Immigration and Economic Realities: A Closer Look Amidst Congressional Negotiations
In the midst of critical discussions over aid to Ukraine and Israel, Republican lawmakers are introducing a surprising twist, linking support to changes in the U.S. immigration system. President Joe Biden has acceded to this unusual pairing in a legislative package, but a deal still needs to be completed with Congress racing against time before recess.
The proposed changes include restrictions on the asylum process and modifications to the Biden administration's parole programme for temporary migrant residence and work authorization. This unexpected connection has sparked debates on the economic implications of immigration, prompting a closer examination of its effects on wages, jobs, and the overall economy.
Zeke Hernandez, a professor at the University of Pennsylvania's Wharton School, shared insights in an interview with "Marketplace Morning Report" host Sabri Ben-Achour to shed light on this complex issue. Hernandez, whose forthcoming book delves into the subject, provides a nuanced perspective on the economic impact of immigration.
Wages and Jobs: Dispelling Common Misconceptions
When addressing the classic question of whether immigration reduces wages or causes job losses for native workers, Hernandez unequivocally states that the evidence contradicts these assumptions. He emphasises that immigrants contribute positively to various factors essential for economic growth, such as increased investment, the introduction of new ideas and technologies, and the creation of demand for goods and services.
The professor dispels the notion that immigrants directly compete for the same jobs or depress wages. He explains that immigrants often take on different roles, and even in sectors where both natives and immigrants work, their skills and preferences differ, mitigating direct competition.
The Myth of Unwilling Native Workers
Addressing the argument that native workers would take jobs if wages were higher, Hernandez dismisses this claim, citing evidence that, in many sectors, natives are unwilling to perform specific jobs. He shares examples, including North Carolina farm jobs in 2011, where, despite high unemployment, few natives applied for available positions, highlighting the practical challenges faced by employers in attracting native workers.
High-Skill Immigration: Driving Innovation
Hernandez emphasises the economic necessity of immigrants across skill levels. He notes that immigrants contribute significantly to various sectors, including low-skilled jobs such as agriculture and hospitality and high-skilled roles in innovation and entrepreneurship. The professor highlights that immigrants are crucial in generating patents and founding startups, contributing disproportionately to economic growth.
Immigration and Investment: A Symbiotic Relationship
The interview explores the connection between immigration and investment, revealing that when immigrants settle in a community, companies from their home countries tend to invest more in that community. Hernandez provides examples, such as a restaurant chain targeting areas with a high concentration of immigrants, demonstrating how immigrant presence attracts investment, creates jobs, and contributes to economic development.
Short-Term Costs vs. Long-Term Gains
Regarding concerns New York City Mayor Eric Adams raised about the short-term costs of accommodating immigrants, Hernandez acknowledges the initial financial burden on localities. However, he emphasises that, in the long run, immigrants contribute positively to the U.S. economy, outweighing short-term costs through increased tax revenues and economic activity.
Navigating the Path Forward
As Congress grapples with the complex intersection of foreign aid, immigration, and legislative packages, Hernandez suggests that the U.S. needs more immigrants to meet the demands of its growing economy. He points out that the current immigration system, last updated in 1990, fails to align with the current economic landscape and job market, urging policymakers to consider a substantial increase in legal immigration.
While Hernandez acknowledges the difficulty in pinpointing an exact number, he contends that historical evidence and contemporary economic needs indicate that the U.S. can and should accommodate more immigrants to support sustained economic growth. As negotiations continue on Capitol Hill, the economic reality of immigration remains a central and contentious aspect of the ongoing political discourse.