Immigrants significantly help the US economy and they do not take American jobs or low wages, a new study says, debunking several assumptions to the contrary being aired in the election year.
“Immigration is integral to the nation’s economic growth. The inflow of labor supply has helped the United States avoid the problems facing other economies that have stagnated as a result of unfavorable demographics, particularly the effects of an aging workforce and reduced consumption by older residents,” a report by The National Academies of Sciences, Engineering, and Medicine says.
Released this week the report provides a comprehensive assessment of economic and demographic trends of U.S. immigration over the past 20 years, its impact on the labor market and wages of native-born workers, and its fiscal impact at the national, state, and local levels.
The report comes amid a raging political debate on beneifts of immigration. Democratic Hillary Clinton and Republican
Donald Trump have often clashed on the issue of immigration, with the latter expressing his vehement opposition to unauthorized immigration and linking immigrants from other countries to security and governance challenges.
“Over the long term, the impacts of immigrants on government budgets are generally positive at the federal level but remain negative at the state and local level — but these generalizations are subject to a number of important assumptions. Immigration’s fiscal effects vary tremendously across states.
“The panel’s comprehensive examination revealed many important benefits of immigration — including on economic growth, innovation, and entrepreneurship — with little to no negative effects on the overall wages or employment of native-born workers in the long term,” said Francine D. Blau, Frances Perkins Professor of Industrial and Labor Relations and professor of economics at Cornell University, and chair of the panel that conducted the study and wrote the report.
“Where negative wage impacts have been detected, native-born high school dropouts and prior immigrants are most likely to be affected. The fiscal picture is more mixed, with negative effects especially evident at the state level when the costs of educating the children of immigrants are included, but these children of immigrants, on average, go on to be the most positive fiscal contributors in the population. We hope our detailed analysis of the evidence will be of use to policymakers and the public as they consider this issue.”
The panel examined the available evidence on how immigration affects the U.S. labor market and economy and came to the following conclusions.
Effects on wages. When measured over a period of 10 years or more, the impact of immigration on the wages of native workers overall is very small. To the extent that negative wage effects are found, prior immigrants – who are often the closest substitutes for new immigrants – are most likely to experience them, followed by native-born high-school dropouts, who share job qualifications similar to the large share of low-skilled workers among immigrants to the United States.
Effects on employment levels. There is little evidence that immigration significantly affects the overall employment levels of native-born workers. Recent research finds that immigration reduces the number of hours worked by native-born teens (but not their employment rate). As with wage impacts, there is some evidence that low-skilled immigrants reduce the employment rate of prior immigrants – again suggesting a higher degree of substitutability between new and prior immigrants than between new immigrants and natives.
Effects of high-skilled immigrants. Until recently, the impact of high-skilled immigrants on native wages and employment received less attention than that of their low-skilled counterparts; but, as the number of high-skilled immigrant workers has grown, so too has interest in studying their role in the economy. Several studies have found a positive impact of skilled immigration on the wages and employment of both college- and non-college-educated natives.
Such findings are consistent with the view that skilled immigrants are often complementary to native-born workers; that spillovers of wage-enhancing knowledge and skills occur as a result of interactions among workers; and that skilled immigrants innovate sufficiently to raise overall productivity.
The role of immigrants in consumer demand. Immigrants’ contributions to the labor force reduce the prices of some goods and services, which benefits consumers in a range of sectors, including child care, food preparation, house cleaning and repair, and construction. Moreover, new arrivals and their descendants are a source of demand in key sectors such as housing, which benefits residential real estate markets.
Impacts on economic growth. Immigration is integral to the nation’s economic growth. The inflow of labor supply has helped the United States avoid the problems facing other economies that have stagnated as a result of unfavorable demographics, particularly the effects of an aging workforce and reduced consumption by older residents. In addition, the infusion of human capital by high-skilled immigrants has boosted the nation’s capacity for innovation, entrepreneurship, and technological change. Research suggests, for example, that immigrants raise patenting per capita, which ultimately contributes to productivity growth. The prospects for long-run economic growth in the United States would be considerably dimmed without the contributions of high-skilled immigrants.
Impacts on Federal, State, and Local Budgets : Beyond wage and employment considerations, policymakers and the general public are interested in the impact that immigration has on public finances and the sustainability of government programs. All parts of the U.S. population contribute to government finances by paying taxes and add to expenditures by consuming public services – but the levels differ. The panel conducted several analyses estimating the fiscal contributions and costs of first-generation immigrants, the second generation (native-born individuals with at least one parent who is an immigrant), and the rest of the native-born U.S. population (referred to in the report as the third-plus generation).
The report also sheds light on recent trends in Immigration:
More than 40 million people living in the United States were born in other countries, and almost an equal number have at least one foreign-born parent. Together, immigrants and their children comprise almost one in four Americans. The panel examined key developments and trends in immigration over the past two decades.
Education. Educational attainment has increased steadily over the past few decades for both recent immigrants and the native-born, although the former still have about 0.8 years less of schooling on average than do the latter. The foreign-born are overrepresented in both the population with less than a high school education and the population with more than a four-year college education, particularly among computer, science, and engineering workers with advanced degrees.
Labor force. The portion of the labor force that is foreign-born has risen from about 11 percent to just over 16 percent in the last 20 years. Immigrants and their children will account for the vast majority of current and future workforce growth – which, at less than 1 percent annually, is slow by historical standards.
Legal immigration. Annual flows of lawful permanent residents into the U.S. have increased in recent decades. During the 1980s, just under 600,000 immigrants were admitted legally (received green cards) each year. After the 1990 Immigration Act took effect, legal admissions increased to just under 800,000 per year. Since 2001, legal admissions have averaged just over 1 million per year.
Unauthorized immigration. The estimated number of unauthorized immigrants in the United States roughly doubled from about 5.7 million in 1995 to about 11.1 million in 2014. The number of unauthorized immigrants arriving in the U.S. reached more than 800,000 annually by the first five years of the 21st century but decreased dramatically after 2007; partly as a result, the unauthorized immigrant population shrank by about 1 million over the next two years. Since 2009, the unauthorized immigrant population has remained stable, with about 300,000 to 400,000 new unauthorized immigrants arriving each year and about the same number leaving.
