Restricting Immigration Makes Americans Richer, Not Poorer

Posted: Nov 10, 2020 12:01 AM
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Restricting Immigration Makes Americans Richer, Not Poorer

Source: AP Photo/Gregory Bull, File

Over the summer, President Trump suspended many guest-worker visas for the duration of 2020.

Business groups like the Chamber of Commerce howled in outrage. Immigration and guest-worker programs grow the economy, they claim -- so by cutting off the flow of roughly 500,000 guest workers this year, President Trump is impeding the economic recovery and hurting Americans.

This is at odds with reality. Restricting the influx of foreign workers makes Americans better off, especially during times of high unemployment.

On the most elementary level, it's true that immigration grows the economy -- but only because it increases the total population. Measuring a country's economic wellbeing based on GDP alone, without factoring in population size, is silly.

Consider an example. Luxembourg's 2019 GDP totaled nearly $72 billion. That's 71st in the world -- far behind poverty-stricken nations like India and Nigeria, which have the world's fifth and 27thlargest economies, respectively.

But with a population of only 626,000, Luxembourg's per capita GDP exceeded $113,000 in 2019 -- making it the world's third-richest country on a per-person basis. India and Nigeria reported per capita GDPs of roughly $2,400. America's GDP per capita, for reference, was $67,000.

So the relevant question isn't whether high levels of immigration and guest-worker programs boost GDP. They do, in the same way that annexing Canada would boost U.S. GDP. What we need to take into account is that bigger isn’t always better. 

Does importing millions of foreign workers make Americans better off? For tens of millions of Americans, the answer is no.

The Economic Policy Institute estimates that immigrants contributed about $743 billion to U.S. GDP in 2011, a little less than 15 percent of total GDP. Almost all of that money went to immigrants themselves as income.

Most of the remainder was captured by businesses, who benefit from cheaper labor. Harvard professor George Borjas finds that for every 10 percent increase in the size of a given labor pool due to immigration, workers' wages in that pool decline 3 percent.

Writing in 2016 based on then-current figures, Borjas concluded that "immigration has barely affected the total wealth of natives at all. Instead, it has changed how the pie is split, with the losers -- the workers who compete with immigrants, many of those being low-skilled Americans -- sending a roughly $500 billion check annually to the winners."

In other words, immigration is a boon for CEOs and shareholders. For regular American workers, it's an enormous drag on their earnings.

The National Academy of Sciences has reached a similar conclusion. It published an exhaustive report in 2016 examining the economic impact of immigration and found that American workers with similar skills as foreigners "may experience a wage reduction as a result of immigration-induced increases in labor supply."

No one, least of all me, will deny that many immigrants are hardworking and contribute to the United States. No one else should deny, either, that high levels of immigration drive down wages and displace American workers, who can and will do any job in the United States. The solution isn't to end immigration. What Congress needs to do is to reduce the overall level of immigration, and reform the system so that employers can’t use it to undermine the standing of American workers.

In order to bring about genuine immigration reform, the federal government needs to enforce the law to stop illegal border crossings and to hold criminal employers who hire illegal aliens accountable, as was the compromise that accompanied the 1986 amnesty. The laws are already on the books. What's lacking is political will. Congress also needs to finally follow the recommendations made by the Jordan Commission in 1996 and reduce annual admissions of legal permanent residents.

These are commonsense reforms that would benefit the American people, as well as allow newly arriving immigrants the opportunity to more easily assimilate, both economically and culturally.

America's economy is slowly recovering from COVID-19 -- but the unemployment rate remains above seven percent. Importing more foreign workers would boost GDP, but only at the cost of tens of millions of Americans' financial wellbeing. President Trump was right to suspend guest-worker visas. Whoever the next President is, he should keep in mind that "growth" is not substitute for an economy in which the average American has the chance to prosper.

Shakil Hamid, an immigrant from Bangladesh, lives in Gaithersburg, MD.

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