Skilled Immigrants Helped Saved our Butts.
Does restricting immigration necessarily reduce unemployment? In the long run, it doesn’t, as there is an infinite amount of work to be done. If you doubt that, think of another group that entered the labor force, a group that, from 1950 to 2000, was a more important entrant over that time than immigrants. The group is women.
In 1950, there were 43.8 million men in the U.S. labor force and 18.4 million women.
By 2000, there were 75.2 million men in the U.S. labor force and 65.6 million women.
So the number of men in the labor force increased by 31.4 million and the number of women increased by 47.2 million.
And what happened to the unemployment rate? It was 4.8% for men and 5.3% for women in 1950.
By 2000, it had fallen for both groups, to 3.9% for men and 4.1% for women.
In the long run, therefore, the entry of women did not cause an increase in unemployment for men. And notice that the number of women entering the labor force annually averaged just shy of one million. This is substantially greater than the number of immigrants entering the labor force annually over those years.
We could break out the employment of immigrants versus those already here if I had quick access to the data. But I don’t need to. Notice that during that era, when we had a fair amount of immigration annually, the unemployment rate for both men and women fell.
But what about the short run? In particular, what about now? That’s less clear a priori, but fortunately, Alex Nowrasteh at the Cato Institute had a nice blog post on the issue on June 19. The whole thing is worth reading, especially for the links that back up his claims.
His bottom line is that employment of immigrants has helped employment in general.
Why would that be? Because immigrants, like non-immigrants, are not a homogeneous mass. Think about what happens when the U.S. government, in this case Donald Trump, prevents a foreign worker from getting a work visa. The fact that an employer wanted this worker means that the employer’s estimate was that this worker would have produced something worth at least as much as he/she would have been paid in money and benefits. But when that job isn’t filled by an immigrant, it could take time to find a non-immigrant, and the non-immigrant might not be quite as good in the job. So with that job not being filled for even as little as a month, that’s part of the economy that isn’t producing as much as it could. Even once the non-immigrant is found to fill the job, he/she, as noted, might not be quite as productive.
Here’s an excerpt from Alex Nowrasteh’s post that gives a sense of his reasoning:
Among those visa programs on the chopping block is the H-1B visa for skilled foreign workers. In 2019, two‐thirds of migrants received the H-1B visa to work in computer‐related occupations with many of them employed in the information technology (IT) sector. IT is an important source of productivity growth, but it became more obvious how important it was for saving employment opportunities during the COVID-19 pandemic.
According to research by economist Adam Ozimek, “Remote work has risen rapidly as a result of the pandemic, with more than half of the American workforce currently working from home.” Crucially, he found that “the ability to work remotely has reduced the risk of job loss early in the crisis by 32 percent to 53 percent.” According to related research by Ozimek and others, “[S]tates with a higher share of employment in information work … were more likely to shift toward working from home and had fewer people laid off or furloughed.”
READER COMMENTS
Alan Goldhammer
Jun 24 2020 at 4:43pm
One word simple answer – NO
I see GNC has just filed for Chapter 11 and wants to close maybe 1000 stores. How many people does this represent that will be out of a job. I honestly can’s see unemployment coming down much for the remainder of the year as we begin to see more bankruptcy filings. Amazon warehouse jobs won’t pick up the slack.
RPLong
Jun 25 2020 at 7:29am
If you mean GNC the nutritional supplement retailer, then I would posit that perhaps Amazon warehouses have already taken up the slack. I’ve been buying my nutritional supplements online for years. I used to get some of them at GNC, but their prices were too high and I found it inconvenient to make a special trip to the mall. Eventually, GNC rolled out a loyalty program that required an annual subscription fee in order to enjoy lower prices on supplements. I gave it a try for a year and found that it wasn’t worth it on value considerations.
I now buy all my supplements online from either Amazon, Walmart, or Costco’s websites. The prices are lower, the quality in most cases is equal or better, and the convenience of having it shipped to my door for free is impossible to beat. Best of all, I don’t have to deal with pushy sales-staff peddling “bro science.” I know I’m not the only consumer who has moved from brick-and-mortar retailers like GNC to online vendors. I’d guess that a critical number of us have done so.
It’s true that recent events have probably hastened the demise of a lot of inefficient retailers, but I do think that the more efficient firms are indeed picking up the slack.
Alan Goldhammer
Jun 25 2020 at 10:18am
I agree with this but my point is there are going to be a large number of people who lose jobs and it’s more than retail. Jobs in hospitality (restaurants, hotels, etc.) will also be lost. Where do they find employment? What happens to retail space vacancies?
All of this will lead to a very lackluster recovery.
P Burgos
Jun 25 2020 at 12:22pm
Ideally a lot of those people would find jobs building housing in supply constrained metros like the SF Bay Area, Boston, etc. It isn’t going to happen, but it is not as if we don’t know where the proverbial “$20 bills” are.
robc
Jun 25 2020 at 2:02pm
<em>What happens to retail space vacancies?</em>
Conversion to residential? I know it would require some dezoning, but maybe we will get some good things out of this.
Thomas Boyle
Jun 24 2020 at 6:33pm
The whole “immigrants take our jobs” mantra amounts to a claim that the more people there are, the less likely it is that any one person will be able to find a job.
If this were true, people would leave cities and move to small rural hamlets when they were looking for work, because there would be very few people to compete with them for jobs; and no-one in their right mind would move from a small town to the big city for work, because with all those people there would be far too much competition for jobs.
Of course, what people actually do is the opposite, because they know that people create opportunities faster than they create competition.
So, in fact people don’t really believe that “other people will take our jobs” – their behavior shows they actually believe “other people create jobs”.
Which means the “immigrants will take our jobs” cry isn’t about jobs; it’s about xenophobia. And that, you can’t fix with statistics.
Mark Brady
Jun 24 2020 at 11:02pm
David asks, “Does restricting immigration necessarily reduce unemployment? In the long run, it doesn’t, as there is an infinite amount of work to be done.” And one might add, “and an infinite amount of leisure to be enjoyed.”
But that perhaps focuses on a problem with David’s original statement.
I’ve certainly heard many economists answer the question in the way that David did. Why, even I have said that! But as I think about it further, we as economists should not talk about the amount of work that needs to be done without reference to the price that employers, and ultimately consumers, are willing to pay for labor, and the price that employees are willing to receive for labor as they trade off income from work, and thus the goods that they are willing to buy with that income, against the leisure that they enjoy when they refrain from working.
Matthias Görgens
Jun 25 2020 at 6:05am
The more sophisticated argument is about agglomeration effects raising productivity. See what Thomas Boyle wrote above.
But I think David’s arguments is fine for what it is. Otherwise you have to also argue that productivity increases don’t lead to unemployment. Which is another can of worms as far as folk economics is concerned.
Comments are closed.