Just a few months ago, it looked like immigration might be the defining issue in the 2006 elections. But it seems that the politics of immigration have proved too complicated for simple sloganeering, muting the potential impact.

It's still worth examining the economic impact of this national trend.

James Kegley

As apartment executives know, immigration is a major factor affecting the U.S. economy. But the answer to the question of immigration's economic impact is more complex and nuanced than many realize. Let's begin with some numbers. So far this decade, legal immigration has averaged just fewer than 950,000 new arrivals annually. Despite a drop in such numbers in 2003, anecdotal evidence and the rebound in 2004 data (the latest available) suggest this dip was only temporary.

Of course, the numbers are only part of the story. For many, the big question is: How much of this immigration is outside the bounds of U.S. immigration regulations? Obviously, by definition, we can't know those numbers exactly. But the most widely cited estimate places the total number of unauthorized (or undocumented) immigrants in the country currently at 12 million. Projections are that 250,000 to 500,000 such people enter the United States annually.

These 12 million undocumented immigrants are hardly new arrivals. An estimated 60 percent have been in the country for more than five years, while one-third have lived in the United States for more than 10 years. (Here, "unauthorized" immigrants include not only those who entered the country illegally, but also visitors who entered the United States legally and stayed beyond their visa or otherwise violated their terms of admission.)

They're not who you might think. Much media attention has focused on immigration from Mexico, but more than half of all U.S. immigrants (legal and illegal) come from Latin American countries. Asia contributes another 25 percent, and a sizable 15 percent of immigrants come from Europe and Canada.

While immigrants have spread out across the country, four states–California, Florida, Texas, and New York–still account for about half of new immigrants (both legal and illegal).

Job Competition?

The most widely discussed aspect of immigration may be its effect on the job market. In many people's minds, the impact is straightforward: Immigrants compete with native U.S. workers–especially less skilled workers–for the same jobs, and as a result lower wages for all Americans, legal and illegal, native or immigrant. (Of course, whether you think this is good or bad depends upon whether you're looking for work or looking for workers.)

This view is mistaken, however. It is based on something economists call the "lump-of-labor fallacy," namely the idea that there is only a fixed amount of work to be done, hence more workers means more unemployment.

In actuality, though, the amount of work (and the number of jobs) has expanded in the United States as the number of workers has grown.

Office of Immigration Statistics

This has happened for several reasons. First, immigrants don't just produce goods and services; they also consume such products, increasing overall demand for those goods and services. Second, the increased supply of labor often brings an increase in capital. This has been the case in formerly declining areas such as Dawson, Neb., and Panorama City, Calif., that have been revitalized by immigration, with a corresponding increase in employment. Third, immigrants often are, or become, entrepreneurs, producing goods and services for local demand and for export. In the process, these entrepreneurs create jobs for both immigrant and native workers. This isn't just a theoretical argument; economic evidence supports this approach. Still skeptical? Consider this: The parts of the nation where less-skilled workers have seen the greatest deterioration in wages in the last two decades are generally regions that have been least affected by immigration.

Why? Because immigration is just a special case of population growth. Think back to the baby boomers. When this generation entered the labor force, the number of jobs did not remain stagnant. Instead, it grew.

Taken together, the evidence suggests that the impact of immigration on the employment and compensation of native U.S. workers is small, but positive overall. Lower-skill workers may be slightly hurt by immigration, but this is a segment of the workforce that already faces long-term negative trends, such as declining real wages. Reducing the number of immigrants entering the United States is hardly the best policy option for improving the economic prospects for this group of workers.