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Something I've never been clear on is how this dynamic is controversial. Obviously if labor is scarce wages will go up, eating away at the 'income inequality' boogeyman.
But try to argue that flooding the country with cheap labor will (besides making housing much more expensive) drive down wages and people smirk and tell you that's the "lump of labor" fallacy.
I don't think it is though. Yes, having more people around also generates some economic demand, but surely this is in the same sense that broken windows will generate economic demand? Unless those people are actually providing more value than they cost -- and here we must consider healthcare, education, wear and tear on infrastructure, social friction, decline in cohesion, crime, and so on -- doesn't the argument come down to "Well we have more mouths to feed so that generates economic activity"? And isn't that rather the broken window fallacy?
What is going on here?
Yes, it will drive up wages, but those wages will buy less, because there are less workers to produce goods and provide services. As long as each person produces more than they consume, each additional worker makes us better off.
There are two big hiccups:
"As long as each person produces more than they consume"; is this true? Illegal immigrants are generally not eligible for welfare, but they drive on public roads, use public libraries, illegal immigrant children go to public schools, etc. There are also negative externalities, but Latinos are much less criminal than blacks, and Latinos get rid of blacks, so it's probably a net positive.
Housing. We have insane zoning policies that forbid us from simply building enough housing for everyone. Per pigeonhole principle, if you have 100,500 people but only space for only 100,000, then 500 people must be homeless and the remaining 100,000 will spend all their spare money bidding up the rent to avoid being homeless. If you deport 1000 people and get the population down to 99,500, that would make a huge difference.
(Of course, would be better to just build more housing, but there wasn't a build more housing candidate on the ballot; there was a deportation candidate)
No, they totally are, at least in many blue states. Medicaid is often open to illegal immigrants and many of them qualify because they don't report their taxes. I don't want to self-dox, but I literally see people who can't speak English interacting with state welfare systems on a daily basis.
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