Don't Fear Immigration, It's Good For the Economy

“Populism” is a mushy political term, and populists tend to be a scattered bunch. But as much as the “populist” label has been applied to varying interests over the decades, three factors seem to provide a common thread for populism, i.e., fear of something, opposition to “elites” (which also has had a very flexible meaning over time), and resulting bad economic policies.

Populism first gained traction in U.S. political circles in the late nineteenth century, whereby rural, agricultural interests lined up against urban areas. Looking back on that era, the populists ironically were Democrats and Republicans were more urban.

Today, populism lurks in each party. During last year’s presidential election, Bernie Sanders captured leftist populists who fear and oppose free markets, along with, it seems, personal responsibility and hard work. And of course, Donald Trump tapped into nationalistic populists moving among Republicans. Those populists fear globalism, especially free trade and immigration.

Of course, there can be legitimate or rational fears. But opposition to free trade and immigration is not rational, especially in a nation like the United States. Our economy traditionally has thrived thanks to lowering barriers to trade, and thereby expanding opportunities for businesses and workers, and reducing costs and expanding choices for consumers. Also, we have welcomed and benefited from individuals from around the world who come here willing to accept the principles upon which the nations rests, mainly, the Declaration of Independence and the Constitution, and to work and contribute to our economy and society.

On the matter of immigration, a letter was just released that was signed by nearly 1,500 economists cutting across political philosophies and schools of economic thought – from, for example, Jim Miller, who was Ronald Reagan’s OMB director, to Laura Tyson, who led Bill Clinton’s Council of Economic Advisers. I was proud to be a signee, as the letter notes “our broad consensus that immigration is one of America’s significant competitive advantages in the global economy. With the proper and necessary safeguards in place, immigration represents an opportunity rather than a threat to our economy and to American workers.”

Four key points made in the letter are undeniable in terms of the economic realities of immigration, as they are backed up by both economic theory and historical results:

• “Immigration brings entrepreneurs who start new businesses that hire American workers.”
• “Immigration brings young workers who help offset the large-scale retirement of baby boomers.”
• “Immigration brings diverse skill sets that keep our workforce flexible, help companies grow, and increase the productivity of American workers.”
• “Immigrants are far more likely to work in innovative, job-creating fields such as science, technology, engineering, and math that create life-improving products and drive economic growth.”

The costs of immigration are acknowledged as well – for example, for certain industries and the very least educated native-born workers – but “the benefits that immigration brings to society far outweigh their costs…”

These points have been confirmed in a wide array of studies on immigration. For example, in September of last year, a report from the National Academies of Sciences, Engineering, and Medicine looked at the economic and demographic trends on immigration over the past 20 years, assessing the impact on labor markets, wages of the native-born, entrepreneurship, innovation and economic growth. Francine D. Blau, the Frances Perkins Professor of Industrial and Labor Relations and a professor of economics at Cornell University, who led the panel that conducted the study, summed up the findings: “The panel’s comprehensive examination revealed many important benefits of immigration — including on economic growth, innovation, and entrepreneurship — with little to no negative effects on the overall wages or employment of native-born workers in the long term. Where negative wage impacts have been detected, native-born high school dropouts and prior immigrants are most likely to be affected. The fiscal picture is more mixed, with negative effects especially evident at the state level when the costs of educating the children of immigrants are included, but these children of immigrants, on average, go on to be the most positive fiscal contributors in the population.”

The economists’ letter notes that “smart immigration policy could better maximize the benefits of immigration while reducing the costs. We urge Congress to modernize our immigration system in a way that maximizes the opportunity immigration can bring, and reaffirms continuing the rich history of welcoming immigrants to the United States.”

Will any of this matter to the populists? Unlikely. After all, those darn economists, no doubt, are just a bunch of elites.