Should we cut immigration to help natives?

How restricting immigration is like shooting ourselves in the foot

In J.K. Rowling's Harry Potter and the Sorcerer's Stone, Ron sacrifices himself in a game of wizard’s chess to clear the path for Harry and Hermione to continue their quest. It leaves Ron unconscious but enables the group’s ultimate success. 

Immigration policy needs a similar reckoning about wages and immigration surges. Defenders of immigration exhaust themselves by arguing that immigration doesn’t reduce wages, while critics do the same by pointing out the exceptions. Neither realizes that they mostly agree—Ron needs some medical care after the game of chess just like the small number of people who lose from immigration need a hand up!

In the story, Ron makes a quick recovery. Research on immigration suggests the same is true for natives. Most are unaffected by immigration, and those who are affected, are quickly made better off.  Even so, the magnitude of losses is small. For the most part, immigration negatively impacts only those without a high school degree—just one in ten Americans. Ultimately, it’s a temporary reduction in wages by 3 or 4 percent according to George Borjas’s research.

Unlike in wizard’s chess, there’s no sacrificial choice in immigration policy. Increasing immigration in the short run may seem like “losing the battle” as wages of low-skilled workers are negatively impacted, but in the long-run immigration brings far more benefits to everyone. In fact, American history is full of examples of immigration restrictions doing more harm than good. Immigrants are key to the innovation that powers the US economy’s growth. On top of that, immigrants start businesses that then provide jobs for other Americans.

Looking at the full picture, the net benefit of immigration is not a close call for Americans. Ninety percent of Americans don’t have strong reasons to expect to lose wages to immigrants. And every American benefits from the improvements brought by immigrant inventors and entrepreneurs. In total, research on immigration makes clear that restrictions fail to help those in need, and instead make the entire country worse off. 

Overall, the research suggests a simple guiding light for immigration policy: We’re better together. Immigration contributes to a stronger and more prosperous country. With immigrant support, we’ll be better able to help natives in need.

The relationship between immigration and wages isn’t black and white

Immigration’s effect on the wages of workers is a loud area of public debate, but practically settled in the academic world. In his book We Wanted Workers, Harvard’s labor economist George Borjas makes a compelling argument that adding more people into a country lowers the wages of high school dropouts. 

Most of Borjas’s research examines the 1980 Mariel boatlift during a time when Cuba’s economy was ailing. On April 20, 1980, Cubans who wanted to emigrate to the United States were allowed to board at the Port of Mariel and were taken to Florida. The first boatlift delivered 125,000 Cuban refugees. This influx of people increased Miami’s labor force by 7 percent. 

Borjas’s research on the boatlift concludes that because of this increase in the number of workers, wages fell for low-skilled workers in Miami, “by at least 10 percent in the exceptional context of the Mariel supply shock…low skill workers in Miami were indeed made worse off by the Marielitos.”' For Borjas, this research is why he compares immigration with income redistribution programs. Except, with immigration, Borjas argues that the redistribution is from the poor to the rich.

Of course, there’s extensive research on the Mariel Boatlift. Other researchers disagree with Borjas’s conclusion. One powerful critique centers on the sparse data in Borjas’s analysis. For example, researchers have argued that his wage effects are only there because his data includes 17 people in Miami. 

We have better evidence of wage effects from more recent immigration surges. Giovanni Peri, Derek Rury, and Justin Wiltshire study the immigration from Puerto Rico into Orlando, Florida because of Hurricane Maria. They found that immigration overall had a positive, but close to zero effect on the wages of those already in Orlando. Across the entire city, employment actually rose a small amount. But the story gets more complicated when you look within industries. 

Migrants into Orlando didn’t all work in the same industry. In Orlando’s construction market, wages fell because of the increase in the number of workers. But in the retail and hospitality sectors, wages rose. Why the difference? Because the construction industry saw a huge increase in labor supply. About four times as many displaced Puerto Ricans started working in Orlando’s construction sector as joined the retail and hospitality sectors. 

Taking the research on Hurricane Maria and the Mariel Boatlift together, it is clear that immigration can reduce wages. However, it’s far from a simple, one-to-one relationship of one immigrant in and one native out. Immigrants are complementary—they make natives more productive rather than replacing them. In addition, immigrants also shop at local stores. That expands the demand for workers. Both of these reasons suggest that immigration can increase the wages of natives as they did in the retail and hospitality sectors after Maria. 

As the results of the research on Hurricane Maria illustrate, the effect that you find depends on the way that you split the data. If you look at a single sector where labor supply increased the most, or look at just a subset of workers more similar to immigrants, such as those without a high school degree as Borjas does in his research, then you’re more likely to find a negative effect on wages. But if you wrap everyone together, then you find an overall improvement that is close to zero, something that other research on immigration finds. 

In the consensus view of immigration’s effects, it’s not really natives who should worry about new immigrants. Instead, earlier immigrants are most likely to have to compete directly with the new arrivals. That’s one of the primary reasons that so many studies find close to zero effect of immigration on the wages of natives—it’s a comparison of apples to oranges. 

Some want to restrict immigration to protect native wages

In an effort to protect natives from competition with immigrants, prominent politicians have called for restricting immigration to raise the wages of less educated natives. The argument here is that for natives to have a chance at the American Dream, immigration should be slowed or even stopped. 

Former President Trump is perhaps the most prominent example in recent history. His administration tried to reduce immigration by half through the Reforming American Immigration for a Strong Economy Act. The “RAISE Act” would have limited immigration of low-skilled workers as a way to help low-earning Americans. Trump also advocated for building a wall around the US-Mexico border with an agenda to protect Americans by restricting immigration. 

The central shortfall of these arguments is that they overextend the evidence. Yes, immigration sometimes reduces the wages for natives, but that’s rarely the case. When immigration does reduce wages, it’s on a small sector, not on everyone. 

None of that implies that policymakers should ignore these costs—every American matters! These are people who need a hand-up. But this common overextension is the wrong cure for the problems that face Americans. It assumes that because immigration inflows sometimes reduce wages for some people, that the right way to protect Americans is to prevent immigration. But past immigration restrictions, even the largest ever in American history, suggest the opposite. The “cure” of immigration restrictions is much worse than the problem they aim at solving.

Past immigration restrictions haven’t increased native wages

Two noteworthy reductions in immigration to the US come from the Chinese Exclusion Act of 1882 and the ending of the Bracero Program in December 1964.

The Bracero program was a guestworker program that allowed Mexican workers to come to the US from 1942 until the end of 1964. President John F. Kennedy ended the program in an attempt to protect native workers from competition with migrant workers. The motivation mirrors the intentions of more recent proposals like the RAISE Act. 

The elimination of the Bracero program meant excluding about half a million Mexican agricultural workers from the US. This makes it one of the largest attempts to protect native workers in US history. 

Ending the Bracero program didn’t have any of the benefits that the Kennedy administration expected. Instead of hiring natives, farmers turned to machines. Where technology couldn’t entirely make up for the fewer workers, they temporarily raised wages to attract labor. However, it was more common that farmers would switch to growing crops that are easier to produce with machines. Because of this, the Bracero exclusion didn’t sustainably improve the lives of Americans. In fact, both American consumers and American farmers were more hurt than helped. 

The Chinese Exclusion Act of 1882 was not as large of an exclusion of foreign workers. But it had more nuanced effects that make it important for understanding the trade-offs in immigration policy. The act prevented the entry of Chinese people for more than 50 years. Again, the economic justification was about protecting native workers from competition with Chinese immigrants. And again, immigration restrictions ultimately did more harm than good.

Research on the Chinese Exclusion Act by economist Dean Hoi traces individuals through the US Census records. Because the Census declassifies its records 72 years after they are collected, Hoi can trace individuals through their life before and after the Chinese Exclusion Act to see if they benefited. After tracing people through these records, Hoi finds a short-term benefit, but a life-long loss from the exclusion of Chinese immigrants. 

The short-run benefits accrue because it seems the Exclusion Act did maintain some positions for natives that would have otherwise gone to immigrants. He calls this the “honeypot” effect. People were drawn to the now-open positions and away from educational opportunities or otherwise improving their talents. This makes sense—taking four years to go to college today means sitting out of the labor market for four years. The same trade-off between education and working existed in the past. 

So for someone who got a job that would have otherwise gone to an immigrant, the long-run costs outweighed any short-term benefits. That person may have earned more at first, but over their lifetime ultimately earned between 6 and 15 percent less than they would have if they had invested in education instead. Americans who lived in places where the Exclusion Act took effect remained in low-skilled employment because of the higher pay and did not improve their skills through education. 

The US experience with large immigration restrictions tells a consistent story—every time we restrict immigration we shoot ourselves in the foot. We fail to make those we want to help better off. At the same time, we make the entire country worse off. After all, immigrants are more likely than natives to start new businesses and create inventions that improve our standard of living. 

Immigration restrictions do more harm than good

Research on America’s history of immigration restrictions illustrates that more restrictions won’t lay the right groundwork for America’s future. Nor will they promote the economic success of Americans in need. The right path will mean improving the US education system, tackling impediments to economic growth, and reorienting public concern at the right targets, in lieu of immigrants. 

Policymakers need to look at the entire game—not any single piece—to make effective policy. Helping those in need can be better done with direct policies that open economic opportunities and encourage growth. Immigration restrictions are attacking the wrong targets.