Deflationary Effects of Illegal Immigration

The “economists” from the ultra-liberal institutions can’t connect these dots, apparently.

Just as the law departments of these ivory-tower institutions were mute on Obama’s castigations of the Supreme Court and his ever-expanding executive overreaches, the economics departments don’t seem to draw the obvious but unspoken conclusions regarding the economic impacts of illegal immigration on wage growth and deflation.

The push for a higher minimum wage is driven by the phenomenon that average wages have not increased as they might have been expected to over the course of the economic recovery. The situation isn’t really a “phenomenon” at all.  Simple supply and demand charts of jobs vs. available labor are all that is needed here.

The estimates vary, but the working number of illegals in this country hovers around the 11 million mark.  Do any liberal economists notice that an increase of 11 million in the labor pool increases the supply and thus inhibits the increase in average wages?

Of note is the recent study by the Center for Immigration Studies, which reveals that illegal aliens are taking much of the new job creation.  In New Hampshire, for example:

since 2000, 71 percent of the net increase in the number of working-age (16 to 65) people holding a job in New Hampshire has gone to immigrants (legal and illegal).

And…the report notes:

While difficult to measure, our best estimate is that perhaps one-third (7,000) of the increase in immigrant employment since 2000 in the state was among illegal immigrants.

It would be refreshing to have some of the liberal economists draw the conclusion that the influx of illegal immigrants has depressed wages in this country.  If New Hampshire has had this type of impact in its labor market from illegals, imagine what the states closer to the southern border must report.

So, as Janet Yellen wrings her hands about deflation and sustains her dovish monetary policy, and as others attempt to push up average wages via legislation, all seem to avoid the obvious.  Wages have been suppressed by the de facto suspension of immigration law enforcement, and deflation has been fed by cheap illegal immigration-supplied labor.

This would be counter to the liberal mindset but consistent with the laws of economics.

Labor costs are down because of the influx of illegals and those who have overstayed their visas.  Normally, as economic activity increases, wage rates necessarily rise to bid people back into the workforce.  Much to the delight of fast food companies and manual labor-intense businesses, there is a supply in the system that short-circuits what normally might have occurred.

Our economy cannot grow at the pace necessary to put the unemployed citizens back into the workforce and also provide necessary job growth for illegals.  Aggressive and unwise monetary policy and minimum wage legislation thus are the reactionary responses to what could be resolved by enforcing the immigration laws on the books.  Monetary actions and wage legislation thus are the faux elixirs to disregard for immigration laws, disregard for the laws of economics, and the adherence to the Obama agenda.