Posts Tagged ‘Gang of Eight’

Comprehensive immigration reform may or may not happen. However, a legislative package has been created by eight members of the US senate. For how will this will impact the US economy, let’s take a look at the past.

After the Immigration Reform Act of December 1986, average real wage rates immediately dropped for six straight years in the USA. Wage rates had dropped during the Reagan years, but then they rebounded and were going up. That growth was stopped cold in December 1986. Then real wages began the big drop, and didn’t rebound to their December 1986 rate for eleven years. All of this information is available at the United States Bureau of Labor Statistics, http://www.bls.gov.

So it’s possible (and likely) that with comprehensive immigration reform, wage rates will once again be adversely impacted. Who will gain from this?

Wall Street wins and immigrants who move from the shadow economy to the taxed economy will improve their livelihoods. The rest of us will lose in this case.

Wall Street wins because average wages will go down, meaning corporate profits will go up further than would otherwise be the case. This will fuel dividends which pushes stock prices higher. It will also likely strengthen the corporate bond market. Most of those assets are owned by the 1 percent. So it stands to reason that income and wealth will be redistributed from the 99 to the 1 percent with a reform package.

However, there is some good that will likely occur with reform. One will be the likely suicide of the Republican Party, the most viciously anti-middle class warriors of the political elite. Don’t get me wrong. About 80 percent of the Democrats in congress and the white house are anti-middle class warriors on behalf of the 1 percent. However, with the Republicans out of the way, perhaps the base of the Democrats will take a look at how important of a role most Democrats have played in the massive redistribution of income and wealth from the 99 to the 1 percent over the last thirty years.

Click below for the latest news about comprehensive immigration reform.


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