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Ideas


WHAT EMMA LAZARUS GOT WRONG ABOUT IMMIGRATION

Immigrants aren’t a call upon America’s charity. They’re far more likely to
start a business—and employ other workers—than native-born Americans.

By Benjamin F. Jones

Mario Tama / Getty
June 18, 2023, 7 AM ET
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Americans have long worried that immigrants will take their jobs. Henry Cabot
Lodge, who championed restrictive immigration laws as a U.S. senator, described
foreign-born workers in 1891 as a “great reservoir of cheap labor” that was
“constantly pulling down the wages of the working people.”

Emma Lazarus, a contemporary of Lodge, presented a different point of view.
Inspired by the Statue of Liberty, she wrote the 1883 poem “The New Colossus,”
and her words “Give me your tired, your poor / Your huddled masses yearning to
breathe free” were later installed at the statue’s base.




From the May 2021 issue: America never wanted the tired, poor, huddled masses

The tension between Lodge and Lazarus—between economic self-interest and
humanitarian ideals—continues to define our immigration debates. And yet, in a
crucial way, both perspectives share the same flawed premise. A growing body of
research suggests that immigrants are primarily neither job stealers nor a call
upon our charity. Rather, they are overwhelmingly job creators.

If there are a certain number of jobs in an area, and immigrants settle there,
it may seem intuitively true that immigrants will take jobs at the expense of
native-born workers. Indeed, Lodge found this point “too obvious to need
comment.” But he and his ideological heirs make two mistakes. First, immigrants
don’t just add to the labor supply; they also add to labor demand. By joining a
local economy, immigrants increase demand for goods and services—such as
housing, food, and transportation—which in turn expands the need for local
workers. This helps explain one of the most famous research findings in labor
economics: David Card’s study of the Mariel boatlift from Cuba to Miami. From
May to September 1980, approximately 125,000 Cubans arrived in Miami. Half of
them settled there, increasing the local labor force by 7 percent. Nevertheless,
Card found no negative effect on wages or employment levels in Miami.

The second mistake made by the Lodge school is to think of immigrants only as
workers or potential workers. This leaves out one of the most important ways in
which immigrants participate in the economy: as employers. Immigrants create new
businesses, and these businesses create new jobs. In fact, immigrants are
dramatically more likely to start a new business than native-born Americans are.
In a recent study, my co-authors and I analyzed the country of origin for the
founder of every business created in the United States from 2005 to 2010. Our
findings suggest that immigrants are 80 percent more likely than native-born
Americans to start a business. These are mostly small businesses, with just a
few employees each—single-establishment restaurants, auto-repair shops, beauty
salons, retail outlets, and so on. But immigrant founders are overrepresented as
founders at every level of employment size, from firms employing a handful of
workers to firms employing hundreds, thousands, or tens of thousands. (Consider
the likes of Google, eBay, Yahoo, and Tesla, or Dow, Dupont, Merck, and Pfizer
before them—all founded or co-founded by immigrants.) When we added the numbers
up, the results were striking: Immigrants to the U.S. create so many successful
businesses that they ultimately appear to create more jobs as founders than they
fill as workers. Furthermore, we found that immigrant-founded businesses pay
wages at least on par with those of other businesses.



This result does not appear to depend on where exactly the immigrants come from.
Immigrants to the U.S. start businesses at the same rate, and at all eventual
employment sizes, regardless of whether they were born in OECD countries (which
are mostly in Europe and have an income per capita that is 3.5 times higher than
the world average).

One might still be concerned about regional differences. Immigrant entrepreneurs
may create jobs in certain places, and even have a positive net effect on the
national economy, while immigration disproportionately hurts non-immigrant
workers in other areas. To analyze this possibility, we can return to the
Mariel-boatlift example. The boatlift provided what economists call a “natural
experiment.” Miami received an unexpected shock to its local labor market; other
cities did not. This was for idiosyncratic geopolitical reasons: Fidel Castro
announced to Cubans that if they wanted to leave, they could go down to Mariel
and set sail, and he wouldn’t stop them. Those who emigrated went to Miami and
not to comparable U.S. cities because Cuban émigrés were already there, and
Miami was easy to reach by boat. The end result was the kind of randomly timed
event that economists love to study.


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Read: The accidental experiment that changed men’s lives

Two recent, independent projects drew on this approach to analyze the economic
effects of the Age of Mass Migration (roughly 1850 to 1914). As with the Mariel
boatlift, immigrants during this period typically came in discrete waves, driven
by economic or political events in their homelands. They tended to settle where
their fellow nationals had already come and in regions they could reach by rail,
which was expanding West. (Think of Willa Cather’s My Ántonia, about Bohemian
immigrants settling on the Nebraska plains.) Examining the local impacts of
these regional immigrant waves in cities and counties across the United States,
the studies’ authors found that regions that experienced an influx of immigrants
saw better economic performance. In the immediate years after the immigration,
these areas experienced increased employment, even for American-born workers in
sectors that drew immigrant labor. In the very long run, places with higher
historic immigration levels saw less poverty, less unemployment, and higher per
capita income.

At the national level, the economic case for immigration is related but broader.
Today, the United States faces substantial economic challenges. Productivity
growth has slowed. Government debt is alarmingly high. Our society is aging and
retiring, with fewer Americans paying taxes and more relying on Social Security
and Medicare. Immigrants can be a key solution to these problems. With their
entrepreneurial potential, they can expand the workforce, drive technological
progress, and increase overall growth.



Both major U.S. political parties say they want to create jobs and support
America’s workers. Seeing immigrants clearly in the light of these goals calls
for a fundamental shift in perspective. Progressives often tell very particular
job-market stories, arguing that immigrants do jobs that Americans don’t want to
do. Voters, however, are understandably skeptical that immigrants exist in some
separate universe of jobs. The more accurate argument is that with immigration,
there are many more jobs to go around. Immigrants start companies, creating more
opportunities for everyone.

It’s not hard to see why this would be. To immigrate is to take a risk. It is to
brave an ocean or a desert, or to cross the Darién Gap on foot. Immigrants
create a new life for themselves. We should not be surprised that they are
exceptionally entrepreneurial once they arrive.

And so, Lazarus’s poem needs a correction. Yes, many immigrants arrive after a
difficult journey. But from an economic point of view, they are defined by their
energy, not their weariness. We should say: Give us those who seek a better
life. They will return the favor.

--------------------------------------------------------------------------------

Support for this article was provided by the William and Flora Hewlett
Foundation.






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