The Impact of Immigration on American Workers and Businesses

Immigration policy has become a vigorously debated topic in Washington. Strident demands for more restrictive policies and criminalization of illegal immigration are clashing with proposals to expand the number of temporary work visas and preserve America’s traditional openness to immigration. In the meantime, surveillance along the Mexican border has been substantially increased. Farmers, many of whom depend heavily on undocumented Mexican labor, are understandably nervous and claim that the border crackdown is already leading to labor shortages.1 This article describes what role immigrants play in the U.S. economy and what economic impact they have on the United States. It examines immigration broadly, but because of its importance to the farm sector, special attention is given to Mexicans, who make up one-third of recent immigrant arrivals and over half of farm sector labor. Economists’ research suggests that workers, consumers, and businesses likely benefit from higher immigration, but this is traded against potentially adverse distributional consequences for low-skilled Americans. However, most estimates suggest that the harm to low-skilled Americans is small. One reason for this seems to be that employers are able to adapt their production techniques to the types of workers that are available. Immigrants in the U.S. Economy