Immigration

The Nationalist Right Is Wrong: More Immigration Doesn't Reduce Wages

The reason: Immigrants help increase labor demand as well as labor supply.

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Alongside claims that immigrants are a "cultural" and "demographic" threat to the United States, some prominent members of the new nationalist right argue that increased immigration will hurt working-class Americans in the pocketbook.

"These new arrivals compete primarily with the very Americans most likely to have lost their jobs, and the effect is lower wages," Tucker Carlson declared during an anti-immigrant monologue on his Fox News show last year. Academics like the controversial University of Pennsylvania law professor Amy Wax have argued that immigration, particularly low-skilled immigration, has undercut working-class American wages.

At first blush, this seems to make intuitive sense. But new a new paper in the Journal of Development Economics helps show why new immigrants do not, in fact, tend to hurt native workers. After reviewing the flow of Syrian refugees into Jordan, researchers found that "Jordanians living in areas with a high concentration of refugees have had no worse labor market outcomes than Jordanians with less exposure to the refugee influx."

That's particularly eye-opening given the scale of the migration. Over 1.3 million Syrians moved to Jordan from the beginning of the Syrian civil war in 2011 to 2015. That's a huge influx into a country of 6.6 million Jordanians.

The study's result is consistent with the vast majority of economic research about immigration's impact on wages. The Mariel Boatlift in 1980 is a common case study. 

In 1980, amid especially bad domestic economic conditions, Cuban dictator Fidel Castro allowed about 125,000 people to leave the country. They fled to southern Florida, increasing the size of Miami's labor force by 7 percent in a matter of weeks. Given the sudden nature of this change, and given that most of these migrants were not particularly high-skilled, the Mariel Boatlift a good place to examine how immigration affects wages. And most studies of the boatlift find that the boatlift did not reduce native-born Americans' pay. A 1990 paper by the Berkeley labor economist David Card, for example, found that the boatlift had "virtually no impact on the wages or employment rates" of lower-skilled Miami workers.

The Harvard economist George Borjas reached a different conclusion. His paper, published in 2017, found that the wages of high school dropouts in Miami fell by between 10 and 30 percent after the boatlift. But now a new study in The Journal of Human Resources finds that the wages of high school dropouts in Miami didn't change relative to the wages of high school dropouts in other cities that did not experience a large immigration influx. 

How, you might ask, is that possible? After all, the basic laws of economics suggest that an increase in the supply of labor should lower the price of labor. But increased immigration doesn't just increase the supply of labor—it also expands the demand for labor. Immigrants aren't just workers. They also help start businesses, and they purchase goods and services from existing businesses. 

Indeed, immigrants play a substantial role in American entrepreneurship. Immigrants make up 15 percent of the U.S. population but start around 25 percent of new businesses. And while high-skilled immigrants disproportionately found the largest American companies, less-skilled newcomers are also disproportionately responsible for low-income entrepreneurship.    

So that's why native wages didn't drop. If you look at immigrants as contributing only to labor supply and not labor demand, you are committing what economists call the lump of labor fallacyGiven how entrepreneurial immigrants tend to be, letting more foreigners into United States might actually be a partial solution to slow wage growth, not its cause. 

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  1. seems like this is probably a tough thing to measure definitively.

    1. You got that right. So instead of falling back on principles, people make up stats and create bogus studies, all to support whatever their opinion is to start with.

      The principle of self-ownership is a lot simpler. It leads to the basic question which no immigrant-basher can ever answer: by what moral authority do you have the right to control who I do business with, who I hire, who I rent to or sell to or buy from, or even just visit?

      They have none. So they fall back on race, culture, politics, anything they can think of to tell me how to run my life.

      Slavers, the lot.

  2. I wonder if that study really applies to the current situation in the U.S. If you have a large influx of laborers who are taking less than the lawfully required minimum wage because they’re taking the money “under the table”, isn’t that a different situation?

    Of course, if we make those workers all legal the employers will be obliged to pay them minimum wage–theoretically, at least. But since that will drive up the labor costs I imagine those employers will look for other solutions.

  3. Given how entrepreneurial immigrants tend to be, letting more foreigners into United States might actually be a partial solution to slow wage growth, not its cause.

    Is Reason conceding that the US has experienced slow wage growth? Funny how that happened during a steady increase in immigration.

    I am surprised that Reason is even trying to make this argument. If later we see evidence that immigration does hurt wages, especially of those of low-skilled natives, is Reason going to change its mind on the issue?

    Of course not.

    Reason should just stick to insisting that borders violate the NAP and calling anyone who objects to anything less than Open Borders a “Racist.” No amount of studies or data will ever invalidate those arguments.

    1. You mean, studies don’t change the minds of people who have an emotional commitment to a particular position? You’re probably right. But that swings both ways.

      No amount of studies which demonstrate that illegal immigrants aren’t a bunch of murderous psychotic violent criminals will convince the die-hard Trumpists to change their position on illegal immigration.

      Nonetheless, it’s important to know the actual facts and data behind a particular position. If one argues from a deontological premise, then there are going to be likely negative consequences from that position. It’s important to be aware of those nonetheless.

      1. People like me aren’t opposing illegal immigration on economic grounds.

        1. Yeah I figured that part out already.

        2. Way to own the “dirty brown people are ruining our wonderful paradise” position!

          1. More like “If your first act in being here is to violate our laws, I don’t see the benefit in having you here”.

            1. But this idea is predicated on the assumption that the laws in question are worth respecting. Are they? That is the real question.

              1. Yes.

                Thanks for playing.

                You know who has a seat at the table to debate that question? Citizens.

                Not dudes who just strolled across the border.

                It’d be like me walking into your house and pissing on your floor because, dammit, a toilet SHOULD be here!

      2. Alex Muresianu took a study last month that showed:
        a) beer makers profits are up
        b) there are more breweries now than ever before, employing more people
        c) brewery suppliers are doing well and increasing jobs

        And concluded that Drumpf’s aluminum tariffs had cost 40,000 “beer industry” jobs, because buried in the report
        there were fewer waitress jobs (minimum wage hikes in Prog cities)
        and fewer grocery stockboy jobs (Amazon, Shipt, store delivery apps)

        Never belief anything he writes, especially if you can’t follow all the links and see for yourself

  4. And while high-skilled immigrants disproportionately found the largest American companies,

    Maybe we could break down those Fortune 500 founding immigrants and their descendants by country of origin or ethnicity.

    On that list I see one guy from Sub-Sahara Africa, but he’s actual
    an ethnic Indian.

    There’s one guy from Brazil, who looks to be Jewish, and anyway he renounced his citizenship and moved to Singapore.

    There are 4 guys from Taiwan. So they are punching above their weight.

    Everyone else seems to be from Canada or Europe. So maybe we should orient or immigration policies to prioritize: Canada, Europe and Taiwan. Or would that be bad, because it’s noticing.

    1. Wait, you mean to tell me that not a single Ecuadorian dirt farmer who schlepped across Central America and Mexico, then specifically avoided ports of entry when crossing into the USA has founded a Fortune 500 company?

      I’m shocked!

  5. Is Tucker anti-immigrant or anti illegal immigrant because this often gets unfortunately conflated including here at Reason.

    1. more of a dork people should shun but somehow has a show.

    2. He’s anti-illegal and anti-refugee, but when it comes to legal immigration he’s just a NIMBY unless the immigrant is white

  6. I don’t see any good reason to question the idea that an increase in the supply of unskilled workers will give unskilled workers who are already here more competition.

    I just have no sympathy for people who are so pathetic that they can’t compete with unskilled workers, and I find the suggestion that the government should protect them from the negatives consequences of their own poor decisions to be entirely revolting.

    It’s the same things with international trade. There’s no good reason to pretend that foreign competition won’t hurt domestic producers who can’t compete. That’s no reason why the government should get involved in interfering with my freedom to buy from whomever I please. If you can’t compete, then you should be trounced by the competition.

    Losing industries, losing companies, and losing individuals being free to get trounced by the competition is one of the things that makes America great. The reason our GDP per capita is six times the size of Russia’s is because Russia protected its industries and workers from competition for 60 years. They’re suffering from the lack of all that creative destruction, and we’re flourishing because of creative destruction.

    Creative destruction is the source of economic growth. You can break it into various kinds. There’s new efficiencies from foreign trade. There are increases in productivity from technology. Whatever flavor you want to talk about–technology or foreign competition–we’re talking about creative destruction. If you can’t compete, then you should fail. If you can’t compete with the foreigners who come here from Mexico and the Central America–man of whom have no more than eighth grade education and can’t speak English, . . .

    There are negative consequences associated with making bad choices. If you got pregnant at 18, became a drug addict, or got a felony on your record, there should be negative consequences associated with that. If you failed to move to another part of the country where there are better jobs available, there should be negative consequences for that. If you voted for socialist slobs who taxed the fuck out of industries and companies that would have hired you if they weren’t paying for the welfare state, then there are and should be negative consequences associated with that.

    Trying to game the laws of economics by using the government to limit other people’s choices may help for a short period of time, but it’s not a long term solution to any of your problem–not if the “problem” you’re trying to solve is that there are negative consequences associated with your own poor choices. The solution to that problem is to stop making bad choices.

    1. Absolutely on point.

      But the authoritarians who hate illegals are nothing but central planners who believe that their particular 5-year plan will work. They can mold the economy to perfection! You just gotta break a few eggs.

      Also, “wars” against consensual peaceful behaviors work so well, right?

  7. More open borders shilling from Reason today…it doesn’t take much effort to realize that illegal immigration does not cause offsetting increases in demand, never mind net increases. They depress wages by increasing the supply of labor and by virtue of being illegal, working for much less. Then, instead of spending what they earn in our economy, they ship it off to Mexico where their families spend it on, you guessed it, Mexican made goods, not American exports.

    Deport all illegals.

    1. awildseaking
      July.25.2019 at 11:39 am
      “More open borders shilling from Reason today…”

      More protectionist shilling from dimwits today.

  8. National Conservatism = Jingosim?

  9. The law of Supply and Demand – revoked by a “Libertarian” magazine.

  10. Legal or illegal immigration?

    Are illegal immigrants disproportionately numbered among the founders of Fortune 500 companies?

    What’s that? No? Ah.

    Well then, illegal immigrants must start 25% of American businesses…No? Ah.

    They’re probably not disproportionately responsible for low income entrepreneurship either, are they?

    What’s that? You’re conflating illegal and legal immigrants again to confuse the issue and make people illegally entering the country look like a net plus by hiding them among legitimate migrants.

    Oh, you’re lying. AGAIN.

    Sad.

    1. Did your ancestors sign any papers when they came over?

      Mine just killed the natives and took their shit from them.

      1. Did your ancestors sign any papers when they came over?

        Yes.

  11. With all the reflexive insults, is lil Emeril Hihn, or Shriek, or whoever? I always lost track of that.

    He seems just a bit too sane to be them though.

    1. Not sure, but the stupidity is several feet thick.

  12. George Borjas disagrees. He found a long-run negative impact of 4.8% on the wages of high-school dropouts (i.e., those most likely to be harmed by competition from high levels of immigration by unskilled workers).

  13. Indeed, immigrants play a substantial role in American entrepreneurship. Immigrants make up 15 percent of the U.S. population but start around 25 percent of new businesses.

    Of course, what you manage to leave out here is that the immigrants that create businesses are overwhelmingly from Europe and Asia. The ones from Africa and South America, not so much.

    Seriously, has this rag ever published a single honest article about immigration?

  14. What a disappointing article from REASON. This is just idiotic. Perhaps M. Muresianu should have been an economics intern instead of a journalism intern. The reasoning defies first principles. A significant influx of low wage earners is going to lower wages at the low end of the wage distribution and is not going to somehow stimulate demand. That’s just nuts. A given empirical study can show almost anything because so many other things are moving around and confound the measurements of wage growth and unemployment. But we know from first principles that if you keep adding low wage workers, wages will drop and a minimum wage just puts people out of work. No magic saves them in the end.

    1. “A significant influx of low wage earners is going to lower wages at the low end of the wage distribution and is not going to somehow stimulate demand.”

      Of course not. Those brown people don’t eat, they don’t drive cars, none of that.

      1. I like the way we assume production is always local when it comes to immigration. Given that with the exception of food, few consumer products are still produced in the US, the fact that the immigrant consumes things like cars, consumer electronics and clothes isn’t bloody likely to be producing many jobs, unless we’re counting jobs produced in Mexico or China.

  15. Over time, I’ve realized that you can find a study that says virtually anything you want it to.

  16. Yes the Alt Right is wrong on immigration but at the same time the Right (not alt right) is also correct. The law states the method that a person can immigrate to this country. Also the UN recommends a person who is a refuge apply in the first nation for asylum where they will no longer be under the danger of their home country. Most of the immigrants entering the US are of the economic nature. Yes the US has and will benefit from them. But the US also has the right to limit the number and skills of economic immigrant that it takes in.
    Now if those who don’t like the law that the US now has then instead of breaking the law change it. When laws are broken without consequence causes all laws are held in lower value in the eyes of the residents of the nation.

  17. Wow, so Reason finally comes out against the baseline laws of economics. Impressive. Their shift to full blown Progressivisim is immanent.

    Generally speaking, if you expand the supply of anything you also reduce the price ceteris paribus.

    The author certainly tries to pretend that immigrants are a special case, but given that they’re using statistics from legal immigrants and extrapolating into a dissimilar group…well lets just say they’re either stupid or a liar. Take your pick.

    Fun Fact: IF you were to massively restrict immigration, U.S. wages would skyrocket.

    Bonus Fun Fact: U.S. wages skyrocketing via massively restricted immigration is also a stupid and destructive idea.

    Both sides of this argument are idiots, and our current immigration policy is actually centrist. This is why everyone hates it, of course.

    1. Also, just curious if the Mariel Boatlift folks ever paid back that 100 million (in 1980 dollars, a rough armchair calculation puts that at 310 million dollars in 1980) the government spent on them. I’m assuming that we’re saying that this money had a ROI in bringing those immigrants up to U.S. labor standards.

      Should we also assume that spending 310 million dollars on every 125,000 people will also be a net gain in labor productivity?

      This is perhaps why you’ll find that certain people on the left and right want more immigration. They believe the ROI is greater in giving immigrants money than letting Americans keep it.

  18. Now that we have this evidence, we can all stop with the “economic anxiety” that pollutes these threads and live in peace with our brown neighbors.

    Why do I think most of you will continue to serve warmed-over spoonfed horseshit to justify being anti-immigrant?

    I think if you think that too much of a supply of humans causes a decrease in wages (which is a collectivist problem anyway and not really the concern of individualists), then why not start with citizens? They’re already here, pumping out babies, and nobody’s telling them not to. I fact, many of you same goobers want to force them to pump out children against their will, at the hands of the federal government.

    What could possibly be the common thread in all this nonsense?

  19. A massive increase in the number of people does NOT raise demand as much as it raises supply. In case you morons forgot, in modern times production is so efficient that producer-workers are outnumbered by consumers by 10,000-1 if not even worse. Why would an increase of 10,000 people create so much demand that more than 1 job is created? This isn’t the 1700s, stuff isn’t made by freaking whittling. In modern times we’re clearly on the other side of the scale.

    Countries only “don’t have a right” to stop immigration if you’re an autistic libertarian extremist retard. In the real world, states exist and are charged with looking out for the welfare of their own people, and are given the power to do so. Anything predicated on an imaginary libertopia is not a valid opinion.

  20. Huh; funny. The last statistics I saw from the US Census showed that southern immigrants (by a 2/3rds margin) were using up more government resources (welfare systems) than any other category. Asian being the lone exception but even Asian immigrants took slightly more than native. Seems to me under those circumstances that immigrants aren’t all so terribly hard at work as this article seems to say they are.

  21. There’s no percentage in consequentialist ethics.

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