The Congressional Budget Office (CBO) projects that the ongoing surge in immigration, both legal and illegal, will put “downward pressure” on inflation-adjusted wages through 2034, according to a recently released report.
The downward effect on real wages will continue until 2027, at which point it will “partially reverse,” with immigration still expected to cause average real wages to be lower in 2034 than they otherwise would be, according to CBO. CBO did predict some positive impacts of immigration, as well, such as increased GDP growth and an expanded labor force.
The surge in new workers is expected to reduce the amount of available capital, resources like factories or machinery, per worker, as well as work in low paying areas of the economy, both of which will exert a downward pressure on wages, according to CBO. The impact of these variables will decline over time as CBO expects additional capital to be built and workers to gain more skills.
The combined effects of immigration “will cause average real wages to be slightly lower than they would have been otherwise” in 2034, according to CBO. The agency also expects immigrants to “stimulate construction of new homes during the second half of the 2020s.”
Some economists have argued that the arrival of legal and illegal immigrants is causing housing prices to increase in the United States, The Wall Street Journal reported.