The Immigration-Wage Myth
Why are people frustrated by high levels of immigration? As refugee crises proliferate, this has become a central political question. In order to justify anti-immigration policy or rationalize restrictionist sentiment, commentators and elected officials have repeatedly returned to one hypothesis: Immigration must be bad for American workers.
There’s just one problem: This hypothesis is wrong. Economists have studied this question repeatedly, in a variety of contexts and in every segment of the population, and they have found that the demand effect consistently outweighs the supply effect. Simply put, when immigrants come to a place looking for jobs, they also demand goods and services—thus creating jobs for native-born workers. Immigrants need legal services and taxi drivers; they need groceries and cars. The question has always been which effect is bigger. And the literature has resoundingly answered that the demand effect wins out.
This doesn’t explain away all immigration worries. But it should force politicians to seriously reckon with why xenophobia exists instead of resigning themselves to treating new immigrants as an economic burden, when, for example, they were actually the “sole source of growth in the U.S. working-age population in 2021 and 2022.”
