Immigration Benefits Us All
It was May 23, 1633 when my first direct ancestor in North America arrived at a small outpost known as Quebec. Just under one year later he help found the city of Trois-Rivières and his descendents have been producing goods and services on the continent for almost 400 years since he arrived.
That’s how it is with migrants. The prime reason people migrate is to improve their economic status. In short that means by moving they produce more wealth in their new location than they did in their old one.
Each one who saw their own prosperity increase benefitted others even if that was never their intention. They improved the lives of others by selling them the goods or services they needed. Some provided needed labour to employers while others were employers who gave jobs to laborers.
Studies found that immigrants tend to increase economic productivity. The reason isn’t hard to understand. “Immigrants are more mobile than natives in response to local economic conditions, perhaps because they have fewer long-standing familial and community ties, helping labor markets to function more efficiently.”
The White House said that a “1 percentage point increase in the population share of immigrant college graduates increases patents per capital by 9 percent to 18 percent.”
Nobel laureate Milton Friedman pointed out there is a very simple reason immigration tends to benefit the receiving nation.
If you have free immigration, in the way we had it before 1914, everybody benefited. The people who were here benefited. The people who came benefited. Because nobody would come unless he, or his family, thought he would do better here than he would elsewhere. And, the new immigrants provided additional resources, provided additional possibilities for the people already here. So everybody can mutually benefit.
People migrate precisely because by doing so they increase their own productivity and they, and their family, are better off. Because markets are marvelous webs of human cooperation the improved lives of some ultimately benefits all. Consider a migrant who sees their income increase 10% by immigrating. That means they purchase more goods and services for themselves. They spend that money with individuals who benefit by the increased trade as well.
Those producers take their increased wealth and spend it with yet more producers. Each transaction — whether large or small — tends to benefit all the parties to the exchange. If it didn’t they wouldn’t do it.
The George W. Bush Institute agrees:
Immigration fuels the economy. When immigrants enter the labour force, they increase the productive capacity of the economy and raise GDP. Their incomes rise, but so do those of natives. It’s a phenomenon dubbed the “immigration surplus,” and while a small share of additional GDP accrues to natives — typically 0.2 to 0.4 percent — it still amounts to $36 to $72 billion per year.
In addition to the immigration surplus, immigrants grease the wheels of the labor market by flowing into industries and areas where there is a relative need for workers — where bottlenecks or shortages might otherwise damp growth.
This last point is critical to understand right now given how the pandemic has reduced labour in supply chains resulting in shortages and pushing up prices in general. One solution to ending pandemic-related supply chain problems is increased immigration.
I tend to see immigrants the way I see lottery tickets — but with a difference. Most immigrants, unlike actual lottery tickets, are winners. Some may only be small winners but most make us better off.
Hamdi Ulukaya was born in Turkey of Kurdish descent but left because of Turkey’s cruel history of ethnic persecution of Kurds. In the United States he opened a small company making feta-cheese. Then in 2005 he saw a defunct yogurt factory for sale. It had been closed down by Kraft and the workers were left fending for themselves.
Ulukaya purchased the factory and started producing yogurt. In less than five years he was doing $1 billion in sales per year and his Chobani brand became the number one selling yogurt in the country. He pays his workers well above minimum wage and contributes millions to worthy causes, not just in the United States, but in the Middle East and Africa as well.
Ulukaya is one of those big wins in the immigration lottery whose productivity is so massive it can’t be ignored. Yet, even the street hawker with some vegetables is helping improve the national economy as they seek to better their own life. They may be one of those small paying lottery tickets but they are still creating wealth, offering goods and services to others, and ultimately increasing the demand for labour — in other words they help create wealth and jobs.
This column was just published by City Press in South Africa and by The International Policy Digest.