The Economic Policy Institute (EPI) offers me with a number of factually correct statements that do not provide proof to back their boldly titled piece, Immigrants are not hurting U.S.-born workers - Six facts to set the record straight (2/20/2024). So, let us set the record straight.
First, let's discuss immigration in general and the debate around it. In general, the left will argue that all immigration is beneficial, while the right will argue that all immigration should be banned. Both sides have pushed us to make an either/or or black-and-white decision, but neither is asking the right question: what is the best level of immigration and why?
The way to think about immigration and many other issues is to start with the extremes. Would 0% immigration be the best policy? vs., is unlimited immigration the best policy?
The answer to the first question is no. Around 1970, the fertility rate in the United States fell below replacement, around 2.1 births per woman, and is presently less than 1.8. Without immigration, the United States' population would decrease, resulting in negative economic outcomes. Economically, some immigration is beneficial; in fact, some immigration is required to maintain the overall population.
On the other side, we definitely could not support unrestricted immigration. There is an upper limit that is undesirable, at least economically. As a result, there is some immigration that is economically advantageous with a cap, with the ideal amount falling somewhere in the range decided by economic as well as other criteria.
Along with economic concerns, there are cultural values to consider. What annoys me, especially from the left, the home of inclusion, is the notion that anyone who wants to limit immigration to maintain culture must be racist. No, that isn't always true and should not be assumed. People have varied values, and while the left may appreciate greater variety, others may love their culture as it is, with neither side being wrong, evil, or whatnot. At the same time, it is the hubris of the left, which considers itself to be the educated elite, that feeds us with pieces that will “set the record straight” and yet be wrong. Let's go to the data.
Before getting to the “facts” of the essay, we should acknowledge how much immigration, particularly unauthorized immigration, has increased. Figure 1 is from the Pew article What we know about unauthorized immigrants living in the U.S. (11/16/2023). The data is only through 2021, but it is worth noting that there has been a threefold increase from 1990 to 2021, despite a minor dip beginning around 2007 and stabilizing after 2017.
Over 10 million unauthorized immigrants into a population of 330 million is noticeable, especially since they tend to enter only a few states. It is not unreasonable for someone, especially in, say, Texas, to be concerned by this.
One last point before getting the article. The impacts of immigration are difficult to measure. Here is a quote from that National Academies of Science report, The Economic and Fiscal Consequences of Immigration (2017):
The empirical evidence reviewed in this chapter reveals one sobering reality: Wage and employment impacts created by flows of foreign-born workers into labor markets are complex and difficult to measure. The effects of immigration have to be isolated from many other influences occurring simultaneously that shape local and national economies and the relative wages of different groups of workers.
In other words, anyone from either side that is going to “set the record straight” on immigration should probably be ignored. Now, let’s look at some quotes from the EPI article.
Unemployment
The unemployment rate for U.S.-born workers averaged 3.6% in 2023, the lowest rate on record. Obviously, immigration is not causing high unemployment among U.S.-born workers.
I like how they take a current fact and assume it is always true. So, the next time unemployment is high, can I point to immigration as the clear cause? Of course not. Bottom line: There is a bait and switch here. They want you to believe that immigration has no impact on US-born employment, yet all they have is a period of low unemployment and large immigration. This is not to say that immigration has no effect on job opportunities for Americans. How do we know, for example, that if there were fewer immigrants, unemployment would not be lower than 3.6%? Or is an increase in unemployment acceptable as long as it is not excessive?
But it's even worse because immigration is a local issue rather than a national one. Figure 2 compares the percentage of foreign-born people in each state from the World Population Review to unemployment in each state from the Bureau of Labor Statistics. Note that the most recent foreign-born statistics per state I could find were from 2021, but I'm going to assume that percentage hasn't moved dramatically in two years.
The regression line is significant (p-value = 0.00166, adjusted R-squared = 0.1679). The association isn't strong, but it exists, so perhaps immigration is affecting unemployment in some states, and this is the foreign-born population rather than just unauthorized immigration.
California, Texas, New York, Florida, New Jersey, and Illinois are the top six states in terms of unauthorized immigration, accounting for 25%, 26%, 7.6%, 7%, 4%, and 3.8%, respectively, of unauthorized immigrants. Georgia comes next at 3%, followed by states with less than 3% of the unauthorized immigrant population. Note that five of these six states are above the regression line. In other words, it is possible that both the foreign-born population and the unauthorized immigration population increase unemployment.
None of this implies causation. My point is that the data in this quote from the EPI paper is superficial, incomplete, and proves nothing. Immigration may be contributing to greater unemployment rates in states such as California, New York, and New Jersey, but it really is complicated, and we don't really know.
The next few quotes are similar to the first in that they point to a single national figure and claim that immigration is not a problem, despite the lack of a clear relationship between the statistics. As an example,
The share of prime-age U.S.-born individuals with a job is at its highest rate in more than two decades.
and
The prime-age LFPR of U.S.-born men without a bachelor’s degree grew at a record pace in each of the last two years and is above its pre-COVID trend.
Immigrant labor force growth
Though the immigrant share of the labor force reached a record high in 2023, immigrant labor force growth is not occurring at an unprecedented rate.
This seems weird to me. The immigrant work force hit a record high in 2023, but it isn't growing at a rate that is unprecedented. It's almost as if they want to shift the spotlight away from the record-breaking statistic. The fact that growth is unprecedented does not mean that it is not having a detrimental impact on US-born workers. Interestingly, they have avoided the pay issue. I will get to that.
Demographics
Immigrants are an integral part of our labor market, filling gaps caused by demographic changes in the United States and contributing to strong economic growth.
If EPI had intended to focus on this, they might have published a thoughtful essay about demographic changes and the connection, or even necessity, of immigration. Yes, the United States' low fertility rate is an economic issue. Indeed, immigration may harm certain workers, but this may be preferable to no immigration, which may harm the entire economy. This should be discussed.
Wages
After the article lays out their six facts, they have this to say.
While there’s no question that the immigration system desperately needs updating so that workers are adequately protected, it’s important to remember that it is employers that underpay and exploit workers based on their immigration status—committing workplace violations against those who lack status at a vastly higher rate than U.S.-born workers.
If employers can underpay and exploit immigrants, doesn't that mean they can avoid paying U.S.-born employees more? This appears to have the potential to harm US-born workers. All “facts” about immigration focus on job rates rather than compensation. So, is it good for US workers to get paid less as long as they have a job? Here's what the NAS report says about this:
Consistent with theory, native dropouts tend to be more negatively affected by immigration than better-educated natives. Some research also suggests that, among those with low skill levels, the negative effect on native’s wages may be larger for disadvantaged minorities (Altonji and Card, 1991; Borjas et al., 2012) and Hispanic high school dropouts with poor English skills (Cortés, 2008).
The wage issue is complicated, but Figure 4 from Immigration and the Wage Distribution in the United States (12/2019) sheds some light on the issue.
First, the research distinguishes between low- and high-skilled immigrants in the workplace. The image on the left, where the blue squares are below zero, shows workers who have lower wages because of immigration. These are workers from the bottom 20% of the labor force. The impact on wages may be small, but for those workers, there is really no small loss of wages.
Both figures show that the general average impact on earnings is positive, yet it remains negative for some. Recall my data rule: Know the distribution, not just the mean and median. It should be noted that the data for this article were collected between 1980 and 2015, when immigration was generally lower. This study concludes with the following:
Our main findings indicate that an increased presence of low-skilled immigrants is associated with small wage losses for similarly skilled natives.
Conclusions
The EPI article hasn’t set anything straight. They are left-leaning and will most likely support immigration regardless. Immigration has complex short- and long-term effects. There are no straightforward facts. What appears to be true and makes sense is that lower-skilled workers' salaries are lower as a result of immigration, but this is likely to vary somewhat by state.
Finally, we need a nuanced and thoughtful immigration debate. What is the appropriate level of immigration in terms of economics, and how does it affect culture? In general, few policies have no negative implications; therefore, what are the negative consequences of any immigration policy we implement? For example, if wages improve for some but decrease for others, should there be an immigration tax that leverages the gains for some to offset the losses for others? Good, fair policy is complex and difficult. Which party will start by offering a thoughtful policy? It cannot be achieved with open borders or zero immigration. If you discover one, please let me know.
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Disagreeing and using comments
I'd rather know the truth and understand the world than always be right. I'm not writing to upset or antagonize anyone on purpose, though I guess that could happen. I welcome dissent and disagreement in the comments. We all should be forced to articulate our viewpoints and change our minds when we need to, but we should also know that we can respectfully disagree and move on. So, if you think something said is wrong or misrepresented, then please share your viewpoint in the comments.