Economists: Having fewer immigrants doesn’t guarantee more jobs
Prevailing view is that immigration improves lives
WASHINGTON — When the federal government banned the use of farmworkers from Mexico in 1964, California’s tomato growers did not enlist Americans to harvest the fragile crop. They replaced the lost workers with tomato-picking machines.
The Trump administration on Wednesday embraced a proposal to sharply reduce legal immigration, which it said would preserve jobs and lead to higher wages — the same argument advanced by the Kennedy and Johnson administrations half a century ago.
But economists say the tomato story and a host of related evidence show that there is no clear connection between less immigration and more jobs for Americans. Rather, the prevailing view among economists is that immigration increases economic growth, improving the lives of the immigrants and the lives of the people who are already here.
“The average American worker is more likely to lose than to gain from immigration restrictions,” said Giovanni Peri, an economist at the University of California, Davis.
The Trump administration is proposing sharp reductions in the number of skilled and unskilled workers who are allowed to become permanent residents, halving annual immigration from the current level of roughly 1 million people a year.
“This legislation demonstrates our compassion for struggling American families who deserve an immigration system that puts their needs first,” President Donald Trump said.
The proposal revives elements of President George W. Bush’s effort to rewrite federal immigration law in 2007, and it appears no more likely to succeed. It already has drawn sharp opposition from Democrats and from some Senate Republicans.
Economists say that skilled immigrant workers are clearly good for the U.S. economy. The United States could import computers; if it instead imports computer engineers, the money they earn is taxed and spent in the United States. Moreover, some of those engineers invent new products — or even entirely new technologies.
The administration says it still wants high-skilled workers, and it has described the cuts as targeted at low-skilled immigrants. It would still issue roughly 140,000 merit-based green cards each year, while sharply reducing the number of people admitted as family members of current residents.
But about one-third of those family members who received green cards since 2000 had college degrees, Peri said. “People have an outdated image” of legal immigration, he said. “It’s mostly Asian, Indian, Chinese people who are coming to do mid- and high-level professional jobs.”
George J. Borjas, the Harvard immigration economist whose work is the only evidence that the administration has cited as justifying its proposals, said in an interview on Wednesday that there was no economic justification for reducing skilled immigration.
“That is a political decision,” he said. “That is not an economic decision.”
The economic effect of lowskilled immigration is more hotly debated. Borjas is the foremost proponent of the view that lowskilled immigration reduced the incomes of U.S. workers without high school degrees. He estimates the total effect at 3 percent to 5 percent of income during the last two decades.
Economists agree that other factors, notably technological improvements, are primarily responsible for the broader deterioration in the fortunes of the American working class.
Borjas also argues that lowskilled immigration does not produce clear benefits for the economy as a whole. He said that the benefit of low-cost labor was offset, or even slightly outweighed, by the cost of providing government services to immigrants.
The primary beneficiary of immigration is the immigrant, Borjas said.
“If all you care about is economics, then it’s really clear,” he said. “But do you want to live in a country that only cares about money, or do you want to live in a country that has a legacy of being generous to immigrants? Maybe you want a compromise.”
Other economists, however, have sharply disputed Borjas’ research. Most studies put the negative effect on low-skilled wages closer to zero, Peri said.
One key reason is that immigrants often work in jobs that exist only because of the availability of cheap labor. Picking tomatoes is a good example. California farmers in the 1950s and early ’60s relied on Mexican workers even though machines were already available. In 1964, 97 percent of California tomatoes were picked by hand.
The U.S. let farmers hire Mexican workers on seasonal permits, a program that began as a response to labor shortages during World War II. By the early 1960s, the program was politically untenable.
“It is adversely affecting the wages, working conditions, and employment opportunities of our own agricultural workers,” President John F. Kennedy declared in 1962. President Lyndon B. Johnson ended the program in 1964.
By 1966, 90 percent of California tomatoes were being picked by machines.
“The story that ‘when labor supplies go down, wages go up’ is a cartoon,” said Michael A. Clemens, an economist at the Center for Global Development who has studied the end of the Mexican guest-worker program, which was known as the Bracero program.
Similarly, in the present day, some U.S. dairy farmers warn that the nation needs to continue importing farmworkers or it will end up importing milk.
Low-skilled immigration can also provide a boost to the rest of the economy.
A 2011 study found that highskilled women were more likely to work in cities with high levels of immigrants, because families could pay for child care or elder care.
The National Academy of Sciences made an ambitious effort to assess the bottom line in 2016. It concluded that the average immigrant cost state and local governments about $1,600 a year from 2011-13 — but the children and grandchildren of immigrants paid far more in taxes than they consumed in public services.
More broadly, the report concluded that immigration benefited the economy.
A recent analysis by economists at JPMorgan Chase concluded that halting immigration completely would reduce annual economic growth by 0.3 percent.
The Trump administration’s immigration proposal would also change the rules for merit-based immigration. It wants to create a point system that would give higher priority to applicants based on factors including age, job skills and the ability to speak English.
Canada and Australia use similar points-based systems to pick immigrants.
Some economists argue that it would be better to just let the market make decisions, for example, by using a system like the H-1B visa program that allows companies to request permission for workers to come to the United States on a temporary basis.
Also, Clemens said that pointsbased systems tended to prioritize education. That might not be advantageous to the economy when in fact employers also need workers with fewer skills. He noted that the Commerce Department has projected that demand for workers without a college education will significantly outstrip the growth of the working-age population.