My new Niskanen Center study refutes the common argument against immigration that the influx of immigrants since 1980 explains the lower income growth for America’s middle class. Here are just four reasons why the argument is wrong.
- Median income grew faster when more people were entering the workforce. From 1948 to 1980, Americans saw a dramatic increase in the labor force. Baby boomers and women flooded the labor market with new talent. During this time, the labor force exploded by 76 percent, and wages shot up by over 80 percent for both men and women. The notion that income cannot increase if the labor market is competitive is false.
- Median income grew slower when fewer people were entering the workforce. More importantly, the notion that the labor force is more competitive now than it was prior to 1980 is simply false. From 1980 to 2013, the growth in the labor force slowed mainly because Americans had fewer children than prior decades, and most women had already joined the workforce. During this time, the labor force grew just 43 percent—nearly half the earlier rate—but wage growth slowed dramatically.
- Economists agree that immigration has boosted wages for Americans. Economists point out that immigrants actually support jobs for American workers. Harvard economist George Borjas, often cited by immigration critics, actually agrees with economists Giovanni Peri of the University of California at Davis and Gianmarco Ottaviano of the London School of Economics that immigration has increased average wages for Americans between 0.1 percent and 0.6 percent.
- Removing immigrants or preventing them from coming would cut wages. A team of economists at the United States Department of Agriculture estimated the effect on domestic incomes of a policy that would remove or prevent entry of 5.8 million workers. Using a computable general equilibrium model, they found that the policy would lower average incomes for domestic workers between 0.9 percent and 1.1 percent after 15 years.
The basic point is that an influx of immigrants or new workers more generally are not an explanation for lower median income or wage declines since 1980. The reality is just the opposite. Americans would be worse off without immigrants working alongside them.