Most studies show that a larger supply of workers raises the employment rate and wages for Americans. Contrary to popular belief, immigrants typically complement rather than compete with American workers. They increase domestic economic demand by spending their wages on homes, food, TVs and other goods and services.

They also help remove bottlenecks that slow down economic growth. This helps boost productivity.

Changes in immigration policies

Immigration can have a wide range of effects on the labor market. The direction and magnitude of these effects depend on the size and speed of the immigration inflow, the comparative skills of foreign-born workers versus native-born ones, and the way other factors of production adjust to changes in labor supply. Nevertheless, immigration primarily raises the supply of both low- and high-skilled labor.

Immigrants from all entry routes – family, employment, and illegal – can increase the number of workers in the economy and boost productivity. However, they also have some negative short-term impacts on the job market. In the long run, however, immigration should have positive effects on native-born workers by pushing them into higher-paying occupations and raising productivity growth.

In the United States, immigration policies slowed down significantly prior to the COVID-19 pandemic, contributing to lower net international migration (NIM). As a result, the ratio of job vacancies to worker shortages rose and state economies experienced tighter labor markets. Reopening borders and easing immigration restrictions caused a rebound in immigration, which has helped ease labor market tightness.

Asylum seekers

The United States has a long history of welcoming refugees seeking protection from war, poverty, and persecution. The refugee resettlement program is an important part of the nation’s immigration system, but recent policies have reduced the number of refugees accepted each year. These policies are not only harmful to refugees, but they also negatively impact the economy and American jobs news.

Research on wage impacts is mixed, but some studies find that immigrant workers reduce the wages of low-skilled native workers. In one study, a 1 percent increase in the share of migrants reduced hourly wage gains for low-wage workers by half a penny per year.

Other studies, however, find that high-skilled immigrants increase the productivity of native workers by generating more demand for goods and services. They spend their wages on homes, food, TVs, and other items that generate more jobs to make those products and provide the services needed to support them. These gains are greater for high-skilled immigrants than for low-skilled natives.

Undocumented immigrants

Despite concerns that undocumented workers will fill vacant jobs, there is little evidence that immigration is increasing the supply of low-skill labor. Instead, industries with higher shares of foreign-born workers tended to have larger increases in job vacancy rates during the COVID-19 pandemic, suggesting that reductions in immigration may have exacerbated already-sharp labor shortages.

Furthermore, a number of studies suggest that processes of occupational closure may shield undocumented immigrants from particular types of occupational risk. For instance, Enchanutegi and Valenzuela report that unauthorized immigrant workers are more likely to engage in day labor jobs that involve exposure to dangerous settings.

Finally, a substantial share of immigration is associated with family reunification, which may increase access to social benefits. Indeed, based on benefit use among demographically similar non-citizen legal immigrants, an increase in the number of family-reunification migrants could lead to increased take-up of federal programs. This, in turn, could reduce the demand for low-skill labor.

Unfilled jobs

In the long run, immigration has tended to raise the supply of both low-skilled and high-skilled workers. However, the decline in immigration that accompanied the COVID-19 pandemic has caused some industries to face difficulty filling job vacancies. This has led to higher wage growth in those industries.

Immigrants increase demand for goods and services, and the resulting economic expansion requires more jobs to build homes, make food and transport TVs. Some critics argue that immigrants are taking American-born workers’ jobs, but most empirical studies indicate that immigrant employment does not reduce wages in the long run.

As a result, the unemployment rate for Hispanic and Asian immigrants fell to nearly parity with that of U.S.-born workers in the first quarter of 2021. However, their rates have since dipped below parity with those of the general population, reflecting the impact of the COVID-19 pandemic. Moreover, the rate of unemployment for college-educated immigrants has increased to almost parity with that of natives, suggesting some are employed in positions for which they are overqualified.