Immigration Moratorium: Effective Path to a Living Wage for Working Americans

by Virginia Deane Abernethy, Vanderbilt Medical School

August 3, 2001

Not so long ago, one wage-earner's take-home pay was sufficient to support a middle-class family. Median wages in today's economy are too low, however, to support an ordinary family in many urban settings where families must live in order to work.

Over half of mothers with very young children are now forced to work outside the home in order to make ends meet. Too often mothers and fathers must choose between living on the edge of poverty so that a parent can care for their children, and a more secure standard of living that consigns children to long hours of day care. Many couples deal with this dilemna by limiting themselves to one child or no children.

Parents, family values, and children all suffer when both parents must work outside the home in order to keep a roof over their head and food on the table. The plight of so many American familes leads to demands for a government-guaranteed "living wage." This is a misguided demand.

Government can fix the wage inequality that now pervades American society but not through jimmying with the minimum wage. The federal government can restore the integrity of American families just one way: with changes in immigration law and enforcement.

The middle class is destroyed by rapid growth in the labor force--more growth than can be matched by increasing the stock of capital. Population growth and immigration cannot be ignored as the cause of greater, and growing, inequality in the United States--and also its growing indebtedness.

The United States Population is now growing by 3.2 million people, or approximately 1.2%, a year. That may not sound like much in a population of 285 million people. But it is a faster growth rate than any other industrialized country in the world, and it is enough to double the size of the population in about 60 years.

Immigration and the children of recent immigrants accounted for approximately 70% of population growth during the 1990s. If American family size stays small and immigration continues, the immigrant share of population growth will become steadily larger.

An oversupply of labor drives down the price of labor (wages) in any type of economy. Demographer Ronald Lee (1980) documents the effect of the labor supply on wages in late medieval--that is, pre-industrial--England. The English population crashed during repeated waves of the Black Death (approximately 1348 through 1420) but soon rebounded. Comparing wages in periods of labor shortage caused by premature mortality with wages after population recovery. Lee concludes that a ten percent growth in the population had the effect of raising returns to landowners (employers) by 19%, at the same time that it depressed real wages by 22%.

The lower and middle class usually do not benefit from population growth. Economist David Ricardo, early-nineteenth century advocate for free markets, warned that the power elite benefit from excess--therefore, cheap--labor at the expense of almost everyone else. The majority, who depends on wages and salaries, ends up being worse off.

Demographer Nathan Keyfitz (1990) identifies the same relationship. Here is his paraphrase of Alfred Suavy's reflection on ideal population size: "The farmer calculating the number of cows to raise in his pasture will always arrive at a larger number than the cows themselves would prefer." That is, employers benefit from a population that grows faster than the stock of capital, workers lose--and economic disparities widen.

Let us see some recent numbers that compare modern, industrialized nations. Table I shows a nearly perfect relationship: where the rate of population growth is smallest (Japan and Germany), wage inequality is least. The United States has the fastest growing population by far and the greatest disparity between CEO pay and average worker pay.

Table I. Population Growth Rates and Corporate Pay Disparities in Selected Industrialized Countries (numbers in millions)*

	Pop, 2000	Pop, 2001	Annual growth (%)	Pay ratio: CEO to Avg. Worker
Japan	126.9	127.1	0.16	16:1
Germany	82.1	82.2	0.12	21:1
U.K.	59.8	60.0	0.33	33:1
U.S.	275.6	281.3	1.14	120:1

Does this table suggest that slowing the population growth in the United States would begin to equalize wage rates? It does. But what sectors want population growth and immigration to keep booming along? Big business and the politicians and the elite, big media that big business feeds.

Immigration amounts to high cost cheap labor--cheap labor as far as employers are concerned, high cost to Americans whose wages are depressed and, adding insult to injury, pay taxes that support the average immigrant's high use of social welfare programs.

The Center for Immigration Studies finds that, "Mexican immigrants who have lived in the United States for more than 20 years, almost all of whom are legal residents, still have double the welfare use of natives....Based on estimates developed by the National Academy of Sciences for immigrants by age and education at arrival, the lifetime fiscal impact (taxes paid minus services used) for the average adult Mexican immigrant is a negative $55,200." (Immigration from Mexico, July 12, 2001).

The cost of immigration, by itself, is horrendous. But one should keep in sight the cost of rapid population growth, regardless of its source. A larger population more quickly consumes non-renewable and very slowly-renewable natural resources--including fresh water and fossil fuels--gradually shrinking the nation's store of wealth and eroding its carrying capacity.

"Energy" emergencies are often described as generation or distribution problems. But as more generators are built, the fundamental adequacy of the fossil fuel energy source will come into focus. It is the same with water. Dams, river diversions, and other hydrology projects will mask for a short time--but not forever--the real truth. The truth that rivers carry just so much water, snow falls into mountain reservoirs just so much each winter, and the nation's largest underground aquifers are, in fact, being used faster than they recharge.

The average American would be much better off with less population growth and no immigration. Americans should call on local media to feature stories that link local problems to local population growth, and demand of our national politicians that they enact an immigration moratorium.

*Population size estimates from Population Reference Bureau, Washington, D.C.

Pay ratio data from "Does America Still Work?" Harper's Magazine, May 1996.