Immigration and Its (Non-)Effect on Wages

By April 11, 2006General

Rode the Washington Metro home from work last night, a train packed with some of the estimated 200,000 immigrants who were out on the Mall as part of the immigration rally. Most were carrying American flags, as carry them they should. They are Americans, after all. Sat next to a guy from El Salvador, a citizen, holding his 17 month-old son sound asleep in his arms. “He’s an American”, he said, nodding toward the boy. A well-dressed Anglo guy nearby smiled. “So are you.”

Got home in time for the NBC News. Brian Williams was well-nigh screaming into his TelePrompTer. Over to Carl Quintanilla (pause for irony here) for the report. What’s this? Immigrants depress American wages! He even quotes a Harvard study, so it must be true!

Ah, but as regular blog readers know, this Harvard study more or less stands alone in its finding and it’s been roundly criticized. We noted both the Washington Post and Wall Street Journal editorials last week on the topic. They were far less hysterical than Brian Williams (and thus infinitely less newsworthy) and made the point that’s been obscured here, i.e., that in fact, immigrants do not drive down wages for Americans. Or let’s just say that the facts don’t support the widely-held canard, if anyone still cares about the facts.

Says the Journal:

“[M]ost economic studies have found only a very small negative immigration impact on the wages of even the lowest-skilled American workers. Restrictionists advertise the study by Harvard”s George Borjas, who found the widest impact across all income levels. But Diana Furchtgott-Roth of the Hudson Institute points out that his study assumes that immigrants and native-born workers are perfect substitutes. In the real labor world, immigrants often fill niche markets and bring varied skills.

Immigrants also increase the demand for labor, not just the supply. That is, they are also consumers who create jobs by buying goods and housing here. Former Federal Reserve Chairman Alan Greenspan often pointed out how immigration has been driving housing demand. And if immigrants really were “stealing” American jobs, we wouldn’t have had the remarkable job growth of recent years.

Perhaps the biggest fallacy is that the same jobs that foreign workers now fill would exist in their absence. That’s not likely to be the case. Seal the border, and what you’d see is not the same number of jobs at higher wages but, rather, fewer of these types of jobs overall in the U.S. This is certainly the case in parts of Europe, where some services (such as dry cleaning) are rare and cost a fortune.”

We understand that immigration is an issue that raises the ire of many people. But let’s have a debate that’s based on fact and not on fear.

Join the discussion One Comment

  • It is a real shame that blog posts like this are not more common at Redstate and elsewhere. Maybe it is time for the House Republicans to hear from the business community that their obstinance on this issue will have a price.