Business leaders are pushing Congress and President Obama to move forward with broad proposals for immigration reform, hailing the measures as an opportunity to expand the U.S. workforce. But another group stands to benefit as well: American workers.
Despite the common political narrative that immigrants cost American workers jobs and drive down wages, new arrivals to the United States actually deliver a modest bump in wages to all workers, according to a report from the Hamilton Project, an economic policy initiative of the nonpartisan Brookings Institution. The report found U.S-born workers see an increase of between 0.1 and 0.6 percent in their wages on average with a boost in immigrants.
Immigrant workers also bring skills with them that can often complement those of American workers, creating new jobs. In addition, the overall increase in population means growth in demand for goods, which in turn means more production and more money available for businesses to hire more workers.
“It makes the pie larger,” Michael Greenstone, director of the Hamilton Project, told The Huffington Post. “When immigration is comprised of people who are not exactly the same as people who are in the U.S., or there are opportunities for new amounts of capital, then there doesn’t have to be this negative impact on wages.”
That doesn’t mean everyone is a winner. The same report notes some estimates show that low-skilled workers, who compete the most directly with immigrants for jobs, can actually see their wages fall by as much as 4.7 percent due to increased immigration.
“I find the evidence pretty persuasive that low-skilled immigration has driven down the wages of low-skilled U.S.-born workers,” Gregory Hanson, a professor at the University of California at San Diego, told HuffPost.
Still, those low-skilled workers should be cheering lawmakers’ proposals to create an easier path to citizenship for undocumented immigrants, Hanson says. Undocumented workers vie with native workers for low-paying jobs in janitorial and food services; once they become citizens, they're more likely to pursue better-paying jobs, cutting down on competition and giving them more money to spread around the economy.
“Some of those individuals will do really well in the U.S. economy, but only if they’re no longer undocumented workers,” Hanson said.
Pia Orrenius, a senior economist at the Federal Reserve Bank of Dallas, said once undocumented workers gain citizenship, their wages will also likely go up, pushing up the wages of native workers.
“Native workers say [undocumented workers] have been undercutting our wages because they’ve been underpaid,” Orrenius said. “Now it will be more of an even playing field.”
While debate remains in the economic literature as to whether immigration helps or hurts the wages of American workers, it’s clear that the effect is relatively small. And it’s unlikely immigration reform would have a major effect on the current labor market, Orrenius says, because the economy has already adjusted to the immigrant population.
Still, an increase in immigrants would have an outsized effect on one group of Americans: high-skilled workers. Companies like Microsoft and Facebook have hailed immigration reforms that allow in more high-skilled immigrants that they say are needed to fill certain jobs. With those those personnel needs met, the companies can produce more and create new jobs for other high-skilled workers, Orrenius said.
In addition, if more immigrants are available to take on certain low-skilled work, more high-skilled U.S.-born workers can outsource jobs like childcare and head into the workforce, Robert Smith, an economics professor at Cornell University said.
At the end of the day, the biggest winners in the event of more immigration are businesses and consumers.
“Everyone is a consumer and we all benefit, because when you have more labor and labor costs go down, things are cheaper,” Orrenius said. “We as consumers have been spoiled by lots of immigration driving down the prices of goods.”
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