Impact of Immigration on United States Economy


Immigration has a huge impact on the American economy, just in 2014, a total number of 42.4 immigrants have been recorded to be living in the United States, including those who are undocumented and working beneath the government monitoring (Zong & Batalova, 2016). An estimated 11.4 million undocumented workers have been reported to be working in the US since 2012 (Sherman, 2015). The debate as to whether the immigrants have positive or negative impact on the American economy and ultimately on the American people is still yet to be settled by research reports, as most reports are contradictory, wherein some are positing about the positive impacts of the increasing number of immigrants in the United States while others are highlighting the negative impacts of this occurrence.


Review of Literature

On one hand, experts argue that immigrants working in the United States, whether documented or undocumented, have been taking the jobs that would otherwise go to local citizens, as a result, unemployment rate for Americans is increasing and it is getting harder and harder for new high school and university graduates to find a job opening that would suit their knowledge, skills, and preferred wage (Epenshade & Hempstead, 1996). For immigrants working professionally in high skilled jobs, their expertise are sought out by local companies and migrate to the US upon getting a job offer that would fit their expertise. For instance, immigrants from Europe and Asia are mostly highly skilled professionals in medicine, science and technology, and engineering; thus, some local companies try to hire these experts to increase the general productivity of their company by sponsoring their green cards or fixing their temporary working visa (Kaushal & Fix, 2006). Evidence has shown that job competition for highly skilled positions is higher between native employees and immigrants (Shachar, 2006). This suggests that immigrants who recently moved to America tend to take jobs that require higher education and expertise as local companies have a harder time finding natives who would have the same level of education as the highly skilled and educated immigrants.

Other jobs that are mostly taken by immigrants in the United States include jobs in skilled professions such as nursing, education, and information technology (Kiersz, 2015). It has been argued that immigrants taking these jobs that are meant for local citizens could be deleterious to the economy. New graduates and other citizens seeking employment end up being unemployed with no source of income, thus, increasing the poverty rate (Borjas, 2003). The competition for work between the natives and the immigrants is most pronounced in the low-skilled jobs or jobs that do not need formal educational training such as jobs in housekeeping, care giving, construction, food industry, manufacturing and agriculture (Kiersz, 2015). Immigrants account for a considerable proportion of the employment in these low-skill jobs that they significantly increase the labor supply, thus impacting on the general wage of all workers in these fields for both immigrants and locals. The increased supply of labor has been argued to significantly decrease the wages of low-skilled workers; as a result, the undocumented immigrants are more willing to take these jobs at a lower wage as compared to locals, leading to higher unemployment for locals which led to the notion that immigrants have been stealing the jobs for the locals (Epenshade & Hempstead, 1996). Furthermore, much of the undocumented low skilled workers are willing to work without benefits at a lower wage, thus, more and more employers are quick to hire undocumented workers to save on the cost of labor. As a result, even the local workers are forced to take jobs at a lower wage just so they could compete with the immigrants from taking all the jobs (Davidson, 2006). As a result, it is argued that immigrants are responsible for limiting wage increase in low-skilled jobs in the United States since the 1970s when the number of immigrants has started to surge which continues to increase until now. From increasing unemployment rate for natives to limiting wages of certain jobs, immigrants have been blamed for generally increasing the level of families under the poverty line in the United States (Davidson, 2006).

It has been argued that since the immigrants are mostly taking the highest skilled and lowest skilled jobs in America, the wage increase in these areas have been seen to decline for all workers since the immigrants drive the wages down (Borjas, 2003). However, in a research by Ottaviano and Peri (2012), they have concluded, using the data on wages for immigrants and native workers in the last few decades, that native workers even experienced a small but positive increase in wages in general, and it is the immigrants who are mostly affected by the decreased wages, not the locals.

Another negative impact of immigrants on the economy is that majority of them are undocumented workers, and they receive their wages in cash without paying any taxes to the government (Camarota, 2007). This means that the government is losing money on low skilled undocumented workers, yet the government still continues to spend for them, such as giving them benefits, assistance and welfare, especially those with children who are born in America as American citizens (Camarota, 2007). Furthermore, it is often the less educated immigrants who have more children who would all benefit from government funded public education. In addition, they increase the tax burden on taxpayers since these immigrant children are most likely nonnative English speakers who receive a higher cost of education as compared to those who can speak English fluently (Congressional Budget Office, 2007).

Despite these arguments about how immigrants are stealing jobs, increasing poverty and driving the wages down through competition, many scholars would argue that immigrants have a positive impact on the American economy. For one thing, as it was refuted earlier, the decrease in wages only impact the immigrants and not the locals, indicating that it is the impact of immigration on worker salary is does not generally impact the wages of the locals (Ottaviano & Peri, 2012)

Furthermore, some scholars have observed that in terms of low-skilled jobs, such as those that do not require a higher education or a high school diploma, immigrants are not stealing the jobs of the locals, rather they are taking the jobs that locals are not willing to work on (). These are the jobs that are deemed undesirable for locals; thus, immigrants are in a way, helping fill up the jobs that the locals do not even want (Peri & Sparber, 2009). Furthermore, since the migrants with little to know education are often unable to communicate properly, they take the jobs that normally do not require them to have any communication skills. These are the jobs in areas such as construction or agriculture that only require intensive labor. Most Americans, even those who do not have a higher education or a high school diploma would not take these jobs, they would opt to take jobs wherein they could capitalize on their language and communication skills, where competition against immigrants is very low. Thus, they opt to take jobs in retail, sales, and other jobs that require customer service (Peri & Sparber, 2009). These differences in preferences and skills among the less educated immigrants and locals show that there really is not any competition among jobs since locals and immigrants want or fit in different jobs. Thus, completely banning immigrants from working in the low skilled jobs would entail a huge deficit in labor in certain industries like construction and agriculture that would be disastrous for the economy, as it would injure these industries severely if migrant workers do not do these jobs (Peri & Sparber, 2009).

This trend could also be observed among the highly skilled immigrants and locals, the difference in communication skills tend to disperse the locals and the immigrants to different fields or industries that also work in minimizing the job competition. For instance, highly educated immigrants are more likely to take technical and scientific jobs that require minimum English communication skills, on the other hand, highly educated locals are more likely to take jobs in leadership, management, and media and communication wherein they face little to no competition from immigrants (Peri & Sparber, 2009).

This job specialization between locals and immigrants regarding skills, education and communication skills have led to increase in productivity, especially among the states where there is a higher population of immigrants (Peri, 2012). Since the immigrants are taking the jobs that offer lower wages and do not require communication skills, the locals move to the jobs wherein they have a competitive advantage over the immigrants, thus, the skill and job specialization have led to a more productive economy (Peri, 2012).

Another argument that refutes the claim that immigrants steal the jobs from the local workers and increases unemployment is that immigrants even generate jobs, other than the fact that a lot of the new entrepreneurs in the US are immigrants who build businesses and create jobs for others, the low skilled and low wage earners tend to save jobs because their impact on decreasing production cost could save a company from going out of business, or they could also keep the companies from updating to more expensive technology that would automate production that might result from losing manual jobs (Malanga, 2006)

One positive impact of immigrants in the economy, especially the undocumented workers in low skill jobs, is that they reduce the cost of production because they are willing to work with lower wages compared to locals (Malangga, 2006). As a result of reduced production cost, companies and manufacturers could afford to reduce the prices of goods on the market, thus, impacting the local citizens positively (Malangga, 2006). The reduced wages of immigrant workers cut the prices of goods for the consumers that could ultimately increase local spending that improves the economy.

Furthermore, immigrants have been reported to increase productivity and innovation in America, as most of the successful new businesses in the United States have at least one immigrant founder (Anderson, 2011). In addition, most of the patents that have been registered in the States are written by foreign migrants (, 2012). In terms of advanced education, a major proportion of postgraduate diplomas in the US is awarded to immigrants or immigrant children (, 2012).  In addition, most of the new successful entrepreneurs in the United States are immigrants, even generating jobs for others. Highly educated and less skilled immigrants often arrive in their destination countries carrying with them a special set of skills and knowledge and education that could further increase the quality of the country’s labor supply and supplement whatever skills that the country is missing (Hunt, 2010). In addition, especially in the United States, immigrants have been reported to be responsible for a significant proportion of technological inventions and research and development (Hunt, 2010).

One of the arguments mentioned earlier that support the negative impact of immigrants on the economy is the fact that undocumented immigrant workers mostly work with out paying income tax but they still receive government funding through welfare, education and assistance. Other scholars have argued that despite this, the fact that immigrants are mostly younger than the retiring population, suggest that they do not need as much healthcare assistance from the government, they are more able thus, they are capable of doing hard labor that most of the local population are not willing or capable to do (Gagnon, 2014). In terms of education, the immigrant children for whom the government spend for often graduate and become a useful member of the labor force in the future, thus, compensating the government even more than what the government has spent for their education. Despite not paying taxes, the immigrant workers also spend a considerable amount of money on their daily needs and wants, thus they still contribute to the country’s economy.



Overall, the impact of the continuous increase of immigrants in the United States has been generally positive according to economists and other scholars. The few negative impacts identified by scholars who suggest that immigrants are harmful to the economy have been refuted by further research and evidences that show otherwise. For instance, the popular notion that immigrants in the United States are stealing the jobs from the local workers have been shown to be fallacious since the immigrants are mostly taking the jobs that the current local labor force is unwilling or unable to fill, such as the lowest skilled jobs and the highest skilled jobs. Thus, they are not stealing jobs rather they are supplementing the labor market. Furthermore, immigrants promote job specializations wherein locals and immigrants tend to take the job that matches their communication skills, thus increasing the productivity of the state or country.

The notion that the immigrants are decreasing the wage growth for all workers is also refuted by the evidence that the wage decrease has only impacted the foreigners themselves and has no significant impact on the wage growth of local workers. The lower wages given to the immigrants have a positive impact in terms of lowering production costs. These savings from production could lead to lower prices of good in the market that would be beneficial to the consumers and the economy because it would increase local spending.

In conclusion, the skills, knowledge, expertise and complementary labor that immigrants bring into The United States have had positive impacts on the economy so far. However, further research is still needed to accurately identify the extent of how immigration policies impact economic growth. According to the available data so far, immigrants have been generally helpful to the economy and have a positive indirect effect on the local workers’ productivity and job security.







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