Don’t expect a bigger paycheck anytime soon, according to Fed Chair Janet Yellen. She recently admitted there might be far more “slack” in the labor market than she and her colleagues realized, meaning that employers can attract all the workers they need without raising wages.
This is a longstanding problem. Inflation-adjusted wages have climbed just 0.2 percent annually since 1973, according to a new Brookings report.
{mosads}Several lawmakers on Capitol Hill plan to end this wage stagnation by transitioning to a merit-based immigration system. Limiting low-skilled immigration would make it easier for working-class Americans to find jobs and negotiate raises.
Each year, the U.S. gives out more than 1 million “green cards,” permanently allowing foreign-born individuals to live and work in the United States. Only 140,000 of those are employment-based green cards for highly skilled immigrants.
The current immigration system reserves two-thirds of all green cards for foreigners who already have extended family in the United States without accounting for prospective immigrants’ economic potential. A 60-year-old high-school dropout who has a sister in New York City would be more likely to receive a green card than a 30-year-old physics Ph.D. who has no relatives here.
Because so many extended family members of immigrants possess few skills, they compete with the most vulnerable Americans for jobs.
This influx of workers has pushed many less-educated Americans out of the job market entirely. In the late 1960s, 95 percent of male high-school dropouts were working or actively looking for jobs; today, only 80 percent participate in the labor force.
American workers also take a pay cut because of high levels of immigration. Harvard economist George Borjas found Americans lose $402 billion annually in foregone wages as a result of competition from immigrant laborers. Workers without high school diplomas bear the brunt of this burden, losing up to $1,500 a year.
Congress may soon consider a bill, the Reforming American Immigration for a Strong Economy (RAISE) Act, to relieve these Americans. The RAISE Act would cut the number of green cards by up to 50 percent by scrapping family-sponsored green cards, with several notable exceptions. Recent immigrants would still be able to obtain green cards for their minor children and spouses but no longer be able to bring over adult children and siblings, who would have to earn green cards on their own through the RAISE Act’s new preference point system.
People will receive points if they have high-paying U.S. job offers, fluent English language skills, and college degrees — especially in STEM fields. Young people would receive more points than older applicants who would soon rely on Social Security and Medicare.
The RAISE Act would eliminate slack in the labor market, giving workers more leverage to demand raises. It’s no coincidence that the 1940s, ’50s, and ’60s — the decades with the lowest levels of economic inequality in American history — were also the decades with the lowest immigration levels. On average, America admitted fewer than 250,000 legal immigrants during those years.
Plenty of voters already back the RAISE Act. Six out of 10 voters support cutting legal immigration by half or more, and 57 percent think the government should distribute green cards based on economic merit. Only 30 percent think otherwise.
Some special interest groups have expressed skepticism. They needn’t be concerned.
American colleges and universities worry the RAISE Act would disadvantage their foreign students. Actually, the RAISE Act would benefit them because currently, those students often struggle to obtain work visas once they earn degrees.
The new system would award extra points to graduates of U.S. universities, giving them a leg up on graduates from foreign institutions, making American schools more attractive to foreign applicants who hope to work in America.
Some agricultural firms fear the RAISE Act would jeopardize their labor force. Those concerns are similarly misplaced. The bill’s sponsors — Sens. Tom Cotton and David Perdue — hail from Arkansas and Georgia, where agriculture is the top industry. These two senators are well-versed in agribusiness needs.
The agricultural industry doesn’t depend on green card holders. Out of more than 1 million green cards distributed in 2015, less than 4,200 went to immigrants in farming, fishing, or forestry jobs. The H-2A visa program, which lets firms bring in an unlimited number of guest workers for farm work, would remain untouched under the RAISE Act.
Our economy is changing. It’s becoming tougher for less-educated Americans to find decent-paying jobs. Reforming the legal immigration system would help these citizens while still attracting the best and brightest from around the world.
Deena Flinchum is an IT worker who was employed by the AFL-CIO for 25 years before retiring. She is now a community volunteer in southwest Virginia.