The Immigrants Are Coming…
By Basirat OwePublished May 6, 2018President Trump’s candidacy was fueled by xenophobia. A major factor behind these sentiments is the belief that immigrants are “stealing” jobs from native-born Americans. To address that assumption, he seeks to enact prohibitive immigration policy (i.e., the construction of a border wall, increased border control and deportation).
That said, political critics say that Trump’s solution to the plight of (unemployed, underemployed, or disgruntled) blue collar workers played a huge role in the 2016 presidential election outcome. So, was President Trump right? Are immigrants taking our jobs and money? One way to evaluate that question is by examining the effect of immigration on the labor market for native-born Americans.
It goes without saying that the U.S. is experiencing an increased level of immigration. In 2015, the U.S. foreign-born population reached a record 43.2 million, and by 2065 that figure is expected to grow to 78 million. Specifically, in terms of jobs, immigrants made up around 16.9 percent of the total civilian labor force in 2016. However, the U.S. Department of Labor — Bureau of Labor Statistics found that “foreign-born workers were more likely than native-born workers to be employed in service occupations and less likely to be employed in management, professional, and related occupations.” That said, this examination boils down to whether or not the costs of immigration (reduced earnings and employment opportunities), which are mostly put on less-skilled native-born Americans, are substantial enough to validate prohibitive immigration policy.
In one examination published with the National Bureau of Economic Research, Robert LaLonde and Robert Topel concluded that the effect of immigration on native-born Americans is minor. For example, they found that the long term doubling of immigration in an area may reduce annual earnings of young Blacks by 4%. Given their assumption that the market outcomes of young Blacks and Latinos would be the most sensitive to increased immigration, this supports the theory that immigration has a minimal effect on native workers’ wages. Another analysis in the Journal of Population Economics used data from Spain to perform an area-analysis (which correlates wages and employment rates with the incidence of immigration) that suggested a “10% increase in the fraction of immigrants reduces the wages of native workers by about 1%.” The research goes on and on, but to put it briefly, the estimated effect of immigration on the average wage paid to a native worker is very close to zero — the question becomes: how?
While there is an increased level of immigration to the United States and the immigrant population is increasingly involved in its economy, this does not inherently mean that they are “stealing” jobs or depressing wages of native-born Americans. One explanation lies in preferences: perhaps immigrants have different tastes in employment opportunities, so they do work that native workers were not willing to do.
Another explanation highlights comparative advantage in the labor market. An academic paper published by IZA World of Labor found that an increased number of immigrants in one skill group allows firms to create other job opportunities for workers in different skill groups. This would stimulate job creation through the concept of complementary goods. For example, an influx of college-educated immigrants who create new products would encourage firms to have more customer service positions to facilitate their sales process. In this situation, native-born Americans could specialize in communication-intensive work; as only half the 2015 immigrant population was proficient in English on average, native-born Americans have a comparative advantage in it.
Additionally, in the long-term, immigrants bring new skills that could spur innovation and increase productivity (read: jobs). Since they are consumers, they could also increase the country’s demands for certain goods and services which would spur job growth in a roundabout way.
All things considered, the rise of immigration in America has had adverse socio-political effects, but the growing participation of immigrants in the U.S. economy does not inherently mean they are “stealing” jobs. By most measures, they have no net effect on the wages of native-born workers. Additionally, while the rate of immigration continues to increase, it does so at a lower rate than in the past. That said, perhaps President Trump’s administration should focus on maximizing the long-run economic benefits of increased immigration, rather than politicizing the short-run inconveniences.