Effect of Immigration on American Economy

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Table of Contents

Introduction
The US Economy
The Importance of Immigrant Workers
Conclusion
Works Cited

Introduction

The United States became a superpower in the early 20^th century through the hard work of two major components of American society, the native inhabitants and immigrants. But as one looks even further the United States became a nation through the combined efforts of people that originated from other continents.

The majority of were whites and they can trace their ancestry to Europe. African Americans on the other hand can trace their ancestry to Africa and the Caribbean Islands. In the past there was no problem with regards to mass movement of people into the US but in recent decades this nation saw an influx of immigrants from Asia, Puerto Rico and Mexico and the issue of immigration began to take shape. It is important to tackle this issue because immigration is both a positive and negative force when it comes to the US economy.

The issue when it comes to immigration is based on an economic principle that resources are not infinite. This statement can be expanded to mean that resources are fixed like a family of five sharing a loaf of bread. In an ideal scenario there is enough food for everyone but if this family grows in size not everyone will get enough nourishment.

The same thing can be said with the increasing number of non-native born workers coming into the United States and competing with native-born Americans for limited number of jobs. The competition between the two groups is intensified by the fact that immigrant works are willing to work for lower pay.

The US Economy

There are many who are saying that immigration is always a bad thing for America. The reason for saying so is embedded in this statement: “a surge of low-skilled immigrants should increase the supply of such workers, driving down wages at the expense of working-class Americans” (Henderson 1).

It does not require a genius to understand the forces of competition at work. Consider for instance a city’s construction industry. There are only a finite number of houses and buildings that can be built in a given time. Therefore, there are a fixed number of workers that are needed by construction companies. Imagine the sudden increase of immigrant workers into that particular city and in an instant native-born works are out of work. They are suddenly unemployed because they cannot compete with low wages.

The concern raised by many Americans is based on alarming numbers. According to the U.S. Census Bureaus’ March 2005 survey it was estimated that the United States is home to “11.5 to 12 million illegal immigrants and of that number 6.2 million come Mexico and about 2.5 million come from the rest of Latin America” (Forbes 1).

A few million spread all over the United States should not pose a threat to the job security of US citizens. But 12 million workers ready to accept low-pay can significantly alter the job market. In a weak economy the call to reduce the number of immigrant workers can be deafening.

The indirect impact of immigration to the economy is seen in the significant use of resources to prevent illegal immigrants from entering the country as well as the high cost of litigation to deport them. According to one report “Immigration courts are so jammed it can often take more than a year for a judge to rule on a deportation case” (Jordan 1).

If one factors in crime statistics one can also highlight another economic impact of immigration especially when it comes to undocumented aliens. However, from a macroeconomic point of view it is best to limit the discussion to the labor market.

The illustration provided earlier helps clarify the reason why many Americans are worried about the negative economic impact of immigrant workers. But there are those who are saying that a macroeconomic perspective of the issue can yield different results. On the other side of the fence there business leaders and economists who asserted that immigrant workers can be a boon to the US economy.

They supported their assertion with research findings that the impact of immigration “are difficult to disentangle from other factors that have dampened wage growth for most workers in recent decades, including new technologies, the decline in manufacturing jobs, the drop in unionization, globalization and recessions” (Henderson 1). In other words it is easy to blame immigrant workers because they are highly visible but if one uses a more scientific approach to the issue the results are surprising.

The Importance of Immigrant Workers

Economists and business leaders are saying that immigrant workers are important contributors to the US economy. They are valuable in terms of answering the employment call for menial jobs. According to one commentary, “They do jobs most Americans wouldn’t take, for wages they wouldn’t want” (Quintanilla 1).

For example, a restaurant must be well-managed and must offer sumptuous meals but if there are no dishwashers it is impossible to offer high-quality service. But there are only a few native-born Americans who are willing to work as dishwashers.

It is important to look at the big picture and at the same time determine the direct effect of allowing immigrant workers to live and work in this country.

A Harvard University study in 2004 discovered that “immigration – both legal and illegal – reduced annual earnings for American-born men by 3.7 percent, or nearly $1,700 … for those without a high school degree, the effect was double that, with wages down 7.4 percent” (Quintanilla 1). This study is undeniable proof that there are American citizens that are at a disadvantage when it comes to immigrant workers.

Aside from those who do not have high school diplomas, the segment of the population that are severely affected by illegal immigration are “blacks and native-born Hispanics, according to George Borjas, a Harvard University economist who has studied immigration for years” (Henderson 1). Although these research findings strengthened the argument of those who opposed the influx of immigrant workers, the research data also clarified the fact that not all Americans are negatively affected by this trend.

In addition many economists are saying that US consumers benefit from lower prices because of the low wages paid to immigrants but also from the fact that “lower-wage labor helps create more work for higher-skilled, higher-paid workers who are generally native born” (Isidore 1).

Consider for instance the following report from the U.S. Department of Labor: “at least half of the nearly 2 million crop workers in the United States are illegal aliens … the cheap labor they provide is crucial to the $30 billion U.S. farm industry” (Parker 1). Imagine a US labor market without immigrant workers and it is easy to see how devastating it would be if migrant workers are no longer allowed to enter the United States.

The Hispanics alone represent 25% of workers in the meat and poultry industry; 24% of workers in the drywall and ceiling tile installation industry; and 24% of dishwashers in US restaurants (Grow 1). These figures explain why “some US industries have become so dependent on illegal labor that a wholesale expulsion would be crippling” (Grow 1).

Another positive impact of immigration is that it can be used to deter relocation of businesses abroad. According to economists “the easier it is to find cheap immigrant labor at home, the less likely that production will relocate offshore” (Cowen 1). It would be a tremendous boost to the American economy if US-based companies no longer relocate their operations in China or India.

The fear that immigrant workers will steal available jobs away from Americans must be clarified even further. According to economists, the decade between 1960 and 2000, was the time period when “working-age native born U.S. residents without a high school degree fell to 12% from 50% of the population” (The Wall Street Journal 1).

The implication is that Americans must be thankful for the high number of immigrants because otherwise an overqualified native-born American will have to fill in a low-paying job (The Wall Street Journal 1). But more than that, it highlighted the fact that there is a specific segment of the population that are significantly affected by immigrant workers while the rest of the United States benefited extremely well because of their presence.

It cannot be denied that there are segments of the population that will be severely affected by the influx of immigrant workers in this country. Poorly educated Americans competing with low-paying jobs will be negatively affected. Native-born Americans without a high school diploma will also find it difficult to find work in farms, factories, and construction sites. However, the number of native-born Americans that have no high school diplomas are decreasing based on one research finding cited earlier.

From a macroeconomic standpoint however, the US economy is made more cost-efficient by the presence of migrant workers. Business owners are happy with the ability to hire manual laborers and low-pay workers for job that does not require specialized skills. It is a boon to their business because they can reduce the cost of production.

Thus, the goods and services can be priced competitively. If US companies can tap immigrant workers in order to create a cost-efficient operation then there is no need to move their business abroad. But analysis made at the macroeconomic level is rarely appreciated by the average American who continually expresses concern regarding the impact of immigration to this country.

A surprising development was reported by the New York Times that Mexican migration has “sputtered to a trickle due to various factors such as improving economic conditions in Mexico, border crime and economic slowdowns, and immigrant crackdowns” (Cave 1). If this trend continues then one can clearly see what will happen to the US economy if migrant workers are no longer interested to live and work in this country.

Conclusion

Immigrant workers are only a threat to a specific segment of the US population. This group is comprised of native-born Americans without a high school diploma and do not have the necessary resources to create their own business.

But overall immigrant workers are a boon to the American economy because they are willing to work for a job that many native-born Americans feel are below their standards. No one is excited to work as a dishwasher or a farm help but without farm workers and dishwashers the United States economy cannot expand and business leaders will never be able to provide low-priced but quality products and services.

Works Cited

Cave, Damien. Better Lives for Mexicans Cut Allure of Going North. The New York Times, 2011. Web.

Cowen, Tyler. How Immigrants Create More Jobs. The New York Times, 2010. Web.

Forbes. Immigration’s Impact. Forbes, 2007. Web.

Grow, Brian. Embracing Illegals: Companies are getting hooked on the Buying Power of 11 Million Undocumented Immigrants. Bloomberg-Businessweek, 2005. Web.

Henderson, Nell. Effect of Immigration on Jobs, Wages is Difficult for Economists to Nail Down. The Washington Post, 2006. Web.

Isidore, Chris. Illegal Workers: Good for U.S. Economy. CNN Money, 2006. Web.

Jordan, Miriam. U.S. Alters Policy on Deporting Immigrants. The Wall Street Journal, 19 Aug. 2011. Web.

Parker, Serena. Immigrants: US Economic Savior or Social and Economic Burden. Voice of America, 2005. Web.

Quintanilla, Carl. The Economic Impact of Immigration: Do Illegal Workers Help or Hurt the Economy? CNBC, 2006. Web.

The Wall Street Journal.Immigration Out of Sight: Ignoring Immigration Policy Does no Favors for the U.S. Economy. The Wall Street Journal. 2009. Web.

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