Immigration to the U.S. is by its name a wage positive. It’s tautological. Higher wages are what instigate immigration, so to pretend as some do that the arrival of immigrants pushes down wages implies that the purest of market signal of all (the migration of humans) is a stupid one. No, not likely. More on this in a bit, but if the inflow of people pulled wages down then there wouldn’t be an inflow.
Conversely, a lack of immigration is bad for the country that’s not receiving the inflow of people. Think about it. And in thinking about it, ask yet again why immigrants are coming to the U.S. in the first place. It’s in pursuit of the higher wages that are associated with enhanced deployment of human capital.
If would-be immigrants stay in Mexico because they’re immobile, they have too much family in Mexico to transport, because of allegedly impenetrable walls, or because they hear about relatives being fished out of private business by ICE agents, the loser is the American worker.
That’s because an inability to take their skills to the U.S. won’t keep would-be immigrants from working, it will just keep them from working in the U.S. Not working in the U.S., their wages will be lower in Mexico and other locales south of the U.S. In other words, if Americans fear the negative wage impact of Mexicans, or the wage competition of their lower wages, they should want them working in the United States where their wages will be much higher.
Except that there’s more. What’s easily forgotten is that contra the popular view that wages are regulated by supply and demand, the actual truth is that they’re regulated by productivity. Jobs don’t just exist, rather they’re an effect of investment. Investors will put wealth to work in plant & equipment along with workers to man both only insofar as the returns are greater than the capital put to work.
Which is why immigration logically associates with rising wages. That’s because when work is divided, those doing the work get to specialize their labor on the way to immense leaps in productivity. Adam Smith saw this in a pin factory in the 18th century, and Henry Ford perfected this on the path to inexpensive cars produced by well-paid workers in the 20th century.
The simple, crucial truth is that workers aren’t a cost, they’re an input. And the more hands at work in specialized fashion, the more production, and by extension, the higher the wage for everyone.
It’s surely a “cancellable” offense, but “supply and demand” just might be one of the most overrated, oversold notions in economics. And that’s not just because supply is demand, it’s because worship at the altar of what’s vastly overrated blinds people to the truth that the arrival of capable hands isn’t a cost, or a weight on wages, it’s quite the opposite.
The only limit to productivity is the hands and machines at work in the creation of market goods. The problem with capable hands remaining stuck in Mexico and beyond is that investment down south isn’t sufficient to monetize the capabilities of those stuck. Which means would-be immigrants don’t just lose, but so do the would-be recipient countries lose as work isn’t divided as it otherwise would be, all the expense of – yes – wages.
