Immigration: Why It's Good for Us and the U.S.

The knee-jerk response to allowing more immigrants into the country is that there will be fewer jobs available to natives. After all, there's a finite supply of jobs at any given time, and a greater number of people to fill them would mean that someone goes without a job or receives a lower wage because workers are that much more replaceable. It's simple -- until you look at the research.

Immigration actually raises wages for a country, and emigration -- the exiting of a population -- is what hurts citizens.

How?
So what's wrong with the popular but flawed equation that says more labor and a constant supply of jobs leads to a worse-off working situation for all? The key is that the supply of jobs increases with immigration. This is because many immigrants hold college degrees and create opportunities wherever they decide to live. And these opportunities not only employ themselves, but can create jobs for others as well.

By studying the effects of immigration and emigration on wages and employment in OECD countries from 1990 on, researchers concluded: "In the long-run, the wage and employment effects of immigration in the 1990s and in the 2000s were rather small and always positive for less educated workers of all OECD countries." The study specifically found that:

Less educated workers in Canada, Australia, the US, Luxembourg, the UK, and Switzerland, which were among the magnets of international migrants, all experienced positive long-run effects from immigration, between 1 and 5%, according to our calculations. To the contrary, emigration, which entails the loss of talent and brains in much larger proportion than the loss of unskilled workers, is the real threat for unskilled workers left behind, even in some OECD countries. Less educated workers in Cyprus, Malta, Ireland, New Zealand, and Portugal all lost between 1 and 6% of their wages because of the flight of highly educated emigrants.

In short, immigrants likely help us out. And it's very unlikely they hurt our job prospects.

A fight for talent
Tech companies especially understand this, as they are fervent supporters of immigration reform through a variety of interest groups like FWD.us. FWD.us includes the support of Microsoft's (NASDAQ: MSFT  ) Bill Gates, Facebook's (NASDAQ: FB  ) Mark Zuckerberg, LinkedIn's (NYSE: LNKD  ) Reid Hoffman, and Netflix's (NASDAQ: NFLX  ) Reed Hastings. Microsoft trounces these tech peers in terms of number of H1-B workers sponsored -- that is, workers on this special non-immigrant type of visa that allows for six years of work in the U.S. Here's a rough take on how important these types of workers are for each company:

Company H1-Bs in 2012 Percent of Company's U.S. Workforce
Microsoft 4,067 7%
Facebook 384 7.2%
LinkedIn 196 4.6%
Netflix 41 2%

A summit is scheduled in Washington, D.C., at the end of the month to advance immigration legislation, and Zuckerberg himself has promised to spend $50 million to support representatives who work to achieve an updated immigration system. Microsoft offered a different plan to incentivize the government to act: The government could issue an additional 20,000 H1-B visas per year, reserved for jobs in science, technology, engineering, and mathematics. Companies could then pay $10,000 each for the extra visas, raising up to $500 million per year in government revenue with additional expenses such as green cards included..

A growing pie
So the same pie is not split among more mouths; rather, the pie grows along with the number of mouths because of greater opportunities. Immigrants are, after all, twice as likely to start a business, and those businesses can employ natives and immigrants alike. As many companies depend on the skills of highly educated immigrants, watching the future of immigration reform can mean much more for your investments than for your own job.

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  • Report this Comment On October 08, 2013, at 5:35 PM, FoolinSD wrote:

    Nice, so whats stopping unemployed workers from starting their own companies?

    foolinsd

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