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Immigrants and Wages

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This new CNN/Gallup/USA Today poll [2] finds that a majority of Americans believe both illegal and legal immigration to "hurt the economy by driving wages down for many Americans." (Hat tip to Jeff Noble of the Mercatus Center [3].)

Many economic truths are difficult to convey, but perhaps none more so than the idea that people who work in markets that are at least reasonably free are net producers – that a larger number of people in the market’s workforce means a deeper, more fine-grained division of labor – that more people mean more creativity, more problem-solving capacity, more knowledge, all of which increases and widens prosperity.

People are, as Julian Simon [4] emphasized, the ultimate resource [5] – the one resource without which nothing else becomes a resource – the foundational resource — the only truly indispensable resource.

From one angle, it’s easy to see why the man-in-the-street so readily accepts the notion that greater numbers of workers mean lower wages. But from another angle, it’s not so easy. After all, even the man-in-the-street knows that America’s population today is far larger than it was at America’s founding, or during the mid-19th century, or during the Great Depression, or during JFK’s presidency. The man-in-the-street should wonder how it is that we’re so much wealthier now than then – why real wages are so very much higher.

Perhaps the man-in-the-street would reply to the above point by saying "Technology!" Well, yes. But technological advance doesn’t just happen; it’s not a force that descends from on high or that emerges, cicada-like, from the soil. People – and people only – create technological advance, as well as the businesses, products, and services that embody these advances in ways that are useful to the masses.

Alas, it’s not fair to blame the man-in-the-street for his failure to understand this point. We economists have done far too little to explore it and to explain it. That’s a shame.

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