Sen. Jeff Sessions (R-Ala.), the ranking member of the Senate Budget Committee, spoke about the economic costs on the Senate floor Thursday, before the bill passed on a vote of 68 to 32, with 14 Republicans joining Democrats in favor.
“I said for weeks that this flow of labor had no other reasonable impact but pull down the wages of American workers. What does CBO say? CBO said the same thing,” Sessions said, pointing to a chart. “This shows in 2025 wages coming back to catch up. But still, this shows if the bill hadn’t passed, we would have had more increased wages here and we would have had a different picture altogether.”
Sessions added, “You can’t bring in large, large increases of labor at a time of high unemployment and not expect labor rates to go down. I mean, is the free market crowd not aware of that? Are my Democratic colleagues who talk about protecting the worker not aware of that? How can you deny that?”
The CBO, the accounting arm of Congress, released a report last week saying that if the immigration bill is enacted, it will “slightly raise the unemployment rate through 2020” and “increase average wages in 2025 and later years (but decrease them before that).”
“As noted, the additional people who would become residents under the legislation would earn lower wages, on average, than other residents, which would pull down the average wage and per capita GNP," the CBO report states.
The lower predicted average wage can be partially explained by a previous CBO analysis that said well over two-thirds of illegal aliens are from Mexico or Central America. More than half of that population lacks a high school education, yet 92 percent of working age men from Mexico and Central America are in the labor force competing for jobs, according to the May CBO analysis. Thus, based on this data, the majority of immigrants benefiting from the legislation is likely to be low-skilled and less educated.
The CBO report said enacting S. 744 would:
-- Increase the size of the labor force and employment;
-- Increase average wages in 2025 and later years (but decrease them before that);
-- Slightly raise the unemployment rate through 2020;
-- Boost the amount of capital investment;
-- Raise the productivity of labor and of capital;
-- Result in higher interest rates.”
President Barack Obama said during his weekend address that the Senate immigration reform bill will “grow our economy for everyone” and “will help the middle class grow.”
“It’s a bill that would modernize the legal immigration system so that, as we train American workers for the jobs of tomorrow, we’re also attracting the highly skilled entrepreneurs and engineers who grow our economy for everyone,” Obama said.
Obama later added, “A few days ago, a report from the Congressional Budget Office definitively showed that this bipartisan, commonsense bill will help the middle class grow our economy and shrink our deficits, by making sure that every worker in America plays by the same set of rules and pays taxes like everyone else.”
Last week’s CBO report states that average wages for the entire labor force would be 0.1 percent lower in 2023 and 0.5 percent higher in 2033.
“Average wages would be slightly lower than under current law through 2024, primarily because the amount of capital available to workers would not increase as rapidly as the number of workers and because the new workers would be less skilled and have lower wages, on average, than the labor force under current law,” the report says. “However, the rate of return on capital would be higher under the legislation than under current law throughout the next two decades.”
The separate May 8 CBO analysis of the U.S. foreign-born population states, “About half of the noncitizens living in the United States were from Mexico or Central America and about one-fifth were from Asia,” said a letter from CBO Director Douglas Elmendorf to House Budget Committee Chairman Paul Ryan (R-Wisc.) that was part of the analysis. “Of noncitizens unauthorized to live in the United States, an estimated 59 percent were from Mexico, and an estimated 14 percent were from El Salvador, Guatemala, or Honduras.”
The letter said that in 2011, about 37 percent of all – legal and illegal -- foreign-born people in the United States were from Mexico or Central America with Asians being the second largest group at 28 percent of the total foreign-born population.
“In 2012, 27 percent of foreign-born population between the ages of 25 and 64 had not completed high school, compared with 7 percent of the native born population,” Elmendorf wrote. “More than half of the people in Mexico and Central America, 54 percent, had not finished high school, but only about 9 percent of the people from Asia and 5 percent of the people from Europe and Canada had less than a high school education.
In addition, about 55 percent of the people from Asia had at least a bachelor’s degree, as did 51 percent of the people from Europe and Canada; just 33 percent of the native-born population had earned at least a bachelor’s degree.”
Elmendorf adds that foreign-born men are far more likely to be in the labor force – either working or looking for work – than foreign-born women. “In 2012, 92 percent of men ages 25-64 from Mexico and Central America were in the labor force, compared with 88 percent of their counterparts from Asia and 83 percent of such men born in this country."