Immigration And Its Effect On The Economy

Of The U.S Essay, Research Paper

Immigration and Its Effect on the Economy of the U.S

The 1990s have brought the largest influx of immigrants into labor force of the

United States of any decade in this nation’s history. A panel of social science

scholars concluded their assessment of U.S. society with the observation that

“America’s biggest import is people” and determined that “at a time when

attention is directed to the general decline in American exceptionalism,

American immigration continues to flow at a rate unknown elsewhere in the world”

[Oxford Analytica 1986, 20]. Unlike earlier mass immigration periods to the

United States the present day wave of immigration to the U.S. show “no sign of

imminent decline” [Bouvier 1991, 18]. “In today’s world setting, international

migration is a discretionary action that is regulated by the specific actions of

the governments of individual nation-states.” There is no international

obligation for any nation to allow others to enter or to work, in fact, most

nations do not admit immigrants for permanent settlement

Mass immigration has played a significant role in the economic history of the

United States, nevertheless the harsh fact is that what may be necessary and

beneficial at one time, may not be so at another. The demand for labor is being

affected by “restructuring forces stemming from the nature and pace of

technological change; from the stiff international competition the United States

that now confronts for the first time in its history; from major shifts in

consumer spending away from goods toward services; and from the substantial


In the national defense expenditures brought about by the end of the Cold War in

the early 1990’s”. (vernon m. briggs,jr. and stephen moore. pg 35.) In looking

toward the future the twenty occupations projected to grow the fastest in the

1990s, half are related to the growing computer and health fields. The shift to

a service based economy is leading to an upgrading of the skills and education

required by the labor force. On the other hand the occupations that require

minimal skills and education have declined and are presently forecasted to

continue to do so. Immigration can be useful in the short run as a means of

providing qualified workers where shortages of qualified domestic workers exist.

But, the long-term objective should be that these jobs should go to citizens and

resident aliens. “The 1990 Census revealed that the percentage of foreign-born

adults (25 years and over) who had less than a ninth grade education was 25

percent (compared to only 10 percent for native-born adults) and whereas 23

percent of native-born adults did not have a high school diploma, 42 percent of

foreign-born adults did not. Immigration, therefore, is a major contributor to

the nation’s adult illiteracy problem. On the other hand, both foreign-born

adults and native-born adults had the same percentage of persons who had a

bachelor’s degree or higher (20.3 percent and 20.4 percent, respectively), but

with regard to those who had graduate degrees, foreign-born adults had a

considerably higher percentage than did the native-born, 3.8 percent versus 2.4

percent.( )” It is at both ends of the U.S. labor force that immigration

has its greatest impact at the bottom and at the top of the economic ladder.

“The overall unemployment rate of foreign-born workers in 1994 was 9.2 percent,

while the comparable national unemployment rate at the time was 6.5 percent.

The unemployment rate for foreign-born workers with less than a ninth grade

education in 1994 was 13 percent; for those with some high school but no diploma,

it was 15.2 percent. The comparable rates for native-born workers were 13.5

percent and 29.9 percent.” Consequently, the greatest labor market impact of

immigration is in the sector of the labor market that is already having the

greatest difficulty finding employment. “The 1990 Census also disclosed that

79.1 percent of the foreign-born population (five years old and over) speak a

language other than English (compared to 7.8 percent of the native-born) and

that 47.0 percent of the foreign-born (five years and over) reported that they

do not speak English very well.( )” The ability to speak English in an

increasingly service-oriented economy has been definitively linked to the

ability to advance in the U.S. labor market of the post-1965 era [Chiswick 1992,

15]. Considering the factors aforementioned “the incidence of poverty among

families of the foreign-born population in 1990 was 50 percent higher than that

of native-born families or that 25 percent of the families with a foreign-born

householder who entered the country since 1980 were living in poverty in 1990 (

).” “Nor is it surprising to find that immigrant families make greater use of

welfare than do native-born families” [Borjas and Trejo 1991, 195- 211].

“Even when legitimate labor shortages exist, immigration should never be allowed

to dampen the two types of market pressures: those needed to encourage citizen

workers to invest in preparing for vocations that are expanding and those needed

to ensure that governmental bodies provide the human-resource-development

programs needed to prepare citizens for the new type of jobs that are emerging.”

( pg.44 ). We may need to reconsider ” an immigration policy that annually

encourages or tolerates the mass entry of immigrants with only minimal regard to

their human capital attributes or places additional remedial burdens on an

already underfunded and inadequate education and training system. It is not

only the actual effects of increased competition for jobs and social services

that are important, collectively we must consider the opportunity costs as well

when considering immigration and its effect on our economy.”(Pg,48)

The phrase “a melting nation of immigrants” is popularly used to describe the

people who settled the United States. Historian Oscar Handlin added to this

statement by stating that “once I thought to write a history of the immigrants

in America. Then I discovered that the immigrants were American history”

[Handlin 1951, 3]. ” The benefits of immigration, however are manifold.

Immigrants are highly entrepreneurial. Their rate of business start-ups and

self employment tend to be higher than that of United States born citizens.

Immigrants contribute to the global competitiveness of US corporations,

particularly in high technology industries. Perhaps the most important benefit

is that immigrants come to the United States with critically needed talents,

energies that serve as an engine for economic progress.”(pg 78). Economist

Ellen Seghal of the US Bureau of Labor Statistics did a study examining welfare

usage in 1984 of several major federal programs of immigrants who entered the

United States before 1982. She found that “the share of foreign born collecting

public assistance including unemployment compensation, Food Stamps, Supplemental

Security Income (SSI), and AFDC was 12.8 percent. The percentage for US born

was 13.9 percent.” (pg 93). “A study by the City of New York’s Office of City

Planning found that the public assistance rate was 7.7 percent for immigrants

and 13.3 percent for the population as a whole. Hispanic immigrants are alleged

to be especially heavy users of welfare services, but the research does not

verify this stereotype. A study done by the Urban Institute found the “annual

welfare benefits averaged $575 per California household, as opposed to $251, per

Mexican immigrant household.

Do immigrants compete with American workers for jobs? “There are almost always

economic losers under such competitions, even though the society as a whole is

almost always left wealthier.

The pressure of competition is one of the engines of economic growth under a

capitalist economy.”(pg98). ” When immigrants come to the United States, they

immediately raise the demand for US goods and services (Greenwood and McDowell

1986).” “They shop for food in US grocery stores; they move into apartments or

homes, as producers’ immigrants fill jobs, but as consumers they create

jobs”(pg106). Several studies have documented that the immigrants who come to

the United States tend to be more skilled, more highly educated and “generally

more economically successful than the average citizens in their home countries”.

(pg142) “Among Iranians who came to the United States in 1979, 57 percent were

professional, technical, or managerial workers. In Iran , only 6 percent of all

the workforce falls into those high skill categories. In that same year, 68

percent of the immigrants from India fell into these high skilled categories

compared to less than 5 percent among the entire Indian workforce. Finally, 15

percent of the 6,000 Haitians who entered the United States in 1979 through

normal immigration channels were professionals, administrators, or managers

compared to 1 percent for the Haitian workforce (Gibney 1990,372.)” The

children of immigrants also tend to reach exceptionally high levels of

achievement as adults, in earnings and professional skills.

“Economist Barry Chiswick has calculated that throughout this century, the

children of immigrants have had earnings that are on the average 10 percent

above those of comparably educated US born children (cited in McConnell 1988,

101 ).”

Americans are split on an issue that will likely remain on the forefront for

some time to come. The subtle nuances interwoven within the issue of

immigration are facets that require answers more akin to shades of gray than

black and white. As we look toward the future and our economic stability we can

be sure the battle will be for the scarcest natural resource, that of talent and



Baumol, William J. “Sir John Versus the Hicksians, or Theorist Malgre Lui.” The

Journal of Economic Literature 19, no. 4 (December 1990): 1708-1715.

Becker, Gary S. “An Open Door for Immigrants–the Auction.” The Wall Street

Journal, 14 October 1992, p. A-14.

Borjas, George J. “The Economics of Immigration.” The Journal of Economic

Literature 23, no. 4 (December 1994): 1667-1717.

Borjas, George J., and Stephen J. Trejo. “Immigrant Participation in the Welfare

System.” Industrial and Labor Relations Review 44, no. 2 (January 1991): 195-211.

Bouvier, Leon. Peaceful Invasions: Immigration and Changing America. Washington,

D.C.: Center for Immigration Studies, 1991.

Briggs, Vernon M., Jr. “Non-Immigrant Labor Policy in the United States. ”

Journal of Economic Issues 17, no. 3 (September 1983): 609-630.



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