Many Central Americans are destitute. Yet, as hard as it may be to believe, Central America is not exceptionally poor by global standards. Unskilled wages average $1.50 / hour in Guatemala and Honduras, but they are only $0.50 / hour in South Asia (India, Pakistan, Bangladesh) and $0.25 / hour in parts of sub-Saharan Africa. As impoverished as parts of Central America may seem, they are still middle class by the standards of much of the rest of the world. Even China is not much better, with a minimum wage of $2 / hour outside the large cities.
These realities drive poor Latin Americans and others to leave their home countries and migrate to the US, legally or illegally. Once such migrants are in the US, they will remain until they are indifferent between staying in the US or returning to the conditions shown above. That is, if borders are open, migrants will continue to come to the US en masse until their standard of living in the US, all things considered, is no better than in their home countries.
This has yet to occur, however, and for a good reason: border enforcement. Border enforcement has historically prevented most undocumented migrants from entering the United States. As a result, the demand in the US for undocumented migrant labor has generally exceeded its supply. Consequently, illegal immigrants have not encountered great difficulty in finding work at wages near those prevailing in the US, rather than those in their home country. This mirrors the dynamics of the illegal drugs trade. The great fortunes of the Colombian, and later Mexican, cartels were driven principally by the drug enforcement efforts of the DEA, Customs and Border Protection, and other agencies. Those who were able to smuggle drugs across the border enjoyed outsized profits because drug interdiction kept supply well below demand, leading to high prices and elevated profits. Illegal immigration is no different. It is border enforcement, and resulting high wages, which makes illegal entry so attractive.
In an Open Borders model, as currently practiced by the Biden administration, migrants can enter the country largely at will. Border Patrol and Customs are no longer limiting supply through enforcement. As a result, the equilibrium will not be the US unskilled wage, as it was prior to the Biden administration, but rather the migrants' home country wage. Over time, the living conditions of illegal immigrants (asylum seekers) and their competitors -- principally earlier waves of illegal immigrants and some low income blacks -- will tend to deteriorate, and do so in predictable ways.
Open Borders and Wage Levels
I have written frequently about the Relocation Wage, the wage necessary to induce a migrant to come to the US. This is the migrant's home wage, plus an adjustment for higher living costs in the US, and perhaps a premium to induce migrants to leave home. In Central America, the unskilled wage is $1.50 / hour. Add to that $3 / hour higher for higher living costs in the US, and migrants would need to earn $4.50 / hour at a minimum to come to the US. If we include a premium to induce relocation, unskilled migrants would move to or remain in the US for, say, $5 / hour, that is, about 30% of the effective minimum wage of $14-18 / hour in the US.
If Open Borders persists for an extended period of time, migrants will continue to arrive until those with whom they compete face either falling wages or a loss of employment. Of course, not everyone sees it this way. My friends at the CATO Institute, for example, might argue that migrants create their own employment, and indeed they do. The relevant question, however, is the maximum pace of absorption without disrupting either prevailing wages or employment levels. As my prior analysis showed, in a typical good year, the US can create around 2.5 million new jobs. By implication, the US is unlikely to be able to absorb much more than 1 - 1.5 million incremental, migrant workers annually.
At the same time, quite literally billions of people could be induced to move to the US even at wages much lower than those prevailing. For example, even if US unskilled wages were $5 / hour, unskilled Indian workers could triple their income by moving to the US, even after allowing for a higher cost of living here. That is, the pool of potential migrants vastly outnumbers -- by a factor of perhaps 1,000 to 1 -- the US ability to absorb them. The US would require centuries, and perhaps millennia, to absorb the potential pool of migrants without damaging its own labor markets.
Those most exposed are low wage blacks and Hispanics. A New York Post story illustrates the impact on undocumented Hispanic immigrants who arrived earlier:
Longtime migrant workers are disgruntled with new waves of arrivals to New York City who they say are undercutting them — claiming anyone hiring them should “get the f—k out of here”. “If you can get the work cheaper you are going to use those guys. You are not going to pay $200 when you can get [it for] $40. Anything you give them, they’ll take it."
Unskilled blacks are similarly affected. According to a 2007 study by the National Bureau of Economic Research, black employment is more sensitive to an immigration influx: “For white men, an immigration boost of 10 percent caused their employment rate to fall just 0.7 percentage points; for Black men, it fell a full 2.4 percentage points.” As Brian Mullins, cofounder of the Black American Voter Project, sees it today: "From construction to stores, even the guy washing the windows, it’s a migrant charging less than the black men.”
Nearly half of US blacks and Hispanics could be affected. A recent Oxfam study reports that 46% of Hispanic, and 47% of black, workers earn $15 / hour or less. For nearly half the minority electorate, unchecked immigration is a bread-and-butter issue.