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Low-Skilled Immigration Brings Economic Benefits for U.S. Consumers, Employers and Skilled Workers; Also Imposes Some Costs

Press Release
Thursday, January 13, 2011

Low-Skilled Immigration Brings Economic Benefits for U.S. Consumers, Employers and Skilled Workers; Also Imposes Some Costs

WASHINGTON — In contrast to the broad consensus that exists regarding the benefits of highly skilled immigration, the economic role of low-skilled immigrants remains one of the most controversial questions in the immigration debate. Economists continue to disagree about the costs and benefits of less-skilled immigrants, as well as the policies that govern their admission to the United States.

In a new report for the Migration Policy Institute, Immigration Policy and Less-Skilled Workers in the United States: Reflections on Future Directions for Reform, Georgetown Public Policy Institute Professor Harry Holzer assesses the research literature and finds that the benefits of low-skilled immigration accrue primarily to employers, who benefit from paying lower wages; and to both higher- and lower-income consumers, who purchase the goods and services less-skilled immigrants produce. The costs are borne by low-skilled native and earlier-arrived immigrant workers who must compete with these immigrants for jobs; though there is little consensus on the exact magnitudes of these costs, they generally appear to be quite modest. There are also both fiscal costs and benefits to federal, state and local governments but these generally turn more positive over the long run and across generations.

“Even the most negative estimates of the impacts of less-skilled immigrants on U.S. workers in similar jobs suggest that in the long run, immigration accounts for only a small share of the deterioration observed in less-skilled Americans’ employment and earnings,” said Holzer, a former chief economist for the Labor Department.

Immigrants’ negative impacts on native workers are muted by a range of factors, the report explains, including that low-skilled immigrant workers are themselves consumers of U.S. goods and services (and thus job creators); the fact that they are more likely to compete with earlier cohorts of immigrants than with U.S.-born workers because they are concentrated in jobs requiring limited English skills; and the fact that employers adjust their production techniques to make use of the greater supply of less-skilled labor available.

While Holzer argues that the costs and benefits are too complex and varied to determine an optimal level of less-skilled immigration, he proposes some immigration system changes that would be economically beneficial, including:

  • Providing pathways to legal status and citizenship for low-skilled workers already here, and a legal route for future workers by using provisional visas that make it possible for some temporary workers to become permanent residents
  • Allowing less-skilled workers on employment-based visas to switch employers more easily and gain a path to citizenship
  • Setting employer visa fees at a level sufficient to offset some of the costs that low-skilled immigration imposes
  • Ensuring flexibility in the numbers admitted so that flows can respond to employer demand and macroeconomic conditions.

Holzer suggests allowing some flexibility in implementing reforms to permit experimentation with different approaches, noting that it is unclear how employers and workers, both immigrant and native-born, would react to policy change. “The potential effects of reform are sufficiently uncertain that immigration policy changes should be undertaken with care and evaluated over time,” he said.

The report was commissioned to inform the work of MPI’s Labor Markets Initiative, which has been conducting a comprehensive, policy-focused review of the role of legal and illegal immigration in the labor market. Earlier reports have examined middle-skilled immigrant workers, the effects of illegal immigration on the U.S. economy, how immigrants fare during periods of boom and bust, their impact on the economy throughout the economic cycle and the effects of the global economic crisis on immigrants in the United States and around the world.

The report is available here. For more on the Labor Markets Initiative, visit www.migrationpolicy.org/lmi.  

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The Migration Policy Institute is an independent, non-partisan, non-profit think tank in Washington, D.C. dedicated to analysis of the movement of people worldwide. MPI provides analysis, development and evaluation of migration and refugee policies at the local, national and international levels. For more on MPI, please visit www.migrationpolicy.org.