The Impacts of Immigration on Job Competition

Introduction

America is known for its ethnic and racial diversity as well as the people’s relative acceptance of immigrants. According to research conducted by the Pew Research Center^[1], just about every country in the world is represented by more than the 40 million immigrants in America today (Lopez). Despite this, President Trump “supports ending chain migration, eliminating the Visa Lottery, and moving the country to a merit-based entry system” (The White House). The appeal for a more restrictive immigration policy is reinforced by the fear that immigrants will replace American workers in the workforce. In the 2016 presidential election alone, there were multiple differing views on immigration. Hillary Clinton, campaigning for a more comprehensive immigration reform, calls immigration a “family issue” while Donald Trump emphasizes the need for a “solution to the ‘problem’ of immigration” (Winders). In addition, job competition created by immigrants can be seen as both a positive and negative factor. In his Labor Day address, President Nixon states:

This Nation is not going to turn inward. We are not going to build protective walls to shelter us from fair competition. We are not going to live in our own cocoon while the rest of the world passes us by. (Nixon)

Despite this, others are concerned that job competition due to immigration is decreasing the availability of jobs for Americans, and fiscally induced immigrants are putting a burden on the American economy. This controversial issue that immigration may bring raises the question: To what extent does immigration increase job competition in the US?

Since the quota system was replaced by US immigration laws in 1965, the immigrant population has more than quadrupled (Lopez). According to the Pew Research Center, many Americans feel that jobs are “less secure than in the past and competitive threats come from several directions”. With technology predicted to take over “half of all US jobs within two decades” (Thompson) and immigration expanding the size of the workforce, high-level skills are becoming a requisite in order to succeed, and American workers in the low socioeconomic class are left without jobs. As such, US immigration policies have become more skill selective since President Trump’s inauguration. Factors such as age, education, and English skill are taken into consideration, resulting in a limited number of immigrants in the US. However, many reports indicate that immigration has significant potential to improve the country’s economy and growth. Immigration has little negative impact on job competition but rather, promotes innovation and increases revenue in the US. Therefore, the extent of immigration on job loss and competition must be determined in order to effectively reform the US immigration policies, considering the effects on American workers as well as the American economy as a whole.

The Impact of Immigration on Natives’ Wages

Further regulation on immigration policies is supported by the fact that immigration may reduce wages of Americans. According to the National Public Radio^[2], wages for low wage workers declined 5 percent from 1979 to 2013 while immigration increased (Kelly). Low wage American workers are especially impacted by immigration because the majority of immigrants work in low-level jobs. In addition, a study by the Center of Immigration Studies^[3] also suggests the negative implications of immigrants on the wages of natives in the same occupation. An increase by one percent in the immigrant composition of low wage jobs reduces wages for natives in this same occupation by .8 percent. Because these occupations are composed by 15 percent immigrant, this may result in the wage reduction of a native in a low-skilled occupation by “perhaps 12 percent, or $1,915 a year” (Camarota).

Moreover, lenient immigration policies are severely threatening even the professional and white collared American workers. In 1996, immigrants took 40 percent of the 720 available mathematics jobs (Cummings and Lambert). These findings show that high competition created by immigration negatively impacts both citizens in low and high socioeconomic classes. In fact, the exploitation of high skilled immigrants contributes not only to high competition in America but also to the “brain drain of the highly educated in low and middle-income countries” (MacKay). Brain drain occurs as “young, well educated, healthy individuals” from low-income countries are pulled to high-income countries due to political stability, an abundance of resources, better standards of living, higher salaries, greater opportunities, and or access to advanced technology (Dodani). This exploits highly educated individuals in developing countries, furthering the disparity between low and high-income countries.

Immigrant Revenue Contributions

Nevertheless, highly skilled and educated immigrants bring in revenue for the American economy. 40% of fortune^[4] companies were founded by immigrants, and the value created by 9 immigrant entrepreneurs alone exceeds the total wages paid to all illegal immigrants over the past decade (Davies and Harrigan). In addition, 44 of the 87 privately held companies that valued greater than 1 billion dollars had at least 1 immigrant founder and each of the immigrant-founded companies created 760 jobs (Mobarak). In contrary to the assumption that unemployment rates are caused by competition due to immigration, unemployment rates and immigration are inversely related. Immigration rates are not impacting unemployment rates but rather, unemployment rates are impacting immigration rates (Collins). Immigrants are attracted to the US during times of economic productivity and contribute to overall economic growth. The trend of high skilled immigration since the 1990s has been linked to higher patenting rates among immigrants. According to a report by the Brookings Institution,

Immigrants make up only 18 percent of the U.S. 25-and-older labor force but are 26 percent of the STEM workforce and 28 percent of high-quality patent-holders. Their high degree of patenting is not surprising given their disproportionate share of PhDs. In fact, 31 percent of PhD holders in the United States are immigrants (Shambaugh).

Immigrants contribute to development and progression in the US by presenting innovative ideas. This phenomenon also spurs natives’ patenting rates, showing how competition in high-level jobs increases the advancement and productivity of the natives in the US (Orrenius).  In 2014, immigrants made up 17 percent of the total US workforce, and in the next 2 decades, immigrants and their US-born children are projected to drive growth in the nation’s working-age population (Lopez).

Correspondingly, many concur that immigration “does not cause any sizable decrease in wages”, and instead raises wages overall. (Greenstone and Looney). As a matter of fact, capital per worker was higher when immigration was at its peak in 2007 (Peri). In 2016, the National Academies of Sciences Engineering Medicine^[5] released a comprehensive assessment of economic and demographic trends of U.S. immigration over the past 20 years, highlighting the fiscal impacts of immigration in country, state, and local levels as well as its impacts on labor market competition. The report concludes that negative impacts are most likely to be found for “prior immigrants or native-born workers who have not completed high school… the closest substitutes for immigrant workers with low skills” (Blau). As this shows, though immigration may cause the inflation of workers in low socioeconomic sectors, immigrants benefit the American economy overall as they contribute to innovation and raises wages for the majority in middle and high socioeconomic sectors.

Social Tensions due to Job Competition

However, both the phenomenon of “antiforeign sentiments and multiracial segregation” are reinforced by the high competition due to immigration (Ha). The main reason for opposition to immigration in Americans is the rivalry they feel in the workforce. Over a quarter (26%) of Americans say that “immigrants burden the country by taking jobs” (Lopez). Metropolitan areas, or regions in which work is conglomerated, is where competition of power, resources, and jobs between groups can be seen the most. Furthermore, the extent of tensions caused by job competition differs in accordance to racial stereotypes. While “Asian immigrants have been depicted as a ‘model minority’” due to their more successful and smooth transition into the American socioeconomic system, Hispanic immigrants are perceived as “illegal aliens” as they strain the US labor market (Ha). In this way, immigrants may face discrimination because they are seen as powerful rivals in the workforce and are blamed for taking jobs away from American workers. This engenders antagonism and opposition, leading to the support for a more conservative immigration policy in the US.

Furthermore, it is perceived that governmental assistance and succors given to fiscally induced immigrants impose a burden on native tax-payers. However, immigrants pay taxes including social security tax, state income tax, federal income tax, property tax, and sales tax, contributing to the tax base. According to the National Immigration Forum^[6], immigrants paid an estimated 328 billion dollars in state, local, and federal taxes, and paid more than a quarter of all taxes in California in 2014 (Kosten). Immigrant-founded companies also pay corporate taxes, contributing to the tax base.

Conclusion

In conclusion, immigration proves to have a more positive economic effect on the American economy in the long run. Immigration is crucial to the growth of the US as it increases revenue, jobs, innovative advancements, and the tax base. To further this economic progression, a more liberal immigration policy is an ideal solution. In contrast to the current approach by President Trump for a heavily regulated immigration policy, a liberal immigration policy will protect the national security of the US while encouraging lawful immigration. However, social issues such as the increased racial tensions and the disparity between low and high-income countries are possible limitations of this solution. To accommodate for this limitation, racial tensions must be relieved by promoting racial integration through settings other than the workplace. According to a study conducted by Professor Ha^[7], when native populations were more exposed to immigrants “via intimate and confirming contact”, a mutual understanding was more likely to be facilitated (Ha). In addition, the US must continue to provide aid to low-income countries. As McKay^[8] suggests, high-income countries have the duty of protecting low-income countries “to ensure that residents of LMICs have access to the conditions necessary for a decent human life” (MacKay). By providing necessary support such as improvements in sanitation, education, healthcare, and technology, low-income countries are able to benefit from innovations in high-income countries. However, one defect is that low income countries will become increasingly dependent on high-income countries for aid. Despite these limitations, immigration has more merits than demerits to the US economy, and therefore a comprehensive reform on immigration policies has significant potential to improve the country’s economic outlook.

Works Cited

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• Camarota, Steven A. “The Wages of Immigration.” CIS.org, Center of Immigration Studies, 1 Jan. 1998, cis.org/Report/Wages-Immigration.
• Collins, Reanna, “Factors related to the unemployment rate: A statistical analysis” (2009). Honors Program Theses. 9. https://scholarworks.uni.edu/hpt/9
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• Dodani, Sunita and Ronald E LaPorte. “Brain drain from developing countries: how can brain drain be converted into wisdom gain?” Journal of the Royal Society of Medicine vol. 98,11 (2005): 487-91.
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^[1] The Pew Research Center is a nonpartisan, non-advocacy fact tank that conducts research on demographics, public opinion, and media content.

^[2] The National Public Radio is a nonprofit media organization which was recognized as the most trusted news source in the US in the 2005 Harris Telephone Survey.

^[3] The Center of Immigration Studies is a nonpartisan, nonprofit think tank that has been cited by President Trump.

^[4] The Fortune 500 is an annual ranking of the largest 500 companies in the US based on revenue, published by the Fortune Magazine.

^[5] The National Academies of Sciences Engineering Medicine is a collective national scientific academy of the US which publishes reports that are extensively reviewed by the National Research Council.

^[6] The National Immigration Forum is one of the premier immigration policy organizations in the US, and advocates for the value of immigrants.

^[7] Shang E. Ha is an associate professor at Sogang University and was a postdoctoral associate at Yale University.

^[8] Douglas MacKay is an assistant professor at the University of Northern Carolina and has completed a postdoctoral fellowship at the National Institutes of Health.