The data contradicts Trump: Migrants don’t steal jobs, they save the economy

“Illegal immigrants are taking our jobs.” It’s a claim that Donald Trump has repeated again and again. It’s not a new argument: it’s been used around the world for decades. But ahead of the U.S. presidential elections in November, the Republican candidate has made sure to make it one of the pillars of his campaign, along with the argument that the administration of President Joe Biden and Vice President Kamala Harris has led to the decline of the U.S. economy — despite evidence to the contrary. Indeed, the facts also paint a very different picture when it comes to both legal and illegal immigration, with data showing that it is one of the key factors that have kept the world’s largest economy afloat in the post-pandemic period of uncertainty and disruptive wars.

The importance of immigration dates back to the country’s very founding: the United States is a nation built by immigrants, the story goes. But that is where the consensus ends. Today, there are two differing views of immigration and its economic impact. On the one hand, there are people who argue that when more immigrants arrive, they compete with locals for the same jobs and the result is lower wages and higher unemployment among the local population. On the other hand, there is the argument that only migrant workers are able to fill the many vacancies left by an aging population. While it may seem impossible, the reality is that to a certain extent both scenarios are true.

Giovanni Peri, an economist at the University of California and founder and director of the Global Migration Center, a multidisciplinary research group, believes that this is due to the tendency to oversimplify a dynamic and complex reality that goes beyond a simple question of supply and demand.

“When migrants enter an economy, many other things happen. So, if we limit ourselves to looking at the correlation between the number of migrants entering a market and changes in wages or employment, we could wrongly attribute effects that are due to other factors. Identifying a causal effect is not easy, but that is what I have tried to do in my work: develop methods to identify these effects,” says Peri, who has been studying the impacts of immigration on the labor market and the broader economy for more than 20 years. This year, he published a major study on the subject in the National Bureau of Economic Research that found that immigration has been positive for competition and wages.

For decades, a series of demographic and economic dynamics have shaped the issue. The birth rate in the U.S. has been declining for a long time, gradually shrinking the available workforce, but there has also been greater automation in many sectors, which has reduced the demand for low-educated workers, who usually fill these positions. At the same time, the economy in general has grown relatively steadily, at least when viewed with more distance, which has translated into higher income and more education for the local population — in other words, more qualified people doing more technical and better-paid jobs. This has created a shortfall of workers for low-skilled jobs, a hole that has also been growing, as carer roles have been rising due to the aging population. And these positions, historically, have been filled by migrants.

Although there are many other variables that vary slightly from sector to sector or even from one geographic area to another — this is where the negative impact on job opportunities for certain local populations can be seen — it is correct to argue that immigration is filling jobs that have been left vacant by the local population, says Peri.

But this only takes into account low-educated immigration. Because of legislation in place since the early 1990s that offers virtually no legal avenues for people without college degrees to enter the U.S., most migrants to the country are undocumented. But Peri is quick to point out that up until two decades ago — when immigration laws began to be enforced much more strictly in the wake of 9/11 and the entry of undocumented migrants was sharply curbed — the U.S. largely welcomed highly qualified immigrants.

This type of immigration, he notes, not only does not steal jobs, it creates them. “Immigrants are entrepreneurs. They start companies at a much higher rate than Americans, which contributes to job creation by generating demand for labor. Second, many immigrants are scientists, engineers, and innovators who contribute to productivity growth. Third, they are also consumers, which increases demand for goods and services, which in turn drives demand for labor.” What’s more, they pay a large amount of taxes.

The pandemic, however, broke the trend and led to a completely different scenario. Suddenly, immigration that had already been falling slowly due to immigration policies during Donald Trump’s presidency collapsed completely with the closure of the borders. Many baby boomers retired, while others took the opportunity to gain a higher level of education and look for better-qualified jobs. “Because of all this, the working population has decreased and, if it weren’t for immigrants [who have arrived in record numbers], it would have decreased even more. Immigrants are the only group that prevents the workforce and the economy from contracting,” explains Peri.

The fact that the economy has not collapsed following the Covid pandemic and the war in Ukraine is also due to measures such as the Fed’s interest rate hikes, which have stabilized inflation, and the enormous investment facilitated by legislation such as the Inflation Reduction Act or the CHIPS Act, which has revitalized entire sectors of the economy. But in the end, immigrants are the reason why the consistently growing job vacancies have been filled.

“What you see is that the administration is trying to find a balance between the economic need for immigrants and political pressures to appear tough on immigration. It does this by emphasizing border security or deportation in public appearances, while allowing more asylum seekers and other legal immigrants into the country. This balancing act is in response to the economic reality that the United States needs immigrants to fill labor market gaps, while also to manage the political narrative around immigration,” says Peri, who adds that this has been the case for some time and will continue to be the case as the United States navigates its demographic and economic challenges.

Donald Trump’s Republican Party, in fact, has also toned down its message in this regard: it singles out only “illegals,” while claiming to defend legal and orderly immigration. Given these dynamics, Trump’s promise to carry out “the largest domestic deportation operation in American history,” if elected president in November, is unlikely to happen. It would be a self-inflicted economic catastrophe. What needs to happen, says Peri, is a reform of immigration legislation to provide a legal pathway for much-needed low-skilled migrants.

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