Immigrants Boost Wages for Everyone

Not long ago, prominent Democratic leaders like former President Barack Obama and progressive pundits like Paul Krugman publicly questioned what unskilled, low-paid immigrant laborers meant for American workers and the U.S. economy. Today, however, Democrats are almost totally unified in their support of open borders.

That’s the basis of Peter Beinart’s argument in The Atlantic that Democrats have lost their way on immigration. Beinart cites much-debated research that suggests low-skill immigrants depress the wages of less-skilled Americans, and he questions other findings that immigrants of all skill groups benefit U.S. cities and the American economy as a whole.

As I’ve written here before, turning away the talented people who immigrate to the United States would be a foolish, self-inflicted wound to the American economy. But it’s not just high-skilled immigrants who give the country a leg up: a diverse population of immigrants improves the economy, for everyone. That’s what a new study in the Journal of Economic Geography concludes in the closest look yet at the effects of immigration on U.S. workers, cities, and the economy. The study by Thomas Kemeny of the University of Southampton and Abigail Cooke of the University of Buffalo looks not only at the overall effects of immigration broadly, but at the specific effects of immigrants with different levels of education, wages, and skills—both high-skill and low-skill immigrants—on the labor market, metropolitan areas, and the nation as a whole. Their findings confirm immigration’s economic benefit to the U.S. and even counter misconceptions about its drawbacks.

Immigrant Diversity Raises Productivity Across the Board

It’s not just about having immigrants in the workforce, but about having a diverse pool of immigrants. Kemeny and Cooke find that when immigrants in a metro area come from many different countries, the wages and productivity of the metro area rises across the board.

In statistical wonk-speak, their models find that a one-standard-deviation increase in a workplace’s immigrant diversity is associated with a 1.6 percent rise in the wages of the average worker there. And that effect is more pronounced on a larger scale: a one-standard-deviation rise in a metro area’s immigrant diversity is associated with a 5.8 percent increase in that area’s wages.

This key finding holds up after controlling for a wide range of factors, such as the size and education of metro areas and the kind of industries and firms that make up the economy. In other words, the finding is not subject to any sort of bias in the data or quirk in their statistical analysis. The authors write that the evidence leads definitively to the point that “immigrant diversity in U.S. cities and workplaces has an independent positive influence on worker productivity.”

Immigrant Diversity Benefits High- And Low-skill Workers Alike

Immigrant diversity not only leads to higher wages on average and overall, it also leads to higher wages for workers at different skill levels and at different positions in the labor market. Kemeny and Cooke find consistent evidence of a positive effect of immigrant diversity across each wage quartile.“To the extent that we are observing a social return from immigrant diversity, this return is evenly spread across a very wide spectrum of earners,” the authors write.

Increased diversity of immigrants across metros even correlates with increased earnings for native-born white males and for workers at manufacturing plants—that’s a sharp and definitive contrast with the prevailing anti-immigrant narrative.That said, they do find that immigrant diversity of high-wage, higher-skill workers plays a bigger role and has a bigger effect than that from lower-paid, less-skilled immigrants. Across metropolitan areas, the diversity of high-wage immigrants is positively associated with higher wages on average and for each of the four groups of workers. Places with greater diversity of high-skilled immigrants have higher wages overall and for low-, mid- and high-skill workers alike. But the diversity of lower-skilled, lower-paid immigrants has no statistically significant effect either on wages overall or on wages for the various skill groups of workers.

Even though the diversity of higher-skilled immigrants in workplaces has a bigger effect on wages in workplaces (as opposed to across metros overall), the diversity of lower-skilled immigrants has a positive effect—albeit a smaller one—on workers’ average wages across the four skill groups. There is no evidence that immigrants depress the wages of workers whether they work in well-paid high-skill jobs or low-paid less skilled jobs. Ultimately, this is some of the most powerful evidence yet that immigrants are good for cities and for the U.S. economy as whole.

It is easy to blame immigrants for the economic problems of the U.S. economy, the low wages of low-skilled workers, rising economic inequality, growing geographic inequality, and the challenges of hard-hit cities and regions. But the reality is that those problems stem not from immigrants but from the broader structural economic transformation that has led to the decline of middle class jobs and the bifurcation of the economy and the labor market into a small set of high-paid knowledge jobs and a much broader set of low-paid service jobs.

All kinds of immigrants benefit the U.S. economy. And places with more and more diverse groups of them perform better and have higher productivity and wages. High-skill immigrants bring talent and ambition that make them disproportionate contributors to our scientific and technical base and innovative and entrepreneurial economy.As I have long argued, what has made the U.S. the most innovative nation in the world is not American ingenuity, but that talent and entrepreneurial zeal of immigrants. Less-skilled immigrants, like my own grandparents who came to this country from Southern Italy with virtually no education, bring their own talent and ambition, do the kinds of dirty and dangerous jobs Americans don’t want to do, and bring skills and capabilities that bolster those of our own workforce. Many, if not most, of our large cities would not be growing at all if it wasn’t for immigrants.

Immigrants are the very backbone of American innovation, the American economy and the American Dream. It would be disastrous economically for the Democrats to cave in to Trumpism on this. To close our borders and turn our backs on them will end up hurting us as well as hurting them.