UW News

June 6, 2006

We should welcome them to the melting pot

Much of the conventional wisdom about immigration is just plain wrong. Done right, immigration doesn’t take jobs away from Americans and is clearly good for the economy. Current policy, though, is miles away from done right.

First, a two-question quiz. Which country has been the world’s outstanding economic success story over the last couple of hundred years? (The right answer is the United States of America).

Which country has always been known as a nation of immigrants? (Right answer: see above.).

As history shows, immigration has been good for us. There’s a good reason for this positive outcome. People with extra get- up-and-go are the people who get-up-and-come. We all benefit from immigrants’ energy, talent, and fresh perspective, just as we have throughout our nation’s history.

But what about jobs? Here’s a secret that all economists know, but that we seem to be incapable of explaining to people: the economy doesn’t have a set number of jobs. There’s roughly one job per person who wants a job. When someone comes to the U.S. to work, the number of jobs goes up by one. Why? Because the new immigrant increases demand for goods and services. Supply and demand balance.

In fairness, the balancing story is only about 98 percent true. In particular, the kind of skill-unbalanced immigration we have now creates winners and losers in the labor market for Americans who already live here. On net the winners come out ahead, but there are definitely individuals who get hurt. Let’s take an example.

Many Mexican immigrants work installing drywall. It’s a job that requires skill and hard work. You don’t have to speak English. And because drywallers don’t work for big corporations, your documentation doesn’t have to be perfect.

Who wins from the influx of drywallers? The immigrants benefit from a better wage than they could earn in Mexico. Home builders benefit from cheaper labor and, indirectly, so do you because the cost of housing is kept down. And everyone who sells goods and services to the immigrants wins too.

Who loses? Americans who install drywall who now have to compete with cheaper labor.

Under the current system, most immigrant labor competes with the skill set at the low end of the wage distribution. (There’s a smaller group of legal immigrants who compete in the high-tech sector for jobs; jobs like mine for example.) What would happen if the skill set of immigrants matched the distribution of skills of Americans? Immigrant labor would increase the supply of goods across the whole spectrum. Immigrant purchasing power would increase the demand for goods in roughly the same amount. Supply and demand would balance in an expanded economy. We’d get the benefit of immigrant get-up-and-go. Most of all, we’d move away from the current system in which the gains we all make as consumers come at the expense of low-to-moderate-wage workers.

Other Western democracies take a selective approach to immigration, although many select for skills in short supply rather than take the broad-spectrum approach. While immigrants help us build houses and pick crops, we’d do well to balance this with shop owners and nurses and college professors.

Let’s do as Canada and New Zealand do. Invite in immigrants who add to our country and then make them welcome as the newest members of our American melting pot.