Evidence Shows that Immigration Does Not Increase Unemployment

Originally posted at Immigration Impact, a project launched in 2008 by the American Immigration Council to help shape and develop a rational conversation on immigration that shifts the terms of the debate towards achieving workable and effective comprehensive policy reform.

Busting the Myth of the “Job Stealing” Immigrant

by Walter Ewing

Some critics of the immigration bill now winding its way through the Senate claim that it would increase

unemployment among native-born workers—especially minorities—by adding more immigrants to an already tight job market. In fact, both the legalization and “future flow” provisions of the bill would empower immigrant workers to spend more, invest more, and pay more in taxes—all of which would create new jobs. Contrary to the simplistic arithmetic of immigration restrictionists, employment is not a “zero sum” game in which workers compete for some fixed number of jobs. All workers are also consumers, taxpayers, and—in many cases—entrepreneurs who engage in job-creating economic activity every day.

If immigrants really “took” jobs away from large numbers of native-born workers, especially during economic hard times, then one would expect to find high unemployment rates in those parts of the country with large numbers of immigrants—especially immigrants who have come to the United States recently and, presumably, are more willing to work for lower wages and under worse conditions than either long-term immigrants or native-born workers. Yet there islittle apparent relationship between recent immigration and unemployment rates at the regional, state, or county level. An IPC analysis of 2011 data from the American Community Survey found that, at the county level, there is no statistically significant relationship between the unemployment rate and the presence of recent immigrants who arrived in 2000 or later.

The principal reason unemployment is not the automatic byproduct of immigration is that immigrants and native-born workers fill different kinds of jobs which require different skills. Even among less-educated workers, immigrants and native-born workers tend to work in different occupations and industries. If they do work in the same occupation or industry—or even the same business—they usually specialize in different tasks, with native-born workers taking higher-paid jobs that require better English-language skills than many immigrant workers possess. In other words, immigrants and native-born workers usually complement each other rather than compete. As data from the 2012 Current Population Survey illustrates, most foreign-born workers differ from most native-born workers in terms of what occupations they work in, where in the country they live, and how much education they have. What this means in practical terms is that most native-born workers are not directly competing for jobs with immigrant workers because they are in different labor markets.

This is true even in the case of immigrants and African Americans who live in the same urban areas. An analysis of 2010 Census data by Saint Louis University economist Jack Strauss found that cities with greater immigration from Latin America experience lower unemployment rates, lower poverty rates, and higher wages among African Americans. Latino immigrants and African Americans fill complementary roles in the labor market—they are not simply substitutes for one another. In addition, cities which have suffered the effects of declining population are rejuvenated by an inflow of Latino immigrants who increase the labor force, tax base, and consumer base.

The grim job market which confronts many minority workers is the product of numerous economic and social factors: the decline of factory employment, the deindustrialization of inner cities, and racial discrimination, among others. Immigration plays a very small role. According to Yale University economist Gerald D. Jaynes, the impact on less-educated native-born workers of competition with immigrant workers “is swamped by a constellation of other factors (such as declining factory jobs and other blue-collar employment).” Jaynes and a colleague “launched a large-scale statistical analysis to measure immigration’s effects on wages and employment of natives nationwide. To our surprise, no matter how we approached the data, our results showed either no effects or very modest effects for the least-educated black men.”

Immigration restrictionists conveniently overlook the fact that immigrants create jobs as consumers and entrepreneurs. Immigrant workers spend their wages in U.S. businesses—buying food, clothes, appliances, cars, etc. Businesses respond to the presence of these new workers and consumers by investing in new restaurants, stores, and production facilities. And immigrants are 30 percent more likely than the native-born to start their own business. The end result is more jobs for more workers. Economist Giovanni Peri of the University of California, Davis, concludes that “immigrants expand the U.S. economy’s productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity,” and “there is no evidence that these effects take place at the expense of jobs for workers born in the United States.”

Critics of the Senate bill who raise the specter of mass unemployment need to learn how labor-force dynamics really work.

Posted in: business,Economics,Employment,Integration