What was the impact of these foreigners on the American economy? The great majority of immigrants entered the labor markets of New England, the Middle Atlantic states, and Ohio, Michigan, and Illinois, where they concentrated in the great industrial cities. Working for low wages in crowded factories and sweatshops and living in unsanitary tenements, immigrants complicated such urban social problems as slums, crime and delinquency, and municipal corruption.
For the most part, the difficulties of predominantly European immigrants did not result from discrimination in hiring or in wages. The relative earnings of native and foreign-born workers were approximately equal after adjusting for differences in schooling, experience, skills, and similar factors. Unskilled immigrants, in other words, earned about the same as unskilled American-born workers, and skilled immigrants about the same as skilled American-born workers (Hill 1975; Shergold 1976; Frauendorf 1978).
European immigrants who went to work in American mines are often thought to have been an exception. Coal miners in particular, it is said, were paid in scrip (privately issued paper money or tokens) that could be used only at company stores. Prices at company stores were high and miners were forced to go into debt. They “owed their soul to the company store” in the words of a folksong made famous by Tennessee Ernie Ford, and became, effectively, indentured servants. Research by Price Fishback (1986, 1992), however, showed that this picture was overdrawn. He found (at least in the early 1900s) that prices in company stores were similar to prices in other stores, that miners were paid only partially in scrip, which was mainly an advance on wages, and that miners were not generally in debt.
American business profited greatly from an inexhaustible supply of unskilled and semiskilled workers. The steamship companies that brought these immigrants to America and the railroads that took them to their destinations were the first to benefit. Manufacturing and mining companies profited most of all: Immigration enabled them to expand their operations to supply growing markets. The influx of immigrants also meant more customers for American retailers, more buyers of cheap manufactured goods, and a greatly enlarged market for housing. American consumers benefited from the increased supplies of goods and services.
The rapidly increasing supply of unskilled labor, however, kept wage levels for great numbers of workers from rising as fast as they would have otherwise. Therefore, established American workers who could not escape from the unskilled ranks were adversely affected (see Economic Insight 18.1 on page 327). Supervisory jobs and skilled jobs were Between 2000 and 2010 nearly 14 million new immigrants (legal and illegal) settled in the United States; many were from Mexico and Latin America. The immigrant population reached 40 million, about 13 percent of the population. This is the latest wave of people into a nation that is a land of immigrants: Less than 1 percent of the U. S. population is Native American. Inevitably, there are many complaints: Immigrants are odd, they are disloyal, and they compete with Americans born in the United States for jobs. Many critics argue that these new immigrants, legal and illegal, have not made the kinds of advances that past European immigrants made because of their resistance to assimilation. These criticisms are perennial, no different than those expressed about the Irish (1840s and 1950s), the Italians, and others of southern European origin (1880s to 1910s).
The perception that Mexican and other Latin immigrants have assimilated less effectively than did Europeans should not rest on opinion. This claim is a testable proposition, and as we assert in Economic Reasoning Proposition 5, evidence is needed to prove or refute a hypothesis. Using census data James Smith (2006) of the Rand Corporation found that male immigrants from Mexico born between 1905 and 1910 had an average of 4.3 years of formal schooling. Their sons had 9.4 years, and their grandsons more than 12 years. European immigrants in the same period started with higher levels of formal schooling, nearly 9 years, with their grandsons having nearly 13.5 years. Salaries for Latino male immigrants around 1900 were about 55 percent of the salaries of native white males, but their grandsons’ comparable earnings were nearly 90 percent of that of white males. In most respects, Latino immigrants have shared the same pattern of experiences with earlier immigrants, whether Irish, Italian, or eastern/southern European.
Given to native white Americans, and the number of better jobs available increased as the mass of unskilled new immigrants grew. As William Sundstrom (1988) has shown, by the turn of the century, U. S. firms methodically recruited and trained existing employees for more advanced and skilled positions. Promotion ladders were common, especially in large firms. Moreover, the wages of craftsmen engaged in making equipment to be used by the unskilled and semiskilled masses doubtlessly rose. Native-born American workers gained as consumers of the lower-priced manufactured products made possible by cheap labor. The reality, and in some cases the fear that immigrants posed a threat to the wages of American workers, however, led to repeated efforts to restrict immigration.
World History
