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Trump wants to limit immigration to protect jobs. Will that work?

Immigration allows U.S. companies to attract top talent from around the world

- June 28, 2020

On June 22, the Trump administration announced a new executive order that continues restrictions on entry for new green-card holders (“immigrants”) and restricts new authorization for “nonimmigrant” visas through the end of the year. The administration argues that cutting these visas protects U.S. jobs.

However, this move is unlikely to do so, and may even cost jobs. Here’s what you need to know about the new executive order and how it fits into President Trump’s larger anti-immigration agenda.

What immigration is restricted?

The executive order continues a ban on new green cards — typically, these go to family members of U.S. citizens and legal permanent residents. However, the new rules also affect nonimmigrant visas for what we often call “temporary workers” or “guest workers.”

What makes this order different from prior Trump immigration moves is that it largely targets high-wage workers. Most importantly, it affects H-1B visas for high-wage workers, often in the tech sector; L-1 visas for corporate executives; and H-4 visas for the spouses of these visa holders. It also includes a smaller number of low-wage workers: J-1 visas for internship, trainee, teacher, camp counselor, au pair and summer work travel programs (but the new order excludes foreign students and professors) and H-2B visas for low-wage seasonal workers. H-2A visas for agricultural workers and visas in the health-care sector were not included.

These restrictions affect only new authorizations — not visas for those already in the country. Nonetheless, the new measures are likely to affect employers looking to hire specific types of workers.

These restrictions won’t protect jobs

The Trump administration says it is passing these restrictions to protect American workers. However, research shows this is unlikely to happen. Once, economists such as Wolfgang Stolper and Paul Samuelson thought that increased immigration would lead to lower wages and fewer jobs for American workers. This makes intuitive sense — more people means more competition for jobs.

However, these economists wrongly assumed that immigrants could compete head-to-head with American workers for jobs. Instead, immigrants have a hard time competing for some jobs because they haven’t grown up in the native culture. For example, in the tech sector, American-born workers might work on designing a product, which would need an understanding of American consumers, while immigrant workers work on programming the product, which is a more routine task.

Immigration also allows firms to bring in top talent from around the world. Studies show that the diversity of teams makes them better, as new immigrants bring different perspectives and skills to a problem. We often see this effect in professional sports: Imagine if last year’s NBA champions, the Toronto Raptors, couldn’t have hired star players Kawhi Leonard (born in the United States) or Serge Ibaka (born in Congo Republic). By creating better teams and better products, businesses can grow and hire new workers.

Furthermore, as I show in my book, “Trading Barriers: Immigration and the Remaking of Globalization,” businesses can replace workers with automation or move production overseas, regardless of immigration policy. While I focus on low-wage workers in my book, offshoring and technology are increasingly replacing high-wage jobs in the United States.

And immigrants aren’t just employees. They are also consumers. Greater immigration leads to more demand, which in turn boosts economic growth and creates more jobs. This is especially true in services and other products that cannot be produced overseas but also affects tradable industries.

Past restrictions didn’t boost jobs

These factors help explain why economists find little effect of immigration on wages and employment. Leah Boustan and co-authors, for example, found that the quota laws in the 1920s reduced immigration from about 1 million a year to 150,000 a year but that wages actually fell in places where immigration declined, because rural inhabitants moved from other parts of the country to cities, while farmers mechanized production. Similarly, there is a growing consensus that when a sudden increase in immigration occurred in 1980 because of the Mariel boatlift — when about 125,000 Cubans migrated to the United States and settled mostly in Miami — it had little effect on wages or unemployment (though earlier studies found that this influx caused wages to fall).

Immigration restrictions may lead to job losses

It’s plausible that lower immigration may, in fact, mean fewer U.S. jobs. Lower immigration means lower demand, which may lead local businesses already struggling with the fallout of the novel coronavirus pandemic to close and lay off workers. Similarly, businesses that serve international or specialized markets may close because they do not have the high-skilled workers they need. As automation becomes more sophisticated, some firms may choose to automate production rather than hire additional American workers, displacing even high-wage workers.

Some companies may choose to move abroad, not only moving the jobs that immigrants used to do but also the jobs of U.S. workers. The chief executive of the language-learning platform Duolingo tweeted: “Since we can now work well remotely, and since the US is reducing immigration, a lot of technology development will shift away to other countries.”

We already have anecdotal evidence that tech firms that anticipated these restrictions increased their operations in Canada. The Canadian government has even run advertisements in Silicon Valley, broadcasting an open-arms welcome to foreign workers.

Trump’s new policy may not get much public support

The Trump administration, especially White House senior policy adviser Stephen Miller, has long said that it wants to restrict immigration into the United States. And it is a policy that resonates with Republican voters. It appears that the administration is using the pandemic and recession to do just that.

The administration argues that this move is popular with the U.S. public based on a survey about halting immigration during the coronavirus outbreak.

Yet other surveys suggest that the majority of the American public agrees with academics that immigrants do not compete with workers in the country for jobs, suggesting that voters were interested in stopping cross-border travel during the outbreak. It’s not clear that the White House’s latest move in immigration will help American workers — or be as popular as Republicans think.

Margaret Peters (@MigrationNerd) is an associate professor at the University of California at Los Angeles.