One, immigrants tend to bring a different set of skills and differing preferences for the kind of work they perform compared to native-born workers, which means immigrants are less easily substituted for their native-born counterparts.
Two, by increasing the size the labor force, immigrants tend to boost the returns to capital, stimulating more investment in the economy and thus raising the productivity and wages of all workers, including the native-born.
Immigrants can also boost investment through their own human capital and entrepreneurial spirit. A 2007 Duke University study found that one-quarter of all engineering and technology companies launched between 1995 and 2005 had at least one key founder who was foreign-born. Those companies with at least one immigrant co-founder produced $52 billion in sales and employed 450,000 workers in 2005.
Three, for all the political hype over immigration, the number of immigrants and their output continue to be modest compared to the overall size of a U.S. economy that employs close to 150 million workers and produces more than $14 trillion in output a year.
The best approach to immigration as our economy recovers from recession would be to expand channels for legal entry. Legal immigrants tend to invest more in their job and language skills, and they enjoy more bargaining power in the market place, resulting in higher wages not only for the immigrants but for Americans working alongside them.
There is a lot a blame to go around in Washington for the recession and the resulting loss of millions of jobs in the past few years. Immigrants working hard in our economy today are not part of the problem, but part of the solution.
Daniel Griswold is director of the Cato Institute’s Center for Trade Policy Studies. He has written widely and testified before Congress on U.S. trade and immigration policy.