In the spring of 2022, New York City began receiving an extraordinary number of asylum seekers. The city opened emergency shelters, booked hotel rooms, provided food and medical care, and helped families navigate schools and public services. What began as a humanitarian response soon became a fiscal crisis.
By the end of the 2024 fiscal year, New York had spent roughly $5.1 billion on asylum-seeker services. The city’s official accounts show approximately $1.41 billion in spending during fiscal year 2023 and another $3.70 billion in fiscal year 2024, followed by billions more the next year. These were real costs borne by a city already struggling with expensive housing, crowded services and a high cost of living.
But the New York experience does not, by itself, answer the larger economic question.
A sudden influx of asylum seekers into one expensive city is not the same thing as the long-term economic effect of all immigration across the United States. A recently arrived family awaiting work authorization has a different economic profile from a software engineer recruited by an American company, a naturalized entrepreneur who has lived in the country for 20 years, an agricultural guest worker or an international student who stays after graduation.
Yet public arguments often place all these people into a single category and ask whether “immigration” is good or bad.
That question has become increasingly urgent. The foreign-born share of the American population reached 14.8% in 2024, according to Pew Research Center’s historical demographic analysis. That matched the share recorded in 1890, during another great era of immigration.
At the same time, many native-born Americans feel economically insecure. Housing has become unaffordable in large metropolitan areas. Wage growth has been uneven. Stable working-class jobs have disappeared from many communities. Wealth has become increasingly concentrated, while the bargaining power of workers has weakened.
This creates a powerful suspicion: if employers gain access to millions of additional workers, must wages not fall? If immigrant households use public services, must taxpayers not become poorer? If immigration makes the economy stronger, why do so many Americans feel that they are losing?
There are serious economic arguments behind those questions. Immigration can create genuine costs. It can increase competition for particular jobs, weaken the position of workers who are easily replaced, strain local housing and school systems, and allow employers to postpone improvements in wages and working conditions.
It can also expand production, create demand, increase tax revenues, support ageing communities, encourage investment and contribute disproportionately to entrepreneurship and innovation.
Both things can be true.
The central issue is not simply whether immigration produces economic value. It is how that value is created, who receives it, who bears the adjustment costs and whether public policy distributes those costs fairly.
Why the Immigration Debate Produces Such Conflicting Numbers
Immigration statistics often appear to contradict one another because different studies are not always measuring the same thing.
One study may examine the wages of all native-born workers over several decades. Another may focus on high-school dropouts in a single city over five years. A third may calculate the federal taxes paid by immigrants and their descendants over a lifetime. A fourth may examine how much a state spends educating recently arrived children.
All four studies may be accurate within their chosen boundaries while producing very different headlines.
The first problem is the definition of an immigrant. The foreign-born population includes naturalized citizens, lawful permanent residents, temporary workers, international students, refugees, asylum seekers and people living in the country without authorization. These groups differ in education, age, earnings, access to public benefits and ability to work legally.
Their effects also change over time. A newly arrived refugee family may initially require substantial public support. A young employment-based immigrant may begin paying taxes immediately. A child who requires public education today may become a high-earning taxpayer later. An immigrant who arrives near retirement will have a very different lifetime fiscal effect from one who arrives at 25.
The second problem is the level of analysis.
An immigration policy can improve federal finances while placing pressure on city budgets. Washington may collect additional payroll and income taxes, while local governments pay for schools, shelters, hospitals and housing assistance. The national economy may grow even as one occupational group experiences lower wages.
The third problem is the distinction between averages and distribution.
The National Academies’ comprehensive study of immigration’s economic and fiscal consequences concluded that immigration’s long-term effect on the wages and employment of native-born workers is generally very small. However, it also identified groups that may face more meaningful losses, especially previous immigrants and native-born workers without high-school qualifications.
Those conclusions are not contradictory. A small average can conceal substantial differences beneath it.
Suppose immigration raises the wages of engineers, managers and business owners while slightly reducing the wages of workers performing similar tasks to new arrivals. The national average may be close to zero even though the effect on each group is economically important.
A wide-ranging review of the labour-market evidence by economist David Roodman reaches a similar conclusion. Immigration generally produces small effects on the average native worker, but workers who most closely resemble incoming immigrants can face larger negative consequences. Previous immigrants are often among the most exposed because they are more likely to work in the same occupations, possess similar language skills and live in the same local labour markets.
Fiscal studies create another layer of disagreement.
Some researchers count whether anyone in an immigrant-headed household receives a public benefit. Others calculate the dollar value of benefits consumed per person. Some include benefits received by U.S.-born children. Others assign those children to the native-born population. Some allocate the entire cost of national defence and other public goods across every additional resident. Others assume that adding one person does not meaningfully increase the cost of maintaining the military or servicing the national debt.
None of these choices is neutral. But methodological disagreement is not necessarily evidence of fraud.
Economic models are also unavoidable. No dataset can observe an immigrant’s effect on wages, investment, taxes, children, public services and productivity over 75 years without making assumptions about the future. The correct question is not whether a study uses assumptions. Every long-term study does. The correct question is whether those assumptions are visible, defensible and tested against alternatives.
The immigration debate becomes misleading when one result is presented as the only possible truth while its denominator, timeframe and assumptions remain hidden.
Immigration Makes the Economy Bigger—But That Is Not the Same as Making Everyone Richer
Immigration almost certainly makes the American economy larger.
More people means more workers, but it also means more consumers. Immigrants rent homes, buy groceries, use transport, purchase clothing, start companies and pay for services. Their spending supports employment in other industries. Businesses respond to a larger workforce and customer base by investing in buildings, machinery, software and equipment.
This is why the effect of immigration cannot be understood by imagining a fixed economy with a permanent number of jobs.
The number of jobs in the United States is not predetermined. It changes with population, demand, investment, technology and business formation. During periods of population growth, the economy can support more workers because it is also serving more people.
Recent immigration has contributed to this expansion. The Congressional Budget Office estimated that the immigration surge expected between 2021 and 2026 would enlarge the labour force, raise output and increase federal tax revenues. Under its assumptions, CBO projected that the surge would reduce cumulative federal deficits by roughly $900 billion between 2024 and 2034.
That does not mean every immigrant creates an identical fiscal gain. Nor does it mean states and cities receive enough money to cover their costs. CBO’s estimate is a federal budget projection for a defined population increase, not a universal calculation covering every form of immigration or every level of government.
New York illustrates the distinction.
The city faced immediate shelter, health, education and administrative expenses. Many asylum seekers initially lacked legal authorization to work, limiting their ability to earn income and pay taxes. They arrived in a city where temporary accommodation was extremely expensive and permanent housing was already scarce.
The result was a severe short-term municipal burden, documented in New York City’s official asylum-seeker expenditure records.
But that local burden does not establish that the same migrants will remain a net fiscal cost throughout their working lives. Nor does a favourable federal projection reimburse a city for hotel rooms and emergency shelters today.
Immigration can therefore improve national finances while overwhelming particular local institutions. This is not an economic paradox. It is a problem of timing and fiscal federalism: the federal government may capture much of the revenue while cities and states bear much of the initial expense.
Housing produces a similar divide.
Additional population increases demand for homes, particularly in the cities where immigrants first settle. If construction can expand, developers build more housing, landlords renovate vacant properties and workers enter the construction industry. The supply response absorbs part of the demand.
When cities restrict construction, however, additional demand raises rents more sharply. Immigration can then contribute to housing pressure, but its effect is amplified by policies that prevent supply from responding. The deeper problem is often that housing supply fails to keep pace with growing demand.
The same distinction applies to national prosperity.
Total gross domestic product can rise simply because more people are producing and consuming. GDP per person may rise more slowly, remain unchanged or even fall. Native-born income can follow a different path again. An economy can become larger without making every existing resident richer.
This is why “immigration increases GDP” is not a sufficient argument for any particular policy. It establishes that immigrants participate in production. It does not establish how much productivity rises, whether public infrastructure keeps pace or how the resulting income is distributed.
Does Immigration Lower Wages or Take Jobs?
The most intuitive argument against immigration begins with labour supply.
If the number of workers increases while everything else remains unchanged, the price of labour should fall. Employers have more applicants to choose from, workers become easier to replace and wages face downward pressure.
That mechanism is real. The mistake is assuming that everything else remains unchanged.
Immigrants increase the supply of labour, but they also increase demand for goods and services. Their consumption creates work for other people. Businesses may invest more because additional labour makes new projects profitable. Some immigrant workers perform tasks that complement native workers rather than replace them.
A construction labourer may make an architect, engineer or project manager more productive. A home-care worker may allow a family member to remain in full-time employment. A farm worker may keep a labour-intensive agricultural business operating in the United States rather than moving production abroad or mechanizing more quickly.
This does not mean competition disappears. It means the effect depends on how closely the new worker substitutes for an existing one.
A newly arrived labourer with limited English is unlikely to compete directly with a corporate lawyer. The competition is more immediate for workers with similar education, language ability, location and experience. That is why previous immigrants frequently experience more pressure than the average native-born worker.
Time also matters.
In the short run, a business may respond to a larger labour supply by paying less. In the longer run, it may expand production, attract investment and purchase more equipment. Those adjustments increase demand for workers and offset part of the initial wage effect.
This helps explain why broad literature reviews often find small average long-term effects without proving that no one loses.
The experience of Crider, a poultry-processing company in Georgia, shows the mechanism at its most concrete. In 2006, an immigration-enforcement operation removed approximately three-quarters of the plant’s workforce. Faced with the possibility of losing production, the company raised wages and recruited hundreds of local applicants, many of them Black.
The case appears to confirm the argument that employers call jobs undesirable when they really mean the jobs are undesirable at the wages and conditions offered.
But the full account of the Crider raid and its aftermath is more complicated than a simple success story. The wage increase attracted local workers, yet employees also complained about harsh conditions, disputed pay and high turnover. Replacing undocumented workers did not automatically transform poultry processing into stable, desirable employment.
The deeper lesson is that employers can adapt when access to vulnerable labour disappears. They may raise wages, recruit from communities they previously overlooked, improve productivity or automate. But the durability of local recruitment depends on whether the job itself becomes tolerable.
Crider also demonstrates why the phrase “jobs Americans will not do” is often misleading.
Americans perform difficult, unpleasant and dangerous work every day when compensation and conditions make it worthwhile. The more accurate statement is that some employers cannot attract enough local workers at the wage, location, schedule and level of protection they currently offer.
Unauthorized immigrants are particularly vulnerable in this environment. A worker who fears deportation is less able to complain about unpaid wages, unsafe machinery or abusive supervision. That vulnerability can lower labour standards for everyone in the same workplace.
Concerns about Black workers deserve special attention because they have historically been concentrated in labour markets where competition can be intense.
A widely debated NBER working paper on immigration and African-American employment found that immigration-induced increases in labour supply within particular skill groups were associated with lower wages and employment among Black men. Its estimates suggested especially significant employment effects for low-skilled Black workers.
The finding is important, but it is not uncontested. Researchers disagree about how workers should be grouped, how local labour markets adjust and whether immigration inflows are truly independent of economic conditions. Immigrants often move toward places where employment is already expanding, making it difficult to separate cause from destination choice.
The responsible conclusion is neither that immigration has no effect on native workers nor that every immigrant takes a job from an American.
Immigration usually produces small effects for the average native worker. It can nevertheless impose meaningful costs on workers who are close substitutes, lack bargaining power or live in places where employers can easily replace them.
Those losses matter even when the national average looks benign.
Who Captures the Gains—and Who Bears the Costs?
Immigration creates economic gains partly by allowing resources to be used more productively.
A worker moving from a low-productivity economy to the United States can become far more productive without changing their underlying abilities. Better infrastructure, technology, capital, institutions and access to markets increase the value of their labour.
Some of that higher productivity becomes wages. Some becomes profit. Some appears as lower prices for consumers.
The distribution depends on the market.
When an employer gains access to additional workers willing to accept the existing wage, labour costs may fall relative to what the company would otherwise have paid. The employer captures part of the gain through higher profits.
Consumers can benefit as well. Restaurants, farms, construction companies, hotels and care providers may charge lower prices when labour is cheaper. Families that employ childcare or home-care workers may be able to work more hours themselves.
Complementary workers may gain because the new labour makes their own skills more valuable. Owners of land, equipment and businesses may also benefit as production expands.
Workers who compete directly with the newcomers may lose through lower wages, reduced hours or a slower improvement in conditions.
Economists sometimes describe the net increase left after gains and losses as the immigration surplus. The concept is useful, but it can be presented deceptively.
A calculation may show that immigration creates a modest net gain for the native-born population while redistributing a much larger amount of income between groups. That does not mean hundreds of billions of dollars literally disappear from workers’ bank accounts and reappear in corporate treasuries. It means that wages may be lower than they would have been in a counterfactual economy, while profits and consumer purchasing power may be higher.
A small positive total can therefore coexist with a politically explosive distribution.
Imagine a policy that creates $50 billion in net national benefits but causes one group of low-income workers to lose $100 billion while employers, consumers and other workers gain $150 billion. The country is richer in aggregate, but the people absorbing the loss may receive no compensation.
Telling those workers that national GDP increased does not answer their complaint.
This is where labour institutions become decisive.
If workers can organize, change employers, report violations and demand safer conditions, immigration does not automatically translate into a race to the bottom. If employers face meaningful penalties for wage theft and unsafe practices, they cannot easily build a business model around workers’ fear.
If immigration status ties a worker to one employer or makes complaints dangerous, the employer gains unusual power. The resulting wage suppression is not simply the product of population growth. It is created by the interaction between immigration rules and weak labour enforcement.
This also reveals why hostility toward immigrants is often misplaced.
The undocumented worker accepting a dangerous job is usually responding rationally to limited options. The employer who uses that vulnerability to avoid raising wages is responding to incentives created by law and enforcement. Native workers and immigrant workers may appear to be competitors, but both can be harmed by the same workplace institutions.
A serious immigration policy cannot judge success solely by the number of jobs created, the size of GDP or the reduction in consumer prices. It must ask whether the gains depend on maintaining a class of workers who cannot exercise ordinary rights.
Prosperity produced through exploitation is not broadly shared prosperity.
Do Immigrants Pay More in Taxes Than They Receive in Benefits?
Claims about immigrants and welfare often begin with two apparently incompatible statistics.
One side reports that immigrant-headed households participate in public-benefit programs at higher rates than native-headed households. The other reports that immigrants consume fewer welfare and entitlement dollars per person than native-born Americans.
Both findings can be true because they measure different things.
The Center for Immigration Studies’ household-level analysis counts whether an immigrant-headed household receives assistance through programs such as Medicaid, food benefits or cash support. Immigrant-headed households tend to be larger, more likely to contain children and more likely to have lower incomes, all of which can increase the probability that someone in the household qualifies.
Many of the beneficiaries are U.S.-born children who are citizens. Assigning their benefits to an immigrant-headed household is reasonable when estimating the fiscal circumstances associated with that household. It is less appropriate if the claim is that noncitizen adults personally receive every benefit being counted.
A contrasting Cato Institute analysis of per-capita benefit consumption asks how many dollars in welfare and entitlement spending immigrants consume per person. Under that method, immigrants use less than native-born Americans in part because they are younger and therefore consume fewer benefits from enormous old-age programs such as Social Security and Medicare.
Neither measure gives the complete fiscal answer.
Household participation helps show the immediate pressure associated with low-income families. Per-capita expenditure captures the actual value of benefits consumed. But fiscal impact also includes taxes, public education, infrastructure, future earnings and the eventual contributions of children.
Age at arrival is crucial.
A person who enters the United States as a young adult can work and pay taxes for decades without the public bearing the cost of their childhood education. A person who arrives at an older age may have fewer working years before becoming eligible for age-related services. A child may require years of public schooling before entering the workforce.
Education also matters because it is closely related to earnings and tax payments. Highly educated immigrants tend to have stronger lifetime fiscal outcomes. Lower-earning immigrants may pay substantial payroll and consumption taxes while still receiving more in services than they contribute, particularly at the state and local level.
The level of government changes the calculation.
The federal government collects income, payroll and corporate taxes. States and cities pay heavily for schools, emergency health care, policing, transport and housing-related services. An immigrant family may improve the federal balance while creating an initial local cost.
Generations matter too.
First-generation immigrants can produce a weaker fiscal balance than their children, especially when the parents arrive with limited education. The second generation may become highly productive taxpayers after receiving public education. A calculation that stops with the parents will miss those later gains. A calculation that automatically attributes every descendant’s achievement to the original immigration decision may overstate them.
Public goods create another disputed assumption.
Some studies allocate a share of defence spending, interest on the national debt and other collective expenses to every additional resident. Others treat many of those costs as fixed because the arrival of one more person does not require another aircraft carrier or proportionate expansion of the federal bureaucracy.
Changing that assumption can shift a lifetime fiscal estimate by a large amount. But sensitivity does not mean that the most pessimistic result is automatically correct. It means the estimate must be interpreted as a range produced by competing assumptions.
Recent federal projections complicate the claim that immigration necessarily burdens taxpayers. CBO expects recent immigration to increase federal spending on some programs, but it projects an even larger increase in tax revenues. Its resulting estimate is favourable for the federal budget over the coming decade.
That conclusion should not be stretched beyond its limits. It does not settle the long-term fiscal position of every immigrant category. It does not fully capture state and local costs. It depends on assumptions about employment, wages, legal status and future policy.
The honest answer is that immigrants do not have one universal fiscal effect.
Younger, highly educated and consistently employed immigrants are more likely to create a positive lifetime balance. Recent low-income families may require substantial support. Unauthorized workers can pay payroll and sales taxes while remaining ineligible for many benefits. Refugees may initially be costly but improve their fiscal position as they integrate. Their children may produce outcomes very different from those of their parents.
The argument cannot be resolved by choosing whichever single number produces the desired political conclusion.
Why High-Skilled Immigration Has Outsized Economic Effects
All workers contribute to production, but some forms of immigration can generate benefits that extend far beyond the immigrant’s own wages.
High-skilled workers can create knowledge, technology and companies that make other people more productive. An engineer who improves semiconductor design, a scientist who develops a new medicine or a founder who builds a scalable company may generate value that spreads across industries.
The United States has benefited enormously from this process.
According to National Science Foundation workforce data, foreign-born workers represented approximately 22% of the American STEM workforce in 2023. Their presence was considerably higher in some scientific and technical fields.
This is not merely a matter of filling vacancies. High-skilled immigrants contribute disproportionately to invention.
Research summarized in NBER’s review of high-skilled immigration found that immigrants constituted approximately 16.5% of inventors in the underlying data but produced patents representing about 25.2% of total patent market value. Their work also generated spillovers by increasing the productivity of collaborators and exposing firms to ideas and networks from other countries.
These effects differ from the immediate benefit of supplying labour to an existing job.
Innovation can create entirely new products, markets and occupations. A successful invention may raise the productivity of thousands of workers who never meet its creator. An immigrant-founded company may employ far more native-born Americans than the number of founders involved.
The scale of immigrant entrepreneurship is often illustrated through famous founders such as Google co-founder Sergey Brin or Nvidia founder Jensen Huang. Individual examples are not proof of average outcomes, but the broader pattern is substantial.
The 2025 New American Fortune 500 analysis found that 231 companies in the Fortune 500 had been founded by immigrants or their children. Together, those companies generated approximately $8.6 trillion in revenue during fiscal year 2024.
The reference to immigrants “or their children” is important. Some discussions misleadingly attribute the full total to first-generation founders. The second generation is part of immigration’s long-term story, but it is analytically different from a founder who personally migrated to the United States.
America’s advantage also comes from more than its visa system.
Talent is valuable because the country has deep capital markets, research universities, large technology companies, experienced managers and customers willing to adopt new products. The United States has often succeeded at attracting and commercializing global talent that other economies educated but struggled to retain.
This creates a genuine national advantage. It also creates risks for countries that lose their best scientists, doctors and entrepreneurs.
High-skilled immigration is not costless for every American professional. Additional engineers, programmers or researchers can increase competition in specific occupations. Employer-sponsored visas can weaken workers’ bargaining power when changing jobs threatens their ability to remain in the country.
A policy designed to attract talent should not create a permanently dependent workforce.
Even so, the economic case for high-skilled immigration is unusually strong because innovation and entrepreneurship create positive effects that are not fully captured by the immigrant’s own salary. The benefits can spread through patents, business formation, scientific collaboration and productivity growth.
That does not prove that low-skilled immigration has no value. It shows why the composition of immigration matters when the objective is long-term economic growth.
What the U.S. Immigration System Actually Selects For
The United States does not operate a single immigration queue organized from the most economically valuable applicant to the least.
It operates several systems serving different purposes.
Some people receive permanent residence because they are immediate relatives of U.S. citizens. Others enter through family-preference categories, employment sponsorship, humanitarian protection or the diversity visa program. Refugees and asylum seekers follow separate legal processes. Temporary workers and students are not permanent residents unless they later qualify through another route.
Official Department of Homeland Security green-card admissions data show that family-linked categories account for a large share of lawful permanent residence, while employment-based admissions represent a smaller portion.
This is often described as proof that America selects family members instead of workers. The reality is more complicated.
Family-based immigrants are not necessarily low-skilled. A spouse, adult child or sibling may be a doctor, engineer, business owner or care worker. Employment-based totals, meanwhile, can include spouses and children of the principal worker. The category describes the legal basis of admission, not the complete economic profile of every person within it.
Family reunification also has economic effects that are difficult to capture in occupational statistics. Relatives may provide childcare, help run family businesses, pool savings or support elderly family members. These contributions can increase the employment of other household members even when the arriving relative does not possess an advanced degree.
Still, the system creates severe obstacles for many workers whom the economy appears to value.
Employment-based permanent residence can require employer sponsorship, labour certification and an approved immigrant petition. Applicants are then subject to annual numerical limits and, in many categories, country-based restrictions.
The applicant’s priority date determines their position in the queue. As USCIS guidance on visa availability and priority dates explains, a worker may have an approved petition yet remain unable to receive permanent residence until a visa number becomes available.
For applicants from heavily oversubscribed countries, the wait can last years.
Not every skilled immigrant must complete the same steps. Some categories do not require the standard labour-certification process. People with extraordinary ability, multinational executives and applicants qualifying for national-interest waivers may follow different routes.
But the broader problem remains: the system can admit a worker temporarily, allow that person to establish a career, and then leave their long-term status dependent on queues and employer decisions they cannot control.
That dependency can distort the labour market.
A worker who fears losing their immigration status may be reluctant to change jobs, report mistreatment or negotiate aggressively. The visa may therefore give the employer more leverage than it would possess over a citizen or permanent resident.
A system intended to bring valuable skills into the economy should encourage workers to move toward the firms where they are most productive. It should not trap them in positions merely because changing employers is administratively risky.
The balance between family and employment admissions also reflects a deeper question: what is immigration policy for?
If its only purpose were to maximize measurable economic output, the government might favour younger, highly educated applicants with strong English skills and occupations associated with innovation. But immigration law also expresses commitments to family unity, refuge and humanitarian protection.
Those goals cannot be reduced to a spreadsheet.
The mistake is pretending that no trade-off exists. A place allocated through one category is not available through another when legal limits are fixed. A serious system should state its priorities honestly and design different channels to achieve them effectively.
Does Immigration Increase Inequality?
The historical relationship between immigration and inequality is visually tempting.
The foreign-born share of the American population was high during the early twentieth century, when inequality was also high. Immigration declined sharply after restrictive laws were introduced in the 1920s. Inequality fell in the middle of the century. Both immigration and inequality began rising again during the late twentieth century.
Placed on the same chart, the lines appear to tell a simple story.
But parallel movement is not proof of causation.
The postwar decline in inequality coincided with strong unions, progressive taxation, rapid productivity growth, regulated finance, expanding education, powerful manufacturing industries and the destruction of overseas industrial capacity during the Second World War.
The rise in inequality after the 1970s coincided with technological change, globalization, deunionization, declining minimum wages, tax changes, financialization, market concentration and enormous gains for highly educated workers and owners of capital.
Immigration may be part of that story, but it cannot be isolated by placing two historical trends beside each other.
There are several credible mechanisms through which immigration can affect inequality.
Low-skilled immigration may reduce wages or employment opportunities for some workers who perform similar tasks. If employers and consumers capture the benefits while low-income workers absorb the losses, income inequality can widen.
High-skilled immigration can also affect inequality, though in a different way. Immigrant scientists, entrepreneurs and executives may create large amounts of wealth. Their innovations can raise productivity broadly, but the immediate financial gains may flow disproportionately to founders, investors and highly skilled employees.
Immigration can therefore increase total wealth while also increasing measured inequality.
Population composition matters as well.
A newly arrived low-income household enters national statistics near the bottom of the income distribution. Even when the household’s income is dramatically higher than it was in its country of origin, its arrival can increase measured inequality within the United States.
That statistical increase is not necessarily evidence that existing Americans became poorer. It may partly reflect the addition of people who improved their own living standards but remain relatively poor by American standards.
The effect on Black workers is especially politically significant because immigration intersects with a long history of labour-market exclusion.
Historian Jeff Cowie has argued that the Great Migration of Black Americans from the rural South into northern industry was facilitated by the severe immigration restrictions of the early twentieth century. With fewer European workers available, northern employers recruited Black Americans who had previously been excluded from many industrial opportunities.
The interpretation is plausible, but it should not be treated as a controlled experiment proving that immigration restrictions created the postwar middle class. War mobilization, unionization, industrial expansion and civil-rights struggles were also essential.
The modern labour market is different again. Manufacturing employs a smaller share of the workforce. Automation and international trade have changed employers’ alternatives. Restricting immigration may raise wages in some sectors, but it may also accelerate mechanization, move production abroad or cause businesses to close.
Immigration can influence inequality through competition, capital returns, housing demand and access to opportunity. Its effects are likely to be strongest where workers possess little bargaining power and where supply cannot adjust.
But immigration is neither a complete explanation for American inequality nor an economically irrelevant factor.
The correct conclusion is narrower and more defensible: immigration can redistribute income within the United States, and the distribution deserves as much attention as the aggregate gain.
What an Economically Coherent Immigration Policy Would Look Like
An economically coherent immigration policy would begin by abandoning two slogans.
The first is that more immigration is always beneficial because immigrants increase GDP.
The second is that immigration is inherently harmful because additional workers compete with Americans.
Both statements capture part of the mechanism and ignore the rest.
A stronger system would distinguish among economic needs, humanitarian duties and family commitments rather than forcing them into one undifferentiated debate.
The employment system should make it easier to admit people with skills that create large spillovers or fill genuinely persistent shortages. That includes scientists, engineers, medical professionals, researchers, entrepreneurs and workers with specialized technical abilities.
But “high-skilled” should not become a synonym for economically worthy.
The economy also requires care workers, construction workers, agricultural labourers, technicians and service employees. The relevant question is whether their admission produces gains that are shared and whether the labour market protects both immigrant and native workers.
No employer should be able to justify recruitment by claiming that Americans refuse the work while offering wages and conditions that would be unacceptable in a functioning labour market.
Workplace enforcement must therefore be central to immigration policy. Governments should investigate wage theft, unsafe conditions, illegal retaliation and the use of immigration status to silence complaints. Penalties should fall on employers who profit from vulnerability, not merely on workers who possess the least power.
Employment visas should also permit greater mobility.
When a worker’s legal status depends heavily on one employer, the employer gains leverage unrelated to productivity. Making it easier for sponsored workers to change jobs would encourage labour to move toward better firms, improve bargaining power and reduce exploitation.
The permanent-residence system should reduce irrational backlogs, particularly for applicants who have lived, studied and worked in the country for years. Numerical limits and country caps should be evaluated against their economic effects rather than defended simply because they are longstanding.
Family reunification should remain a legitimate purpose of immigration law. Families provide care, financial support and social stability that conventional skill metrics often overlook. But policymakers should be honest about how limited visa allocations are distributed and whether the overall balance reflects current national priorities.
Humanitarian immigration requires a different framework again.
Cities receiving sudden asylum inflows should not be left to finance a federal policy challenge through emergency local budgets. Federal support should respond automatically to large arrival surges, with funding tied to housing, health care, schooling and administrative capacity.
Where legally appropriate, faster work authorization would reduce dependence on shelters and public assistance. Preventing people from earning wages while criticizing the cost of supporting them is economically incoherent.
Housing and infrastructure must expand alongside population.
Immigration into regions that refuse to build homes will increase pressure on rents. Immigration into regions with responsive construction can support new development and expand the tax base. The impact is shaped not only by how many people arrive but by whether institutions allow supply to grow.
Policy should also measure more than aggregate output.
Government agencies should regularly examine effects by occupation, education, geography, race, legal status and income. When a policy creates large national gains but concentrated losses, officials should consider wage subsidies, training, stronger bargaining rights or direct fiscal support for affected communities.
Compensation should not be treated as an afterthought. It is what turns aggregate economic efficiency into politically sustainable prosperity.
Immigrants themselves are not the enemy in this story. People move because they want safety, dignity, opportunity and a better future for their families. Those motives are not different from the motives that shaped earlier generations of Americans.
But compassion toward immigrants does not require indifference toward workers who face real competition, cities that absorb sudden costs or communities whose bargaining power has eroded.
The economic impact of immigration in the United States is neither universally positive nor generally destructive.
Immigration enlarges the economy and can strengthen federal finances. It contributes to science, entrepreneurship and technological leadership. It can lower prices, fill labour needs and create complementary jobs.
It can also strain local services, increase housing demand, weaken particular workers and transfer income toward employers and consumers. The people who bear those costs may be among those least able to absorb them.
That is why aggregate benefit is not a sufficient standard.
A defensible immigration system must ask who is entering, through which channel, at what stage of life and into which labour market. It must protect workers from exploitation, give local governments the resources to manage arrivals, allow housing and infrastructure to expand, and preserve the country’s ability to attract people who create exceptional long-term value.
The choice is not between an America that welcomes immigrants and an America that protects its citizens.
A well-designed system must do both.
Last Updated on July 21, 2026 by Aseem Gupta