Immigration Reform: A Perfect Fit for the U.S. Economy

Payton Alexander Economic Prosperity, Uncategorized

Does immigration harm our economy?

Should we prevent additional job-seekers from crossing our borders?

Do immigrants compete with Americans for jobs?

The United States has a long and rich history of immigration, and questions like those above have perennially dogged supporters of the immigrants who wish to come to our country in search of opportunity.  Common as these doubts may be, much of the economic and historical evidence indicates that the answer to each of these questions is no.  Immigration does not harm our economy. In fact, it fits it perfectly.  Rather than believe that the number of jobs is stagnant in America, we should see immigration as a means of expanding the opportunity “pie” for all.  Immigrants do not compete with Americans for the same jobs; they create new opportunities.  Immigration does not harm the U.S. job market; it complements it.

Perhaps the most intractable immigration myth is that immigrants take jobs from native-born Americans.  This idea has motivated much anti-immigration policy in recent years, and has unfortunately grown ever more salient in the years following the recession.  At a time when so many Americans are struggling to find work, why should we allow even more job-seekers into the country?  A closer examination of the evidence reveals that far from taking jobs from Americans, immigrants actually create more jobs.  According to a 2012 report by the Kauffman Foundation, immigrants are nearly twice as likely as native-born citizens to start businesses in the United States.  While this number fell slightly from the year prior, the immigrant rate of entrepreneurial activity, and the Hispanic entrepreneurship rate in particular, remain significantly higher than the national average.  In fact, 27.1% of new entrepreneurs in that same year were immigrants, up from 13.7% in 1996.  Far from dragging down our job prospects, immigrants are increasingly driving the creation of new American businesses.

Chart 1

Those that are looking for existing jobs, do so in areas that complement gaps in the native-born work force.   Fewer Americans work in either very highly skilled or very low-skilled jobs compared to jobs in the middle.  The vast majority of Americans have at least a high school diploma but fall short of a graduate degree.  Their skills distribution is bulged out in the middle tiers, and the jobs for which they are qualified are for that reason concentrated in the middle classes.

Graph 2

The immigrant population is different.  Rather than competing for the same jobs as native-born Americans, immigrants overwhelmingly concentrate at skill levels occupied by the fewest natives.  While 10% of natives have less than a high school diploma, a whopping 30% of immigrants lack the same.  On the other hand, while another 10% of natives have graduate degrees, over 11% of immigrants do.

According to the Manhattan Institute, “immigrants increase economic efficiency by reducing labor shortages in low- and high-skilled markets because their educational backgrounds fill holes in the native-born labor market.”  In order for American businesses, and the economy as a whole, to react more efficiently to changes in the market, we must adopt a more flexible, market-driven immigration policy.  Immigration reform is a pressing economic need, and market-based reforms that allow immigrants to start businesses in our country, and allow American businesses to access the diverse range of employees that they need, are crucial to our future growth.  Rather than holding steadfast to myths about immigration reform, policymakers must embrace the growing research illustrating that immigration expands opportunities for both foreign and native born populations.  For the American economy, immigration is a perfect fit.