are not simply workers—they are also consumers. Like everyone else, immigrants need basic goods such as food, shelter, and clothing. Immigrant workers spend their earnings on these goods as well as (to the extent they can afford them) on other nonessential items. Immigrants therefore increase the total demand for goods. In response, businesses increase their production. To do this, they must increase their labor force and hire more workers. Thus, the entry of immigrants into the labor market ultimately creates jobs by pressuring businesses to expand their production. In fact, the mere presence of a new immigrant—even one who is not working—can increase consumption or the demand for goods and services, and cause the same result. Thus, all native workers—including minorities and women—would find better job opportunities due to overall economic growth.3
If immigrants actually create jobs for native workers, why do so many people believe that immigrants pose a threat to native workers’ jobs? This may be a matter of what we think we see. While the average person may actually see an immigrant working in a job once held by a native worker, the more indirect job-creation process attributable to immigrants (and verified by studies discussed below) is not as easily perceived.4 This may help account for much of the public suspicion of immigrants and jobs.
IMMIGRANTS ARE COMPLEMENTARY WORKERS
The notion that increases in immigration correspond to losses in native workers’ jobs relies not only upon a model of the workforce as static, but also upon the belief that immigrants and native workers are vying for the same types of jobs. However, immigrants and native workers generally do not compete for the same jobs. Immigrants largely fill undesirable, unskilled jobs in which native workers have little interest, thereby serving as complements to, rather than substitutes for, native workers in the labor force.
The labor market is divided into primary “good” jobs and secondary “bad” jobs. The first group is largely populated by native workers, the latter by migrants. Primary sector jobs are situated in so-called “core” industries, where investments and financing of production are relatively high, and mainly large-scale and unionized, and where instability has been minimized by such market features as little effective competition. Workers who fill such jobs must have relatively high skills. They are well paid and work under generally desirable conditions. By contrast, secondary jobs are found in smaller firms where production is not as highly financed and products face highly competitive markets. Positions tend to be unstable, low or unskilled, relatively low paying, and generally marked by undesirable working conditions.5
Migrants are more suited for these low-paying, low-skilled jobs due to (1) the flexibility of the migrant workforce; (2) the lasting nature of the migrant labor supply; and (3) their susceptibility to manipulation and control. Migrants thus dominate low-paying, low-skilled jobs. The question then is whether, on account of immigrant domination of secondary jobs, native workers are pushed into primary jobs, or whether they are unemployed. President Ronald Reagan’s Council of Economic Advisors, agreeing with the principle that immigrants generally do not displace native workers, emphasized the job and occupational mobility of native workers. Native workers can move from one sector of the labor market to another, while immigrants generally cannot.6
Yet this conclusion is not comforting for native workers ill-suited, on account of skills and/or geography, to occupy primary jobs. Further, immigrants get secondary jobs because they are more subject to manipulation and control—in other words, exploitation. Emphasizing the exploitability of immigrants for “good” economic effect is troubling even if such an approach does help us understand that immigrants generally do not take jobs that native workers desire. (These concerns are more fully addressed in chapter 7.)
Immigrants are likely to fill secondary jobs: immigrants commonly inhabit ethnic enclaves and are able to settle into a certain part of the labor market without having to assimilate into the larger society. The social norms of immigrant enclaves differ greatly from those of native workers with regard to the way in which secondary, low-paying, low-skilled jobs are valued. While the native population generally views such jobs as “low status” and therefore undesirable,7 the jobs often meet the expectations of members of immigrant enclaves. The reference point by which many immigrants measure the desirability of jobs often differs from that of native workers. Many immigrants, after all, come from countries whose jobs are characterized by even lower wages and worse labor conditions than secondary jobs in America.
Given differences in English ability, education, and job experience between the so-called “typical” Mexican undocumented alien and a native worker, the immigrant seems ill-equipped to fill many of the jobs open to native workers. Thus, many low-skilled immigrant workers and more skilled native workers may fulfill mutual needs (complementary rather than competitive), leading to increased productivity. However, things are probably more complicated; various combinations of complementarity and substitutability among many immigrant and native groups are likely. To the extent that some immigrants serve as (real or potential) substitutes for native workers, their presence increases the supply of workers, and at the very least can depress wage rates. And when wages are lowered, some natives may no longer find it worthwhile to remain in the labor force and may therefore drop out.8
While many of the low-wage jobs filled by immigrants might otherwise go to teenagers and retirees (e.g., at McDonald’s), such a phenomenon should not be considered the same as displacement of a typical native worker. We should look at the long-run positive general effect of immigrants on the job market, even though in the short run some specific groups may be harmed by one group of immigrants. Additionally, absent immigrants, some of the advertised jobs which currently go to immigrants would remain unfilled and therefore be withdrawn after a while because employers may choose to use machines or cut back.9 Immigrants who fill such positions pose no direct harm to native workers.
THE IMPACT OF IMMIGRANTS ON WAGES
Assuming little substitution of native workers and the stimulation of job growth by the presence of immigrants as consumers, President Reagan’s Council explained that immigrants have little negative impact on native wages. The Council acknowledged that wages can drop when the supply of labor increases (either because of immigration or the increased participation of native workers). But the Council urged us to look beyond short-term wage depression or job loss for the following reason: in the sectors where native workers are complementary with immigrant labor, both labor demand and wages will increase. The demand for labor increases because the availability of immigrant workers encourages investment in industries that have become more competitive. This increased demand in labor provides opportunities for new jobs and better wages for many native workers who were displaced in the noncomplementary sector. Therefore, short-term negative effects are outweighed by new opportunities, and the total combined income of the native population is actually increased.10
In a sense this position urges us to think of short-term wage depression as an investment of sorts, made for the purpose of attaining a long-term increase in prosperity. But we must recognize that short-term wage depression is a serious problem that should not be casually disregarded or even easily sacrificed for the benefit of long-term gains. However, better methods can be implemented to ameliorate this problem than by restricting immigration, for example, raising the minimum wage and/or expanding the Earned Income Tax Credit. Better job training and investment in our educational institutions are also relevant.
Immigration causes income benefits which are spread throughout the economy in other ways. Beyond the increased job opportunities and higher wages for some native workers, lower product prices and higher business profits also result. The concentration of unskilled immigrants in industries such as agriculture keeps prices down, thereby increasing the