Immigration has always been a prominent issue in American politics.
It has become even more salient with the presidency of Donald Trump. A
major debate at the moment concerns the economic impact of
immigration—low-skilled immigration, in particular. It is argued that
immigration has suppressed wages, discouraged unions, and exerted fiscal
pressure on the welfare state.
How valid are these arguments? Is immigration really the culprit for these woes?
Let us start with welfare. It is argued immigrants make demands on
the welfare state, while not paying enough taxes to cover the cost of
the benefits they receive. This is not accurate. America’s welfare
system is facing pressure; there is no dispute about that. However,
immigration is not the cause. Non-citizens’ use of welfare benefits has
declined significantly since the 1996 Welfare Reform no matter where you
look: TANF, SSI, food stamps, Medicaid (see
here,
here and
here). At the same time, there is
evidence that, in urban areas, immigrant households are paying taxes at nearly the same rate as native households.
If the American welfare system is in distress, that is largely because
of the revenue side. The tax revenue the US collects is relatively
small, which renders the American welfare state ineffective and unable
to meet the needs of the public, as political scientist
Sven Steinmo’s work shows. To be specific, in 2015, US’s total tax revenue,
at 26 percent of GDP,
stood significantly below the OECD average of 34 percent, while in many
European countries it exceeded 40 percent. The US’s total corporate tax
revenue that year, at 2.2 percent of GDP was also below the OECD
average.
Since the 1970s, the highest marginal income tax rate has nearly
halved.
The bottom line is, it is not the demand on the system caused by
immigration that is threatening the welfare state, it is the tax revenue
needed to fund it, which is not being collected. Unfortunately, the
situation is not likely to improve with the recent passing of the new
tax bill.
The truth is, immigrant workers themselves are the victims of the
same structural forces that have contributed to the demise of unions:
de-industrialization, financialization, and policies, which for decades
prioritized market flexibility over wages, employment protection, and
unionization rights. Depending on particular political and institutional
factors, unions fared better in some countries than others in the face
of these global challenges. To make some comparisons with America’s
northern neighbor, the percentage of the foreign-born population has
been increasing in both countries, and, in fact, it is now higher in
Canada than in the US (20% versus 13%). Yet, unions seem to have been
faring far better
in Canada—both
in the private and public sector, despite higher rates of immigration.
To be more specific, America’s unionization rates remained very similar
to Canada’s until the 1960s, whereas now trade union density in Canada
is more than twice that of the United States. Why is this the case? That
is a complex question,
as Barry Eidlin shows, having to do with these nations’ particular contexts of labor mobilization and party politics.
The worry that immigrants take more than they give, that they would
become a “public charge” rather than an “economic contributor” is not
new.
Cybelle Fox’s
work shows, for instance, how deep the
economically-based-anti-immigration sentiment ran during the New Deal,
how “rumors circulated in the press that there were a million or more
aliens on relief,” and how most Americans believed aliens should not
receive relief and that those who did should be expelled from the
country. These arguments surface time and again, are misguided and
simply fuel new nativist attitudes. The overwhelming evidence is that
the inflow of immigrants, whether high- or low-skilled, contributes to
US economic growth and is not the cause of American workers’ plight.
Read more: Blaming Immigrants For Economic Troubles
