Don't Blame Immigrants for Your Flat Paycheck
Does immigration hurt American wages? Some Republican presidential candidates seem to think so.
Rick Santorum wants to reduce legal immigration by 25 percent to boost wages. Scott Walker has hinted that he'd support something similar. Because Walker's a top-tier candidate, his comments have led to some shocked reactions. Some pundits have labeled his comments extreme, and others have denied that immigration has any worrisome effect on wages at all.
Both sides of this debate are overstating their case.
The restrictionist side has been citing some dubious evidence. Senator Jeff Sessions says that real hourly wages are lower than they were in 1973, and suggests that immigration bears much of the responsibility. Santorum says that Americans in the middle of the income spectrum have lost ground because over the past two decades "we've brought in roughly 35 million unskilled workers ... to compete against you."
Use better measures of wages and inflation, though, and the apparent decline since 1973 becomes a large gain. And even the go-to economic expert for restrictionists, Harvard professor George Borjas, doesn't say that immigration depresses wages for middle-income workers. He finds that it slightly reduces the earnings of native-born college grads and significantly reduces the earnings of native-born high school dropouts. But he also finds that it has a modestly positive effect on the earnings of the majority of American workers who got jobs after finishing high school or attending college for a while.
If you want to know why middle-class living standards aren't rising as fast as they used to, in other words, don't look to immigration for an explanation.
Immigration advocates tend to offer two responses to Borjas. One is to minimize the importance of his findings. In the Daily Beast, Veronique de Rugy writes that native-born Americans without high school diplomas are a small minority and that their wages fall by "only 5 percent." She cites studies saying that native-born workers in general saw their wages rise between 0.4 percent and 0.6 percent as a result of immigration. These gains, she thinks, outweigh any negative effect immigration may have on the least-educated workers. But that's a tradeoff that plenty of people see differently.
Other immigration advocates point to happier research about high school dropouts. Two often-cited economists, Gianmarco Ottaviano and Giovanni Peri, estimate that immigration has a very small effect on native-born workers without a high-school diploma, reducing their income by at worst 0.1 percent and possibly even increasing it.
But the same study found that new immigration reduced the wages of previous immigrants by 6 percent. Does that matter? Those earlier immigrants are probably still doing better than they would be in their home countries, even if they'd be doing better still with fewer new competitors. On the other hand, a smaller but more successful population of immigrants might be better than a larger and less successful one -- especially since the latter group would be more dependent on government assistance.
Here's how I weigh the issue. Higher immigration brings big benefits to immigrants and modest benefits to the economy as a whole. It poses a risk of making life worse for Americans with low levels of schooling. And only a small minority of Americans is in favor of it. The smaller the number of immigrants, on the other hand, the more likely they are to assimilate culturally, economically and politically, and the less likely they are to place a strain on American society.
It seems to me then, for all those reasons, that we should refrain from increasing immigration and should perhaps even reduce it. But one thing lower immigration will not do is boost middle-class paychecks.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Ramesh Ponnuru at email@example.com
To contact the editor on this story:
Timothy Lavin at firstname.lastname@example.org