Why Your Economic Argument Against Immigration Is Probably Wrong
By threatening to repeal the Deferred Action for Childhood Arrivals (DACA) program, President Trump has again elevated immigration to the national forefront.
The debate has quickly reverted to familiar territory: crime; taxes; the safety net; national identity; and, of course, wages and jobs for native-born workers.
In announcing the likely end of DACA, Attorney General Jeff Sessions claimed that the program was pushing Americans out of work and eating away at their paychecks. Sessions’ comments, coupled with cable news’ nearly nonstop commentary, gives the impression of a raging discourse among economists over the economic impact of immigration.
The thing is, the debate just isn’t there.
While economists rarely agree on much, immigration has found a rare near-consensus among the profession. The University of Chicago periodically surveys a balanced panel of well-regarded economists on topical issues. In a poll on highly skilled immigration, a whopping 95% of economists who answered thought that the average American would be better off with more immigrants; the other 5% were uncertain. The sentiment on low-skilled immigration was less overwhelming, but it was close.
Economists have found common ground on the topic because study after study reinforces the notion that immigration makes native-born Americans better off on a wide range of effects—innovation, the price of goods and services, the number of jobs, government finances, and even wages. Across the board, the overwhelming bulk of evidence points to improved livelihoods for Americans.
On innovation, the evidence is clear that immigration has a positive impact—from higher rates of patents to more entrepreneurship. For example, economists Jennifer Hunt and Marjolaine Gauthier-Loiselle found that a small increase in skilled immigration can boost patents on the order of 10% to 20%.
On costs, immigration lowers prices economy-wide, ranging from cheaper groceries to less expensive childcare. For instance, economist Patricia Cortes found that increasing low-skilled immigration by 10% would drop the price of services like gardening and housekeeping by about 2%.
On jobs, immigration boosts employment because immigrants are not only workers, but consumers, too. Some of the best evidence on this was raised by economists John McLaren and Gihoon Hong, who found that every immigrant to the U.S. creates 1.2 new jobs—almost all going to U.S. citizens. Here, McLaren and Hong aren’t measuring whether immigrants are taking jobs away from existing native-born workers, but are rather measuring the number of new jobs created by each new immigrant consumer. In the parlance of economics, this study points to the increase in demand for jobs, rather than the supply. (The study does not distinguish between the impact of skilled and unskilled immigration on jobs created.)
On government finances, the net impact of immigration is positive overall, although it has varying impacts depending on whether immigrants are authorized or unauthorized and, in particular, whether one is referring to the federal budget or state and local finances. (Analysis on this point tends not to distinguish between skilled and unskilled immigration.)
The federal government unambiguously wins with more immigration. Immigrants tend to be younger and pay more into the tax system than they take out in benefits; unauthorized immigrants often don’t receive social benefits despite paying into the system. To take one example, Social Security’s Chief Actuary found that in recent years, unauthorized immigrants contributed about 13 times more revenue into the program than they took out. Similarly, the Congressional Budget Office found that easing the journey to legal immigration would reduce the deficit by tens of billions of dollars.
The picture is less clear at the state and local level. Unauthorized immigration probably provides a slight net boost. For unauthorized immigration, states don’t benefit the same as the federal government, and instead likely see, on average, modestly higher cost driven by increased education spending. But it’s debatable as to whether and when this education investment gets paid back; a National Academy of Sciences review found that children of immigrants contribute, on average, more per capita in tax revenue than either their immigrant parents or native-born Americans.
The key point is that taken on the whole, immigrants put more into government coffers than they take out.
If you’re looking for a debate among economists about immigration, the closest you’ll find is on the topic of wages. The bulk of studies have found that low-skilled immigrants fulfill jobs that Americans don’t want—low-paying, physically taxing agricultural jobs—and that more immigration at all skill levels helps American-born workers raise their pay by becoming more productive. On the flip side, a handful of studies have found that immigration can drive down wages in local labor markets. Perhaps the most famous of these perspectives comes from economist George Borjas, who in a series of studies found that wages of lower-skilled U.S. workers take a substantial hit when low-skilled immigration rises.
In sum, economists pretty much agree that immigration boosts innovation and encourages entrepreneurship, lowers consumer prices, raises employment, and strengthens government finances overall. And while the evidence is mixed, immigration probably boosts wages too, although there may be some situations in which Americans’ paychecks fall a bit. Given the evidence, it’s no wonder economists tend to agree that immigration makes us all better off.
Focusing on DACA, the evidence is even more in favor of the program than immigration on the whole because of the relatively high skill level of beneficiaries. Individuals eligible for the DACA program tend to be higher-skilled than their ineligible counterparts, simply because the typical DACA-eligible immigrant arrived in the America at age six and was educated in the U.S. Put differently, sending DACA participants back to their home countries would be a waste of billions in human capital already invested in the young immigrants.
If you’re someone who opposes immigration in general, or DACA in particular, you probably have your reasons. Maybe you don’t like the demographic change that comes with immigration. Maybe you believe that immigration, especially the unauthorized variety, is a threat to national security. Maybe you’re convinced that DACA is unconstitutional. Just don’t cite the economy.
Benjamin Harris is a visiting associate professor at the Kellogg School of Management at Northwestern University and was formerly the chief economist to Vice President Biden.