Why Mass Illegal Immigration Probably Costs More Than You’ve Been Told

Illegal immigration may look good for the economy on the surface, but a deeper look reveals exorbitant costs that disproportionately hurt some of the worst-off in America.

If Americans were honest with themselves, would they admit that they benefit from illegal immigration? According to a recent article in The Federalist, they would.

The author says, “All Americans — not just large farms and meatpacking plants — benefit from illegal immigration by paying lower prices for food. If industrial farms and meatpacking plants across the country refused to hire foreign workers and decided to pay competitive wages that would attract American workers, we would all pay much more for meat, fruit, and vegetables.”

Yet we’re not convinced that mass illegal immigration does produce an overall economic gain. The economics are much more nuanced. The argument that illegal immigration is a net benefit is characteristic of a blinkered view of social costs that is unfortunately prevalent among libertarians and conservatives.

Yes, American consumers may be paying less for the cabbages and the lettuce leaves harvested by illegal workers whose labor is cheap. But that is just the beginning of the analysis, not its conclusion. 

The Problem of ‘Negative Externalities’

The argument about cheaper goods ignores what economists call the problem of externalities. Suppose, for instance, that widgets normally sell for 75 cents. But a widget manufacturer comes up with a method of production that costs the manufacturer only a penny to make a widget. So the manufacturer can undercut its competition by selling a widget for as little as 2 cents. The lower cost of the widget to consumers is an obvious gain to society as a whole, isn’t it?

Not necessarily. Suppose the new technique for manufacturing widgets requires the manufacturer to dump a toxic substance in a nearby river. Let’s posit that the pollution caused by manufacturing each one-penny widget costs 99 cents in damages, spread out among others who depend on the river. Overall, then, the cost of manufacturing the penny widget is $1 (1 cent plus 99 cents).

Read the rest of the story HERE.