Victoria Lipov/Shutterstock.com

The Statistics Show Donald Trump is Wrong On Immigrants

America's immigrants have actually helped lift wages for natives.

Republican presidential front-runner Donald Trump says he wants to stop immigration into the US in order to increase American wages. The only problem? Immigration already raises American wages.

Trump’s decision to seize immigration as the major issue of his campaign has been a key factor in his rise to prominence; foreign job seekers have proven to be a suitable villain for America’s economic anxieties overall. It’s not a surprise that many white power groups see Trump as a spokesperson for their agenda, as the New Yorker reports in a conversation with Matthew Heinbach, a white nationalist who has met with Greece’s fascist Golden Dawn party:

“Even if you play the game, even if you do everything right, then the future, when it comes to your income, when it comes to benefits, when it comes to everything, we are going to be the first generation in American history to be living worse than our parents.” He went on, “My own parents tell me, ‘Well, you should just shut up, you should go get a normal job, and get a two-car garage, and then you’ll be happy.’ ”

On the economics, Heimbach’s narrative is not wrong. During a half-century of change in the American labor market—the rise of technology and trade, the decline of manual labor—nobody has been hit harder than low-skilled, poorly educated men. …

Actually, Heimbach’s narrative is wrong, as is the New Yorker’s assessment of it. Heimbach is 24. Over the course of his lifetime, real median household income has actually risen 3.3%. Comparing young adults in 2013 to young adults in 1989 (pdf), average net worth is slightly lower—thanks to the largest recession since the Great Depression—but today’s young adults are more likely to own homes, hold stock, and save for retirement, and less likely to carry a high share of their income in debt versus predecessor cohorts.

But more importantly, while the New Yorker notes that wages for unskilled male workers have fallen by 23% between 1979 and 2013, it doesn’t mention that immigration has nothing to do with it—and that Heimbach, a college graduate, isn’t part of this demographic to begin with.

The effect of immigration on US native wages

Here are estimates from two separate studies—one from the Economic Policy Institute (EPI), and the other by economics professors Gianmarco Ottaviano and Giovanni Peri, of the London School of Economics and the University of California, Davis, respectively, of how immigration to the US has changed native workers average wages. Both focus on periods spanning the 1990s tech bubble and the 2000s housing bubble, when many immigrants came to the US in search of jobs:

You’ll notice they are all positive: Almost everyone has seen wages rise thanks to immigrants in the economy, even though they are pretty marginal effects.

Economists have been arguing about how to measure the impact of immigration on native workers for a long time now, but consensus seems to be settling on the idea that they are complementary to US workers.

How do more people entering the economy lead to higher wages? They made the economic pie bigger by helping produce more, they are consumers of goods and services themselves, and their new ideas can unlock entire new industries, whether that’s California nail salons or ethnic restaurants.

Some earlier estimates found major reductions in wages from immigration, but newer work has identified a flaw in those estimates: They tended to assume that the amount of capital in the US was fixed and that immigrants can easily substitute for native workers.

But US capital stocks continue to increase, and empirical data suggests that native workers actually tend to be pretty different from immigrants. Native workers tend to have better language and cultural skills, and immigrants tend to bring knowledge and experience that the US is lacking.

Examining those assumptions led to the kind of estimates in the table above, which suggest that native wages increased between 0.4 and 0.6% because of the last big immigration boom.

What about unskilled men?

But when we think about immigrants substituting for native workers, manual labor is one where they should be able to do so pretty easily. And the main area where economists find problems for native US workers is, unsurprisingly, in the demographic composed of men without much in the way of skills. Here’s one breakdown of that effect:

So you might think here that, at last, The Donald has a point. But remember that big statistic—wages for unskilled male workers have fallen by 23% between 1979 and 2013?

For 14 years of that 34-year time period, we know that immigration barely contributed to that dramatic change. Even in the unlikely case that the effect was doubled or tripled during the other 20 years in the sample, immigration just isn’t what’s getting at unskilled male workers wages.

Instead, it appears that the reason unskilled men have seen their wages fall so dramatically is trade—specifically because foreign workers abroad have outbid them for economic activity. And unlike foreign workers who come to the US, none of the benefits of their work accrue to the US economy.

The other culprit eyed is for hurting low-skill wages is automation—that is, robots—but there appears to be more evidence that it’s tradebehind the unskilled US worker’s woes. Stemming low-skilled immigration won’t change that.

Where does this leave us?

There are two other groups of people to consider when talking about jobs and immigration.

The first are other recent immigrants. Economists tend to estimate that increasing immigration tends to hit them the hardest. The reason: Again, substitution, as recent cohorts of immigrants create direct competition for one another when it comes to wages. In that EPI study from 1994-2007, foreign-born workers in the US saw their wages decrease by an average of 4.7% because of the effect of immigration.

The other group to consider is the one causing the decrease: the newest of the newcomers. These are the biggest winners in the wage game. By shifting their labor to a new milieu, they have massively increased their earnings power, even if their wages remain low by US standards. The increase in living standards affects these new immigrants and their home countries; as migration experts are fond of noting, remittances from immigrants vastly exceed foreign aid from governments, leading to theories that increasing immigration is a smart way to increase global economic development and avoid leaving trillion-dollar bills on the sidewalk (pdf).

Arguments for immigration as an anti-poverty program have not yet been able to surmount the kind of deep-set suspicion that Trump’s campaign is exploiting. But at the very least, we can establish that however much he or anyone else claims immigration is hurting US wages, the latest research just doesn’t support the argument.

(Image via Victoria Lipov/Shutterstock.com)

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.