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Q & A

Wednesday, October 1, 1997

What effect do immigrants have on the wages of native-born Americans?

The basic principle of supply and demand would suggest that increases in the labor supply would decrease the price of labor, that is, wages. This principle holds true if all workers possess the same skills. In fact, workers have different skills, and studies have shown that over the past 20 years only native high school dropouts have experienced a decline in their wages because of immigration.

What impact do immigrants have on government budgets?

The most striking difference between immigrants and natives is not in benefits received, but rather in taxes paid. Both immigrants and natives get about the same amount of government benefits during childhood and retirement, when most benefits are received. During the working years, however, the amount of taxes each group pays is quite different. Recent immigrants pay the least, but their children—who tend to make more money and live in high-income/high-tax states—pay the most. Thus, although some immigrants may pose an initial fiscal burden, the U.S. economy, in the long run, benefits from immigration.

What effect do immigrants have on the U.S. economy?

A recent National Research Council report, authored by a panel of economists and sociologists, shows that Americans are generally not losing jobs because of immigrants. Actually, immigrants are increasing economic growth by bringing with them skills that widen the variety of goods the economy can produce. Each year, new immigrants add between $1 billion and $10 billion to total U.S. output.

Are more immigrants entering the United States now than ever before?

That depends on whether one is counting absolute numbers or looking at the percentage of population. The number of immigrants entering the United States legally is greater today than it was in the early 1900s. The current rate of U.S. immigration—the level of immigration adjusted for population—however, is much lower today than it was a century ago. Between 1900 and 1910, about 11 immigrants per thousand residents entered the United States legally. The current rate is about five per thousand, but rising.