With lawmakers finally coming together to talk about immigration reform, the debate over who exactly should be allowed into the country is heating up. One of the most common arguments in this debate is that immigrants hurt native-born American workers. But economic research shows that immigration may in fact boost the paychecks of U.S.-born workers.
The argument seems to fly in the face of economics 101: a greater supply of labor shouldn't raise the price of labor. But not all workers are created equal, so when foreign-born workers fill particular spots in the labor market where there is a necessity for work, it frees up U.S.-born workers to take other positions.
"Immigrant workers are not merely substitutes but rather they have a set of skills that allow them to complement native-born Americans. It allows native-born Americans to be more productive at their jobs," says Michael Greenstone, director of the Hamilton Project, a division of the Brookings Institution that studies economic policy.
If a foreign worker is a taxi driver, then, it can free up a U.S.-born worker to be the taxi dispatcher, Greenstone says. The immigrant construction worker frees up another worker to be the site supervisor. However, the argument carries over to the high-skilled end of the spectrum, as well.
"Imagine you have a biologist, and he has a kind of knowledge that is pretty unusual in the U.S. labor force where employers find it really difficult to find someone with a particular set of skills. He might actually complement other workers who work together on a specific project," says Madeleine Sumption, a senior policy analyst at the Migration Policy Institute, a D.C.-based think tank.
In a 2010 policy memo, Greenstone and his Hamilton Project colleague, Adam Looney, used a chart to show the effects of immigration on wages.
(Source: The Hamilton Project)
The chart shows two different recent studies' conclusions on the matter. In both cases, as the far-right columns show, economists found that immigration provides a slight boost to U.S.-born workers' pay, on average.
The breakdown of where those wage benefits land shows that the wage effects of immigration are uneven, and academics dispute exactly how sizable those effects are at all parts of the spectrum.
"It tends to be the case that it's the people at the higher end of the labor market who gain a lot and people at the low end are largely unaffected and they may lose out in some cases," says Sumption. That is because, at the low-skilled end of the spectrum, foreign-born workers may be more likely to displace low-skilled native-born workers than other workers, says Sumption. Still, that substitution may be very small in many cases. A 2008 study, for example, estimated that one immigrant farm worker in California, for example, displaced only 0.0123 domestic workers and significantly boosted production.
Still, there are other economic benefits that come alongside a boost in wages. A larger supply of ready and willing workers may inspire a retail or store or restaurant to open more outlets, potentially boosting economic output overall. And when immigrants do low-skilled jobs like child-care or gardening, it lowers the cost of those jobs, providing a standard of living boost, says Greenstone. That sounds like a cold reality—cheap immigrant labor boosts standards of living—but this is the very foundation of particular industries.
"I think the way to think of it is no one wants to do those jobs," he says. "So I think the alternative is that they just don't happen. In some industries it seems that those industries actually would not exist without immigrant labor."
Indeed, some experts argue that American agriculture would face devastating consequences without immigrant workers.
Still, it is worth noting that the wage effects of immigration appear to be relatively small—less than 1 percent in both studies cited above. For a worker making $50,000 a year, that's less than $500.