Prioritize skills-based immigration now.

Is Immigration Really Depressing American Workers’ Wages?

The pandemic emergency measure Title 42, enacted by the Trump administration to deter illegal immigration, is set to expire on May 11, and the Biden administration expects rising crossings at the U.S.-Mexico border. American businesses may embrace this influx of immigrant labor with open arms because they often cite a persistent labor shortage as their top concern and insist they need immigrants to do the jobs Americans won’t do.

Are American Workers Really Unwilling to Do Certain Jobs?

In a recent piece, Oren Cass at American Compass argues that American workers would do any job if the wages were high enough. He accuses greedy businesses and the availability of low-wage immigrant workers of causing decades of wage stagnation for American workers. Thus, he advocates for skill-based immigration reform to help American workers secure good-paying jobs. While some of his ideas make sense, others deserve scrutiny.

• Cass wrote, “From 1972 to 2022, real corporate profits per capita rose 185%. GDP per capita rose 141%. Productivity rose 135%. The average hourly wage for production and nonsupervisory workers rose 1%.”
• Allison Schrager, a senior fellow at the Manhattan Institute, called the wage stagnation claims “misleading” because they “rely on the CPI-U (Consumer Price Index of Urban Consumers) measure of inflation … the CPI-U assumes larger inflation than the average household experiences … [and] makes stagnation seem worse than it is.”
• Michael Strain at the American Enterprise Institute concurred. His analysis shows American workers’ wages were not stagnant: “Using July 1990 as the base period, average real wages using the CPI grew by 21 percent over the three-decade period ending in February 2022. Real wages grew by 39 percent using the PCE [personal consumption expenditure price index].”

Do Immigrants Really Depress American Workers’ Wages?

Although the claim of wage stagnation is questionable, Cass is correct to state that “immigration is a form of population growth” and America’s current immigration policy has flooded “the low end of the domestic labor market with foreign workers.” It’s Economics 101: An increase in supply (labor) drives down the price (wages).

• Analysis from Harvard labor economist George Borjas demonstrates that immigrants (both legal and illegal) from 1990 to 2010 reduced the average annual earnings of American workers by $1,396 in the short run.
• Borjas’ study found that the downward pressure on wages caused by new immigrants became negligible in the long run.
• Giovanni Peri, an economics professor at the University of California-Davis, found “little evidence of a wage-depressing effect of immigration because immigrants are absorbed into the receiving economy through a series of adjustments by firms and other workers. Once these adjustments are accounted for, the wages of native workers, even workers with skills similar to those of immigrants, do not change much in response to immigration.”

What Factors Affect American Workers’ Wages and Employment?

Cass also failed to recognize other factors that have nothing to do with immigrants but have affected American workers’ employment.

• America has experienced a cultural shift, and labor-intensive jobs such as picking fruit, slaughtering chickens, and housekeeping are undesirable to even some of the poorest Americans.
• Our nation’s generous welfare system and its relative ease of accessibility have created an unofficial minimum wage and an incentive for some American workers not to work.
• Our education system has failed to produce a sufficiently educated workforce.

What Is the Way Forward?

Cass proposes establishing a skills-based immigration policy and enforcing E-Verify, a system that validates workers’ legal status.

• An actual skills-based immigration policy should give preference to immigrants who possess the skills our economy needs the most, regardless of their potential wages.
• Canada and Australia, two nations that operate the most successful skills-based immigration in the world, rely on national occupation databases to track skills gaps in their economies, and both have benefited by welcoming low-wage and high-wage immigrants. The United States should do the same.

Given all these factors, blaming immigrants for depressing American workers’ wages and employment opportunities is neither fair nor accurate. Our ongoing southern border crisis is a reminder that the time for immigration reform is now, and doing nothing is not an option. Immigration needs more debate on a national level and in the chambers of the U.S. Congress.

About the Author: Helen Raleigh, CFA, is an American entrepreneur, writer, and speaker. She’s a senior contributor at The Federalist. Her writings appear in other national media, including The Wall Street Journal and Fox News. Helen is the author of several books, including “Confucius Never Said” and “Backlash: How Communist China’s Aggression Has Backfired.” Her latest book is the 2nd edition of “The Broken Welcome Mat: America’s UnAmerican immigration policy, and how we should fix it.” Follow her on Parler and Twitter: @HRaleighspeaks.