Matt Lewis

5 reasons the ‘they took our jobs’ fear is exaggerated

1. The economy isn’t a zero sum game. There are numerous examples (including post-apartheid South Africa) that demonstrate the downward slope of the demand curve isn’t as precipitous as some imagine. But here’s a good one from Benjamin Powell, an Assistant Professor of Economics at Suffolk University and a Senior Economist at the Beacon Hill Institute: “Since 1950, there has been massive entry of women, baby boomers, and immigrants into the work force. Yet there has been no long-term increase in the unemployment rate.” … “In 1950, the unemployment rate was 5.2 percent, and in 2007, the year before the current recession started, the unemployment rate was 4.6 percent.” This is partly because careers that never existed in the past can be created (one small example: How many bloggers existed in 1950?)

2. This is not to say there won’t be problems, but the negative impact is exaggeratedAccording to George J. Borjas, Professor of Economics and Social Policy at the Harvard Kennedy School, the long-run effect on native wages is zero. The only cohort significantly impacted in the short-term are high school dropouts, whose wages are reduced by 8.2 percent.

3. A surprise finding?: Immigration encourages Americans to stay in school. The fact that high school dropouts are hurt could be seen by some as a feature, not just a bug. According to Rutgers Professor Jennifer Hunt, a “natives’ probability of completing 12 years of education is increased by immigration” and that the “net e ffect is composed in part of the additional incentive to complete 12 years provided by the presence of unskilled adult immigrants in the labor market…” (This makes sense. If a native-born American thinks he can get a good-paying job without a high school degree, he has less incentive to graduate.)

4. Even assuming the downside, don’t forget the upside. Assuming immigrants decrease the wages of those without high school diplomas in the short term, it also stands to reason that others benefit from the cheaper products and services. A middle class family who can pay less for getting the house painted or for a nanny obviously has more money left over to spend or to save. Likewise, if businesses profit more they can build more factories, afford to hire more workers, etc. But we fail to appreciate these benefits. As Powell notes, “It’s a classic example of Bastiat’s ‘what is seen and what is not.’ Everyone can see when an immigrant takes a job that used to be held by a native-born worker. But not everyone sees the secondary consequence of the new jobs that are created because native-born labor has been freed up for more-productive uses.”

5. American employers probably need more unskilled workersAccording to Michael Clemens, a senior fellow and research manager at the Washington-based Center for Global Development, “the United States will need 3 million additional workers over the next decade to fill the least-skilled jobs,” but “[o]ver the same period, the total number of U.S. workers entering the labor force at all skill levels, between the ages of 25 and 54, will be 1.7 million.”