More immigrants, more jobs

The Wall Street Journal
July 11, 2005

By Stephen Moore

The latest U.S. Census Bureau data confirm that America is in the midst of one of the most dramatic demographic transformations in our nation's history. Driving this transformation is what has been called the "fourth great wave" of immigration to these shores.

The first wave came from Western Europe during the nation's founding. The second wave arrived in the middle of the 19th century when the U.S. first began to industrialize. The third wave was the great Ellis Island influx in the first two decades of the 20thcentury, when nearly one million immigrants arrived each year - from every corner of Europe.

Those earlier immigrant groups generally prospered here and were instrumental in the building of America's economic might. How about this latest fourth wave?

Since 1980 about 20 million immigrants have come,with about three of four arriving from Asia and Central America. Over the past quarter-century the percentage of the U.S. population that is foreign born has about doubled from 6.2% in 1980 to 12% today-which means that about one in eight of us is an American by choice, not by birth.

This large influx of new Americans has intensified calls inside and outside of Congress for closing the Golden Gates.

Groups ranging from the Federation for American Immigration Reform to National Review magazine, have gained political traction by arguing that we need a "time-out" on immigrants because they displace American workers from jobs, depress wages and raise welfare and other social service costs.

Yet the evidence for these claims is contradicted by the actual bullish U.S. economic performance during this era of high immigration.

One can only marvel at how over the past 20 years the U.S. free market system has absorbed millions of new immigrants into the economy and labor force almost seamlessly.

The 1980s and '90s were two of the fastest economic growth decades in American history, in overall and per capita GDP growth, at the very time when immigration was peaking.

Financial and housing assets in the U.S. have more than quadrupled in real terms since the early 1980s, making the past 20 years the most rapid period of wealth creation in American-history.

Immigrants may not have caused this burst of prosperity, but they certainly didn't prevent it.

Have low-waged workers, blacks or Hispanics been harmed by the immigrant influx? There is scant evidence to support that thesis.

As the nearby chart shows, the increase in the immigration flow has corresponded with steady and substantial reductions in unemployment from 7.3% to 5.1% over the past two decades.And the unemployment rates have fallen by 6 percentage points for blacks and 3.5 percentage points for Latinos.

Since 1980 the U.S. has taken in more than twice the number of immigrants of any other industrialized nation, yet we have the second lowest unemployment rate.

Renowned labor economist Richard Vedder of Ohio University has shown, moreover, that the states with the highest levels of immigration have generally had the lowest, not the highest unemployment rates.

George Borjas of Harvard University has claimed that immigrants contribute to the widening income gap between the rich and poor in America.

But not only has median real family income in the U.S. risen by 21% since the early 1980s to $52,000 today, but income seven rose for Americans in the bottom 20% over the 1980-2000 period.

This is not to deny that immigrants compete with American workers in some industries and in localized labor markets. Portuguese fishermen, African cab drivers, Chinese textile workers, and Mexican field hands, for example, often do displace American workers and push wages downward.

On a macro-level, however, there is no evidence of wage suppression by immigrants, because natives have generally migrated into other professions with higher wages.

Even more encouraging news comes from recent Census Bureau data on the economic advancement of immigrants themselves. The longer that immigrants are here, the better they do financially.

For example, immigrants who have been in the U.S.for less than three years have a 7.4% unemployment rate. That rate of joblessness falls to 6.7% after 10 years here, then below 6% after 20years.

The income numbers show the same picture of immigrants climbing the ladder of economic success. New arrivals have a median family income of $31,930.

For those who came in the 1990s there incomes average $38,395. And for those who have been here 20 years or more,family income approaches $50,000.

Immigrants are economic investments with increasing rates of return over time.

In recent years, immigrants have tended to be disproportionately represented in the highest and the lowest skills and education categories.

We attract world class mathematicians and busboys. Not surprisingly, the highly educated and skilled immigrants tend to be far more economically valuable than the unskilled.

In a global economy where the resource that is most scarce is human capital, our ability to attract the best and the brightest scientists, engineers and entrepreneurs is unquestionably one of the nation's greatest comparative advantages.

Silicon Valley could not exist today without immigrant brainpower. One of the most obvious malfunctions of our current immigration policy is that we deny work visas to tens of thousands of highly trained and educated foreign graduate students who have enormous upside economic potential.

For those of us who believe that the melting pot is a vital and unique feature of American society, this finding that the new immigrants are integrating into our modern economy is highly reassuring.

Even more encouraging is the knowledge that a generous immigration policy can coexist with high rates of economic growth and low unemployment.

The nativists have gotten this story all wrong for at least the past 20 years; perhaps it would be wise to stop listening to them.

Mr. Moore is a member of The Wall Street Journal editorial board.

Reprinted with permission of  The Wall Street Journal copyright 2005,Dow Jones & Company