Study: Immigration Drives Wages Up, Actually

The latest in a growing mound of evidence that immigration is a net economic gain.

By Seth Freed Wessler Aug 31, 2010

New research released this week by the Federal Reserve Bank of San Francisco finds no evidence that new immigrants push U.S.-born workers out of the labor market. To the contrary, the study shows that immigration actually helps grow the economy and pushes wages up for all workers. It’s the latest in a growing body of economic research showing that immigration offers a net gain.

The report’s author writes:

[T]otal immigration to the United States from 1990 to 2007 was associated with a 6.6% to 9.9% increase in real income per worker. That equals an increase of about $5,100 in the yearly income of the average U.S. worker in constant 2005 dollars. Such a gain equals 20% to 25% of the total real increase in average yearly income per worker registered in the United States between 1990 and 2007.

The main reason that immigrants don’t have a negative effect on the employment of U.S.-born workers is that the two "tend to take different occupations," the report explains.  Immigrants work in specific, segregated industries, and when immigrants and U.S.-born workers are employed in the same industries they tend to work in different kinds of jobs.

Significantly, language is one of the reasons that job divide emerges. The report’s author explains:

Because those [workers] born in the United States have relatively better English language skills, they tend to specialize in communication tasks. Immigrants tend to specialize in other tasks, such as manual labor. Just as in the standard concept of comparative advantage, this results in specialization and improved production efficiency.

Kevin Drum at Mother Jones observes the irony:

The very mechanism that provides the productivity boost — the fact that immigrants don’t speak English well and therefore push native workers out of manual labor and into higher-paying jobs — is precisely the thing that most provokes the immigrant skeptics. They all want immigrants to assimilate faster and speak English better, but if they did then they’d just start competing for the higher paying jobs that natives now monopolize.

Certainly, the new study is not all there is to say about the matter. As Elise Foley at the Washington Independent notes:

Economists say some workers, particularly in low-skilled jobs, could see lower wages due to an influx of immigrants. Some argue the exploitation of undocumented workers drives down wages for everyone in certain sectors — which they say is why comprehensive immigration reform is vital.

The notion that immigrants threaten the economic well-being of US-born workers is a well worn refrain in the immigration restrictionist lexicon. For the moment it appears to have taken second fiddle to a set of attacks having to do mainly with immigrant criminality. But the jobs argument is not going anywhere anytime soon.

Whatever impact immigration has on the labor market–and the evidence is strong that it is a net positive–we’re likely going to keep hearing the same arguments cast and recast. That’s because the movement against immigration isn’t really about the jobs or about national security or about drugs or crime. It’s really about fear; about the mounting anxiety that shifting racial demographics will unsettle relationships of real or perceived power and privilege that are marked by race. And new numbers aren’t going to unsettle these anxieties.