Immigration, Jobs, and the Economy

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Tamar Jacoby, President & CEO, ImmigrationWorks USA; Giovanni Peri, Associate Professor, Department of Economics, University of California, Davis

In the 1980s, the University of Colorado did a study on how legislatures look at problems. It was found that they do not look at data or analysis. They use anecdotal evidence.

Marshall Kaplan, Executive Director of the Merage Foundations, opened the panel discussion with the above observation that lawmakers and legislatures view problems primarily through an anecdotal lens, ignoring data and informed analysis. In the impassioned debates surrounding immigration in the United States, anecdotes tend to overshadow statistical data and informed analysis.

Do low skilled immigrants take jobs from American workers? Do skilled immigrants help innovation and scientific advance in the US? While the political debate on these topics is heated and there are anecdotes from each perspective, it is crucial to look at what the data and economic research conclude to inform policy decisions. To answer these questions, the Comparative Urban Studies Project, with the generous support of the Merage Foundation for the American Dream, invited Giovanni Peri and Tamar Jacoby to discuss their research and understandings of current policy.

Using education, skill level, and labor market statistics as indicators, Giovanni Peri discussed the overall impact of immigration on wage and employment in the United States. Contrary to popular belief, the United States is not in a period of unusually high immigration. While the foreign-born population is greater in absolute numbers, the percentage of immigrants in the US was significantly higher at the end of the 19th century and beginning of the 20th century than it is today. However, in the last 50 years, there has been a shift in the education and skill levels of immigrants in the U.S. workforce; today there are more immigrants with low education levels in relation to highly educated immigrants than there have been historically.

Peri showed that this disparity can also be seen in the skill distribution of immigrants, with a polarization between low-skilled and highly skilled immigrants and not much representation in the intermediate range. Importantly, this skill structure complements the structure of US-born workers, 70 percent of whom are within the intermediate range of education and skill. In his presentation, Peri highlighted the complementary nature of the foreign-born and native-born skill levels, stating that "to maximize the positive productive effect on US workers one would want to choose immigrants ‘as different' from natives as possible."

Further illustrating the complementary nature of immigration, Peri showed how the inflow of less-educated immigrants generates a particular response of native workers. Among the less-educated population, immigrants have a comparative advantage in manual-physical jobs such as construction, drywall installer, and taxi driver. This advantage pushes natives at similar education levels to jobs with high communication content, such as construction supervisor, blueprint designer, and taxi dispatcher. This dynamic process benefits the native-born population as more companies take advantage of the inflow of labor and these second jobs are created and competition is reduced.

Peri continued his discussion with a focus on the highly educated population, highlighting four important characteristics of highly educated immigrants:
1. Highly educated immigrants are more commonly specialized in science and technology, while natives have increasingly specialized in business, law, and administration.
2. They are a very important contributor to general and applied science.
3. They contribute to the US productivity growth.
4. Internationally, there is much demand for highly educated immigrants.

Backing up his assertions with data comparing native and foreign PhD's in the US, the share of patented innovation by the foreign-born population in the US in relation to other leading countries, and cumulated Nobel Prizes in Physics, Chemistry and Medicine, Peri explained that about 33 percent of innovation in the US can be attributed to immigrants. The international demand for highly skilled immigrants necessitates a US policy that embraces rather than excludes this population.

Peri concluded his discussion with an important caveat that goes back to what Kaplan mentioned in his opening remarks. Anecdotal arguments have shaped perceptions and attitudes towards immigration that detract from the facts. Data and analyses show that immigration is an economic asset for the US in the long-term and that immigrants do increase productivity and average income, in addition to acting as an engine of technological and economic growth.

Tamar Jacoby began by outlining four demographic trends that should inform immigration policy but have been ignored by lawmakers:
1. Currently, the US fertility rate is at the point of just below replacement level. The US workforce is shrinking.
2. Baby boomers are starting to retire and will be retiring in huge numbers in the coming years.
3. The demographics of education have changed. In the 1960s, half of the men in the workforce were high school dropouts. Today, that number is less than 10 percent.
4. Americans are not studying science and technology at the same level of past years.

The public are rightly angry that a third of the people coming here are coming illegally.

As Peri illustrated, immigration can play an important role in rejuvenating the workforce, complementing the native-born labor market and contributing to innovation in the US. The cost gap between the need for workers and the number of visas available is significant. In boom economic years, about 1.5 million foreign workers per year compared to the 1 million visas that are issued. High end visas like H-1 visas are "snapped up on the first day they are made available". Rather than taking full advantage of a dynamic influx of labor and innovation, a third of the immigrant population is labeled illegal and valuable resources are used to counter this trend.

Jacoby argued that Congress is ignoring the dynamism of the world economy and that they need to craft a policy that takes the cost of the visa gap into account. Comprehensive Immigration Reform, which has been part of the discussion since 2005, would address four key issues:
1. border enforcement
2. worksite enforcement
3. an answer for the 11 million illegal immigrants currently in the US
4. visas for workers to close the gap – "the least understood and popular by the public and lawmakers"

Citing Lindsey Graham and Charles Schumer's work on immigration, Jacoby highlighted some current ideas being discussed in policy circles:
1. The pipeline for workers should be flexible. In times of high unemployment, shrink the pipeline; expand it in boom years.
2. The distinction between temporary workers and permanent workers is outdated. People come for a short time to make money or for education. The more successful individuals tend to stay, others go home. On this basis, provisional workers should be allowed to come temporarily and "graduate" to a permanent visa.
3. Employment needs to be fair for both immigrants and natives.
4. To avoid indentured servitude-like situations, in work sponsorship situations, the worker, not the employer, should own the visa. The immigrant can be sponsored but should be able to leave the employer after a time.

Drafted by Lauren Herzer, Project Associate, Comparative Urban Studies Project