Any day now, White House polymath Jared Kushner is set to deliver an immigration reform outline to President Trump. Reportedly, the plan will not propose increasing total annual immigration rates. Rather, it will call to add more economic immigrants at the expense of family immigrants. Given the significant economic and fiscal need for more legal immigration, a Kushner report that does not propose increasing immigration is a missed opportunity.
There are currently more than 7 million unfilled jobs in the country. That’s more than the number of unemployed Americans plus the number who have given up looking for work altogether. This number is set to grow as the busy summer labor season begins. Last week, the Social Security trustees announced that the program is set to go bankrupt by 2035 as the ratio of workers to retirees continues to plunge.
Kushner seems to justify his plan not to raise immigration levels by saying that Trump’s number one immigration priority is protecting American workers’ wages. “We have a lot of objectives,” says Kushner. “Number one, he wants to protect American wages.” Protecting wages is also the argument that Sens. Tom Cotton, David Perdue, and Josh Hawley used to justify their recent Senate legislation to cut legal immigration flows in half. This wage point has become the main restrictionist talking point.
Its premise is based on the supply and demand model. If the supply of workers rises, we are told, the price of labor must fall. Sounds logical, yet the Trump administration doesn’t have to look far to see how this model fails to deliver as promised. Namely, it can look at its own impressive labor market performance and wage growth.
Since President Trump was elected, about six million new net workers have been added to the economy. The national unemployment rate has fallen by nearly 25 percent to just 3.8 percent of the labor force. And prime-age labor force participation has grown significantly and is now back to pre-Great Recession levels.
Despite this significant labor market influx, wages are growing at their fastest pace in a decade. Blue-collar wages are rising even faster. This wage growth is even more impressive when you consider that those coming off the labor market sidelines are likely less-skilled, and thousands of relatively higher paid baby boomers retire each day.
By restrictionists logic, shouldn’t this big increase in worker supply put downward pressure on wages?
What’s more, the parts of the country that are experiencing the fastest wage growth are also the parts with the most immigrants and fastest growing populations. In contrast, the areas with stagnating wages are also the areas with the fewest immigrant and slowest growing populations. These correlations should be flip-flopped if more immigrants and workers really reduced wages.
According to a 2017 study in the Journal of Economic Geography, a one-standard-deviation increase in a metro area’s immigrant diversity is associated with a 5.8 percent rise in its wages.
Perhaps the best evidence that a greater supply of workers does not reduce wages is the unprecedented growth in the female labor force beginning in the second half of the 20th century. Between 1950 and 1978, the female labor force participation rate grew from one-third to half, while real wages more than doubled. According to a study by a University of Akron economist, every 10 percent increase in working women raises wages in an area by 5 to 13 percent.
When White House immigration chief Stephen Miller was asked for an example of immigrants reducing wages, he pointed to the Mariel boatlift of 1980, when Miami’s low-skilled labor force rapidly grew after former Cuban President Fidel Castro temporarily eased emigration restrictions. Yet multiple studies drawing on Census Bureau data show no subsequent effect on the wages of Miami’s low-skilled workers. Miller pointed to a study conducted by Harvard economist George Borjas that purported to show a decrease in wages, yet its sample size was a mere 17 people, among other methodological problems.
The Trump administration and a growing number of conservatives are using this wage deflation argument to justify their opposition to increasing immigration, which the country badly needs. The libertarian and business wings of the conservative movement should call them out for invoking a false premise.
Jordan Bruneau is an immigration policy analyst in Los Angeles.