American Business' Social Contract

The trend in this country during the previous decades of low immigration had long been toward higher wages, less poverty, and a larger middle class. Beginning with the shortage of workers during World War II, more and more Americans found that the toil of their labor earned them middle-class status. The number of Americans in poverty declined for decades. That happy circumstance came to a halt in 1973. Except for minor variations, the number of impoverished Americans has been increasing ever since.

The United States now routinely violates what Washington policy analyst Norman Ornstein has concluded is an implicit, national bipartisan compact. In words similar to Bill Clinton's during his first presidential campaign, Ornstein says the compact holds that "if people play by the rules, working hard and doing their jobs, they will not have to live in poverty."1 But his contention has become increasingly difficult to uphold as inflation-adjusted wages have declined for Americans without college degrees and even many with degrees.

What to do about the millions of Americans mired in poverty or struggling just above it? "The best way to help these young unskilled workers is through supply-side interventions," maintains labor professor Robert M. Hutchens of Cornell University. Initiatives that limit immigration of workers "can promote an environment where academic underachievers have at least some opportunity for upward mo­bility," he adds.2

No studies suggest that halting immigration would immediately put middle-class wages into the pockets of a large percentage of today's poor. But America's poor and its working class are not among the net winners of an immigration policy that brings in people who can compete directly with them in the job market. If the nation desires a return to a more middle-class economy, it is difficult to understand why its government would allow more than a nominal flow of immigrants at this time.

Copyright © 1996, W.W. Norton & Company. All rights reserved. Click here to read the entire book by Roy Beck.

1 Norman Ornstein, "Can America Afford $5.15 An Hour?" The Washington Post, 12 February 1995, p. C1

2 Robert M. Hutchens, A Path to Good jobs? Unemployment and Low Wages: The Distribution of Opportunity for Young Unskilled Workers. Public Policy Brief No. 11 (Annandale-on-Hudson, NY: The Jerome Levy Economics Institute, 1994).