Immigration affects labor market. A large number of immigrants come in and work in the low skilled, paying job, which put downward pressure on wages. It is not that Americans do not want to do a low skilled job, the main reason they do not want the job is because the pay is too low with poor benefits. This affects poorer natives the most especially African Americans. We can also look at it in supply demand terms, where supply of labor increase and demand stays put, therefore wages has to fall. Immigrants also cause income disparity because immigrants push the wage rate so low that the middle class is disappearing. Moreover, we can refer to the immigration theory that we learned in class, when immigrants come to the US, it will push the wage rate down and increase capital owner’s income. The wealth is going away from competing labor and toward companies who hires (Income inequality).
Immigration has social costs. Most immigrants has low pay, they are more likely to use social services such as education, public transportation, health care, etc and government programs such as welfare program and put strain on US and drive up the costs of these programs. Because their pay is generally lower, they also pay fewer taxes than natives. When you put all the costs together, there’s actually a high cost to cheap labor. In fact, the net annual cost of immigration has been estimated at between $67 and $87 billion a year (1996). Also, studies claiming some modest overall gain for the economy from immigration ($1 to $10 billion a year) have found that it is outweighed by the fiscal cost ($15 to $20 billion a year) to native taxpayers (1997). On balance, this would actually cause the US GDP to go down.
Immigration also effect productivity, business and social transaction costs, as time, effort, and money are spent overcoming language and cultural barriers. Ohio University economist Lowell Gallaway says poor English skills among foreign-born residents cost more than $75 billion a year in lost productivity, wages, tax revenue and unemployment compensation. Other problems facing immigration are crime, increase congestion in big cities which creates air pollution and lack of natural resources, water and land.
Increase in labor supply could lead to a glut in labor, where more workers are available than jobs and this could increase unemployment. If you bring in skilled workers who are more productive, they might push out existing native workers who are less productive and take away their jobs.
