Alien residents, the hurdle in the progression of the inhabitant economy?; Immigrant contribution to the dynamic labor market of the first world nation, the United States of America


Amna Ali
Is immigration merely an economic drag for the US economy and its native residents, rather than a staircase to growth? Critics of immigration often allege that foreign-born residents are the reason for the worsening of labor market outcomes for US-born citizens. Including these labor outcomes are the negative impacts on wages and employment, thus depriving the natives of their job opportunities. Dissecting key factors like labor force participation and earnings, a positive relationship is established between active immigrant assimilation in the US labor market and economic growth. Alongside proving favorable input of alien residents into the economy, the conclusion derived also depicts the advantages gained by the native citizens in the shape of adding to the workforce and alleviating labor efficiency. The US economy, even though being one of the most progressive around the globe, faces its fair share of obstacles. Today with a population of 328.2 million, 40 million counts as immigrants; people who were born and raised in a foreign land. Immigrants in the US are often subjected to discrimination and exploitation especially in the labor market. While immigration is still one of the hottest topics circling the daily news, many misconceptions persist in the fundamental aspects of this crucial subject. Many of which include, seizing jobs from natives, adversely affecting the labor supply, contributions to the US GDP, and so on. International Immigration has been a global phenomenon for many years. US immigration patterns have changed drastically from those 50 years ago. With a current 13.7 percent population counted as immigrants, it has become evident that this global phenomenon has been growing rapidly. A significant rise from the 1970s to 2010, can be observed due to the Immigration and nationality act 1965. With this increased rate of migration follows a sense of fear and burden for the host country. With limited resources, an increasing amount of alien nationals will require means and supplies. Therefore, the assimilation of immigrants into the US labor market is typically studied through the comparison of earnings and wages of immigrants versus the Native American residents. In 2019, the labor force 2 participation rate of the foreign-born went up to 66.0 percent from 65.7 percent in the prior year(an increase of 0.3%). On the other hand, the participation rate of the native-born increased to 62.5 percent in 2019 from 62.3 percent in 2018(an increase of 0.2%). (Bureau of Labor Statistics, 2019) The higher participation from the immigrant population in fact validates their dominant presence in the US labor force. Thus, generating earnings into the economy in the form of taxes. The Highest income group which represents 25.7 percent of the total employed immigrants, falls into the $75000 and above category. Thus, suggesting that most immigrants belong to the high income bracket; be it high paying jobs or business owners. In 2019, the median weekly earnings of these tax-paying immigrant salary workers were 85 percent of the earnings of their native-born counterparts. Moreover, to approach the most vital aspect of this literature is to blend in the key findings of immigrant assimilation into the labor market and analyze the outcomes it paints on the economic growth of this country. After much analysis of various factors like employment and immigrant assimilation in the workforce,it has brought some clarity that the US economy might be affected. An Upward increasing trend in the GDP was noted from 1990 to 2007 then again from 2010 to 2019 reaching about 21.4 trillion US dollars. We can make the assumption that US immigration and GDP have a positive relationship. The variety of skills that the immigrant population has to offer, especially, how their education and expertise levels compare to those of the native-born is a key determinant of the impact their arrival will have on the wages and employment in the labor market. These features also affect immigrant assimilation and immigrants’ fiscal impact. If an influx of immigrants consists mainly of low skilled workers, it is reasonable to expect that the pre-existing low skilled population will be most affected by the increased supply of workers. The number of low skilled workers in the United States has been on decline for several decades.There are fewer native-born workers who compete directly with low skilled immigrants. Moreover, the US economy including its workers is constantly adapting to the transforming economic activity. With an increase in the supply of labor, the cost of labor falls resulting in businesses using more labor. In other words, immigration affects how businesses combine capital, labor, and other resources to produce output. If labor becomes more affordable, it can also affect the types of goods or services that businesses 3 produce. Research suggests that an increase in the share of low skilled immigrants in the labor force decreases the price of immigrant intensive services, such as housekeeping and gardening, primarily by decreasing wages among immigrants. Apart from wages and employment, immigration has the potential to affect native-born Americans in other ways, directly or indirectly. As a reduction in the cost of labor, the relative return to capital is elevated, immigration should, therefore, stimulate investment and inflows of capital. Immigrants also tend to settle in thriving areas that otherwise might experience labor shortages, subduing labor market bottlenecks that could hinder growth. These foreign-born populations are themselves consumers who contribute to job creation through their effect on aggregate demand for goods and services. Besides creating and preserving jobs immigrants may be a core factor in boosting consumer demand. Last but not least, some immigrants create jobs through their entrepreneurial activities and ventures. Immigrants are a small share of the US population but no doubt represent a large percentage of its growth. With stagnating labor force participation rates and the aging of the native-born population, immigrants act as a vital pivot around which the US economic growth can reach its heights. This rapid assimilation into the workforce can alleviate growth bottlenecks, such as labor shortages, quickly and efficiently. In addition, the evidence suggests immigration has a number of growing macroeconomic benefits, including spurring investment and strengthening labor market efficiency. Considering the above evidence on earnings, employment, and active immersion into the US workforce, it can be concluded that immigrants do not crowd employment for natives, it in fact adds to the total workforce.


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