Immigration is the top topic right now. Congress is under enormous pressure to resolve the DACA issue within a week, and neither side can really afford the blame of another shut down. While the country debates which way is best to handle “dreamers,” a lot of people are missing the big story in California. Trump’s approach to immigration has cut illegal migration numbers by huge sums, and the results are completely redefining California’s economy.
In this breakdown, you can see which industries are being affected and by how much. You might not be surprised to see that California was almost completely dependent on the criminally low wages they have been paying their massive illegal immigrant workforce.
For all that we hear about immigration controversy, President Trump hasn’t changed the rules by very much. Congress may be about to put that sentence to the lie, but the numbers and facts we have at this moment are based on small differences. Trump’s support of ICE has boosted their productivity, but increased deportation efficiency hasn’t really changed the big numbers of immigration by very much.
What has really happened is that illegal immigration is disincentivized, and fewer people are crossing. Even better, a large number of illegal immigrants have voluntarily left the country. Combined, these factors have caused California’s current immigration population (both legal and not) to drop to a recent low. There are 140,000 fewer immigrants than there were even five years ago.
As you might expect, this exodus has impacted farming first. California farms have exploited cheap immigrant labor for many decades, and suddenly they don’t have the numbers to pick all of the crops. In many locations, the labor shortage is so bad that good produce is rotting before it can be harvested. In just two counties, there were more than $13 million in agricultural losses just last year.
In response, California farmers are offering minimum wage employment and even health and retirement packages for the first time in the state’s history. This will probably lead to a price hike in a lot of California produce, but the problem is largely limited to the Golden State.
Farms across the country aren’t facing the same issues, so California is going to be forced into fair-market competition for the first time in modern history. We’ll see how they fair, but it’s likely that the New California movement will gain support and steam in the agriculture heavy counties.
Cost of Immigration
Of course, liberals would argue that these trends are exactly why illegal immigration is so important. Low labor costs keep prices down. They make these arguments even while they fight for higher minimum wages. The irony is completely lost on them. Still, there is a single grain of truth in this particular argument. The near-slave wages illegal immigrants were getting in California definitely lowered the endpoint prices, but this was ultimately a subsidy. Worse, it was one of the most inefficient subsidies in America.
The annual cost of illegal immigration includes tallies from lost taxes, lost wages, exploitation of social programs and much more. Overall, we have been averaging about $134.9 billion every year to pay for illegal immigration. That’s a large bill, and it’s more than three times larger than the total annual output of California agriculture. That seems like a high subsidy to make avocados cheaper.
We can do better. Now, with Trump correcting the immigration problem, fair-market prices can regulate the state’s prices and they’ll fall in line with the rest of the world. California itself is losing money, but America as a whole is actually growing as a result.
More importantly, California farms are actually the shallow end of this pool. The big money in California is in tech, and it is also directly impacted by immigration. You may have seen the countless heated debates of H-1B visas over the past year. Conservatives have tried to reform the program to limit exploitation seen in California recruiting agencies. So far, no real change has happened on that particular issue, so recruiters are able to consistently undercut American job applicants with cheaper foreign labor.
You see, the H-1B program was created to supplement high-skill jobs where there are American shortages. The idea is that if there aren’t enough qualified individuals in the States to do a job, the H-1B program makes it easier to import workers. Unfortunately, the rules are loose, so most recruiters use the visa program to fill temporary jobs at low wages.
Rather than compensating for skill shortages, they’re just short-changing American workers who, on average, are more qualified for the positions. It’s exactly the kind of story you hear all the time about immigrants “stealing” jobs.
The real issue here, though, isn’t the visa program. Silicon Valley has more than enough money to supplement their cheap visa programs with less legitimate immigrant workers. When they sponsor illegals, labor costs go down even more, and the immigrants are more dependent on the companies that bring them over. The H-1B program brings about 85,000 high-skilled workers into California every year. It is estimated that as many as twice that number come illegally.
You can see the problem. With the newfound exodus of illegal immigration, it’s getting a lot harder for tech companies to acquire enough of their cheap, tax-free labor. Now, they’re starting to have to pay market wages for all positions, and it’s costing a lot of money. In fact, some economists are estimating that $80 billion a year was being funneled to illegal immigrant tech labor.
That money is now flowing back to true Americans, but it buys fewer workers. This is amplifying a labor shortage the forces wages even higher and faster. By the end of next year, Silicon Valley could be paying an extra $100 billion a year in wages for the same level of productivity.
Anyone who tells you illegal immigration doesn’t hurt American workers is lying. California has benefited from these nefarious subsidies for far too long. Worse, it’s fairly amazing how little change was necessary to largely correct the problem. Democrats are horrified because their best success in economics has been built solely on the practice of exploitation and underhanded dealings.
California, as it exists today, cannot survive in a fair market, and the results just might cause a regime change. In the meantime, the rest of America gets to enjoy the benefits of safer borders, higher wages and a more stable economy.