“GARBAGE IN – GARBAGE OUT”

No matter what the Congressional Budget Office (CBO) does it is criticized when it issues a report – a scoring – of proposed congressional legislation that has budgetary effects.
If one agrees with the CBO’s conclusions it is hailed; if one disagrees it is criticized for “Garbage in = Garbage out.”
The reactions in the past few weeks fall in both camps of the CBO’s score of the Senate Comprehensive Immigration Reform bill. One thing is certain, the CBO’s score and its follow up of the Corker/Hoeven amendment made positive conclusions that all Americans can welcome.
The CBO concluded that the immigration bill would add 6 million (more) workers to the work force by 2033 and 9 million by 2033. That would be a 5% increase in the work force.
On the negative side, average wages would drop .01 percent. For clarity’s sake, that does not mean everyone will earn less, it only means that new workers would be paid less. And, the CBO concludes that lower wage levels are only temporary and would actually be 0.5% percent higher by 2033. Did anyone hear that projection by critics?
Immigration naysayers cry that these immigrants will displace American workers, especially the 8% of the American workforce that dropped out of school and have few skills. First, most of the people affected by legalization are already here working and will have little effect on new employment other than to legally move to better paying jobs thus creating job vacancies.
Another assumption by critics is that greedy American employers will employ only lower-pay immigrants to engorge profits. American business, however, is not a zero-sum profit game. As more revenue and profits come in American business invests in more capacity, more productivity and more employees. It is called GROWTH and the entire economy is affected by growth.
Jobs, new jobs, will be created by millions.
This observation in the New York Times (June 25, 2013) is perfectly on point: “Restaurants are much less common in Norway than the United States because Norway lacks the cheap labor — making a dinner out in Oslo prohibitively expensive. In many New York restaurants, the American waiters and maitre d’ owe their jobs to the underpaid immigrants working illegally in the kitchen, whose low wages allow the restaurant to exist.”
Giovanni Peri, a University of California, Davis, economist and Chad Sparber of Colgate University studied immigrant impact on Americans and discovered that American workers in heavy immigrant areas gravitate towards jobs in which English is important and immigrants towards manual and physical labor.
Economist Peri found better news when he studied immigrants that entered the United States between 1990 and 2007. He estimates that incomes of all workers increased by an average $5,100 a year (in 2005 dollars) equaling more than 20% of the income gains over the 17 year period.
The Congressional Budget Office divided the American work force into five equal parts of skill, from low to high (not education as critics do). What it found was that in the long run, none of the five groups was negatively affected by immigration. All gain but none lose. Some gain less but still gain.
Some Average wages would decline 0.3 percent relative to the average by 2033 because of lower wages paid new workers. On the other hand, the rest of American workers (3/5ths of all workers) would see their wages rise by 0.5%.
Critics notwithstanding, the CBO’s projections auger well for the total American work force if this comprehensive immigration reform becomes law. Productivity will increase, the economy will grow and wages will increase.
As to “Garbage in = Garbage Out” isn’t that life? ###
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