A Wharton Professor Makes The Economic Case For More Immigration
With politicians trading punches and millions of immigrants caught in the middle, Zeke Hernandez has made an effort to refocus the conversation before the election.
In June, more than half of Americans told Gallup pollsters that they want to curb immigration, the highest share in more than two decades. The surge in southern border crossings after the pandemic put the issue at the top of voters’ minds. Former President Donald Trump, the Republican nominee for the White House, has capitalized on this dynamic—accusing immigrants of taking jobs that would otherwise go to native workers, spreading false rumors about migrants in Ohio and proposing the biggest deportation program in US history. At the same time, Democrats have tried to strike a harder tone: The outgoing Biden administration has made it more difficult for immigrants to claim asylum, while Vice President Kamala Harris is pitching border reform and blaming the GOP for striking down a bipartisan bill that Democrats say would have curbed the numbers.
With politicians trading punches and millions of immigrants caught in the middle, Zeke Hernandez, a professor at the Wharton School of the University of Pennsylvania, has made an effort to refocus the conversation before the election. His book, The Truth About Immigration: Why Successful Societies Welcome Newcomers, which came out in June, makes the case that the US economy can only benefit from the arrival of more people.
In part, the topic is personal. Hernandez traded his small country of Uruguay for the chance to attend college in Utah on a scholarship. When an American friend told him he’d come to the US only to steal a scholarship from a deserving American, then a job, then eventually a girlfriend, Hernandez somewhat guiltily believed him. Married now to an American wife with whom he has children and a holder of a US passport and a job at one of the nation’s top business schools (incidentally, Trump’s alma mater), he’s changed his mind. “In the process of trying to understand what creates economic prosperity, I realized immigration was inseparable from that growth,” says Hernandez, 44.
He argues that those who warn that more immigration will ultimately mean more competition for jobs and translate into weaker pay gains for Americans are missing a key point: Those critics assume that the number of potential jobs in the economy is static when it’s a figure that changes as more people arrive. That fact is familiar to economists and anyone who’s delved into academic studies of immigration’s impact—Hernandez himself has written them—but in his book he aims for a conversational tone that emphasizes the tangible advantages immigration can bring. He tells the story of Guatemalan chicken chain Pollo Campero’s rapid expansion into the US, which serves as an example of how immigrants attract investment from their home countries while helping to boost consumer spending among natives and introducing products and services. Nodding to patriotic sports fans, he argues that America’s failed World Cup campaigns in the 20th century can be attributed in part to harsh immigration laws that curbed flows from European countries with stronger soccer traditions.
More people also means more consumers in the economy, more taxpayers feeding into government budgets and so on, he says. Those who take lower-skill roles provide an additional boost by pushing native workers up the ladder into higher-productivity jobs. When more immigrants take child-care jobs, for example, American women can enter back into the labor force. “An influx of workers is not just an influx of workers,” Hernandez says. “It’s an influx of consumers. It’s an influx of potential entrepreneurs. It’s an influx of investors. It’s an influx of taxpayers that grow the economic pie. You don’t have more people competing for the same pie of the same size. You have more people building a bigger pie.”
Research by the nonpartisan Congressional Budget Office lends support to his thesis. It found immigration could help bolster the US economy by about $7 trillion over the next decade by swelling the labor force and increasing demand. Still, it cautioned that overall wages will rise more slowly, in part reflecting the increase in the number of lower-skilled workers.
There’s the sticking point. The benefits of growth in gross domestic product are well and good on average and reason enough for investors and white-collar professionals to feel upbeat about immigration. But what about people in lower-skill jobs directly facing newcomers in the market? Does it depress their wages? While adding more low-skilled workers may initially bring down average wages simply by changing the mix of jobs in the economy, it’s more complex to determine whether it harms native workers. Hernandez tries to tackle what for decades has been the million-dollar immigration question among economists.
“The rule is, when supply and demand are allowed to function freely, immigrants don’t impact wages,” he says. He relies on, among other studies, research by Nobel Prize-winning economist David Card, who analyzed the supply shock triggered by the arrival of thousands of Cubans in Miami in 1980 to conclude that those immigrants had no impact on Floridians’ wages.
In an environment this politically charged, it’s no surprise that Hernandez says he’s gotten some pushback—and even the occasional slur—from readers and some people who haven’t opened the book. “I know I am not flawless, but I think I have done a fair job in representing the literature,” he says. To offset the polarization around the issue, he’s tried to keep his argument and presentation upbeat, down to the choice of bright colors on the book jacket. “We made a very deliberate choice for the book to be colorful and happy,” he says.
The Truth About Immigration sweeps through the history of US immigration, dealing with the fallout from laws to curb it, such as the Chinese Exclusion Act and 1924 National Origins Act, as well as numerous success stories arising from the “triangle of immigration, investment, and jobs.” He draws investment links between the German heritage of Rush Township, Pennsylvania, and the establishment there of EMD Electronics, a unit of Merck KGaA. He cites Alphabet, Instacart, Intel, Nvidia and others as companies that had immigrants behind their success.
If Hernandez has one message for skeptics, it’s this: Rather than viewing immigration as a policy of benevolence, think of it as a matter of national interest. That giant sucking sound (to borrow from the late presidential candidate H. Ross Perot) is the US vacuuming up the rest of the world’s talent pool. But Hernandez is under no illusions about the prospect for turning all the doubters around. “I would love for this book to change the entire conversation and influence the election,” he says. “But I don’t have the delusion that one book will change that.”
