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THINKING ABOUT JOBS AND WAGES IMMIGRANTS AND JOB CREATION

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One concern about immigrants is that every job that goes to an immigrant is a job that a native worker loses (or fails to gain). The fear that immigrants take away jobs from native workers rests on the theory that the number of jobs is static or fixed. Under this theory, when immigrants get jobs, fewer jobs are left for native workers thereby causing increases in unemployment among native laborers.

The idea of a fixed workforce has a certain commonsense appeal, but is inaccurate. The number of jobs is dynamic rather than fixed. As more persons begin working and spending their earnings, the demand for more goods follows, and generally more labor is needed. Immigrants 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.

To Be An American

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