Immigrants are less likely than natives to commit crimes or use welfare programs (and much less likely than natives to commit violent crimes). They also drive down the cost of housing by moving here and helping build up local economies by starting businesses or investing their savings here.
New research suggests that immigration may depress wages for the native-born. But this effect is small, and in any case, it’s an argument for keeping immigration low and controlled, not against it. America should welcome talented newcomers who will help build our country into a more prosperous place. The new study points to one of the great advantages of living in a rich country like America: We have access to so many talented and dedicated people from around the world who would love to come here but can’t because of restrictions or high costs in their own countries.
For example, most immigrants cannot simply purchase a green card through savings or investment—they must first prove that they are willing to work hard here and integrate into American life. Unsurprisingly, this drives many highly skilled people away from coming to America. The problem with restrictive immigration policies isn’t that there aren’t enough restrictions on them; there are too many restrictions on them.
Why Some People Think Immigration Depresses Wages
Immigration has been correlated with lower wages for a long time. In the words of the economist George J. Borjas: “If we allow large-scale immigration, then the wages of low-skilled native workers will be driven down.” But is this correlation really meaningful?
When people think about immigration, they often focus on the number of new immigrants and how that number compares to the number of natives who might take their jobs. But it’s more relevant to look at the number of immigrants relative to the number of natives because the composition of the population matters more.
One study found that the impact of immigration on native wages depends entirely on how many natives have the same job. When native workers and immigrants have the same job, the native-born workers’ wages increase. Immigrants take jobs that are already occupied by native workers, and when you’re talking about low-skill jobs, most of those jobs are already occupied by natives.
So when there are more immigrants, and fewer natives, the number of low-skill jobs stays the same. Native-born workers are being crowded out by an influx of new immigrants, driving down their wages. Because those natives are the ones who, on average, have the same job as the immigrants, their wages are the most likely to be depressed.
What’s Going on When Immigration Depresses Wages?
The best way to understand the impact of immigration on wages is to think like a macroeconomist. Imagine that there are two economic sectors, one with lots of low-skill native workers and one with lots of immigrant workers. In the economy as a whole, it’s good for both sectors to have lots of low-skill workers. Still, it’s especially good for the native sector because that sector is most likely to be affected by the minimum wage and other labor regulations.
In contrast, the immigrant sector is most likely to have firms that are large enough to hire lots of immigrants without hurting their profits. The overall effect is that immigration depresses wages for native workers because it lowers the number of jobs in the economy.
The New Study: Did Immigration Really Cause Wage Depression?
The wage depression study followed the same methodology as past wage depression studies, but it examined the effect of immigration in detail. The researchers examined the relationship between immigration levels and wages for 5,000 native and immigrant workers.
The native workers were from a variety of occupations, but the vast majority were high school dropouts working in low-paying jobs like waitressing and cleaning. The immigrants were from a variety of countries and had a diverse set of occupations as well, but most were skilled workers with advanced degrees. The researchers found that, across all occupations, immigration did not have a statistically significant effect on native wages.
Limitations of the Study and What it Means for Future Research
This study has a lot of strengths, but it also comes with some important caveats.
- The researchers looked at wages and found no relationship between immigration levels and wages. This is a limitation. Wages are not the only way in which immigrants might lower the wages of natives. Immigrants might also lower the quality of jobs by crowding native workers out or by increasing racial or sexual discrimination.
- The researchers looked at the impact of immigration on wages for 5,000 workers. This number is impressive, but it’s tiny compared to the overall U.S. population. A much larger study would be needed to see if the findings from this one hold for the entire population of the United States.
Conclusion: What Should We Take From This Research?
In sum, this study suggests that immigrants tend to depress native wages for the same reason that minimum wage laws and other labor regulations depress wages for native workers: When the number of native-born workers is low, it is more efficient to hire immigrants than to hire more native-born workers.
However, the study found that immigration did not affect native wages when native-born workers and immigrants have different jobs. This suggests that the impact of immigration on native wages is small and that natives are more likely to lose out in the competition for jobs.
Immigrants are an important part of the U.S. population, and it’s important to remember that they help build our country into a more prosperous place. Worrying about immigration at the expense of understanding the benefits of immigration is a waste of time.
