Culprit or Scapegoat? Immigration's Effect on Employment and Wages

Over the past several decades, U.S.-born Americans have become increasingly detached from the labor force, with declining rates of employment and labor force participation. Seeking explanations, many attempt to blame these trends on immigration itself, under the notion that immigrants both displace U.S.-born workers and drive down their wages. Although superficially appealing, these arguments are ultimately overly simplistic and misguided, as they ignore several other factors driving these trends.

This report suggests that declining U.S.-born labor force participation is largely due to the various options U.S.-born individuals tend to have at their disposal to pursue non-labor force activities, namely, retirement, disability, and school enrollment, rather than any direct competition from immigrants. Additionally, U.S.- and foreign-born individuals tend to work in different industries. A majority of the predominantly foreign-born industries are composed of lesser-skill, lower-wage occupations, some of which have seen strong employment growth in recent years, and have even suffered from labor shortages.

Given that U.S.-born workers tend to have overall higher levels of skills and educational attainment than immigrants, it is unclear that a sufficient number of workers would flock to these positions in the absence of immigration. Indeed, research indicates that immigrants play a vital role in supplementing the labor force, filling jobs that would otherwise remain vacant or disappear. Finally, with regard to wages, it is true that immigrant-heavy industries do tend to pay considerably less than native-born industries. However, this is largely because the majority of occupations in these industries have lower educational and skill requirements, not because of immigration itself.

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