“The rate of return on capital would be higher [than on labor] under the legislation than under current law throughout the next two decades,” says the report, titled “The Impact of S. 744.”
The higher rate of return would also push up the interest rates by paid by American taxpayers for the federal government’s $17 trillion debt, the report says.
Populist conservatives who oppose the immigration bill, and some progressives who back the bill, also have long bemoaned the declining percentage of new wealth earned via blue-collar wages and professionals’ salaries.
President Barack Obama strongly backs the immigration rewrite, but has complained about the trend.
“In all countries around the world, you’re seeing growing inequality, and so we have to find ways to make sure that ladders of opportunity exist for those at the bottom, and that profits and increased productivity all does not just those at the top,” Obama told a German audience in Berlin.
Last September, those worries were buttressed by a report from Bank of Cleveland, which showed that labor’s share of income has dropped by roughly 10 points since the early 2000s.
The federal Bureau of Economic Affairs estimates that labor’s share fell from roughly 67 percent to 58.2 percent.
The estimates the share fell from 75 percent in 1979 to 67 percent in 2007.
The result of this economic shift is that economic inequality widened, according to the authors of the reserve’s report, Margaret Jacobson and Filippo Occhino.
But once the economy recovers, the widening gap “will be reversed as the recovery continues … [and] the labor share will pick up and converge to its long-run trend ,” says the September report.
The pending bill will roughly double the inflow of immigrants over the next 20 years to roughly 46 million, or about 1 immigrant for every 7 Americans.
At least 85 percent of the immigrants will be low-skilled, and will not pay enough in taxes to cover the cost of routine government , said Robert Rector, a budget analyst at the Heritage Foundation.
“It is very difficult to imagine that those households could pay enough in taxes to pay for their benefits,” he told reporters Wednesday.
The huge inflow of new workers will force down average wages, the CBO predicted. Average wages would then increase after 2025 as the balanced itself out, according to the prediction.
“Because the bill would increase the of growth of the labor force, average wages would be held down in the first decade after enactment by a reduction in the ratio of capital to labor, which would make workers less productive,” said the densely written report.
The lost wages would be felt most by the low-skill Americans, but also by the smaller population of high-skill worker who will face an influx of from roughly 5 million skilled immigrants, and from a changing pool of roughly 2.5 million skilled guest-workers, the CBO report said.
Bill supporters dismissed the criticism.
The immigrant low-skill workers “complement our labor force, they make it more ,” said Diana Furchtgott-Roth of the Manhattan Institute. Even if the gain for capital increases inequality, “what’s important is not the degree of inequality, but the ability [of Americans] to move between income groups,” she said.
Increased immigration will that movement because it will increase the economy’s efficiency, she told The Daily Caller.
The CBO report shows that low-skill and high-skill workers may not gain as much as middle-skill workers, but “average wages across all skills increase in the long term,” said Josh Culling from , which is backing the immigration rewrite.
The bill’s opponents’ dismiss these defenses.
For example, said Rector, the bill authors allow low-skill workers to be imported until the rises to 8.5 percent.
“What they’re really saying is that we don’t give a darn about those [American] low-skill workers,” Rector said.