The current level of immigration has a depressive effect on the wages of workers in the United States. On average, the United States has admitted one million immigrants every year since 1990. In addition, between 700,000 and 800,000 guest workers are admitted every year. There are 28.4 million immigrants in the labor force, including over 7.5 million illegal aliens.
In order to bolster their claims that immigration can only have positive effects on American workers, those who defend the status quo, and those who demand higher levels of immigration, have long relied on economic evidence that they present in misleading ways.
In order to dismiss the negative effects on American workers, proponents of mass immigration invariably make two claims. The first is that immigrants do not compete with Americans for jobs, that immigrants only take “jobs Americans wont’ do.” Or, in the case of higher-skilled occupations, “jobs Americans can’t do.” The second is immigration “grows the economy.”
The Complementarity Ruse
The theory that immigrants are not be substitutes for native workers and only take jobs native workers will not do is called complementarity. Complementarity holds that immigrants to the United States do not compete with native workers, and that the economic output of immigrant workers is such that the higher the rate of immigration, the more jobs opportunities at higher wages there are for native workers (though some economists will at least admit that new immigrants do compete with immigrants who arrived earlier).
Anyone with even a passing familiarity of the U.S. labor market recognizes that complementarity does not hold true. It may occur in some limited cases and on an extremely small scale, but it does not broadly account for the dynamics of the of the U.S. economy.
Take for examples occupations that have in recent decades seen an influx of immigrant workers, such as meatpacking, construction, roofing, landscaping, agricultural laborers, janitorial services and housekeeping. Complementarity holds that any displacement of American workers that has occurred in these occupations resulted in displaced Americans moving up into higher-skilled, higher paying jobs. The problem with this model is that there is no reliable credible evidence to support it.
Some construction laborers who are laid off in favor of lower-wage immigrant workers may move into other occupations or into higher-paying supervisory positions, but some will remain unemployed and others will struggle to find jobs with adequate pay. As we will see below, there are economic advantages that accrue from immigration, but these do not accrue to the workers who compete directly with immigrants for jobs (and there are fiscal costs borne by American taxpayers, too.)
The contention that immigration “pushes Americans up the economic ladder” doesn’t hold up under scrutiny. A laid-off construction worker is unlikely to then become an accountant or dentist. He will much more likely try to find jobs at a comparable skill level, and these jobs are increasingly being automated, off-shored, or being taken by immigrants who are willing to trade the benefits of living and working in the United States for lower wage rates than Americans are willing, or able, to accept.
Immigration Does Grow the Economy
It is true that adding more people to U.S. population through immigration grows the economy by increasing the Gross Domestic Product (GDP). That does not mean growth is distributed equally throughout the economy. Growing the economy through immigration results in a net gain for immigrants and the employers of immigrants. However, it does not result in increased per capita GDP gains for Americans, meaning the income of the average citizen does not increase with increased levels of immigration.
Moreover, GDP includes all economic activity, including government spending, so payments made to unemployed Americans also “grows the economy.”
While the media seldom reports on it, there is an extensive economic literature that provides evidence of the negative wage effects of immigration.
One prominent example is the Congressional Budget Office (CBO) report on S.744, the immigration legislation that passed the Senate in 2013, commonly known as the Gang of Eight bill.
The CBO provides fiscal and economic analysis to Congress. It projected that the Gang of Right bill, which would have doubled both legal immigration and the number of guest workers admitted annually, in addition to granting amnesty to about 12 million illegal aliens, would end up reducing per capita share of the GDP for two decades after it was passed.
In 2016, the National Academy of Sciences (NAS) surveyed the academic literature on the effects of immigration on the wages of native-born workers. The NAS found:
…the evidence suggests that groups comparable to the immigrants in terms of their skill may experience a wage reduction as a result of immigration-induced increases in labor supply, although there are still a number of studies that suggest small to zero effects [p. 189].
…native dropouts tend to be more negatively affected by immigration than better-educated natives. Some research also suggests that, among those with low skill levels, the negative effect on native’s wages may be larger for disadvantaged minorities and Hispanic high school dropouts with poor English skills [p. 185].
A common argument employed to brush aside the fact that immigration does drive down the wages of American workers who directly compete with immigrants for jobs is that it only effects a subset of the workforce – those who are lesser-educated and lesser-skilled – and that the effect is small.
This ignores the negative effects that H-1B guest workers have on the earning of American tech workers, while it endorses an immigration system that has the most pronounced negative economic effect on those Americans who are the least able to withstand it.
One cannot claim that there is absolutely no negative effect of immigration on wages while at the same time arguing whatever effect there is, is minimal. So, when confronted with the multitude of evidence of wage depression caused by high levels of immigration, proponents of mass immigration circle back to “immigration grows the economy.”