Greenspan Applies Supply and Demand to Immigration’s Impact on Wages

Google+ Pinterest LinkedIn Tumblr +

Writing in National Review, Heather Mac Donald notes Alan Greenspan’s comment to the National Association of Business Economics on February 25 that “You don’t have to bring up the bottom if you bring the top down.” Greenspan was referring to the nation’s growing income inequality and the proposal to raise the minimum wage to decrease inequality. And to bring the top down, Greenspan was advocating increasing skilled immigration to increase the supply of those workers, thereby decreasing demand and lowering the earnings of professional workers –something he has been advocating for years.

Mac Donald noted, however, that current immigration reform efforts, i.e. S.744, not only would increase the supply of skilled workers, but also increase visas for low-skilled workers. Therefore, the effect of the increased immigration would lower earnings of both high-wage and low-wage workers, leaving both poorer but without closing the gap. Greenspan’s concept – even if there were some moral justification for deliberately reducing the wages of U.S. workers by importing more foreign workers – would not reduce inequality unless it were confined to just high-wage workers.

Besides, few Americans, other than the employers of highly skilled foreign workers would likely be in favor of artificially lowering the wages of skilled workers and their tax contributions through increasing the intake of foreign workers – and certainly not most U.S. skilled workers.

Share.

About Author

avatar

Jack, who joined FAIR’s National Board of Advisors in 2017, is a retired U.S. diplomat with consular experience. He has testified before the U.S. Congress, U.S. Civil Rights Commission, and U.S. Commission on Immigration Reform and has authored studies of immigration issues. His national and international print, TV, and talk radio experience is extensive (including in Spanish).

10 Comments

  1. avatar

    The Supply of Workers Would Go WAY Down

    If we eliminated overpopulation/immigration in America….wages and our tax base to fight the deficit would go WAY up.

  2. avatar

    The hourly wage is not the only issue. Those who should be high hourly earners, doctors & nurses for example, under the civil service-type credential system, earn more because they most pay more in education & professional licenses, fees, continuing education to be able to work. Unskilled factory or grocery workers, usually at the low hourly rates, do not have to pay to achieve any credentials to be hired for or work their jobs. When unskilled laborers are hired in medical care in insurance data entry jobs, no medical care is provided. Instead jobs are created for relatively unskilled data entry workers.

  3. avatar

    The only group that benefits the increase of “skilled” foreign workers are the employers of them, period. His reasoning is insulting bordering on insane. The rich, who he wants to bring down, will only get richer, while the average worker gets screwed. Greenspan needs to be taken to pasture.

  4. avatar

    I never trusted Alan Greenspan one bit. How do people like him sleep at night?

    It’s entirely clear America’s elite, both on the Left and the Right, want to create an overpopulated, underemployed, Third World America.

    • avatar

      Tim, I agree 100%. But I think it goes even further. I live in San Antonio, Texas and know school a few teachers. At the elementary school and junior high level, districts have added special classrooms to teach English to kids brought here illegally. These same teachers have told me they’ve had to dumb it down to order to accommodate the little illegals. All this at tax payers expense.

  5. avatar

    Part of the mechanism of lowering the wages for the top earners is that sizable numbers of American born professionals are driven into the ranks of the unemployed. They are displaced by newcomers. Thus Greenspan’s solution creates additional numbers of unemployed. Does he not see that? Or does he frankly just not give a damn?

    • avatar

      Why listen to Greenspan anyway? It was because he was asleep at the switch that the whole sub-prime mortgage fiasco evolved.

  6. avatar
    Mass Legalization Is Unsustainable on

    Greenspan’s goal in life seems to be making Americans not earn a high income. He’s already got his, after all.

  7. avatar

    Alan Greenspan turns a blind eye to the fact that the top 2% has garnered almost all the economic gains of the past couple decades, while the bottom 50% has lost ground. But this is fine with him. In fact, he wants to guarantee the wealth of those at the top. Raise the minimum wage? No way. Restrict the immigration that big business wants to keep wages down? No way.