How Would Reduced Immigration Affect the Talent Market?

Fewer immigrants entering the U.S. could mean wins and losses for both employers and employees.
immigration reform

With the surprise election of Donald Trump in November, the debate over immigration — both legal and illegal — has taken center stage. Since Trump’s inauguration in January, crackdowns on undocumented immigrants have been far-reaching, an unsurprising development given the president’s campaign pledge to clamp down on illegal immigrants. That, coupled with proposed reductions to legal immigration, means more changes are likely on the horizon — and not just to the families of those impacted but to businesses and workers as well.

In early February, two U.S. senators — Tom Cotton, (R-Arkansas) and David Perdue, (R-Georgia) — proposed a limit to those receiving green cards, reducing accepted refugees and eliminating a program that aims to bring in more immigrants, according to NPR’s “Republican Lawmakers Propose New Law To Reduce Legal Immigration.” “The goal here is to get our immigration levels back to historical norms, to take something of a pause to allow the economy to catch up with the immigrants that we have allowed into our country over the last two generations and to focus on the well-being of American citizens, those citizens who are here today, many of whom are struggling economically,” Cotton was quoted in the article as saying.

How much would reduced immigration actually impact the talent economy?

In 2015, immigrants made up 13.5 percent of the share of the total population but 16.9 of the civilian labor force, according to data from the Migration Policy Institute. Naturally, rates of immigration changed dramatically over time. In the early 1930s, as few as 23,000 people became legal permanent residents in the U.S., according to MPI. Over time, these numbers have fluctuated while trending generally upward before spiking in 1991, with more than 1.8 million legal immigrants, and settling at around 1 million in 2015. The Trump administration’s policy proposals intend to decrease these figures.

RELATED: How Will the Global Refugee Crisis Affect the U.S. Talent Market?

“Overall, any given year wouldn’t make much difference, but over time, [reduced immigration] would mean a tighter labor market, for example, which is one of the things businesses don’t like,” said Steven Camarota, director of research at the Center for Immigration Studies, a research institute that examines the consequences of legal and illegal immigration on the United States based in Washington, D.C. An increase in bargaining power of employees over employers, for instance, would mean employees gain higher wages and benefits, while employers pay more in labor costs.

This changes when looking at a more granular level, however. “The aggregate can be tiny, but the particular could be quite big,” Camarota said. In geographic locations and industries where immigrants are heavily concentrated, fewer people entering the labor force would have a great impact. For example, immigrants are 1.5 times more likely to be in construction than native-born Americans, whereas immigrants are 0.4 times as likely as native-born Americans to work in public administration. Fewer immigrants entering the U.S. would create more changes to construction than to public administration.

“If immigration slows down, it’s unlikely to lead to growth in high-paying jobs for native-born Americans,” said Andrew Weaver, assistant professor at the School of Labor and Employment Relations at the University of Illinois at Urbana-Champaign. Many jobs vacated from a reduction in immigration would be low-paying roles, and employers would be more likely to invest in technology or outsourcing than to raise wages enough to attract non-immigrant workers, Weaver said.

Gigi Stetler, CEO and founder of RV Sales of Broward, an RV dealership based in Davie, Florida, said she has a job posting that is receiving no responses because it’s a “dirty job” that pays minimum wage cleaning sewers, among other things. Stetler can’t afford to pay more, but Americans without job skills don’t think they should work for low pay, she said. “The jobs that are needing to be filled are jobs that Americans don’t want.”

This is a common understanding of the state of jobs for immigrants, but it’s often inaccurate, Camarota said. “The idea that immigrants only do jobs Americans don’t want is not really the way to think about it,” he said. For example, 18 percent, or about 5.2 million, of engineers in 2015 were immigrants, according to the National Science Foundation.

Ideally, a reduction in immigration would mean that wages would rise and more Americans would enter the labor market, but this isn’t so simple. Not every job an immigrant takes is a job lost by a native-born American, Camarota said, as both the supply of workers and number of jobs aren’t fixed.

Then there’s the debate over issuance of H-1B visas, or work visas designated to high-skilled immigrant workers each year. Making them more selective would put a squeeze on employers and improve the wages of native-born workers, Camarota said. Rather than the lottery system used now, if the process were more selective and went by salary offered, companies would pay more than previously for the worker, without depressing the wages of others.

This would also encourage workers to enter the fields that would see less competition between workers and result in higher wages, Camarota said. Companies that can’t afford to offer the salary that puts them on the map for this type of process, though, would lose out of the talent they’re seeking. It’s a give-and-take system of who loses and wins from limits to reduced immigration.

Another area that reduced immigration would likely influence is in educational attainment. “Immigration generally makes the country somewhat less educated,” Camarota said. Although many immigrants are highly educated, more are not. For immigrants who recently arrived in the U.S. and are 25 and older, 41 percent of them received bachelor’s degrees, according to Pew Research Center’s tabulations of U.S. Census data. This is compared to the 30 percent of native-born Americans who received the same level of education.

However, 90 percent of U.S.-born residents finished high school, whereas 77 percent of immigrants did, according to Pew data. Still, education attainment rates are improving over time.

“Overall, the workforce right now we can say is less educated than it would otherwise have been but for immigration, but that may not be the case, moving forward,” Camarota said.

Lauren Dixon is an associate editor at Talent Economy. To comment, email editor@talenteconomy.io.