“We are going to have an immigration system that works, but one that works for the American people,” Donald Trump told the Republican National Convention. “Decades of record immigration have produced lower wages and higher unemployment for our citizens.”
But the candidate is wrong in two respects. First, the United States has not seen “record” immigration in recent years, and second, higher immigration is not associated with higher unemployment. Immigrants are heralds of growth, not portents of economic disaster.
Recent Immigration Is No Record
The amount of immigration to the United States can be measured in two ways.
One way is to look at the total number of people receiving permanent residency. By this measure, the highest year for immigration was 1991, with 1.8 million green cards issued. Yet even in absolute terms, Trump is still wrong about "decades of record immigration." Out of the top ten years for total immigration, five occurred since 1990 and five came before 1915.
But measuring immigration in absolute numbers is misleading. It implies that a million immigrants to China, with a population of 1.4 billion, would have the same effect as a million entering Estonia, with a population of 1.2 million.
To understand the impact of immigration, you clearly need to control for the size of the destination country.
Table 1: Top Ten Years for Immigration, Rates vs. Totals (1820 to 2014)
|Absolute Totals||Population Rates|
Currently, immigration is five times lower than its record highs. Compared to the overall population, the “record year” of 1991 comes in 45th place. Rather than decades of record immigration, we see decades of below average immigration.
Indeed, per capita immigration during the current decade is almost 30 percent lower than the historical average, and five times lower than the record rates in the 19th and early 20th centuries.
Figure 1: Immigration Rates (1820 to 2014) and Unemployment Rates (1890* to 2014)
Sources: DHS, Census Bureau, BLS.
Higher Immigration Isn't Associated with Higher Unemployment
Unemployment is highest when immigration is lowest.Another thing this chart shows is that years with higher immigration do not coincide with years of higher unemployment. In fact, the reverse is true. Unemployment is highest when immigration is lowest.
During years when immigration was above the historical average, unemployment averaged 5.7 percent. During all other years, it averaged 7.2 percent, a difference of 1.5 percentage points. If you exclude the years where unemployment fell solely because of the military draft, during the World Wars, the difference rises to 1.8 percentage points.
Figure 2: Unemployment in Years with Above and Below Average Immigration Rates (1890-2014)
This relationship is statistically significant, but its magnitude is obscured by non-market phenomena, such as the military draft, as well as immigration quotas that interfere with market forces.
If we focus on the pre-World War I period, we can see a much higher degree of coincidence between low unemployment and high immigration.
Figure 3: Immigration and Unemployment Rates (1890 to 1915)
In the prewar period — before the draft and immigration restrictions — unemployment was 5.5 percentage points lower in years with above average immigration than in years with below average immigration. The magnitude of the relationship is also quite large: roughly 20 percent of the variability in the immigration rate can be explained by the unemployment rate during this period.
Labor Migrates Away from Unemployment
The negative relationship between immigration and unemployment becomes much stronger when you focus on economic migrants. I’ve previously noted this phenomenon in H-1B temporary work visa applications. When there is high unemployment in the top H-1B fields, employers submit dramatically fewer visa applications. Companies hire foreign workers when they are increasing overall employment, not when they are laying off workers.
Of course, immigrants do not cause the unemployment rate to move up or down. The economic literature on this is quite clear: immigration has essentially no effect on the unemployment rate one way or another. Rather, the causation is the other direction. Immigrants come during periods of economic growth, when companies are hiring new workers, both immigrants and natives.
Trump is mistaken to associate unemployment with immigrants. High immigration is a sign of good times, not bad.
* Comparable data on unemployment is not available prior to 1980. Note that pre-1948 labor numbers refer to workers age 14 and up, all other years to those 16 and up.