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    How Unskilled Immigrants Hurt Our Economy
    Posted by admin on: 2006-07-17 05:45:09

     “A handful of industries get low-cost labor, and the taxpayers foot the bill.”

    The day after Librado Velasquez arrived on Staten Island after a long, surreptitious journey from his Chiapas, Mexico, home, he headed out to a street corner to wait with other illegal immigrants looking for work. Velasquez, who had supported his wife, seven kids, and his in-laws as a campesino, or peasant farmer, until a 1998 hurricane devastated his farm, eventually got work, off the books, loading trucks at a small New Jersey factory, which hired illegals for jobs that required few special skills.

    The arrangement suited both, until a work injury sent Velasquez to the local emergency room, where federal law required that he be treated, though he could not afford to pay for his care.

    After five operations, he is now permanently disabled and has remained in the United States to pursue compensation claims.

    “I do not have the use of my leg without walking with a cane, and I do not have strength in my arm in order to lift things,” Velasquez said through an interpreter at New York City Council hearings. “I have no other way to live except if I receive some other type of compensation. I need help, and I thought maybe my son could come and work here and support me here in the United States.”

    Velasquez’s story illustrates some of the fault lines in the nation’s current, highly charged, debate on immigration. Since the mid-1960s, America has welcomed nearly 30 million legal immigrants and received perhaps another 15 million illegals, numbers unprecedented in our history.

    These immigrants have picked our fruit, cleaned our homes, cut our grass, worked in our factories, and washed our cars. But they have also crowded into our hospital emergency rooms, schools, and government-subsidized aid programs, sparking a fierce debate about their contributions to our society and the costs they impose on it.

    The tale of Librado Velasquez helps show why supporters are wrong about today’s immigration, as many Americans sense and so much research has demonstrated. America does not have a vast labor shortage that requires waves of low-wage immigrants to alleviate; in fact, unemployment among unskilled workers is high—about 30 percent.

    Moreover, many of the unskilled, uneducated workers now journeying here labor, like Velasquez, in shrinking industries, where they force out native workers, and many others work in industries where the availability of cheap workers has led businesses to suspend investment in new technologies that would make them less labor-intensive.



    Yet while these workers add little to our economy, they come at great cost, because they are not economic abstractions but human beings, with their own culture and ideas—often at odds with our own.

    Increasing numbers of them arrive with little education and none of the skills necessary to succeed in a modern economy. Many may wind up stuck on our lowest economic rungs, where they will rely on something that immigrants of other generations didn’t have: a vast U.S. welfare and social-services apparatus that has enormously amplified the cost of immigration.

    Just as welfare reform and other policies are helping to shrink America’s underclass by weaning people off such social programs, we are importing a new, foreign-born underclass.

    Immigration can only pay off again for America if we reshape our policy, organizing it around what’s good for the economy by welcoming workers we truly need and excluding those who, because they have so little to offer, are likely to cost us more than they contribute, and who will struggle for years to find their place here.

    Today’s immigration has turned out so differently in part because it emerged out of the 1960s civil rights and Great Society mentality. In 1965, a new immigration act eliminated the old system of national quotas, which critics saw as racist because it greatly favored European nations. Lawmakers created a set of broader immigration quotas for each hemisphere, and they added a new visa preference category for family members to join their relatives here. Senate immigration subcommittee chairman Edward Kennedy reassured the country that, “contrary to the charges in some quarters, [the bill] will not inundate America with immigrants,” and “it will not cause American workers to lose their jobs.”

    But, in fact, the law had an immediate, dramatic effect, increasing immigration by 60 percent in its first ten years. Sojourners from poorer countries around the rest of the world arrived in ever-greater numbers, so that whereas half of immigrants in the 1950s had originated from Europe, 75 percent by the 1970s were from Asia and Latin America. And as the influx of immigrants grew, the special-preferences rule for family unification intensified it further, as the pool of eligible family members around the world also increased. Legal immigration to the U.S. soared from 2.5 million in the 1950s to 4.5 million in the 1970s to 7.3 million in the 1980s to about 10 million in the 1990s.

    As the floodgates of legal immigration opened, the widening economic gap between the United States and many of its neighbors also pushed illegal immigration to levels that America had never seen. In particular, when Mexico’s move to a more centralized, state-run economy in the 1970s produced hyperinflation, the disparity between its stagnant economy and U.S. prosperity yawned wide.

    Mexico’s per-capita gross domestic product, 37 percent of the United States’ in the early 1980s, was only 27 percent of it by the end of the decade—and is now just 25 percent of it. With Mexican farmworkers able to earn seven to ten times as much in the United States as at home, by the 1980s illegals were pouring across our border at the rate of about 225,000 a year, and U.S. sentiment rose for slowing the flow.

    The flood of immigrants, both legal and illegal, from countries with poor, ill-educated populations, has yielded a mismatch between today’s immigrants and the American economy and has left many workers poorly positioned to succeed for the long term.

    Unlike the immigrants of 100 years ago, whose skills reflected or surpassed those of the native workforce at the time, many of today’s arrivals, particularly the more than half who now come from Central and South America, are farmworkers in their home countries who come here with little education or even basic training in blue-collar occupations like carpentry or machinery.

    Nearly two-thirds of Mexican immigrants, for instance, are high school dropouts, and most wind up doing either unskilled factory work or small-scale construction projects, or they work in service industries, where they compete for entry-level jobs against one another, against the adult children of other immigrants, and against native-born high school dropouts.

    Harvard economists George Borjas and Lawrence Katz estimate that low-wage immigration cuts the wages for the average native-born high school dropout by some 8 percent, or more than $1,200 a year. Other economists find that the new workers also push down wages significantly for immigrants already here and native-born Hispanics.

    Immigration is also pushing some native-born workers out of jobs, as Kenyon College economists showed in the California nail-salon workforce. Over a 16-year period starting in the late 1980s, some 35,600 mostly Vietnamese immigrant women flooded into the industry, a mass migration that equaled the total number of jobs in the industry before the immigrants arrived. Though the new workers created a labor surplus that led to lower prices, new services, and somewhat more demand, the economists estimate that as a result, 10,000 native-born workers either left the industry or never bothered entering it.

    In many American industries, waves of low-wage workers have also retarded investments that might lead to modernization and efficiency. Farming, which employs a million immigrant laborers in California alone, is the prime case in point. Faced with a labor shortage in the early 1960s, when President Kennedy ended a 22-year-old guest-worker program that allowed 45,000 Mexican farmhands to cross over the border and harvest 2.2 million tons of California tomatoes for processed foods, farmers complained but swiftly automated, adopting a mechanical tomato-picking technology created more than a decade earlier. Today, just 5,000 better-paid workers—one-ninth the original workforce—harvest 12 million tons of tomatoes using the machines.

    The savings prompted by low-wage migrants may even be minimal in crops not easily mechanized. Agricultural economists Wallace Huffman and Alan McCunn of Iowa State University have estimated that without illegal workers, the retail cost of fresh produce would increase only about 3 percent in the summer-fall season and less than 2 percent in the winter-spring season, because labor represents only a tiny percent of the retail price of produce and because without migrant workers, America would probably import more foreign fruits and vegetables.

    immigrants are likely to wind up farther on the margins of our economy, where many already operate.

    Because so much of our legal and illegal immigrant labor is concentrated in such fringe, low-wage employment, its overall impact on our economy is extremely small. A 1997 National Academy of Sciences study estimated that immigration’s net benefit to the American economy raises the average income of the native-born by only some $10 billion a year—about $120 per household.

    And that meager contribution is not the result of immigrants helping to build our essential industries or making us more competitive globally but instead merely delivering our pizzas and cutting our grass. Estimates by pro-immigration forces that foreign workers contribute much more to the economy, boosting annual gross domestic product by hundreds of billions of dollars, generally just tally what immigrants earn here, while ignoring the offsetting effect they have on the wages of native-born workers.

    A 1998 National Academy of Sciences study found that more than 30 percent of California’s foreign-born were on Medicaid—including 37 percent of all Hispanic households—compared with 14 percent of native-born households. The foreign-born were more than twice as likely as the native-born to be on welfare, and their children were nearly five times as likely to be in means-tested government lunch programs.

    Native-born households pay for much of this, the study found, because they earn more and pay higher taxes—and are more likely to comply with tax laws.

    Recent immigrants, by contrast, have much lower levels of income and tax compliance (another study estimated that only 56 percent of illegals in California have taxes deducted from their earnings, for instance). The study’s conclusion: immigrant families cost each native-born household in California an additional $1,200 a year in taxes.

    Media Link

    http://www.city-journal.org/html/16_3_immigrants_economy.html

    News Source: NAN

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