Free Essay: Immigrants Flood the Labor Market and Drive Down Wages in the U.S.

Despite the efforts by the American government to increase the employment rate, there is evidence that the rate of job growth has reduced. In recent months, the rate of job growth has increased the employment rate so as to cope with new labor market entrant. The rate of unemployment in America has not recorded any significant change. US immigration policy is an area of focus to the state policymakers and the federal. However, controversy has risen when looking into the effects on the labor market and the wages of the US workers. As much as the immigrants are flooding the American labor market, it should be noticed that America is still in demand of the immigrant’s labor to boost their economy.

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Most of the America workers are threatened by the inflow of immigrants. The American workers view them as competitors to the available American jobs. However, according to research that has been done by several economists in America, it has been established that the immigrants cause no significant effect on the wages and the employment rates of the American workers. Instead, immigrants may lower the prices in aggregate and increase the wages. This is because immigrants in America offer labor to the American investors (Golany 2015). In this way, they are able to expand their businesses, earn more profit and thus increase the wages for both the American workers and the immigrants. When the investment expands, it demands more workers and therefore increasing the employment rate.

It, therefore, becomes evitable that immigrants play a central role in raising the average wages of the American workers. Despite the immigrants improving the economy of the US, it should be noticed that these immigrants reduce wages for the particular group of American workers. College graduates and low skilled labors are facing stiff competition from the immigrants and therefore have lost some job opportunities to immigrants.

Zero-sum game

Meaning: the Zero-sum game in finance stands for investments or businesses where one of the investors gathers profit while the other investor counts losses (Rózycka 2015). They are the specific example of specific sum game whereby the summation of each outcome must be zero.

An example of the zero-sum game: Options and futures trading is a perfect example of a zero-sum game. This is because when person A makes X dollars as his profit, then person B must lose X dollars as his loss. This means that his downside is unlimited. A perfect example may be given by a trade being done by IBM. If IB trades $200 per share, and investor X buys a call option on IBM from investor Y, then after certain duration of time, let’s say, one month, IBM, decides to trade their share at $ 210. The call option will give investor X the right to buy shares on IBM at $200 per share from investor Y. In such a case, investor X may decide to use the option to buy the $200 share and then sell them back to the open market at $210. Investor X shall have gained because he shall have made a net profit of $10 while investor Y shall have lost $10 because his share is valued at $210 but has to sell it at $200.

Non-Zero Sum game

Meaning: This is where losses and winning in the investment does not sum up to zero.

Example: A perfect example is the prisoner’s dilemma. Prisoners may be made into a dilemma when they are being investigated differently. They are promised to serve a shorter a jail term when they confess what transpired. Fearing what the other person may say, they opt to remain silence and serve the longer period in jail. This may make both the prisoners to confess what transpired and thus serve the shorter jail term (Holzer 2015).

Reference

Golany, B., Goldberg, N., & Rothblum, U. G. (2015). Allocating multiple defensive resources in a zero-sum game setting. Annals of Operations Research, 225(1), 91-109.

Holzer, H. (2015). Immigration policy and less-skilled workers in the United States: Reflections on future directions for reform. EPRN.

Rózycka-Tran, J., Boski, P., & Wojciszke, B. (2015). Belief in a Zero-Sum Game as a Social Axiom A 37-Nation Study. Journal of Cross-Cultural Psychology, 46(4), 525-548.

Salvatore, D. (2015). Managerial economics in a global economy (8th ed.) New York, NY: Oxford University Press. ISBN: 9780199397129