One reason that Congress does not increase the number of visas is the popular perception that foreign workers, especially those with low skill levels, harm job opportunities of native-born workers. The concern that immigrants drive out native-born immigrants from jobs is predicated on the assumption that large numbers of immigrants are displacing American workers, even though, as we saw in the previous section, the numbers are low as a percentage of the labor force.
A major concern of those critical of immigration, such as Harvard University professor George Borjas, is that immigrants depress wages. Nevertheless, many economists have found that immigrants sometimes raise wages, rather than decreasing them. For example, senior economist Pia Orrenius of the Federal Reserve Bank of Dallas finds a slight increase in wages for professionals and a slight decline for manual workers from immigration of less than 1 percent.[36]
David Card of the University of California, Berkeley finds a decrease in wages of about 3 percent among low-skilled workers in high immigrant cities such as Miami and Los Angeles, and smaller effects in other cities and occupational groups. [37] Card (2009) goes on to find that immigration yields a 5 percent increase in overall wage inequality. This finding supports the other studies showing immigration increases wages of high-skilled workers and decreases wages of lowskilled workers. [38]
Professor Giovanni Peri of the University of California, Davis, in a paper just published in the Journal of the European Economic Association, coauthored with Bocconi University Professor Gianmarco Ottaviano, concludes that immigration raised wages of native-born Americans by six tenths of a percent during the period from 1990 to 2006. It decreased wages of existing immigrants by 6.7 percent, because new immigrants are substitutes for prior waves of immigrants. [39]
Although immigrants no doubt will displace some low-skilled workers, primarily other immigrants, the negative effect on such workers is much smaller than the positive effect for everyone else. The economy as a whole gains, with substantially more winners than losers.
Unlike other economists, Borjas assumes that immigrants are substitutes for native-born workers. Furthermore, he assumes that capital is fixed and does not respond to changes in wage rates. [40] According to Borjas, low-skilled immigrants arrive in America and take jobs away from African-Americans. Due to the lack of job opportunities, African-Americans are drawn into illegal activities, get arrested, and are then put in prison. Borjas concludes that employment and incarceration rates of black men are highly sensitive to immigration, although "much of the decline in employment or increase in incarceration in the black population remains unexplained." [41]
One problem with this line of reasoning is that young black men began withdrawing from the labor force in the 1960s, when the share of immigrants in the labor force was less than 1 percent. The percentage of black men between ages 16 and 24 who were not in school, not working, and not looking for work rose to 18 percent in 1982 from 9 percent in 1964. It then reached 23 percent in 1997 [42] and remained at that level as of 2011. [43]
Borjas's findings that immigrants substantially lower Americans' wages not only have been questioned by other economists but have moderated over time. In 2003 Borjas found that immigrants lowered wages of average American-born workers by 3 percent and wages of high school dropouts by 9 percent. [44] A year later, he found that the effect on high school dropouts had moderated to a 7 percent loss. [45]
By 2006, Borjas had concluded that immigrants raised average wages of Americans by 0.1 percent and lowered the wages of the low-skilled, those without a high school diploma, by 5 percent. [46] This means that America has a net gain from immigrants. Since a relatively small percentage of American workers have less than a high school diploma (8.5 percent in 2012), it is possible for these workers to be compensated through transfer payments, leaving our economy still ahead.
In a 2011 paper, Borjas admits that "the economics literature has found it difficult to document the inverse relation between wages and immigrationinduced supply shifts." [47] If immigrants affect any wages, it is those of prior immigrants, who compete for the same jobs that new immigrants are after. But we do not see immigrants protesting in the streets to keep others out, as we see homeowners in scenic locations demonstrating against additional development. Rather, some of the biggest proponents of greater immigration are the established immigrants themselves, who see America's boundless opportunities as outweighing negative wage effects.