Griswold on Why Immigration is Good for America

Daniel Griswold explains why Americans benefit from immigration:

One argument raised against expanded legal immigration has been that allowing more low-skilled foreign-born workers to enter the United States will swell the ranks of the underclass. The critics warn that by "importing poverty," immigration reform would bring in its wake rising rates of poverty, higher government welfare expenditures, and a rise in crime. The argument resonates with many Americans concerned about the expanding size of government and a perceived breakdown in social order.

As plausible as the argument sounds, it is not supported by the social and economic trends of the past 15 years. Even though the number of legal and illegal immigrants in the United States has risen strongly since the early 1990s, the size of the economic underclass has not. In fact, by several measures the number of Americans living on the bottom rungs of the economic ladder has been in a long-term decline, even as the number of immigrants continues to climb. Other indicators associated with the underclass, such as the crime rate, have also shown improvement. The inflow of low-skilled immigrants may even be playing a positive role in pushing nativeborn Americans up the skills and income ladder.

The arrival of low-skilled, foreign-born workers in the labor force increases the incentives for younger native-born Americans to stay in school and for older workers to upgrade their skills. Because they compete directly with the lowest-skilled Americans, low-skilled immigrants do exert mild downward pressure on the wages of the lowest-paid American workers. But the addition of low-skilled immigrants also expands the size of the overall economy, creating openings in higher-paid occupations such as managers, skilled craftsmen, and accountants. The result is a greater financial reward for finishing high school and for acquiring additional job skills. Immigration of low-skilled workers motivates Americans, who might otherwise languish in the underclass, to acquire the education and skills necessary so they are not competing directly with foreign-born workers.

The shrinking of the native-born underclass contradicts the argument that low-skilled immigration is particularly harmful to African-Americans, who are disproportionately represented in the underclass. By each of the three measures above—poverty, income, and educational attainment—the number of black American households and individuals in the underclass has been declining. Native-born blacks have been moving up along with other native-born Americans as immigrants have been moving in.

Another contribution of immigration has been that it has changed the character of the American underclass for the better. Years of low-skilled immigration have created an underclass that is not only smaller than it was 15 years ago, but also more functional. Members of today’s more immigrant and Hispanic underclass are more likely to work and less likely to live in poverty or commit crimes than members of the more native-born underclass of past decades.

One striking fact about low-skilled immigrants in America, both legal and illegal, is their propensity to work. In 2008, the labor-force participation rate of foreign-born Hispanics was 70.7 percent—compared to an overall rate of 65.6 percent for native-born Americans. Immigrants 25 years of age or older, without a high-school diploma, were half again more likely to be participating in the labor force than native-born dropouts (61.1 percent vs. 38.4 percent). According to estimates by the Pew Hispanic Center, male illegal immigrants, ages 18–64, had a labor force participation rate in 2004 of an incredible 92 percent. Illegal immigrants are typically poor, but they are almost all working poor.

Conclusion

Members of Congress should not reject market-oriented immigration reform because of misguided fears about "importing poverty." Based on recent experience, a policy that allows more low-skilled workers to enter the United States legally would not necessarily expand the number of people living in poverty or the number of low-skilled households demanding government services. It would not impose significant costs on American society in the form of welfare spending or crime abatement.

Daniel T. Griswold is the director of the Center for Trade Policy Studies at the Cato Institute.