New Study By SF Federal Bank Shows Immigrants Boost Wages And Productivity

Yesterday, the Federal Reserve Bank of San Francisco released a report essentially debunking the right wing myth that immigrants steal jobs from U.S. citizen workers. In fact, the study concluded, “immigrants expand the U.S. economy’s productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity.” The study conclusively states, “there is no evidence that these effects take place at the expense of jobs for workers born in the United States.”

The study produced three main findings:

Immigrants don’t “crowd out” U.S.-born workers in either the short or long run.In other words, immigrants aren’t taking jobs from Americans. Instead, the “economy absorbs immigrants by expanding job opportunities rather than by displacing workers born in the United States.” Immigrants in the workforce have “insignificant effects in the short run” and a “significant positive effect in the long run.”

The presence of immigrants is associated with increased output per worker. This is a long-term effect that happens as a result of businesses taking advantage of new immigrant labor. The study estimates that an inflow of immigrants equal to 1% of employment has the effect of increasing income per worker by 0.6% to 0.9%. It may not sound like a lot, but it apparently means that total immigration to the U.S. from 1990 to 2007 was associated with a 6.6% to 9.9% increase in real income per worker, or an increase of about $5,100 in the yearly income of the average U.S. worker.

Immigration is associated with increases in the efficiency and productivity of state economies.The increase in income mentioned above is a result of the boost in efficiency and productivity that new immigrants prompt. Once businesses adjust and expand their physical capital (equipment and structures) to take advantage of new immigrant labor, output increases.

Groups like the Center for Immigration Studies — which never find anything good to say about immigration at all — meanwhile insist that high unemployment among less-educated and younger U.S.-born workers should prompt the U.S. to kick its undocumented immigrants out and shut its doors to the world. However, the Federal Reserve Bank’s study explains that, “among less-educated workers, those born in the United States tend to have jobs in manufacturing or mining, while immigrants tend to have jobs in personal services and agriculture.” Also, U.S. citizens tend to have “relatively better English language skills” which means “they tend to specialize in communication tasks.” Immigrants usually specialize in manual labor. “This results in specialization and improved production efficiency,” states the report.

The report doesn’t distinguish between undocumented and documented immigrants, however, other studies that have uncovered similar findings have further concluded that enacting comprehensive immigration reform that puts undocumented immigrants on a path to legalization would amplify the positive effects of immigrant workers cited in this study.