximately 70% of GDP, that makes the "growth" in consumer spending around $269 billion.

Again, the loss of that $230 billion is no small amount. And it is also $230 billion less money that could have been taxed, costing the Federal government anywhere between $36-55 billion per year. (Increasing the taxable income of a single taxpayer making $35,000/year by $1700 increases Federal income tax by $413. Increasing taxable income of a married taxpayer filing making $35,000/year by $1700 increases Federal income tax by $267. Multiplying these numbers by 135 million amounts to $55.7 billion and $36 billion, respectively.)

Right-wingers will argue that this wage suppression is offset by business profits, and that these profits fuel investment. But investment capital is OVER-abundant at present. Increasing this excess even further will not result in more capital investment. It will result in higher CEO salaries, further overinvestment in the stock market, and further investment in foreign production facilities, the latter of which puts even further downward pressure on American wages.

Furthermore, business profits don't fuel consumer spending. And consumer spending is the engine that drives our economy, not investment. Without consumer spending, there are no returns on investment. And if no returns are anticipated on investment, no investment takes place.

The immigration-fueled reduction in wages does NOT help our economy. It hurts it. It reduces aggregate consumer income and the consumer spending it finances. The reduction in consumer spending reduces consumer production demand, further reducing demand for the labor to provide that production. The reduction in labor demand drives down employment and wages. The resultant labor demand reduction further reduces aggregate consumer income and further reduces consumer purchasing power.

As consumer buying power declines, so do investment opportunities, since those opportunities are created by consumer demand for production. Thus the increased profits resulting from reduction in labor costs create even more excess capital, while reducing investment opportunities still further.

Does anyone really think that wage suppression is "good" for the economy? Doesn't someone have to purchase the goods produced for business to profit? Won't reducing consumer income also reduce consumer goods purchasing? Won't a decline in consumer goods purchasing reduce business revenues and reduce potential profits? Once again, is immigration-fueled reduction in worker/consumer income really "good" for the economy?

unlawflcombatnt

EconomicPopulistCommentary

Economic Patriot Forum

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Capitalism cannot function without consumer income. The benefits of capital investment are limited by consumers' ability to buy the products of capital investment.

There must be balance between the "means of consumption" and the "means of production."

This is bullshit to be frank. And I'm really pissed off for people complaining about how "illegal immigrants lower the wages." You want to know who really keeps the wages down? Congress! How can people be so ignorant as to blame low wages entirely or even mostly on immigrants?

I don't know about you, but last time I checked, Congress controlls the minimum wage; which of coarse is way way too low. People in their greedy capitalistic plutocracy love their low-wage employees, so they're against highering the minimum wage. But then once immigration comes around, of coarse in their xenophobic ways, they blame the low wages on your neighbor and other working class immigrants.

You really hate right-wingers unlawflcombatnt!

When you say people in their capitalistic plutocracy love their low-wage employees, you are essentially agreeing with what I said. Illegal immigrants supply a direct source of low-wage employees, keeping employers from having to pay higher wages to hire Americans. The reason there are so many low wage employees is because Corporate America has been able to illegally hire workers for wages no American will accept.

Certainly increasing the minimum wage would help American workers. But if illegal immigrants do jobs under the table, there's no necessity in paying them minimum wage. And regardless of what the minimum wage is, the increase supply of workers will always, ALWAYS suppress wages. That's simply the laws of supply and demand at work. Increasing the supply of workers decreases the wages necessary to hire a fixed number of workers.

Oh yes. Illegal immigrants are totally driving wages down for migrant crop pickers, slaughterhouse cleaners, and landscapers that are AMERICAN CITIZENS.

Congress is to blame for the low wages. But it is not due to the minimum wage, but rather by the high tax rates. Consider the fact that the employers have to pay matching funds to Medicare and Social Security for each and every employee. That total is near 10%. Eliminate the payroll taxes and most employees would be able to increase their wages. When setting a salary, a business takes into account how much they will have to pay in payroll taxes, without the need of having to pay this, either salaries would increase, or unemployment would decrease, as businesses would have more money to pay employees.

dmk

If healthcare was provided for everyone by a central agency wages could be increased to the point where people could actually live on them.

Considering the top 10% take 90% of this country's wealth doing anything to taxes is pretty meaningless.

These days some small business owners are better off having the employee quit than to be fired because the unemployment insurance, or whatever it is is insane! All this bullshit effects how much the small business takes in, which in return effects everyone elses pay, or ability to hire another person.

And remember nearly half (44%?) of the businesses in America do not provide any health insurance at all. A majority are small businesses I'm sure.

We need to stop being so old fashioned and get everyone covered through a government action.

Now I would agree with you on this. I do believe it is imperitive that small or big businesses offer health insurance to all of it's employees working fulltime. It sure is expensive for my father as a small business owner as well as other business owners to insure their employees, but i'm glad they have chosen to insure them. It saves the employee literally, thousands of dollars on health insurance.