Here's how immigration really affects the U.S. economy

Construction workers holding political and union signs in front of a large American flag.

By Christopher Tang

Oct. 24, 2024 3 AM PT

If you’re a physician and a neighbor asks you a medical question, you’re probably happy to share your professional expertise. If you’re a heating and cooling contractor and a friend asks you about her furnace, you likely do the same. In that spirit, I think it’s time for business people to share what we know about immigration: that it powers economic growth and provides many other benefits to the country.

At a time when many politicians are falsely scapegoating immigration for society’s ills — crime, housing shortages, labor issues and more — people with experience working alongside immigrants, employing them and relying on them for the success of their business should speak up and set the record straight.

If that description fits you, here are some handy talking points:

The United States has plenty of unfilled jobs. The Inflation Reduction Act and the CHIPS and Science Act, both signed by President Biden in 2022, offered incentives for firms to create manufacturing jobs. As of July, the country faces unprecedented labor shortages: The U.S. Chamber of Commerce reports 8 million job openings, substantially more than the total number of unemployed workers, about 6.8 million.
Immigrants act more as “job creators” than as “job takers.” A 2020 study published by the National Bureau of Economic Research found that immigrants create jobs and enhance the economy for native-born workers. Foreign-born founders — including Google co-founder Sergey Brin (Russia), Intel co-founder Andrew Grove (Hungary) and Facebook co-founder Eduardo Saverin (Brazil) — play pivotal roles in high-growth entrepreneurship. Because immigrants found companies at a higher rate than native-born Americans, they create more jobs than they take.
Immigrants often fill jobs U.S. citizens don’t want. Most native-born Americans eschew low-paying, physically demanding work in agriculture, construction and food production and processing. Immigrants play a crucial role in supplying workers in these sectors, allowing employers to fill jobs without overheating the economy or accelerating inflation.
Higher-skilled immigrant workers contribute to innovation and the workforce, boosting productivity. A study of U.S. patents granted from 1990 through 2015 found that immigrants made up 16% of U.S. inventors and produced 23% of innovation output.
Immigrants are less likely to engage in criminal behavior than U.S.-born citizens. A recent study based on data from 1870 to 2020 found consistently lower incarceration rates among immigrants. Moreover, immigrant incarceration rates have declined since 1960 compared with those of native-born Americans: Today immigrants are 60% less likely to be incarcerated than their U.S.-born counterparts. The recent surge of immigration across the U.S.-Mexico border has not been accompanied by a corresponding increase in crime rates in sanctuary cities such as New York and Denver.
“Zero sum” notions of a fixed number of American jobs are simply false. The more people work and spend their wages, the more our economy grows and provides jobs for everyone, regardless of where they were born. According to a July Congressional Budget Office report, an increase in immigration from 2021 through 2026 is projected to boost federal revenues as well as spending. This is expected to lower federal deficits by a net $900 billion over the next decade, primarily because new arrivals work, pay taxes and stimulate economic growth, increasing incomes and tax revenues for everyone. That will boost the gross domestic product by $9 trillion by increasing population, labor force participation and productivity.

Most business people who rely on American labor and consumers are well aware of many of these forces. They know that expelling immigrants would shrink the U.S. economy and make it less competitive with other nations.

We know the consequences of immigration bans from experience dating to the Chinese Exclusion Act of 1882, enacted in an era of racial violence such as the 1871 massacre that killed 19 in Los Angeles’ Chinatown. A recent study showed that the act not only significantly reduced the number of Chinese workers of all skill levels in the country but also diminished the quality of jobs held by white and U.S.-born workers, the intended beneficiaries of the law. It led to a 62% decline in manufacturing output and hindered economic growth in the Western states most affected by the law for the next 50 years.

As a proud U.S. citizen who immigrated to the country in 1981, I urge other Americans who understand business and the economy to spread the good word about immigration.

Christopher Tang is a university distinguished professor at the UCLA Anderson School of Management.