Immigration 'On Net': Evaluating Wage Stagnation and Mass Immigration

Advocates of mass immigration often point to long-term, downstream effects that an influx of cheap foreign labor is supposed to bring. It turns out, though, that this is simply a rhetorical trick to whitewash the many harmful impacts of mass immigration. 

Here are some examples of how the trick is used:

• The Migration Policy Institute reported (emphasis added), “a strong body of research and consensus by most economists finds that immigration, on balance, is a net positive for the U.S. economy.” 
• The Federal Reserve Bank of Richmond opined (emphasis added), “the extensive economic literature on the subject suggests these concerns may be overstated, and that immigration on net has positive economic effects.”
• Penn Wharton concluded (emphasis added): “Immigration also has a net positive effect on combined federal, state, and local budgets.”
• The Congressional Budget Office (CBO), evaluating the 2013 “Gang of Eight” amnesty legislation, explained (emphasis added), “The estimated reductions in average wages and per capita GNP for much of the next two decades do not necessarily imply that current U.S. residents would be worse off, on average, under the legislation than they would be under current law.”

“On Net” is a Confession

This sort of analysis is fine, so far as it goes. It is true enough that policy must be evaluated comprehensively, to include analysis of the long-term downstream effects. However, people necessarily live in the present. The further out a prediction of benefits is, the less likely it is to be realized. 

Generally, readers are aware of the difference between “net” and “gross,” with “net” referring to the bounty minus costs incurred and “gross” referring to the bounty prior to concessions to reality. Everyone with a pay stub is aware of the delta between the gross wages earned and their net take-home pay after taxes and other deductions. So when economists say things like “on net” and “on balance,” they are confessing that the policy being analyzed has costs. When they discuss how positive impacts arise one or two decades in the future, they are admitting the costs will immediately outweigh any benefits. 

But talking about net gains from immigration necessarily requires evaluation of the costs incurred. The discussion of the supposed net gains is designed to obscure or minimize the short-term costs because those costs fall on average American citizens, while the net gains are to employers and to the immigrants themselves. In plain language, the argument for immigration is that the costs borne by average Americans are exceeded by the benefits that accrue to the business sector and the immigrants. No wonder they try to emphasize the net gains while papering over the direct costs. 

Some immigration advocates will, at least perfunctorily, acknowledge this reality. The President George W. Bush Institute wrote (emphasis added), “Immigration changes factor prices—it lowers the wages of competing workers, while raising the return to capital and the wages of complementary workers. In other words, the immigration surplus does not accrue equally to everyone. It goes primarily to the owners of capital, which includes business and land-owners and investors.” 

Properly understood, this is an admission that mass immigration is a wealth transfer from workers to employers. The CBO, in its analysis quoted above, estimated almost two decades of wage stagnation or wage deflation resulting from amnesty and the vast expansion of legal immigration into the United States. While that was an analysis of a bill that thankfully died in Congress, the impacts of mass immigration on wages under current law are clear.

Wage Stagnation Correlates with Mass Immigration

The Hart-Celler Act in 1965, followed by President Reagan’s amnesty in 1986, and the Immigration Act of 1990 under President George H.W. Bush, all expanded immigration into the United States. Even the 1996 attempt by Congress to tighten immigration enforcement did not fundamentally change this trajectory, as it lacked curbs on legal immigration. During this same time period of over 40 years, wages for Americans have stagnated:

• The Pew Research Center wrote in 2018, “[D]espite the strong labor market, wage growth has lagged economists’ expectations. In fact, despite some ups and downs over the past several decades, today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.”
• The Federal Reserve Bank of New York released data in 2025 for recent college graduates. It shows that their median salary in 1990 was $56,642, and in 2024 it was $60,000. For workers with only a high school diploma, the median salary in 1990 was $40,815, while in 2024 it was $40,000. The median salary has either barely moved or actually fallen over more than three decades. 
• In a 2015 report, the Economic Policy Institute wrote, “From 1973 to 2013, hourly compensation of a typical (production/nonsupervisory) worker rose just 9 percent while productivity increased 74 percent. This breakdown of pay growth has been especially evident in the last decade, affecting both college- and non-college-educated workers as well as blue- and white-collar workers. This means that workers have been producing far more than they receive in their paychecks and benefit packages from their employers.”

Admittedly, correlation does not always equal causation. Indeed, economies are complex, with multivariate analyses required for a comprehensive understanding. However, just as the CBO predicted that expanding immigration in 2013 would lead to two decades of wage stagnation and deflation, the past four decades of immigration expansion must certainly be a significant contributing factor to long-term wage stagnation. 

Discerning readers will wonder what to make of the economist's predictions for “on net” positive long-term gains as a result of mass immigration. The reason those predictions haven’t materialized is that mass immigration is on-going. Meaning, once you admit there are short-term negative impacts, then you are baking those negative impacts into the cake permanently. That’s because every year our immigration policy admits more and more new arrivals. Thus, if new arrivals cause negative impacts for a decade or more (as CBO predicted), then each year brings a new harvest of wage stagnation or deflation. Wages have stagnated for 40 years because the influx of immigrants has steadily increased over that period. The long-term downstream positive effects never materialize because the short-term influxes causing wage stagnation are perpetual. It is like someone touting the effectiveness of a mop to clean up a flooded basement while the broken pipe continues gushing water. 

We Know for Certain Mass Immigration Does NOT Raise American Wages

It appears inescapable that mass immigration is a driver of the wage stagnation we have suffered through for most of our lifetimes. 

We see this in the real world, not just in spreadsheets. The Department of Labor (DOL) maintains a Low Wage High Violation list of industries. Not surprisingly, industries with high proportions of alien workers are prominent on the list, including agriculture, animal processing, construction, food services, and landscaping. 

• One in four construction workers are immigrants.
• The Department of Agriculture found, “In 2020–22, 32 percent of crop farmworkers were U.S. born, 7 percent were immigrants who had obtained U.S. citizenship, 19 percent were other authorized immigrants (primarily permanent residents or green-card holders), and the remaining 42 percent held no work authorization.”
• The American Immigration Council released a report finding that “[o]ne in five livestock workers, or 20%, are foreign-born, a significantly higher percentage than the national share of foreign-born workers for all industries combined, which is 17.4%.”
• Similarly, they found one in four workers in transportation in the meat industry were foreign born and one in five for the dairy industry.

Here, we see a stronger correlation between mass immigration and wage stagnation. Industries notorious for low wages and labor violations are also where we see higher-than-average foreign worker representation. Could this all be merely a coincidence? This is difficult to accept when the business community is uniformly in favor of mass immigration. Because they are businesses, we know they do not advocate for policy out of the goodness of their heart or their deep empathy for aliens. They spend tens of millions of dollars advocating for looser immigration laws because it benefits their bottom line. 

Immigration’s downward pressure on wages is thus revealed as one of those costs that is seen but not heard in economic analysis of long-term “on net” downstream effects. When you hear anyone saying that immigration helps the economy “on net” or “on balance,” realize they are saying American wages are worth sacrificing to give employers a larger profit margin. The reason Congress embraces this tradeoff is that its primary donors are the employers that benefit from the wealth transfer and get a massive influx of new consumers to sweeten the bargain. But no politician promising to restore the American Dream will succeed until he or she honestly addresses the main driver of wage stagnation.