People hold all sorts of beliefs about immigrants. A common belief is that immigrants depress wages and take jobs from U.S.-born workers.
And because the fraction of lesser-skilled workers is greater among immigrants than the U.S.-born, many people believe that the workers hurt most by immigration are lesser-skilled U.S.-born workers.
(In case you’re counting, here are the numbers. Among workers 25 years or older, 22 percent of immigrants have less than a high school diploma compared to 4 percent of the U.S.-born.)
Is the belief that immigration reduces the wages and employment of U.S.-born workers supported by the evidence?
Economists have done much research on this question and the results are clear: immigration has little if any effect on the wages and employment of U.S.-born workers, including lesser-skilled U.S.-born workers.
Peruse the dozens of studies that estimate the degree that immigration effects the wages and employment of U.S.-born workers and here’s what you’ll find.
First, immigration is as likely to increase the wages of U.S.-born workers, including lesser-skilled U.S.-born workers, as decrease them.
Second, the effects of immigration on the wages of U.S.-born workers, if there are any effects at all, are puny. In almost all studies, the estimated effect of a percentage point increase in the percentage of immigrants in a labor market ranges between negative 0.3 percent and positive 0.3 percent.
In two-thirds of the studies, the estimated effect ranges between negative 0.1 percent and positive 0.1 percent.
Let’s make clear what that means. Since 2000, the percentage of immigrants in the U.S. labor force has increased from 13.3 percent to 17.1 percent, an increase of 3.8 percentage points.
Suppose the worst case effect is true, that a percentage point increase in the percentage of immigrants in a labor market reduces the wages of U.S.-born workers in that market by 0.3 percent.
That would mean that all the immigration to the U.S. since 2000 has reduced the wages of U.S.-born workers by a total over all those years of 1.14 percent.
Again, that’s the worst-case effect. Research suggests the most likely effect is zero.
Do immigrants take jobs from lesser-skilled U.S.-born workers? On this score, the research is even clearer: no, they don’t.
So we have a puzzle. Immigration increases the supply of labor. Why doesn’t that depress wages?
Because, in addition to increasing the supply of labor, immigration increases the demand for labor. And increases in the demand for labor push wages and employment up.
Immigrants aren’t just workers, they’re consumers. More immigrants means a greater demand for goods and services, which means a greater demand for labor.
Immigrants are also more entrepreneurial than native-born Americans. In the U.S., the percentage of immigrants who become entrepreneurs is double the percentage of native-born Americans who become entrepreneurs. More entrepreneurship means a greater demand for labor.
Further, workers — including immigrant workers — are more likely to be complements of each other than substitutes for each other.
Do architects compete with carpenters in the labor market? Do pipe fitters compete with carpenters in the labor market? No. Workers with different skills complement each other. Each raises the productivity of the others.
Even workers with the same skills often complement each other. Do carpenters compete with carpenters in the labor market? Yes, but carpenters work in teams. Carpenters in a team complement each other; each raises the productivity of the others.
And the more productive workers are, the more valuable they are, and the greater the demand for labor.
Thus, immigration does not depress the wages of U.S.-born workers because immigration increases the demand for labor as much as it increases the supply of labor.
That’s what the evidence says.
Reg Murphy Center