Are Low-Skilled Immigrants Good for the Economy?


According to a Reuters/Ipsos poll conducted in mid-July, 70 percent of Americans (including 86 percent of Republicans) believe that undocumented immigrants threaten traditional U.S. beliefs and customs, and across the country voters are expressing their frustration with current immigration policies at town hall meetings. Advocates of open borders and people who want to immigrate to the U.S., of course, are calling for a very different set of reforms. Would making it easier for immigrants to gain legal status in the U.S. be a step in the right direction? Allowing more high-skilled immigrants to come to the U.S. would certainly be good for the economy. But what about low-skilled immigrants? Last year, Reason's Shikha Dalmia argued that low-skilled workers are good for the economy too.

"Shikha Dalmia: 5 Reasons Why Low-Skilled Immigrants Are Good for the Economy," produced by Paul Detrick. Approximately 3 minutes.

Original release date was April 11, 2003, and the original writeup is below.

The Senate's "Gang of Eight" proposed immigration reform plan will likely take a look at how to make it easier for high-skilled immigrants to gain legal status in the United States. Reason Foundation senior analyst Shikha Dalmia gives five reasons why low-skilled immigrants are good for the economy too:

1. Americans are the Customers of Low-Skilled Immigrants

Most Americans are not competitors of low-skilled immigrants, they are actually their customers. They buy all kinds of services from them: House cleaning services, childcare services, landscaping services, home construction services. If Americans can spend less on these services, then they have more money in their pocket to spend elsewhere, which means more jobs created elsewhere in the economy.

2. Low-Skilled Immigrants are Mobile

Latino and other foreign workers don't have ties to the local community and they haven't invested in property so they can pick up their bags and leave at any point to wherever they are needed. They can go to where houses are built in Arizona or pick fruit in Florida, they can go wherever they want. They "grease the wheels" of the labor market, as Harvard economist George Borjas has put it.

3. Low-Skilled Immigrants are Good for Women

Low skilled immigrants increase the supply of high skilled workers and these high-skilled workers are often called women. Many professional women would be forced to spend much more time at home taking care of their children, cleaning, doing laundry if it were not for the presence of foreign nannies, Korean dry cleaners or Chinese takeout.

4. Low-Skilled Immigrants May Cost the Welfare State Less

A big fear about low-skilled immigrants is that because they are poor they impose a big cost on the welfare state. But the truth is that most of them don't even qualify for most means tests benefits that Americans do so they may actually be saving the welfare state money rather than costing it money. A CATO working paper from February 19, 2013 said, "Low-income non-citizen immigrants are generally less likely to receive public benefits than those who are native born."

5. Low Skilled Immigrants Create Jobs

They create more jobs for Americans because they reduce the cost of a key import in production: labor. When labor costs go down, more businesses can form, when more businesses can form, there are more jobs for everyone–including Americans. The fact that there is someone else to do menial work like pulling weeds means that Americans can do relatively more value added work. For instance, their English speaking skills become more marketable in a diverse economy with lots of immigrants who don't speak English.

Dalmia appeared last month on Capitol Hill to talk about the importance of low skilled immigrants. If you would like to read more articles and videos from Reason on immigration click here.

Video is about 3 min. Produced by Paul Detrick. Shot by Sharif Matar.