Walk into a construction site, a warehouse, a hotel kitchen, or a delivery depot and the immigration debate stops being theoretical.
It becomes a question about who gets hired, what the starting wage is, whether overtime is available, and whether the paycheck stretches far enough to cover rent. Douglas Murray raises this tension in The Strange Death of Europe, but the question is not limited to Europe. The regular guy sees it at the worksite and at the rental office.
So, does immigration lower wages?
The honest answer is: sometimes, for some workers, in some places, especially in the short run. But the broad economy-wide effect is usually small, and immigrants can also create demand, fill labor shortages, start businesses, and complement native workers.
That answer is less satisfying than a slogan. It is also closer to the evidence.
The substitution argument: more workers competing for the same jobs
Start with the basic economics.
If a business needs ten workers and there are twenty qualified applicants, workers have less bargaining power. Employers can take their pick. If the labor supply increases while demand stays roughly the same, wages face downward pressure.
That is the substitution argument. When newly arrived workers have similar skills and compete for the same jobs as native workers, they are substitutes. The pressure is most obvious in occupations such as:
- Construction labor
- Hospitality and food preparation
- Warehousing and logistics
- Landscaping
- Cleaning and maintenance
- Seasonal agriculture
- Entry-level service work
This does not require an anti-immigration theory. It is standard supply-and-demand economics.
The worker closest to the new competition is usually the most exposed. A native-born high-school dropout, a recent immigrant, or a teenager looking for a first job may be competing for the same narrow group of positions. That worker does not care whether the national average wage rose by 0.2 percent. The question is whether the wage offer on Tuesday morning is $17 an hour or $14.
The same issue appears in the debate over artificial intelligence. If technology reduces the number of entry-level tasks available to young workers while a large supply of workers competes for the remaining tasks, the bottom rung gets squeezed from two directions. More labor supply on one side; fewer beginner-friendly jobs on the other.
That is where aggregate statistics can become a little slippery.
The complementarity argument: immigrants can expand the pie
The other side is not nonsense either.
Immigrants do not only supply labor. They also consume goods and services. They rent apartments, buy groceries, use transportation, open bank accounts, visit restaurants, and create demand for more businesses. That demand creates jobs.
Immigrants can also complement native workers rather than replace them. Consider a construction company that hires additional laborers. The company may then need more foremen, estimators, dispatchers, equipment operators, salespeople, and office staff. The laborers and supervisors are not doing identical jobs. They work together.
The same thing happens in restaurants. A larger kitchen staff may allow a restaurant to serve more customers, which increases demand for servers, managers, delivery drivers, accountants, and suppliers.
This is the complementarity argument: when workers perform different but connected tasks, adding one type of worker can increase the productivity and demand for another.
The National Academies’ review of immigration research explains the basic point plainly. Immigrants can reduce wages for workers who are close substitutes while raising wages for workers whose skills complement the newcomers. The overall result depends on the mix of workers, the industries involved, and how quickly businesses and capital adjust.
Immigrants also start businesses. The National Academies review found that immigrants made up 18.2 percent of U.S. business owners while representing 16.3 percent of the workforce in the data examined. New businesses can employ both immigrants and native-born workers.
That is how immigration can raise total economic output without automatically raising every worker’s paycheck.
The Mariel Boatlift: one famous event, two very different conclusions
Economists often discuss the 1980 Mariel Boatlift because it offers a useful natural experiment.
About 125,000 Cubans arrived in Miami after Fidel Castro allowed people to leave through the port of Mariel. The influx increased Miami’s labor force by roughly 7 percent in a matter of months. It was a large and sudden increase in the supply of workers, including many with relatively low levels of formal education.
David Card’s influential analysis found little to no effect on the wages or employment of less-skilled native workers. The Miami economy absorbed the new workers, partly because businesses expanded and adjusted.
Later, economist George Borjas examined a narrower slice of the data: male, non-Hispanic high-school dropouts. That analysis found a wage decline of roughly 10 to 30 percent for the selected group.
Those findings are not minor statistical disagreements. They produce radically different headlines.
Subsequent researchers, including Giovanni Peri and Vasiliki Yasenov, challenged the larger estimate. They argued that the result was highly sensitive to the choice of comparison cities, the sample definition, and the small number of observations in the subgroup. Their reanalysis found no consistent evidence of a large wage decline.
The fair conclusion is not that one side is obviously dishonest. It is that the measured effect depends heavily on who is being studied and how the counterfactual is constructed.
A broad sample can show little average effect while a narrow group experiences a meaningful loss. Both statements can be true.
What does the broader research say?
The National Academies’ review reached three important conclusions:
- Over periods of ten years or more, immigration’s effect on the wages of native-born workers overall is generally very small.
- Workers who are closest substitutes for new arrivals can experience negative effects.
- The short-run effects are usually more negative than the long-run effects because businesses have time to invest, expand, change technology, and reorganize production.
One set of estimates reviewed by the National Academies found that immigration reduced the wages of native-born high-school dropouts by roughly 0.6 to 1.7 percent between 1990 and 2006. That is not an economic apocalypse. It is also not zero.
Other studies find effects close to zero, while some produce larger negative estimates. The disagreement exists because immigration is not one uniform product. A highly educated engineer, a refugee arriving suddenly in a small city, a seasonal farm worker, and a foreign-born entrepreneur can have very different effects on the labor market.
The speed of arrival matters, too. A gradual inflow gives employers time to build facilities, expand production, and invest in equipment. A sudden inflow into a small labor market can hit wages and public services before the supply side catches up.
That is the honest middle: skill mix, speed, location, and economic conditions matter.
Housing is where the argument becomes impossible to ignore
Even when economists find a small average wage effect, housing can make the household experience feel much worse.
New arrivals need somewhere to live. In a market with plenty of vacant apartments and rapid construction, that may not create much pressure. In a market with restrictive zoning, limited land, slow permitting, and years of underbuilding, new demand shows up as higher rents and more competition for available units.
A 2026 Migration Advisory Committee review found that most international estimates suggest a one-percentage-point increase in the immigrant share of a population raises house prices by roughly 0 to 3 percent, with mean and median estimates below 1 percent. Rent effects were similar.
That is a modest national average. It can still matter greatly in a particular city or neighborhood.
The Migration Observatory reports that, in 2021, 43 percent of foreign-born residents in England and Wales owned their homes compared with 67 percent of UK-born residents. Recent arrivals were much more likely to rent: only 17 percent of those who had arrived within the previous five years were homeowners, compared with 68 percent of those who had arrived more than twenty years earlier.
That means new arrivals often enter the rental market first, precisely where supply is tightest. The result is competition among renters, whether they were born in London, Lagos, Warsaw, or Birmingham.
Housing is therefore the least-disputed pressure point. Immigration may not be the main cause of a housing crisis, but adding demand to a market that refuses to build enough homes will raise the price of access. A rent increase is effectively a wage cut, because the landlord gets more of the paycheck before the household gets to spend it.
Why “the economy is growing” and “I am worse off” can both be true
Suppose immigration increases GDP. That can be true.
Suppose businesses find workers, restaurants stay open, construction projects get completed, and consumers have more choices. That can also be true.
Now suppose a low-wage worker receives little or none of the gain while facing stronger competition for jobs and higher rent. That can be true as well.
The benefits and costs do not land on the same people at the same time. Business owners may benefit from a larger labor pool. Consumers may benefit from lower prices or more available services. Highly skilled workers may benefit from complementary labor. Homeowners may benefit from stronger housing demand.
Renters competing for a limited number of apartments may not feel so lucky. Neither may a young worker trying to get the first job on the ladder.
The kitchen-table answer
Does immigration lower wages?
It can lower wages for workers who closely compete with new arrivals, particularly when inflows are rapid, concentrated, and directed into low-skill sectors. The effect is usually modest across the entire economy, and it can disappear or reverse over time as businesses expand, workers specialize, and new demand is created.
That is not a politically convenient answer. It is an economically honest one.
The aggregate studies are useful. They tell us that immigration is unlikely to destroy the average native worker’s paycheck. But the regular guy does not live in the aggregate. He lives in a town, applies for a specific job, pays a specific rent, and watches his children compete for the bottom rungs of a labor market already being reshaped by automation.
Policy should therefore stop pretending that every worker receives the same result. If a country wants the benefits of immigration, it needs enough housing, serious labor-law enforcement, functioning schools, infrastructure that can handle population growth, and an economy that gives young workers a way into the game.
Without those pieces, “the economy is growing” becomes a statistic shouted from a podium while somebody else is checking the rent increase.
Disclosure: This article is for educational and informational purposes only. Regular Guy Economics is not a financial advisor, and this content is not investment advice.
Be mindful, be watchful and good luck.