Opponents of immigration reform in Congress insist that repealing the president’s actions will not only roll back executive overreach, but also benefit the middle class. More legal workers, they claim, have led to stagnant wages. But they are wrong. Since 1980, Americans have faced less competition for jobs from new workers — foreign and domestic.
While economists debate whether income growth has been as bad as a single statistic would indicate, Sen. Jeff Sessions (R-Ala.) blames immigrants. “What has happened to the labor market since 1980?” he asked recently. “From 1980 through 2013, the immigrant population tripled from 14 million to more than 41 million. … [L]egal immigration … has placed substantial downward pressure on wages.”
But history rejects his theory. In a study by the Niskanen Center, I show that faster labor force growth is associated with greater income growth. From 1948 to 1980, the labor force expanded rapidly, increasing 76 percent, and real median income skyrocketed for wage and salary workers, rising over 80 percent for both men and women.
From 1981 to 2013, real median income growth slowed to a meager 8 percent for men and 55 percent for women. Was greater labor competition to blame? No. In fact, the labor force grew at half the earlier rate, increasing just 43 percent. Relative to the size of the workforce, many fewer workers were competing for jobs during this period.
In effect, America has tested Sessions’s policy prescription. Our labor supply has been constricted greatly over the past few decades, but with negative results. Lawmakers should learn from the past and reject the failed experiment of tighter labor markets. We should welcome new immigrants who want to work hard and contribute.
Immigration critics could respond that perhaps lower labor force growth is due to the replacement of American workers by immigrant counterparts. But this is also incorrect. Since 1980, the average labor force participation rate was higher than the earlier period. More immigrants are working, but not at the expense of American workers.
If you’re searching for an explanation for lower labor force growth, focus on American parents, not foreign workers. The baby boom explains almost all of the difference in the labor force growth prior to 1980. The birth rate plummeted from 123 births per 1,000 women to 67 births from 1957 to 1987, before leveling off.
The consensus among economists is unambiguous: New foreign workers are not a threat to domestic wages. Immigrants complement U.S. workers, which increases demand for the skills that natives possess. Adding more construction workers, for example, increases demand for civil engineers, which raises their wages.
More workers also benefit Americans by lowering the prices of goods and services. By leaving more money in the pockets of consumers, Americans can buy more elsewhere in the economy, which creates demand for jobs in those areas. The market adapts to the new workers, and the result is higher wages for everyone.
Economists from both sides of the debate have converged on this conclusion. Economist George Borjas, who is often cited by immigration opponents, agrees with economists Gianmarco Oattaviano and Giovanni Peri, who are often cited by immigration proponents, that immigrants have raised wages for Americans between 0.1 percent and 0.6 percent.
American jobs rely on immigrant jobs. One recent study by economists at the Department of Agriculture estimated that a policy that forced out or prevented the entry of 5.8 million workers would cut domestic incomes by 1 percent. Stopping immigration, in other words, would actually impose a cost on Americans.
By focusing solely on immigrants, immigration critics like Sessions miss the bigger picture. Immigrants are not causing a labor force explosion or crowding out Americans. Instead, they are preventing the decline of the U.S. workforce. They are keeping America’s labor markets competitive internationally.
American workers need a thriving economy. Immigrants are part of the solution; they are not the problem.
Source: The Hill
