“An imbalance between rich and poor is the oldest and most fatal ailment of all Republics.” Plutarch
Economists point to three particularly important drivers of the recent trend in income inequality – off Shoring and immigration, both related to globalization trends and, technological advances that favor skilled workers.
Income inequality in the United States has been rapidly growing over the past four decades. That fact is evident in the growing gap between average (mean) household income and median (mid-point) household income. The gap rose by 22 percentage points between 1970 and 2010, from 14.5 percent to 36.8 percent. The rapidly rising immigrant population — especially illegal immigrants — has contributed to this troubling social trend.
While legal immigration contributes to a shrinking middle class by disproportionately adding both high income and low-income earners, illegal aliens exacerbates income inequality by adding mostly low-wage earners and thereby, depressing wages for those workers. This is especially harmful to minorities — often immigrants themselves — that have larger shares of their populations living in poverty.
Between 2000 and 2010, both median and mean household income fell, yet the gap between the two continued to grow. However, as the illegal alien population stopped growing and ebbed with the recession, the growth in income inequality also ebbed.
Illegal immigrants do not generally include many high earners because highly qualified foreigners often have a legal means to immigrate. According to a survey of the beneficiaries of the 1986 amnesty, average hourly wages received at the time of legalization wre less than 2/3’s (65.1%) of the level earned by the overall workforce. The estimated mean family income was $18,196.
The current amnesty proposal would, if adopted, perpetuate and likely aggravate the harmful trend. Measures designed to encourage the departure of illegal aliens would, on the other hand, reverse their adverse impact on income inequality.
You can read the report, Immigration: Fueling U.S. Income Inequality, in full at this link.
