Supporting Immigration for the Right Economic Reasons
In March and April of this year, hundreds of thousands of marchers look to the streets across the country, protesting the United States’ current immigration laws and policies. In Los Angeles alone, more than 500,000 protesters convened on a single Saturday in what many media outlets called the largest protest in the city’s history. In response, politicians in Washington continued to debate new pro-immigration policies and updated proposed legislation to smooth the pathway to legal migration for illegal immigrants already in the country. As we go to press, this new, proposed legislation appears stalled in the Senate, but certainly we expect some type of modified bill to pass in the coming months.
Immigration is a topic that everyone in manufacturing should care strongly about. According to a study by the American Immigration Law Foundation, “natural population increase is unlikely to provide sufficient workers to sustain the labor force growth needed to maintain overall economic growth.” The U.S. Census Bureau estimates that the fertility rate in the U.S. is currently between 2.0 and 2.1 births per woman, which is not enough to replace the existing population. Given this statistic, unless you believe that the U.S. will achieve unprecedented breakthroughs in worker productivity, the only way that our economy will be able to continue to maintain current growth rates in the long term will be to embrace immigration.
A strong pool of labor is critical to support the domestic manufacturing workforce. The good news is that we still have time to act. Unfortunately, Europe appears to be beyond that stage. Europe has witnessed negative population growth in recent years, and its overall population is expected to decline from 727 million in 2003 to 696 million by 2025. This will put tremendous strains on a social welfare system which will have to use current tax dollars taken from a smaller pool of businesses and employees to fund benefits for retirees and the unemployed. Fortunately, the U.S. does not face such an extreme situation—nor do we have quite the same level of socialist entitlements to fund—but we need to be especially vigilant about defending pro-immigration policies to safeguard strong economic growth for future generations.
Those who oppose policies that make immigration and citizenship for foreign born workers easier typically argue that immigrants drive down wages. But it turns out the opposite is true. Pia Orrenius and Madeline Zavodny of the Federal Reserve Bank in a paper titled Does Immigration Affect Wages? A Look at Occupation-Level Evidence argue that there is “no evidence of adverse wage impacts on medium, and high-skilled native workers. In fact, increases in the newly arriving immigrant share of workers within professional and service-related jobs actually have slightly positive wage effects, suggesting there may be complementaries between native workers and newly arrived immigrants in the top skill categories.” The authors of the study also found that “newly arrived immigrants have no statistically significant negative impact on the wages of low-skilled natives”. Hence the typical arguments in which trade unions often put up that immigration hurts blue-collar U.S. citizens is in fact based on shoddy economic science.
Given these recent findings, on a micro-level, everyone involved in domestic manufacturing—from factory owners to hourly line workers—stands to benefit from strong, pro-immigration policies. But on a macro-level, our entire country stands to grow as well. Perhaps the best parallel to draw here is the relationship between free trade and human capital. Just as leading economists believe that keeping our trading borders open by reducing trade tariffs and quotas is critical to long-term economic growth, we must also keep our human capital doors open as well, for similar reasons. And not just for the top graduates of foreign universities, but for anyone with the drive and determination to build a better life for themselves and their family in our great nation.