America’s GDP growth rate is hovering around 2 percent annually, not high enough to create a demand for discouraged workers who have dropped out of the labor force. Would additional immigrants hurt or, possibly, help?
It is paradoxical that employment in the United States could be improved by bringing in workers from abroad, but only if you think employment is a zero-sum game. In reality, employment is not a fixed pie to be divided, with more for some resulting in less for others. Rather, employment is a dynamic cycle always poised for growth. Greater immigration would allow the US economy to operate more efficiently, creating more jobs for native-born Americans.
US businesses founded by immigrants employed approximately 560,000 workers and generated $63 billion in sales during 2012. Immigrants have a higher propensity to start businesses than native-born Americans. For example, 44 percent of high-tech Silicon Valley businesses had at least one immigrant founder.
Immigrants tend to have different skills from the native-born population that complement the skills of the US labor force, as documented by London School of Economics professor Gianmarco Ottaviano and University of California at Davis professor Giovanni Peri. As a result, a percentage point increase in immigrant scientists and engineers raises the number of patents per capita by as much as 18 percent, according to Professors Jennifer Hunt (Rutgers) and Marjolaine Gauthier-Loiselle (Princeton). Immigrants make the economy more efficient by reducing bottlenecks caused by labor shortages, both in high-skill and low-skill areas.
Statistically, the educational attainments of native-born US workers are distributed in a bell-shaped curve. Many Americans have high school or college diplomas, whereas relatively few adults lack high school diplomas and even fewer have doctoral degrees, particularly in math and science. In contrast, immigrants’ educations are distributed in a U-shaped curve, with disproportionate shares of adults offering manual labor skills or advanced science and engineering degrees, but few in the middle.
A quarter of immigrants have not completed high school, compared to 5 percent of the native-born labor force. On the other side of the bell curve, 56 percent of all engineering doctoral degrees, 51 percent of computer science doctoral degrees, and 44 percent of physics doctoral degrees were awarded to foreign-born students. This distribution describes a complementary workforce.
Those skills and job preferences complement rather than substitute for native-born workers, too, making US workers more productive and attracting capital that takes advantage of new opportunities for growth. Although immigrants will be substitutes for some primarily low-skilled workers, many of whom are also immigrants, studies show that the negative effect on such workers is much smaller than the positive effect for everyone else. The economy as a whole gains, with substantially more winners than losers, even in the short term. In our society, this makes it possible for the winners to compensate those who lose from immigration and still come out ahead.
Immigrants are especially important in the STEM – which stands for science, technology, engineering and mathematics – fields. The increase in the US STEM workforce since 1995 is largely attributable to immigrants, according to William Kerr of Harvard and William Lincoln of the University of Michigan. Other scholars have analyzed the significant increase in research productivity among US science and engineering departments and discovered it is largely due to the increased presence of foreign students.
According to a May 2014 working paper by Giovanni Peri and Kevin Shih, University of California at Davis, and Chad Sparber, Colgate University, more STEM immigrants would raise the wages of native workers. Increasing the share of foreign STEM workers by one percentage point as a portion of a city’s total employment would increase the wages of native, college-educated workers by 7 to 8 percentage points. Even native workers without college credit would get a raise, though only of 3 to 4 percentage points.
Among professionals, foreign-born workers are employed in computer and mathematical occupations at a higher rate than native-born workers, 3.9 percent versus 2.5 percent. Native-born workers are more than twice as likely to be employed in legal occupations. In service-oriented fields, 7.7 percent of immigrants work in food service, compared with 5.3 percent of native-born workers. Only 3 percent of native-born Americans are employed in building, groundskeeping, and maintenance, whereas 8.6 percent of immigrants are so employed.
America’s goal should be an immigration policy that fosters economic growth. That requires finding a way to allow people who want to work here to come legally. Since most immigrants’ skills are complements to the skills of native-born Americans, this would increase the efficiency of our economy and create jobs for those Americans. With our economy in a slow recovery, we should be giving visas to those with innovative ideas who can help move our economy forward. This would prevent offshoring of American manufacturing and encourage economic growth at home.
The research leads us to a clear path forward. Congress should facilitate the process of immigration for high- and low-skill workers. We are turning away foreigners who would help, not hurt, the recovery at a time when economic growth and international competitiveness are major concerns.