Understanding Why Immigrants Are So Crucial to America’s Economic Growth
(FEE) – On May Day, workers rallied across the nation in support of labor and immigrant rights. Their end goal is to make immigration a key issue in the 2018 midterms. If Congressional Republicans want to help struggling Americans and boost their support going into the midterms, they should take this opportunity to fix our broken immigration system so that more immigrants can call America home.
Enlarging the Labor Supply
Increasing immigration levels would make U.S. companies more efficient by increasing the labor pool. Many employers say finding qualified talent is one of their biggest business challenges. In 2015, Randstad US, a staffing company, interviewed 2,004 hiring decision-makers across industries to identify their biggest business challenges. Randstad found that “the inadequate supply of qualified and skilled talent is the second biggest threat to companies’ ability to meet revenue or business performance targets.”
Enlarging the labor pool could fix this by giving employers access to more talent to fill holes in their workforce. The stereotype of immigrants as uneducated field workers is both unfortunate and false; in 2014, 29 percent of immigrants to the U.S. had at least a college degree. That same year, 32 percent of computer programmers were first-generation immigrants. It’s time to start treating prospective immigrants like the skilled workers they often are—and it’s past time to give employers access to this labor pool.
Immigration reform could also help companies cut costs by hiring more affordable labor. Many conservatives worry that if Ronaldo can do the same job as John at half the cost, then John will lose out. Even if that were true, it’s only half the picture. In this scenario, John loses out temporarily. But his company saves money, and they can funnel those savings into expanding operations, developing new products, and even hiring new people. Access to cheaper labor could also help companies to survive that are struggling with too-high costs right now.
From an economic perspective, immigrants are like a piece of technology that’s cheaper and more efficient than hiring someone. Free-market advocates aren’t Luddites about new technology—so why are we so scared of new labor?
Enlarging the Labor Demand
Even if Ronaldo fills John’s job, more immigration gives John a better chance of finding a replacement job. Immigrants don’t just take jobs—countless studies show that they actually create more jobs than they fill. Economics professor John McLaren, of the University of Virginia, and Gihoon Hong, of Pusan National University in South Korea, studied US Census data from 1980 to 2000. According to Hong and McLaren, “Each immigrant creates 1.2 local jobs for local workers, most of them going to native workers.” And 62 percent of these jobs were in the service industry.
How can this be true? According to Harvard Business Review, “immigrants are almost twice as likely to become entrepreneurs as native-born U.S. citizens. Immigrants represent 27.5 percent of the countries’ entrepreneurs but only around 13 percent of the population.” In economics parlance, they do increase the supply of labor, but by creating new companies, they increase the demand for labor even more. As a result, when immigrants come to the U.S., wages actually rise.
This shouldn’t be surprising. It takes courage, long-term planning, and an appetite for risk-taking to pick up and move to a brand new country. Those are all traits found in entrepreneurs. John D. Gartner, author of The Hypomanic Edge: The Link Between (a Little) Craziness and (a Lot of) Success in America, argues that so many good companies come out of the U.S. in part because we’re a nation of immigrants. He notes that “Immigrants are the original venture capitalists, risking their human capital—their lives—on a dangerous and arduous voyage into the unknown.”
Even undocumented immigrants are highly entrepreneurial. New American Economy, a group of 500 mayors and business leaders dedicated to immigration reform, found that in 2014, close to one in 10 working-age undocumented immigrants were entrepreneurs. In over 20 states, undocumented immigrants have a higher rate of entrepreneurship than citizens or legal permanent residents of the same age group. This is even more impressive given the legal and regulatory hurdles that undocumented immigrants face—it’s tough to start a business when you can’t risk the cops looking into your past.
We Have Nothing to Fear from Immigration
In other words, native-born Americans have little to fear from a rise in immigration. Jobs will be created, companies will be more efficient, and goods may even be cheaper. Net wages may even rise.
Immigrants embody the American Dream. Unfortunately, immigration officials move at a speed that would make the DMV embarrassed. In 2013, the backlog was so long that green card applications from 1993 were still being processed. Men and women who want to come to the U.S. and work are being trapped in limbo—let’s get them out of it.
Julian Adorney is a Young Voices Advocate. His work has been featured in dozens of outlets, including National Review, Fox News’ Nation, and Lawrence Reed’s best-selling economics anthology Excuse Me, Professor.
This article was originally published on FEE.org. Read the original article.