How much do we really know about the economics of immigration?

Why is the U.S.-Mexico border the main point of contention once again? After the presidential election, many people have flooded the border, hoping to reach America with less resistance. But our system can’t handle everyone — and both parties have struggled to find a sustainable solution.  

“We are on pace to encounter more individuals on the southwest border than we have in the last 20 years,” Homeland Security Secretary Alejandro Mayorkas said. “We are expelling most single adults and families. We are not expelling unaccompanied children.”

Let’s step back from the current crisis and look at the origins of immigration; it’s an integral part of U.S. history. Arnold Schwarzenegger, Oscar de la Renta, Madeleine Albright, and, of course, Alexander Hamilton all had their origins in other countries. 

Billionaire and Home Depot co-founder Bernie Marcus was born in New Jersey to immigrants. He grew up very poor but started working at the age of 11 and never stopped. In an episode of Follow the Profit, a syndicated podcast, Marcus pinpointed why people like his family want to have their chance in the states. 

“We don’t see people breaking down the walls to get out of the United States; they break down walls trying to get into the United States,” Marcus said. “Why do they want to come here? Because they know there’s opportunity here.”

Once called “the melting pot,” this country has thrived on welcoming people from all over the world. That’s the big picture, but what about logistics? What is the economics of immigration? Let’s break it down.

One of the primary debates has always been over what immigration level should be allowed at a certain point in time. And both sides of a conversation will use economics because it’s a language that everyone speaks. Here are two main facets of the “money talk.”

First, immigrants or recent arrivals (second or third generation) run many of today’s largest, most successful companies. Have you ever heard of little Silicon Valley competitors such as Google, YouTube, Yahoo and WhatsApp? All of these were founded or co-founded by someone who wasn’t born in the states. In 2017, 43 percent of Fortune 500 companies were founded by immigrants or children of immigrants. So, immigration is an essential part of keeping America competitive, especially when it has to do with highly-skilled immigration. 

We talked about skilled labor; now, let’s talk about unskilled labor, which means work that doesn’t require a specific education level. Our entire food supply in the U.S. is tied to immigration, specifically undocumented migration. According to the Farm Bureau, at least 50-70 percent of farm laborers are unauthorized. This labor force has become an essential part of our society and food production.

Now, let’s explore the flip side of this conversation. 

Many migrants work in entirely different job sectors than most U.S.-born citizens, meaning their wages only directly affect others in certain occupations like seasonal farm labor. But this is not the case across the board.

Many immigration policy critics highlight the correlation between working-class incomes and the number of undocumented immigrants in the country at any given point. They’re under the impression that when you flood the market with labor – especially cheap labor – you lower incomes for born Americans. A study by the Cato Institute measured this correlation in a term used by economists: wage elasticity. Some data suggest that as the number of migrants increases by 10 percent, wages fall by 2 percent or sometimes even more. Other economists found that wages don’t change at all. Essentially, public policymakers need reliable information to make critical decisions that affect this country’s economic trajectory, but it’s difficult to come by.

In reality, we don’t understand – or have the political will to care to understand – immigration’s actual economic impact on the job market. We lack balanced statistical inquiry on the proper level of immigration for Americans’ economic sustainability and security. 

People on both sides of the debate agree on one thing: Our current system doesn’t make sense and lacks efficiency. And on one extreme, we have people who don’t recognize the millions of immigrants that already live here and contribute to society. On the other extreme, we have people who ignore the reality that some amnesty programs could create a moral hazard for future migration pressures and fuel a never-ending border crisis.

The economics of integration is multi-faceted, interconnected and not nearly as clear-cut as partisans on both sides would have us believe. As crises arise every year, they’re tell-tale signs that our current system’s foundation can’t withstand our ever dynamic and globalized society where migration – documented and undocumented – is a reality that must be confronted and managed by governments around the world.

David Grasso is the host of the Follow the Profit Podcast, where he shares simple ideas for financial success and lessons learned the hard way. He is also the CEO of Bold TV, Inc, a non-profit media company dedicated to entrepreneurship and cultural empowerment. Hannah Buczek is the managing editor and journalist for Bold TV. She also reports and edits for GenBiz, a non-profit media brand focused on promoting financial freedom.