The admission adds to the other forecasts and the real-world data now which are bolstering Trump’s prediction that a reduced inflow of foreign workers will boost wages for working Americans. Overall, Trump’s “Hire American” policy is opposed by the investors, business groups and employers who gain from the nation’s cheap-labor economic policy.
The new admissions are buried under the group’s diversionary claims that Trump’s merit immigration plan — dubbed the “RAISE’ plan — will reduce total employment and business revenue by 2027. The Penn Wharton Budget Model group says:
By 2027, our analysis projects that RAISE will reduce GDP by 0.7 percent relative to current law, and reduce jobs by 1.3 million. By 2040, GDP will be about 2 percent lower and jobs will fall by 4.6 million.
The group’s report is being accepted by credulous reporters, but it is a diversion because it distracts readers from the hidden admission that Trump’s reform will accomplish what it is intended to accomplish — to raise wages and to get more Americans back to work.
The popular “Reforming American Immigration for Strong Employment (RAISE) Act” would raise Americans’ wages by deliberately reducing the inflow of wage-cutting cheap-labor immigrants. With fewer imported workers, native-born Americans will be able to get higher wages via the normal rule of supply-and-demand in the labor market, says the plan, which is championed by Trump and which was drafted by two GOP Senators, Georgia Sen. David Perdue and Arkansas Sen. Tom Cotton.
When pressed by Breitbart News, the group’s leader, economic professor Kent Smetters, admitted that Trump’s merit immigration plan will continue to raise Americans’ wages for the next 33 years:
By 2027, wages increase a small amount (0.231%) relative to baseline; by 2040, wages increase by an even smaller amount (0.158%).
That is a very small increase — but the Penn Wharton group has declined to explain why the increase is so small. Instead it has kept secret critical assumptions about productivity, investment and workforce participation. Smetters told Breitbart News:
Despite our best efforts at complete transparency, I appreciate that our written analysis was short on details … I agree that we can improve our communications of describing the sophisticated nature of our model, that is, besides just showing the underlying math equations, which are available in white paper presentations on our website.
Smetters’ answer came after Breitbart News emailed critical questions to several academic and business advisors working with Setters and his group.
Smetters told Breitbart News why his group did not publish the wage numbers:
Instead of reporting wage numbers, we originally choose to report the change in per capita GDP because: (a) for these purposes, we think it represents a more comprehensive summary statistic of average economic wellbeing; (b) and, in any case, both of the changes in the ratios (wages and per capita GDP) are very small.
Making too big a deal about very small deltas [changes] strikes me as false precision. In our last immigration report last summer, conservatives — and recall that I was a political appointee during the first term of Bush — seemed to be content with us reporting per capita GDP ratios. However, we will update the current report with some wage information as well, since more information is, of course, the best.
The group also hid its admission that the Trump merit plan will also help millions of sidelined Americans get jobs.
The group hid that admission by first claiming that the economy would be 1.3 million fewer jobs in a decade than is now predicted, while burying the fact that Trump’s plan would reduce the inflow of foreign workers by roughly 3.5 million over the same period. So a simple subtraction of 3.5 million imported workers from an economy with just 1.3. million fewer jobs suggests that Trump’s very popular plan will help bring roughly 2.3 million sidelined Americans back into the workforce.
In a convoluted admission, Kent admitted the wage-increase caused by the reform plan would help remaining unemployed Americans find jobs, saying:
These small [wage] changes just are not enough to boost the participation rate of remaining workers very much.
“Very much” is an admission that Trump plan does raise the “participation rate” of Americans.
In a podcast interview with a university employee, Smetters also said Trump’s plan would cut total jobs by 4 million in 2040. But, assuming no other changes, Trump’s merit plan could also reduce the immigration inflow by roughly 10 million over the same period. Those two numbers suggest Trump’s plan will create roughly 6 million extra jobs for Americans by 2040.
In links behind the main page, the group says its model is similar to the analysis used by the Congressional Budget Office during the 2013 debate over the “Gang of Eight” cheap-labor-and-amnesty bill. That bill would have approved a tsunami of roughly 46 million legal immigrants from 2013 to 2033, and invited an unlimited inflow of foreign white-collar workers.
In 2013, this reporter noted that the CBO admitted employees would get less financial benefit from the mass-immigration economy than would investors for at least 20 years. “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 Economic Impact of S. 744.” It continued:
Because the bill would increase the rate of growth of the labor force, average wages would be held down in the first decade after enactment …The legislation would particularly increase the number of workers with lower or higher skills but would have less effect on the number of workers with average skills. … The wages of lower- and higher-skilled workers would tend to be pushed downward slightly (by less than ½ percent) relative to the wages of workers with average skills.
In September 2016, a pro-immigration panel selected by the National Academies of Science admitted that immigration imposes a 5.2 percent tax on Americans’ salaries.
In June 2016, Moody’s Analytics issued a report saying that Trump’s campaign promise to reduce immigration would spike Americans’ salaries and also reduce the price of housing for young American families.
In July and August, U.S. employers complained that they have to increase salaries for Americans because they can’t import all the foreign workers they wish. The reducing flow of foreign workers is also prompting employers to buy labor-saving machinery from U.S. manufacturing workers.
At the same time, business groups and progressive activists are urging the government to expand the economy by importing more consumers and cheap employees.
Smetters shares that expansion-via-immigration view, saying his podcast that “If we didn’t change the skill mix but we just increased the number of legal immigrants, it would have a very big positive impact on the economy.”
The Penn Wharton Budget Model is backed by several investors who stand to gain from an increased inflow of consumers and cheap workers.
In his August 2 presentation of Trump’s merit plan to the media, presidential advisor Steven Miller made clear the President’s plan to raise Americans’ wages:
At the end of the day, President Trump has been clear that he is a pro-high-wage President. He ran as a pro-high-wage candidate, and that’s what this policy will accomplish.
At the same time, to the point about economic growth, we’re constantly told that unskilled immigration boosts the economy. But again, if you look at the last 17 years [of mass immigration], we just know from reality that’s not true. And if you look at wages, you can see the effects there. If you look at the labor force, you can see the effects there.
And so again, we’re ending unskilled chain migration, but we’re also making sure that the great inventors of the world, the great scientists of the world, that people who have the next great piece of technology can come into the United States and compete in a competitive application process — a points-based system that makes sense in the year 2017.
The annual inflow of foreign workers is very large.
In 2016, for example, federal data shows that former President Barack Obama gave federal “Employment Authorization Document” work permits to at least 2.3 million migrants for U.S. jobs, and approved visas for roughly 500,000 outsourcing workers, such as the H-1B white-collar workers, H-2B blue-collar workers and H-2A agriculture workers. Those temporary workers were in addition to the routine inflow of 1 million legal immigrants and roughly 400,000 illegal immigrants.
The combined inflow delivered almost 4 million legal foreign workers to Americans’ economy in 2016, just as 4 million young Americans turned 18 and began looking for decently paid jobs.
Many polls show that Americans are very generous, they do welcome individual immigrants, and they do want to like the idea of immigration. But the polls also show that most Americans are increasingly worried that large-scale legal immigration will change their country and disadvantage themselves and their children.
The current annual flood of foreign labor spikes profits and Wall Street values by cutting salaries for manual and skilled labor offered by blue-collar and white-collar employees. It also drives up real estate prices, widens wealth-gaps, reduces high-tech investment, increases state and local tax burdens, hurts kids’ schools and college education, and sidelines at least 5 million marginalized Americans and their families.