Imagining America Without Immigrants

Daniel was not where he wanted to be. The Honduran man in his mid-40s had traveled more than 2,000 grueling miles before coming to a halt in Tijuana, somehow both closer and further from his goal than at any other point in the journey. Just a few miles away from the sidestreet where he hung out, listening to Ranchera standards blasting from a nearby restaurant with a handful of other Honduran migrants, loomed the U.S.–Mexico border.

Like the scores of others who Daniel traveled with, he had many reasons to leave: the desire for an improved quality of life, escaping government corruption, and fleeing gang violence. He hoped to receive asylum into the U.S. given the dangers plaguing his country, but his primary reason boiled down to something somewhat more banal but no less vital: economics.

“I’m going [to America] for the opportunity to work,” he said.

A full day’s work in Honduras would only net him $8—just enough for “breakfast, lunch, dinner, but only for myself. My family, my children, they’re not going to eat.”

But as much as Daniel may need the United States, according to economists, the United States may need him even more. As the White House advocates for an increasingly harder line on immigration, economists point to a growing set of historical and contemporary data that makes the case for the benefits of immigration and the dangers of closing the country off to it.

Over the last two and a half years, the Trump administration has made clear that it wants to go beyond fixing a flawed immigration system—it wants to fundamentally change the relationship between the United States and those wishing to enter it. At first, symbolically communicated by “Make America Great Again” and “Build the wall,” Trump has taken escalating steps in recent months in realizing his vision of a whiter America. In July alone, the White House has expanded “fast-tracked” deportations, tightened rules around visas for immigrant investors, announced plans to deny the vast majority of asylum requests, launched mass (albeit apparently ineffective) raids on undocumented immigrants, proposed cutting refugee admissions to zero next year, and indicated plans to change the U.S. citizenship test.

This heightening of rhetoric and policy reached its tragic conclusion on Saturday when a White Nationalist opened fire in an El Paso Walmart, killing 22 and injuring dozens of others. If the Latino surnames of the victims didn’t make clear the shooter’s racist motivations, then the anti-immigrant manifesto he posted minutes before pulling the trigger did. Chillingly straightforward, it describes Mexican and South American immigrants as an “invasion”—echoing a common refrain of the president—which is driving “cultural and ethnic replacement” of whites.

But in the 2,300-word document, which is split into five sections, the shooter devotes an entire portion to “Economic Reasons.” In it, he cobbles together a strange mix of anti-corporate, environmental, and nativistic arguments to declare that immigrants will harm the economy and native-born Americans.

“In short, immigration can only be detrimental to the future of America,” he writes.

As white nationalism has moved from the social undercarriage and into front seat over the last few years, the conversation on immigration has been dominated by this chimera of economic populism and nativism. But at the same time, economists and economic historians have found competing data that undermines the arguments made in the White House and on 8chan.

Giovanni Peri, an economist at UC Davis who studies the impact of international migration on labor markets, has found that immigrants tend to raise all boats when they move into an area. Immigrants, Peri explains, are a self-selective group; they all share a similar audacity in leaving what’s familiar for something new and foreign.

“They have high cognitive and non-cognitive skills in the sense that they are strongly determined, motivated, and this makes them a little bit of a special group. This is true of the scientist and engineer, but also of people who have lower education and come to a country to start a new life and to find a job.”

In a 2015 paper, Peri took advantage of a unique opportunity in Denmark. From 1986 to 1998, the Danish government pursued what was known as the Spatial Dispersal Policy, placing refugees randomly throughout the country to avoid concentrating any financial burden in a single location. Even after the policy ended in 1998, subsequent waves of refugees continued to settle along the lines of the random distribution. This set up the perfect conditions for a “quasi-experiment,” Peri explains.

Using detailed datasets compiled by the Danish government that tracks employment, wages, and demographics of each citizen, the study measured the impact of the influx of low-skilled refugees on less-educated natives from 1991 to 2008. Whereas the “canonical model” of economics would suggest that greater competition with immigrants would result in lower employment and wages for natives, the study finds the opposite.

“We find robust evidence that less-skilled native workers responded to refugee-country immigration … by increasing significantly their mobility towards more complex occupations and away from manual tasks,” Peri writes. The study did not find a rise in unemployment for Danish-born workers, nor did unskilled Danish-born workers experience decreased employment.

“[Immigrants] tend to specialize in jobs which are more manual or physically intensive because their language skills are not as good,” explains Peri. In response, “natives move up or upgrade their type of specialization in to jobs which have a little bit more communication and interactive content.”

Economists have found even more support for this symbiotic view of immigration in the historic record. Nathan Nunn, a professor of economics at Harvard University who studies economic history, put out a recent study on the long-term impact of immigration from 1850 to 1920.

This period of time, known as the Age of Mass Migration, accounts for the largest levels of immigration in U.S. history—almost 30 million people, most of whom came from previously unrepresented countries in Southern, Northern, and Eastern Europe. Strikingly, in 1850, 90 percent of the foreign-born living in the country hailed from Great Britain, Ireland, or Germany; by 1920, the figure dropped to 45 percent.

“During the Age of Mass Migration, there were not many restrictions at all,” Nunn says, explaining that the border between Europe and the United States was virtually open.

Nunn’s study seizes on the tendency of migrants at the time to settle in areas connected to railways, finding that “historical immigration resulted in significantly higher incomes, less poverty, less unemployment, more urbanization, and higher educational attainment today.” Even when controlling for the effect of the railway on the areas, the study calculates that areas with larger amounts of immigrants have, on average, a 13 percent higher income per capita today.

“Immigration resulted in more and larger manufacturing establishments, greater agricultural productivity, and higher rates of innovation,” the paper reads.

In terms of their benefit to manufacturing, the Second Industrial Revolution in the U.S. relied disproportionately on the labor of unskilled immigrants. While immigrants accounted for 10 percent of the total population in 1880, they represented 57 percent of the manufacturing workforce, according to Nunn’s report.

“Between 1880 and 1920,” writes John F. Kennedy in his book, A Nation of Immigrants, “America became the industrial and agricultural giant of the world … This could not have

been done without the hard labor, the technical skills and entrepreneurial ability of the 23.5 million people who came to America in this period.”

Rather than settle in areas that were already prospering, according to Nunn, migrants went to the areas they could afford (read: not prime real estate).

“Immigrants ended up having to go, because of lack of resources, to places that had lower future growth potential—places that were less desirable,” he says.

As a result, these areas improved: “Immigrants went to places that otherwise would have been crappy and they make them a bit better.”

On a national scale, too, immigrants contributed to the eventual industrial and scientific dominance of the United States. In virtually every sector, immigrants brought both the high-skilled innovations to elevate the United State’s economy and the low-skilled labor to realize those innovations.

“Immigration resulted in more and larger manufacturing establishments, greater agricultural productivity, and higher rates of innovation,” Nunn writes, pointing to developments like the suspension bridge, telephone, hot blast furnace, and flashlight.

Research looking at current economic trends shows a similar impact of immigration on manufacturing centers. A report put out by New American Economy and the Great Lakes Metro Chambers Coalition in 2017 attributed the revival of the Great Lakes region to immigrants.

“[I]mmigrants have actually helped to revitalize and strengthen industries like manufacturing and healthcare, creating jobs for Americans that once seemed lost forever,” the report reads.

Population and growth play a critical role in maintaining and expanding an economy. In the Great Lakes region, “immigrants accounted for half of regional population growth between 2000 and 2015.”

Along with this, higher-skilled immigrants have helped drive recent gains in manufacturing. While the Great Lakes region—with historic manufacturing centers like Pittsburgh and Detroit—has atrophied industry since its peak in the 1950s, it actually added more than 250,000 working-class jobs between 2010 and 2015. The vast majority of these jobs (over 92 percent) were filled by U.S.-born workers, but the report credits educated foreign-born immigrants for “fill[ing] the higher-skilled jobs that allow companies to stay local, as opposed to moving offshore.”

Similar to immigrants during the Age of Mass Migration, many immigrants today settle in struggling, more affordable areas. In 2010, a third of those born outside of the U.S. lived in cities and towns with populations between 20,000 and 99,000; a fourth live in municipalities with a population under 200,000. As University of Pennsylvania professor of history Michael B. Katz points out, these Rust Belt cities share a common path: “a vibrant manufacturing past resting on immigrant-dominated workforces; a precipitous economic and population decline around the middle of the twentieth century; and renewed immigrant-led population growth in the late twentieth and early twenty-first centuries.”

What the periods of growth have in common? Immigrants.

The U.S. has partially insulated itself from the stagnating growth and shrinking populations plaguing other countries—in large part thanks to immigrants, who tend to be younger and have more children than native-born Americans.

Japan, Peri singles out, clamped down on immigration in the ‘80s and has “barely grown in the last 20 years.” By 2040, the Financial Times reports, more than one-third of Japan’s population will be over 65 years old, making it the oldest society in the world. This forecast has dire implications for Japan’s pension plans, healthcare system, and overall economy. Immigrants in the U.S., however, make up the brunt of the country’s exploding healthcare workforce—an increasingly vital sector as more Boomers age into retirement.

The Age of Mass Migration came to a close as anti-immigrant sentiment crescendoed in the early 1900s with the advent of eugenics and other modes of race essentialist thought. The arguments made at the time were less economic than pseudo-scientific and were largely driven by elites in academia, business, and politics. “Biological laws tell us that certain divergent people will not mix or blend,” Calvin Coolridge wrote in 1921, shortly before becoming vice president. “The deadweight of alien accretion stifles national progress.”

In 1911, Congress authored a report warning that immigrants from Southern and Eastern Europe were resistant to “Americanization.” Using this report as justification, the U.S. government choked down on immigration over the next decade until, in 1924, it implemented a drastic quota system that sounded the final knell for the Age of Mass Migration.

The relatively sudden and dramatic change in policy “does generate interesting experiments,” says Leah Boustan, who studies the intersection of economic history and labor economics at Princeton University. It also offers a helpful picture of what could happen if the Trump Administration fully implements its own agenda on immigration.

In Boustan’s research, two distinct trends emerge in urban and rural economies. “In cities, almost all of the immigrants that are lost after the border closure get replaced by other workers,” she says. “In rural areas, though, it was completely the opposite. When immigrants are no longer coming into rural areas, other people stopped coming in as well.”

The data paints a bleak portrait for the areas that disproportionately supported Trump in 2016—the white, working-class enclaves in the Rust Belt that oppose immigration the most, but also have the most to gain from it.

“These are a lot of the locations where you hear—at least anecdotally in the journalism—you hear voters saying, I want to shut the border.”

This is not to opine on the non-college educated whites who vote against their own interests, but to suggest that their interest isn’t economic—it’s cultural. Turning back a century, what stands out to Boustan is just how small a role economics played in the discourse around immigration.

“When policymakers were saying we need to shut the border at that time, to be honest, the first eight arguments they would make to you were cultural,” she says. “But if you get to point number nine on their plank, they would finally say, yes, there’s competition going on.”

With the economy performing well (at least on paper), the current discussion on immigration echoes the pre-Depression conversation in the United States. Trump follows a similar template as early nationalists when he characterizes immigrants like Daniel as criminals, disease-ridden, and “an invasion of our country.” But with lingering memories of 2008 and persistent economic insecurity, the economy remains a potent talking point by those advocating against immigrants—a useful boogieman for channeling those anxieties, deflecting from corporate perpetrators, and reinforcing racist sentiments.

Following the Depression, economics provided a somewhat more substantial veil for xenophobia and racism. Starting in 1929, a coalition of local and state governments, with the sanction of the U.S. Federal government and assistance from the Mexican government, pursued a policy of repatriation of undocumented Mexican immigrants. Or, in other words, mass deportations.

With historic levels of unemployment, the recently arrived Mexican immigrants—lured to the U.S. by recruiters in the railroad, meatpacking, steel mill, and agricultural industries—served as convenient political scapegoats. “The large alien population is the basic cause of unemployment,” wrote Congressman Martin Dies of Texas in the Chicago Herald-Examiner in 1930.

Over the next decade, more than 400,000 people of Mexican descent were deported to Mexico—around 30 percent of the Mexican population in the U.S. Between one-fourth and one-third of those deported were U.S.-born, making them citizens. (History seems to be repeating itself in this latest anti-immigrant push, with ICE detaining an American with proof of citizenship for nearly a month.)

Studying the impact of the sweeping deportation, Peri writes, “Given the large amount of pain, disruption and suffering that this campaign caused to Mexicans and their families, it is crucial to notice that it did not deliver any of the labor market benefits promised to natives. In fact, our estimates suggest that it may have further increased their levels of unemployment and depressed their wages.”

For Nunn, he recognizes how the economics of immigration can serve as a tool in the service of an agenda. “People have these gut feelings about immigrants and then they look for hard data that justifies their gut feelings,” he says. They don’t always find it.

Trump showcased his own ignorance when he voiced a preference for Norwegian immigrants over those from “shit-hole countries” in Africa. Norwegian immigrants, Boustan says, were “one of the groups that had the largest earnings gaps in the past—somewhat on par with earnings gap you’ll see today from some of the maligned groups.”

The consequences of replicating the policies of the early 1900s, while likely impacting rural communities most acutely, would also reverberate through the broader economy. “I think overall if immigration slows down, economic growth in the US will start slowing down,” Peri says.

A reduction in high-skilled immigrants “will reduce the competitive edge of the U.S. and other countries will attract these people—the UK, Canada, Australia are very happy to try to attract these people.”

This relationship between immigration and innovation has even greater significance for our post-industrial economy, Nunn says. “[Innovation is] obviously the main source of economic improvements in general throughout history, but particularly today, when the US doesn’t really make goods as much as anymore.”

It’s hard to overstate the role that immigrants have played in developing the fundamental structures and drivers of the economy. Inventions by Nicola Tesla (electrical alternating current), Alexander Graham Bell (telephone), and David Lindquist (elevator) enabled more innovation and development by altering the very infrastructure facilitating that innovation. Today’s tech boom has been equally driven by immigrants. Steve Jobs, the founder of Apple, was the son of a Syrian refugee; Sergey Brin, co-founder of Google, emigrated from Moscow to escape Jewish persecution; and Jerry Yang, founder of Yahoo!, came to the United States from Taiwan as a child speaking virtually no English.

Stepping back from the economics, Nunn acknowledges that his research and the research of his peers tends to miss something else in the equation.

“Maybe we want to bring in immigrants into the U.S. even if they have zero benefit,” he says. “It’s the right thing to do and a purely economic analysis is going to miss all of that.”