Originally Published in the Los Angeles Times
Giovanni Peri and Chad Sparber - August 24, 2020
But in fact, his misguided orders — barring workers in a wide range of jobs, from computer scientists on H-1B visas to seasonal workers in hotels — will further harm the economy during a deep recession.
On Thursday, the U.S. District Court for the District of Columbia will hear a set of cases challenging Trump’s legal authority to issue these orders. The court should block his directives and save the American economy from a disastrous policy.
The president’s claim that immigrant workers take American jobs is ignorant of economic realities. Research shows that capital and technology adjust quickly to immigration in ways that prevent the decline of wages. Americans and foreign-born workers generally don’t fight over the same jobs — they work in different types of jobsthat complement one another.
Immigrants tend to be more entrepreneurial than the general population. They start new businesses and employ Americans. They stimulate international trade and investment while increasing demand for local goods and services. Immigrant workers also reduce the prices of goods and services by working in areas such as childcare, food preparation and elderly care.
The administration says that a severe recession caused by the pandemic justifies sealing the U.S. economy from abroad. But the data and our history show that closing labor markets even in times of crisis, doesn’t work.
During the Great Depression, the U.S. also adopted insular, counterproductive economic policies, believing that would save jobs for Americans.
The Hoover administration carried out a program that deported more than 1 million Mexicans and U.S. citizens of Mexican descent to Mexico. Instead of protecting jobs, it severely damaged local economies and businesses near the border. Native-born Americans who lost their jobs were forced to seek employment elsewhere. The effects were significant: a 10% decline in the local labor force, driven by Mexican repatriations, shrank U.S.-born employment by 2%.
The order Trump issued in June was aimed largely at foreign-born workers with college degrees. This move was especially harmful since these kinds of skilled workers generate much of the innovation that fuels long-term economic growth, with effects that increase productivity.
One influential study has found that for every skilled worker added to a city, an additional three or four connected jobs are created. This effect may be even larger for skilled foreign-born workers because they tend to specialize in STEM fields. Two-thirds of recipients of H-1B visas — one of the foreign worker programs shut down by Trump’s order — work in tech industries.
In one of our studies, we found that foreign STEM workers coming into the U.S. between 1990 and 2010 accounted for more than one-third of U.S. aggregate productivity growth. They also accounted for increased wages of Americans without college degrees by 2 percentage points more than would have occurred otherwise. In addition, data show that immigrants contributed almost 30% of high-quality patents in the U.S. since 1976.
Immigration restrictions also harm the economy by causing firms to increase their offshore operations, particularly to Canada, China and India. Past H-1B restrictions have reduced the number of students interested in attending college in the United States. If we turn away many of the best and brightest young minds, we will only enhance the creative and innovative capacities of foreign countries that compete with the United States at our own expense.
The Trump administration’s views on immigration are rooted in a simplistic idea that adding foreign workers will simply increase the labor supply while everything else in the economy remains fixed. In reality, our economy is dynamic, shedding and creating hundreds of thousands of jobs every month. Immigrants, especially highly skilled ones, contribute to the growth of many parts of the economy and ultimately create more job opportunities for American workers.
Twenty-three state attorneys general and 52 companies, including Amazon, Apple and Facebook, filed amicus briefs asking the district court to block Trump’s anti-immigrant orders. For benefit of our economy and all workers, the court should allow immigration to resume.
If you have doubts about the value of immigrant workers, consider Zoom, the now-omnipresent video conferencing app. It was founded by Eric Yuan, who was born in China and immigrated to Silicon Valley after applying for a work visa nine times.
Giovanni Peri is a professor of economics and director of the Global Migration Center at the UC Davis. Chad Sparber is a professor of economics at Colgate University.