by Yolanda Li
From Jamestown to the present day, economic conditions have been a major driver of immigration, and its economic effects have shaped America in turn. We will look at four major eras in American immigration: 1) the settler era 2) the First Major Wave 3) the Second Major Wave 4) the contemporary era. In each of these, we find a pattern of “push” factors such as economic development driving migrants out of the source countries, while “pull” factors such as high labor demand and appealing economic opportunities attract migrants to the US. The varying characteristics of these groups then result in varying effects on the American labor market and economic growth.
Migration patterns in the settler era (pre-19th century) were shaped by the processes of colonization and mercantilism. This era differs from the others in that the colonial economy was built from the ground up: to Britain and other colonizing nations, the American colonies were a business endeavor. They would send workers seeking new opportunities to extract raw materials from the New World, which would then be shipped back to be used in production, upping the exports of the colonizing nations and boosting their economies. Thus, to fulfill this demand, movement to the colonies was primarily through bound labor. This consisted of indentured servitude for most white migrants (largely British and German), and slavery for nearly all black migrants (largely West African). As the colonies grew more established, the mother countries grew richer, and the white migrants were able to achieve higher standards of living and social status (Ferrie 101-103).
The First Major Wave (1800-1890) was driven by the beginning of economic modernization and the expansion of the American frontier. Immigration in this time was still primarily from the British Isles and Germany, which were among the first countries to modernize. The consolidation of farmland and the rise of mass production eroded traditional ways of life. This, combined with pressure on the labor market from rising population growth, led to more and more people being pushed out of their home countries and pulled towards the high labor demand of the US’ frontier society (Massey 61). However, in densely settled areas like the northeast, this influx of workers put pressure on the labor market and partially crowded out native-born workers, with the proportion of foreign-born workers in some places rising quickly (Ferrie 106).
The Second Major Wave (1890-1920’s) saw immigration from new areas of Europe as economic development spread and new technology facilitated faster and cheaper travel. “New” immigrants from the south and west of Europe flooded in as economic development disrupted their traditional lifestyles and put pressure on the labor market, as it had done in the British Isles and Germany before. However, these immigrants tended to be lower-skilled, partially due to the ease of steamship travel (Ferrie 110-111). This resulted in more crowding-out of native-born workers and a greater impact on wages, with a 1% increase in the foreign-born share of the population resulting in a 1.5% reduction in unskilled labor wages. However, in the long run, this was balanced by the immigrants’ compatibility with new capital investments. Additionally, firms in counties with more foreign-born people in 1920 tended to be larger, more productive, and more organized (Abramitzky and Boustan 1335). Nonetheless, anti-immigrant sentiment rose, and immigrant quotas were introduced.
The contemporary era (1960’s-present day) sees most of its immigrants hailing from developing countries in Asia and Latin America. Once again, the spread of economic development and the instability it brings “pushes” people out. Asian and Latin American countries maintain high birth rates with lower death rates, resulting in extreme pressures from rapid population growth (Massey 68). Migrants are pushed out, particularly during downturns of the source countries’ economic cycles. These migrants tend to be more skilled or educated because of a) rising bureaucratic costs of migration pricing out the poor and b) growing income inequality in the US making wages more attractive to the highly skilled (Abramitzky and Boustan 1312). Despite persisting anti-immigrant ideas that immigrants are hurting native wages, there is less impact on wages in the contemporary era than in the past because the skills contemporary immigrants bring are more different to the native-born’s. Any negative effects they may have on the labor market are balanced by their benefit to economic growth in the long term, as immigration corresponds to higher rates of trade and innovation, with a disproportionately high amount of entrepreneurs being immigrants. Moreover, many crucial sectors like healthcare, tech, and agriculture rely on immigrants as a supply of workers (Abramitzky and Boustan 1335).
Looking towards the future, in the short term, we will likely see a rise in immigration as our economy recovers from the pandemic and draws more people in. In the long term, we can expect to see economic development continue to be a strong driver of immigration, with most immigrants still hailing from Asia and Latin America (and possibly more from Africa as well). As for effects on our economy, we are unlikely to experience major effects on native wages unless immigrant skill sets change significantly; the increased capital investment, trade, and innovation from immigration will lead to a net benefit for the economy in the long run. Speculation that immigration hurts the American economy and hurts native-born workers–which has been a major contributor to anti-immigrant sentiment throughout history and has led to heightened restrictions on immigration–is largely unfounded.