How immigrants are redefining 'American' in Southern California

Report: Foreign workers don't displace native-born

Photo by Michael @NW Lens/Flickr (Creative Commons)

A construction worker on the job at a site in Seattle, July 2010

Several news outlets have stories today on a new report from the Federal Reserve Bank of San Francisco which concludes that foreign-born workers do not displace native-born ones.

The report, published yesterday, was written by visiting scholar Giovanni Peri, an associate economics professor at UC Davis. In it, Peri summarizes previous research on how immigrants affect total output, per-worker income, and employment in the short and long run. From the report:

Consistent with previous research, the analysis finds no significant effect of immigration on net job growth for U.S.-born workers in these time horizons. This suggests that the economy absorbs immigrants by expanding job opportunities rather than by displacing workers born in the United States. Second, at the state level, the presence of immigrants is associated with increased output per worker.

This effect emerges in the medium to long run as businesses adjust their physical capital, that is, equipment and structures, to take advantage of the labor supplied by new immigrants. However, in the short run, when businesses have not fully adjusted their productive capacity, immigrants reduce the capital intensity of the economy.


The report concludes that "on net, immigrants expand the U.S. economy’s productive capacity, stimulate investment, and promote specialization that in the long run boosts productivity."

The argument that foreign-born workers, particularly low-paid undocumented workers, take away U.S. jobs is a long-standing one. In some sectors, chiefly construction, native-born workers have complained that the hiring of lower-paid foreign workers (paid 26 percent less on average in California, per a 2008 report), has led to lower wages overall. Last year, partly in response to the wage issue, the nation's largest labor unions came out in support of comprehensive immigration reform.

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