The “Real” Impact of Immigration on American Jobs & Wages

From my op-ed in the Austin American-Statesman on the so-called “controversy” over immigration’s impact on the American labor pool.

This week both U.S. presidential nominees addressed a unique concern in our nation’s immigration debate — how foreign nationals, working in the U.S., are impacting the American labor pool, especially for the middle class. While evidence indicates that there is currently a shortage of well-paying, middle class jobs, there seems to be many people arguing that this is due in large part to immigrant workers undercutting the wages and displacing the job prospects for native-born workers. Research, however, simply does not support this superficial notion. According to a recent report from the Bipartisan Policy Center on the interplay between immigrant and native-born workers in the U.S. labor market, immigrant workers complement the native-born majority of the American labor force by providing different skills, which ultimately enhance and expand the economy as a whole.

First, the belief that increased unemployment of Americans is a result of immigration is based on the false logic that our country produces and sustains a fixed number of jobs. Textbook economics discredits this “lump of labor fallacy” — that every job taken by an immigrant must equate to an unemployed native-born worker. Nevertheless, the U.S. is in fact currently experiencing a decline in employment among native-born Americans. According to the U.S. Bureau of Labor Statistics, since 2000 employment has decreased by 6% among the native-born Americans. The U.S. Census Bureau’s Current Population Survey, however, indicates that this decline in employment has very little to do with immigration and more to do with the variety of options native-born individuals have at their disposal to pursue non-labor force activities, such as retirement, disability, and school enrollment. Native-born Americans aren’t being forced into unemployment by competition from immigrant workers, they simply have more options to exit the labor market. On the other hand, according to the U.S. Census Bureau’s Current Population Survey, immigrant populations are more likely to be living below the poverty line, less likely to enroll in college, and less likely to save for retirement, which correlates to their higher and longer participation in the workforce.

While immigrant workers may tend to stay in the workforce longer, research contends that they are less likely to compete with or suppress the wages of native-born workers. According to the U.S. Bureau of Labor Statistics, around half of the total native and foreign-born workforces are employed in different industries. About 46% of immigrants are working in industries which tend to be composed of lesser-skilled, lower-wage occupations, compared to about 26% of native-born individuals. On the other hand, the Bipartisan Policy Center’s research indicates that native-born individuals who tend to have higher levels of education, and a greater ability to take higher-paying jobs or opt-out of the labor force, are often less willing to take an open position in an industry that requires lesser-skills and also pays less. Not only does this explain the wage differences between immigrant-focused industries and native-born-focused industries, which require different levels of education and skills, but it is also evidence that most native-born workers are not directly competing for jobs with immigrant workers because they are in different labor markets. While it is certainly possible that native-born workers would flock to lower-skilled and lower-paying jobs if it were not for immigration, research does not seem to support this. Instead, research shows that immigrant workers are critical to supplementing the U.S. labor force, filling jobs that would otherwise remain vacant or disappear.

A report from the American Enterprise Institute for Public Policy Research actually showed immigrants create more jobs at higher wages (between 0.1 and 0.6%) for domestic-workers by increasing the demand for the skills natives possess. For example, adding more low-skilled construction workers to a project, increases the demand for civil engineers, which raises their wages.

A look beyond the so-called “controversy” over the impact of immigration on the American labor pool, and you’ll see that most scholars agree — immigrants are an economic resource, keeping the U.S. labor market strong and enhancing the American workforce.