In Friday’s blog, I introduced our taxpayer burden page. Eighty percent of illegal immigrants are low-skilled, and earn low wages with no benefits. But large concentrations of them reside in cities such as New York, Los Angeles, and Chicago where it is expensive to live. Still, they apparently live better in their homelands. More than 3 billion people in the world live on less than $2.50 per day. In Friday’s blog, I discussed an actual illegal immigrant family in Los Angeles consisting of a husband, wife, and 5 children, living on $15,000 per year. I believe it is impossible to make ends meet in Los Angeles with 5 children on that salary. They survive by turning to welfare benefits and private charity. Employers gain from illegal immigration because they can hire workers at lower wages. Illegal immigrants gain because they can earn more money than they could in their homelands. The problem for the taxpayers is that some of the cost of the employment relationship is shifted onto us. That cost shifting is an externality. Understanding the externality concept is essential to understanding why NumbersUSA has its roots in environmentalism. An externality is when the benefit or cost of a transaction is not reflected in the price arrived at by the buyer and seller when they enter into the deal. The benefit or cost is shifted onto society. When society receives a positive benefit from a private transaction, that is known as a positive externality. An example is when an apartment dweller installs a smoke alarm. The money is exchanged between the apartment dweller and the smoke alarm company, but the entire building benefits from the early warning if there is a fire. Lives and property may be saved because of the private transaction. An example of a negative externality is pollution. Cars used to have no pollution controls. The buyer purchased the car, General Motors sold the car, and the rest of us had to breathe the polluted air. People got lung disease due to the sum effect of millions of private transactions. The cost of the pollution generated by the internal combustion engine was shifted onto society. With the passage of clean air legislation in the early 1970s, rather expensive pollution control features were added to cars in order to prevent pollution. By that action, cars buyers and sellers were required to pay money (in the form of higher costs of production and higher purchase prices of automobiles) to prevent the externality from being shifted onto society. In a recent Frontline documentary on water pollution, Robert F. Kennedy, Jr. participated in an exchange that almost perfectly illustrates why the externality concept applies to illegal immigration: Kennedy:
(at 41:27) Corporations are externalizing machines. They are constantly devising ways to get somebody to pay their costs of production. And if you are in a polluting industry the most obvious way to do that is to shift your cleanup costs to the public and make yourself a billionaire poisoning the rest of us.
Are you saying the market is distorted?
You show me a polluter; I’ll show you a subsidy.
The only alteration I would make to Kennedy’s statement is that all employers, not just corporations, seek to externalize costs. They are just trying to improve their bottom line. It’s very simple: Employers gain from illegal immigration because illegal immigration increases the supply of labor in the U.S. economy (by 8 million workers), which in turn reduces the cost of labor in the United States. The lower cost of labor allows employers to hire workers at lower wages and therefore make more money. If it is a small landscaping business, the owner can make more money by hiring workers at lower wages. If it is a large, public corporation, some of the savings on wages will go to executives in the form of higher salaries, and some of it may go to the shareholders as higher dividends. Sometimes the employer knows they are hiring illegal immigrants; many times the employer does not because the illegal workers have fake papers (which is a federal crime). But since 80% of illegal immigrants are low-skilled, they usually earn such low wages that they turn to welfare to make ends meet. So we, the taxpayers, are subsidizing illegal aliens as they break our nation’s reasonable and duly enacted laws. And we, the taxpayers, are subsidizing employers’ increased profits due to lower labor costs. To paraphrase Robert F. Kennedy, Jr. “You show me an illegal alien; I’ll show you a subsidy.” And to paraphrase Kennedy again, “if you are purposely hiring illegal workers, you are shifting your labor costs to the public and making yourself a billionaire while the rest of us pay taxes to provide welfare to your workers.” And yes, the market is distorted, as Kennedy’s interviewer noted. The availability of welfare benefits to illegal immigrants acts as an inducement for them to come here and accept jobs that Americans would rather not accept because they pay is so low that you cannot take the job without going on welfare. The taxpayer burden of illegal immigration is a negative externality of the cheap labor employer-employee relationship. It is a negative externality just like pollution is. The concept of the negative externality is at the heart of environmentalism and that is why the NumbersUSA founders were environmentalists before they realized what massive immigration was doing to the United States. Because they were and are environmentalists, they understand that illegal immigration imposes negative externalities on society. But I think that if you put the plain evidence in front of Robert F. Kennedy, Jr. and asked him if illegal immigration imposes a negative externality on society, he would deny it. It wouldn’t be politically correct for him to allow logic to lead him to an honest conclusion. CHARLES BREITERMAN is a Lawyer and Research Analyst for NumbersUSA
Updated: Mon, May 15th 2017 @ 4:22pm EDT