Messrs. Gallaway, Moore and I took the 10 states with the highest average percentage of immigrant population in the 1960-90 period and compared them with the 10 states with the smallest relative immigrant presence. Classifying the states according to unemployment rates and confining our analysis to the 1980s leads to even more startling results, as shown in the accompanying chart. We compared the 10 states with the lowest average annual unemployment rates in the years 1980-90 with the 10 states with the highest average annual unemployment rates. More immigrants, lower unemployment. Immigrants expand total output and the demand for labor, offsetting the negative effects that a greater labor supply might have.
Immigrants tend to be highly productive and promote capital formation through high savings rates.
First, there is the visibility problem. Americans literally can see jobs that immigrants have riled. By contrast, the jobs that are created by high immigrant productivity, capital formation and demand for goods are far less visible. Second, politicians and labor union leaders often need a scapegoat, someone to take the blame off themselves and their actions that raise labor costs and thus unemployment. The most important economic lesson of the past generation is that nations that let resources flow freely according to market forces tend to flourish relative to ones that control such resource movement through central planning, trade and property-rights restrictions, high taxation, or oppressive regulation.