Editors' pick: Originally published Nov. 16.
How does illegal immigration affect American jobs?
This was one of the central issues of the 2016 presidential campaign, and many quarters treat it as a settled question. The assumption is that in taking jobs and doing them for less, illegal immigrants push down wages and employment for legal citizens.
This common wisdom is wrong.
In a report published recently by the National Academies of Sciences, Engineering and Medicine researchers found "little evidence" that immigration has any effect on native-born employment, except to the degree that it "reduces the number of hours worked by native teens."
On wages, the NASEM found:
"When measured over a period of ten years or more, the impact of immigration on the wages of native-born workers overall is very small… Some evidence on inflow of skilled immigrants suggests that there may be positive wage effects for some subgroups of native-born workers, and other benefits to the economy more broadly."
Yes, this report form the National Academies may be the most recent of its kind, but it is also consistent with previous research on the subject. Many other credible studies have found similar results. For example, a report published in the Southern Economic Journal not only found little negative impact on employment, but that laws preventing their employment (such as E-Verify) can actually raise the cost of doing business and slightly depress hiring.
In fact, to an increasingly unanimous degree, economists agree that, far from hurting native-born workers, illegal immigration actually helps the economy to a considerable degree.
So how is this possible?
One of the chief flaws with the narrative of stolen jobs is that it treats employment as a zero-sum game, when in fact the labor market is a highly elastic quantity. Among other influences, every income-generating worker also participates in the consumer market, creating opportunities for business expansion and hiring by spending money. This is particularly noticeable at the lower end of the income spectrum (where most illegal immigrants are clustered), as the poor tend to most readily spend money as it becomes available.
More importantly, though, it appears immigrants' advocates have been right about where illegal immigrants cluster as a labor force: they do, in fact, generally take jobs that Americans refuse to do.
"There are some occupations which are almost fully staffed by immigrants," said Giovanni Peri, an economist with the University of California, Davis. "So the manual jobs in agriculture, I would say that more than 80% of people working there are immigrants. These are not jobs that employ a lot of Americans."
"The idea that there is a fixed number of jobs, and when immigrants take the job that job is not there for an American, is totally wrong," he added. "The number of jobs in an economy are created and destroyed every year because the economy grows and shrinks, and the net number is a function of how many workers are available and how many firms and businesses are there to hire these workers."
In a well-publicized effort to prove the truth of this issue, the United Farm Workers launched the "Take Our Jobs!" experiment in 2010. The union placed an application to work as a field hand on its website, promising to "use our knowledge and staff to help connect the unemployed with farm employers."
Out of the half a million people the industry would need to replace illegal labor with U.S. citizens, the Take Our Jobs offer saw approximately 4,000 applicants and only "a few dozen" actual takers.
This was at a time when unemployment was 9.5%. With 14.6 million people out of work and a high profile campaign led by spokesman Stephen Colbert, farms still couldn't find citizens to staff their fields.
This story is true across sectors. In labor-intensive areas such as house- and groundskeeping, elder care and kitchen line work, illegal immigrants increasingly make up the bulk of a labor pool underserved even by out of work Americans. This population has grown, by now, to the point where it makes up a full 5% of the entire labor force.
Kick them all out and, in the words of celebrity chef Anthony Bourdain, "every restaurant in America would shut down."
The common wisdom is that illegal immigration is the cause, rather than the result, of American alienation from labor-intensive industries. With their willingness to accept pay at or below minimum wage, many people assume that immigrants have depressed working conditions to the point where citizens can't or won't accept work in these fields. The corollary to this assumption is that without illegal immigrants, conditions and pay would rise to meet local competition.
However this, too, seems to be largely incorrect.
"In this line of reasoning the presence of immigrants and their labor is the only variable," Peri said, "but there needs to be companies willing to pay these wages in order for wages to go up."
"Americans are moving out of these manual types of jobs in construction and services and agriculture because these are tough jobs that demand a relatively low level of education," Peri added. "So in aggregate, the supply for these jobs is shrinking."
Far from the belief that an unemployed American would take any job if only it were available, the reality seems to be that even among out of work citizens there is a reluctance to do the kind of work that illegal immigrants do. Many will instead spend weeks and months looking for work that's a better fit, rather than taking the first job that comes along.
For the economy at large this is a good thing, as it leads to workers who do jobs for which they're better suited and in which they're more likely to stay. The net result is increased productivity in the long run.
Overall this indicates that illegal immigration has very little impact on aggregate employment, except to boost economic prospects in some limited cases. As found by the NASEM study, by making bulk labor inexpensive, illegal immigration lowers the cost of operating a business. This has a net positive affect on employment overall by allowing businesses to succeed and hire additional employees in higher-skill positions.
"The idea is that each job created in a place is connected to another," Peri said. "Economists use the term job multiplier, that with each job created the firm grows and they hire in another position… The more people we have doing construction and back-end cooking work, the more people we need to enable those jobs. So more dishwashers mean more need for waiters and cooks."
"Because of this complementary effect of jobs, and because immigrants take jobs that Americans are moving out of, the data shows that there are no [net] negative impacts by immigration either on jobs taken by natives or on wages."
Except, he pointed out, for workers who do more or less exactly the same work that illegal immigrants do, and that's the crux of the problem. While American participation in many labor-intensive sectors has been falling for decades, that's not a universal truth. Particularly in construction thousands of citizens do indeed find themselves competing with foreign laborers trying to do the exact same work for pennies on the dollar.
The benefit to consumers and business development cannot be denied, but that's cold comfort to someone whose contracting business was destroyed by bricklayers willing to build the exact same patio for a fifth of the price. While these cases are rare on the national scale, their reality also cannot be denied.
Similarly, small communities have far more difficulty adapting to the influx of disruptive labor.
An urban economy is elastic enough to take advantage of the opportunities offered by inexpensive workers. With a larger, more dynamic consumer base, businesses can expand and spring up, creating complementary jobs that take advantage of the new marketplace. Native workers will benefit from access to higher skill, higher paying jobs, and the effect is a boost for both citizens and non-citizens alike.
Towns with already-stagnating economies do not have that same robust economic infrastructure. In an inelastic labor market, a person's lost job is often a lost job for the economy.
The trouble with illegal immigration, as with all macroeconomic analyses, is that the benefits emerge at a national level. It does not speak to specific individuals or communities, some of whom have absolutely been outcompeted by the arrival of low-cost labor. At the same time, however, these cases are still the exceptions to the rule.
An important rule is that, especially when it comes to jobs, political volume is often disproportionate to macroeconomic impact. While workers who are (or perceive themselves to be) outcompeted by illegal immigrants will argue passionately, those who have a job because of inexpensive labor don't see the line between immigration and their livelihood. As a result they're much less likely to advocate for the issue.
That doesn't make it any less true though, and it's crucial to remember that under any program of mass deportation those benefits would disappear. Businesses which depend on reduced costs and job sectors created by access to the 8 million undocumented workers in the U.S. would both suffer, and the result would be layoffs as the economy grows more expensive and less productive across the board.
Most credibly analyses agree that this would leave far more people unemployed than under current conditions.
And that's not to mention the impact on illegal immigrants who, it turns out, are people too.