No, Illegal Immigrants Aren’t “Stealing Your Jobs”

A recent article titled “Yes, Illegal Immigrants are ‘Taking Your Jobs'” claims that illegal immigrants are currently displacing jobs in the United States. However, little statistical evidence is provided, nor is there a consistent logical flow in the article on why this apparently is. This article will split into two parts: Part A will address the positions put forward by the author, and part B will point out the positives and negatives of illegal immigrants.

Part A: Positions put forward by the author

In this section we’ll look at the positions put forward by the author. Those positions are:

  • Reference to the birthrates of illegal immigrants, writing on how a higher degree of birthrates from them causes a higher misallocation of resources.
  • An argument that employers are more likely to hire employees that are part of their ethnicity, thus promoting a higher degree of labor mobility only for those of the same ethnic background.
  • Makes an argument that minimum wage laws create black markets for illegal immigrants.

First, let’s look at position number one. The author points out that birthrates are currently in decline due to economic times. While this was true, the author implies that illegal immigrants will forever have an increase in birthrates, thus being a constrain on the economy per se. Furthermore, the author uses this as an argument for how illegal immigrants have the ability to exercise labor mobility amongst the community:

“For one, it’s not true the immigrants have no connections. California alone holds some 3 million illegal immigrants, according to the Migration Policy Institute. In 2007, that would have accounted for nearly a quarter of all so-called undocumented people in the country. To think they, who have higher birthrates than the native population, don’t have massive families by which to acquire resources, is preposterous. Although the birth rates for both sects are decreasing, the only study I could find to reference was in 2012, during turbulent economic times.”

The author failed to include one important fact, recent birthrate reports in 2014 have shown that illegal immigrants birthrates are still falling past the Great Recession period. In this sense, we can say that illegal immigrants’ family sizes would reduce due to the declining birthrates. This therefore removes two points made by the author, the first being that the higher number of birthrates by illegal immigrants is currently acquiring resources to a higher degree, as well as, labor mobility amongst the same ethnicity is higher.

Unless, if the economy is frozen in time and would never grow again, with the same current population trend of illegal immigrants would mean that future constraints on resources provided by the state would reduce, not increase. Additionally, this also means that labor mobility amongst illegal immigrants would decrease, not increase in the future.

The next point to address is the argument that employers are more likely to hire their own rather than others. However, the author does not give any evidence for this. Employers in any industry are likely to employ those who would take lower pay than those who currently possess a higher pay check (assuming the same level of productivity is provided). While in certain countries, such as the United Kingdom, with the Pakistani community would create a social network in order to distribute and access resources amongst themselves, this does not necessarily mean that Pakistani employers would hire Pakistanis only, unless if their marginal value product of labor is higher than that of natives or other foreigners outside those communities.

The last position made by the author is that higher minimum wages create an environment of black markets for labor, thus leading towards the higher degree of hiring illegal immigrants. While this is true, this does not necessarily mean that if we magically removed the minimum wage that employers would go back towards hiring native-born workers. We’ll explore why in part B.

In conclusion for part A, we’ve seen that the three positions put forward by the author do not necessarily hold true when looking at the full picture on what impacts illegal immigrants have on the economy. Furthermore, little economic data is provided by the author in order to back up his evidence.

Part B: Impacts of illegal immigrants towards the economy

After exploring the position of the author and why those positions only hold half true in reality, we must now look at the positives and negatives that illegal immigrants have on the US economy all together. First, let’s look at the negatives. As referenced above about how employers are likely to hire those with lower pay rates, the harmful impact that this would have is that natives or lawful immigrants that hold less than a college degree would find themselves without employment. However, more native-born Americans are ascertaining a college degree than their non-native or illegal counterparts. Thus, as referenced from the report, as illegal immigrants take lower-skilled jobs, this would leave native born Americans to pick up what can be referred as “middle-class jobs.” While more native-born Americans with higher education degrees does come with its own problems, the transition for native-born Americans and their education status has been underway since the 1940s. Therefore, this adds to the fact that with or without illegal immigrants, this would mean that native-born Americans are less likely to work at low-skilled jobs.

The next negative of illegal immigrants is that they consume more resources than provided in terms towards the state. As per household, illegal immigrants have a net deficit of $14,387 in terms of taxes paid towards benefits received. However, an issue with this can be split into two parts. First, no analysis is done on how much benefit is contributed by illegal immigrants towards the private economy; and second, while it’s true that illegal immigrants consume more welfare than natives, this doesn’t mean that removing illegal immigrants would reduce the spending burden, but rather that this spending burden would transfer from illegal immigrants towards native-born Americans. Therefore, in the future, if we magically removed illegal immigrants from the US, we would see a transfer of public spending from illegal immigrants to native-born population in the long run.

However, after addressing the negatives, let’s address the positives of illegal immigrants. Illegal immigrants essentially provide lower wages towards employers in various industries. As of 2012, illegal immigrants currently hold these positions and their employment percentages in these industries.

Industry Unauthorized Immigrants
Agriculture, forestry, fishing, and hunting 16.1%
Mining 3.1%
Construction 12.2%
Manufacturing 6.3%
Wholesale and retail trade 4.2%
Transportation and utilities 3.3%
Information 2.8%
Financial activities 2.3%
Professional and business services 6.4%
Education and health services 1.7%
Leisure and hospitality 9.0%
Other services 8.2%

Now, if we compare this towards the changes of these industries, we see that unauthorized immigrants are in industries which have little estimated change of growth from 2016 to 2026.

Industry Unauthorized Immigrants Growth in Industry
Agriculture, forestry, fishing, and hunting 16.1% -2.40%
Mining 3.1% 2.40%
Manufacturing 6.3% -2.9%
Transportation and utilities 3.3% 2.0%
Information 2.8% -0.52%
Professional and business services 6.4% 2.10%
Leisure and hospitality 9.0% 1.5%
Average 6.71% 0.31%

Essentially, illegal immigrants are now in industries that essentially will have little change over the 10-year period (between 2016 to 2026). This shows that even if illegal immigrants were not present in these industries, very little future growth in these industries would add so-called jobs towards Americans. So then, what do illegal immigrants essentially do within these industries? Essentially, because illegal immigrants are paid lower than legal or migrant workers, this would allow for a decrease in real prices (or a slowdown of inflation in these industries), thus as a result, a higher degree of purchasing power is available towards the general public.

Furthermore, what’s the other positive which illegal immigrants provide towards the US economy? Due to their relative low wages, this allows for an increase in output of production (as competing firms would want to reduce prices in order to increase market shares), and thus in the long run, an industry would hit long-run tangency, and therefore yield an economic profit of zero. And as with any investor recouping their profits before this period over the long-run, they would invest into new businesses, as investors and entrepreneurs are opportunity seekers. As a result, illegal immigrants and their low wages help the allocation of resources towards other industries as these other new potential industries arise. Therefore, studies show that illegal immigrants create jobs in the US economy, rather than create gluts in labor supply.

Now that we’ve explored the 2 positives (increase purchasing power of consumers, and being a factor towards better resource allocation) and the 2 negatives which can be counteracted, let’s ask the hypothetical question. What if we just magically remove all illegal immigrants from the workforce? In reality, illegal immigrants are currently working in industries which have little relative growth, therefore, the only reality in the short run if all illegal immigrants disappeared, is that firms would need to replace them with capital goods. Due to the fact that capital goods in the short term are inelastic, this would mean that an output effect would arise in those industries, and thus hamper growth of those industries towards achieving their optimal industry sizes. The reason why legal immigrants or native labor would not pick up these jobs is because their wages are too high relative to the value provided. However, let’s also hypothetically say that we remove the minimum wage simultaneously, would this mean that native labor would take up these jobs? No, not necessarily. The reason for this is that wages for natives are elastic compared to wages of illegal immigrants, therefore a wage cut would reduce the potential labor force of these industries in the short and long term, and the output effect would be likely.

Conclusion

In conclusion, we’ve seen that the arguments made by the author does not live up to the reality that we see with illegal immigrants. We see that his points of birthrates, networking, and black markets do not necessarily add up to unauthorized immigrants essentially “taking jobs” from native-born Americans. When further exploring the data and essential factors on what illegal immigrants provide and take from the economy, we see that the direct impacts being measured are negative. However, the indirect impacts that we see are unmeasurable for now, and that it’s highly likely that illegal immigrants and their positive unmeasurable impacts outweigh those of the negative ones. We’ve also concluded that even if we do essentially remove illegal immigrants, the impacts which it would have on the economy would yield negative results.

In reality, we should be thankful that illegal immigrants provide labor services which benefit the private economy in unmeasurable ways. A solution towards this so-called crisis is not building walls, but rather that stripping the government status as the determinant of immigration is of most importance. Which this so-called power should be transferred toward a market-based immigration system, allowing for businesses and private property owners to determine who they’d want to sponsor, thus allowing for the most efficient labor market.

This post was written by Baland Rabayah.

The views expressed here belong to the author and do not necessarily reflect our views and opinions.

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baland.rabayah@beinglibertarian.email'

Baland Rabayah

Baland Rabayah is a student of accounting and finance at Bangor University and is also pursuing a Graduate Diploma in Economics at the University of London. Baland holds a Diploma in Accounting and Finance from the Bahrain Institute of Banking and Finance. He plans to pursue to continue his studies by doing a master's in economic history and a PhD in Economics. Baland follows a mixture of Chicagoan and Austrian principles in economics, with his influences being Murray Rothbard, Ludwig von Mises, Friedrich Hayek, George Selgin, Lawrence H. White, Peter G. Klein, Ronald Coase, and Milton Friedman. He is currently part of the Being Libertarian Merchandise Project’s management, and runs his own investments. Baland is also the former CEO of MoreTech Bahrain, a start-up company which attempted to launch Bahrain's and the Middle East's first flagship smartphone. He is a racing enthusiast, and regularly races professionally in Bahrain's SWS races.

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