Immigration raises everyone's standard of living
Reader comment on: Immigration and Low-Skill Wages
in response to reader comment: The thesis about immigrants is at least 170 years old in the US
Submitted by Harry Binswanger (United States), Jul 30, 2015 02:34
No one seems to grasp the principle: as long as the immigrant consumes less wealth than he produces in his new job, his arrival is a boon to everyone. And every immigrant who lands a job is hired because the employer anticpates that he will produce more than he is paid.
If the population were (unthinkably) to double, all the immigrants could be hired--at lower nominal wages. Supply increases, prices (i.e., wages) fall. But that's nominal wages. What is overlooked is that doubling the number of workers would mean that (absent inflation) prices would fall in half too. Again, supply increases, prices fall.
So doubling the population with the same spending on labor means halving the current wage rate and doubling output--i.e., halving prices as well. But it gets better: each new hire produces more than he is paid, so the doubled output means more real wealth, a higher standard of living.
(And there's nothing wrong with being paid less than your value to the other party: both sides benefit from a free trade--that's why they trade.)
This is the theory. The empirical proof is that the U.S. labor force has doubled and doubled and doubled again, and the U.S. has grown all the while. It was hard to Google recent data, but a chart I did find shows an almost doubling in the labor force between 1900 and 1940. Would anyone care to maintain that the standard of living was lower in 1940 than in 1900?
And what about the increase if job-seekers that is due to domestic population growth? Should we fear the future effect on workers when an American family has its third child? The logic of the anti-immigrationists would require either limiting family-size to two children. Or maybe deporting any "extra" children, to "protect" the wages of labor in the future. It's absurd. The more workers, the more work gets done.
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