The impact of Illegal Immigration on Wages

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In the post Illegal Immigration and the Economy - Part 2 data was presented showing the wage increase between 1973 and 2013 being 9.2%. This post also established data supporting that both the Republican party and the Democratic Party are using illegal immigration to suppress inflation at the expense of hourly wages for workers almost completely destroying the middle class. In this post I wanted to give you a flavor of where wages would be if the economy had proceeded as it had before 1973. This takes some assumptions and I've tried to use reasonable ones but if you don't like mine, give me your assumptions and I'll tell you what the difference would be.

From a July 1974 Census Bureau report on Consumer Income the median income in 1973 was $12,050 which represented an 8.4% increase over the 1972 median income. For those that may not have a statistical background the "median" represents the middle, half the people made less than $12,050 and half made more. The inflation rate for 1973 was 6.2%, leaving workers with a 2.2% real gain. It may not sound like much but it adds up.

The earlier post also sited the average inflation rate between 1990 and 2012 at 2.7%. If wages had maintained the 2.2% real gain for American workers the average annual salary increase would be 4.9%. In my working career I have received larger pay increases but not very often and they always came with addition work and responsibility. The impact the annual increase of 4.9% on the median income of $12,050 would have can be calculated with the equation

This comes out to be $103,725, well above the 2017 median income of $60,336 estimated by the Census Bureau. The down side is things would be more expensive now because the inflation rate would have been driven higher due to the increases in wages. The point is that as long as wages are increasing at a higher rate than inflation we are all going to be better off. As Ronald Reagan once said "A rising tide lifts all boats".

But make an assumption that the 1973 median income household had 1% of there wages left over after paying all the bills. That's $120 per year or $10 per month. Just $10 a month to do something they wanted to do instead of doing the things that they had to do. Over 45 years that $120 per year would have grown to being about $1033 using the same equation as above just substituting $120 for $12,050.

Without outside influence, like an influx of illegal immigrants distorting the job market, wages and inflation proceed under a balance with wages gradually outpacing inflation. There is no fair, quick fix to the problem of wage disparity. The hole created by 45 years of politicians manipulating the job market by allowing illegal immigration is going take many generations to correct. However, getting back on the right track by controlling our borders will start to show measurable results quickly.

The mid-term elections are now less than a week away. Democrats want to abolish ICE and open our borders to anyone that wants to enter the country. I've repeatedly said career politicians in both parties are to blame for this problem, but with the stance of the Democratic Party it's imperative that we vote Republican next week or watch this problem get worse. Even if we don't like the Republican, we need to hold our nose and vote for them. In future elections, particularly during the primaries, we can then start weeding out the career politicians of both parties. As I have said before, term limits would be ideal but I just don't see our politicians voting themselves out of a job, so it's up to us.

Additional Sources:
Household Income: 2017