Without question, our country is facing the worst income inequality in 100 years and it is likely to get even worse unless we take adequate steps to turn the problem around. At the same time, virtually all economists agree that immigrants, regardless of their legal status, benefit the overall economy and are not a driving force behind income inequality. There can be localized and relatively short term negative consequences of immigration and our political and social challenge is to figure out ways to deal with those without sacrificing the larger and longer term benefits of immigration. We are an immigrant nation and we will continue to prosper as an immigrant nation if we don’t try to haul up the ladder and hunker in a defensive crouch.
Trump and his supporters claim that undocumented workers undercut wages and take jobs that would otherwise go to native-born Americans. Unfortunately, too many Republican members of Congress, including Erik Paulsen, have not taken any meaningful action to counteract the extreme positions of the Trump Administration on immigration. In addition, Trump and many in the GOP claim that undocumented workers and their families use social programs like hospitals and schools that add to our national debt. They argue that we should build a wall at the border to stop illegal immigration, cut back on legal immigration and deport illegal immigrants already in the country. However, last fall, a comprehensive report by the National Academies of Sciences, Engineering and Medicine concluded there were “many important benefits of immigration - including on economic growth, innovation and entrepreneurship - with little to no negative effects on the overall wages or employment of native-born workers in the long term”
To be sure, there can be negative consequences of illegal immigration. Undocumented workers are generally paid less and native-born workers, who may compete for the same unskilled jobs, either have to accept lower pay or not work in the field at all. Economists estimate that undocumented workers have lowered the wages of U.S. adults without high-school diplomas (about 25 million people) by between .4 to 7.4%. However, a series of studies by Giovanni Peri at the University of California, Davis, have shown that undocumented workers do not compete with skilled laborers, they complement them. The use of unskilled workers for unskilled jobs allows the skilled workers to focus on what they do best and Peri found that, in states with more undocumented immigrants, skilled workers made more money, worked more hours and the economy’s productivity increased. Indeed, Peri found that from 1990 to 2007, undocumented workers increased legal worker’s pay in complementary jobs by up to 10 percent.
Initially, first generation immigrants may burden governments, especially state and local governments, with high concentrations of immigrants. By the second generation, those families become a benefit to governments, adding about $30 billion a year and by the third generation, those immigrant families contribute about $223 billion in taxes. The last thing we should be doing is ending the DACA program or the provisional residency permits of 200,000 Salvadorans who have lived in the country since at least 2001. There have been several studies showing that the deportation of significant numbers of immigrants will have a negative effect on our economy. During the Great Depression, about 500,000 Mexicans and American citizens of Mexican descent were “sent home” by state and local officials with the approval of the federal government, on the theory that they were taking jobs from American citizens. Recently, economists examined decades of data to determine whether that resulted in higher wages and lower employment promised by the opponents of immigration. In fact, the researchers found that the cities that sent away more Mexicans had worse unemployment and slower wage growth. No broad group of Americans, including low wage workers, benefited from the massive forced deportation of Mexicans.
America is an immigrant nation. Immigrants are enmeshed in our society and they can’t just be removed with the stroke of a pen without serious negative economic implications. Our nation must update our immigration policy in a fair and humane way, for the benefit of society. Economic reality may force us to do what simple human caring ought to. Despite Paulsen's continuous claim that he is a champion of small business and entrepreneurship, he has failed to take meaningful, humane action in Congress to protect immigrants and the businesses that rely on their contributions.
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Economic inequality is rising across the United States and in Minnesota as well. Recently, Minnesota was ranked second worst in the U.S. for racial inequality in terms of unemployment, income and home ownership.
Paulsen supports the Republican Platform that claims their number one priority is rebuilding the economy and creating jobs. But the GOP's trickle-down economic and tax policies favoring the wealthy on the theory that they are “job creators” who will fuel the economy are dangerously flawed. Those policies have never worked any time they have been tried and will only worsen the problem of economic inequality.
Job creators in the U.S. are customers who are willing and able to purchase goods and services. If the middle class and poor don’t have money to spend, they can’t be customers. When the middle class and poor are strapped for cash, they’re often compelled to incur consumer debt that isn’t sustainable over the long term and we know that every economic depression and major recession since 1900 has been preceded by high levels of consumer debt. Guess what? Consumer debt is now at an all time record high in the United States.
The level of consumer debt shouldn’t be at all surprising because economic inequality has accelerated during the last 30 years. The graphs below from the Congressional Budget Office tell the story.
Consider also the graph from a recent New York Times editorial showing the wealth gap between the top 1% and the bottom 90% over the last 100 years.
On January 4th, the Washington Post reported on a new study using a massive new data set suggesting that economic inequality is going to get even worse.
Clearly we have a problem that cannot be ignored. This economic disparity was at the heart of the angry populist rhetoric of the 2016 election and it will only get worse until the problem is resolved. As Justice Brandeis said, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both.”
Globally, the U.S. ranks only 23rd out of 30 developed countries in the World Economic Forum’s “inclusive development index” which analyzes data on income, health, poverty and sustainability. The fact that we rank so low is in large part due to our dramatic concentration of wealth. We ranked worst on measures of distribution of income and wealth and the level of poverty. Paulsen’s votes supporting the Trump/Republican agenda of tax cuts favoring the wealthy coupled with their plans to cut spending on social safety net programs will only worsen income equality.
Paul Wellstone once said, “We all do better when we all do better.” As a society we need to work to reduce economic inequality, not just because it’s the moral thing to do, but because when the middle class and poor are not economically disadvantaged they will purchase more goods and services which drives the economy that serves us all, including the wealthy.
Are Trump or his cronies in government going to work to reduce economic inequality? Trump campaigned as a populist but he’s governing as a plutocrat. And his plutocratic cronies like Secretary Treasury Mnuchin don't even pretend to want to resolve economic inequality. On the contrary, they appear to revel in it.
Our Congressman, Erik Paulsen, is well aware of the issue. He is a member of the Joint Economic Committee that is charged by law with the responsibility for preparing annual Joint Economic Reports. That Joint Committee has held hearings and heard testimony about the extent of economic inequality and proposed solutions.
It has taken decades to reach the level of economic inequality we currently face. It’s generally agreed that reducing inequality will take time and that there is no single silver bullet solution. Among the partial solutions that have been discussed are:
In the end, economic inequality hurts our entire society. We need a Representative who will fight to reduce economic inequality, not increase it by voting for policies that primarily benefit the wealthy donor class.
Replace Erik Paulsen.
Minnesotans for Real Representation is a grassroots organization in Minnesota's Third District with the goal of replacing Erik Paulsen in 2018.