00:00:00
Zeke Hernandez: [in progress]
is that it's not that natives are losing at the expense of
00:00:03
immigrants. They're both better
off because of those— those differences, and that variety.
00:00:07
Dan Loney: You talk a little
bit in the book about the connection between immigration and job
creation and investment, and
00:00:13
maybe even more so the
investment side. Tell us about what you see there. Yeah, that's such an important
question, because that's one of
00:00:20
the most misunderstood aspects
of what immigration does to the economy. So let's do a simple
example. You know, we're sitting
00:00:29
here in Philadelphia. Just a few
miles from here, in a place called Hometown, Pennsylvania—
small town, 3500 people. Last
00:00:37
year, EMD Electronics announced
the expansion of a facility that would create 200 high-skill
manufacturing jobs. These were
00:00:44
jobs to create parts that are
really critical for chips, right? So this is the kind of
jobs that everybody wants
00:00:50
in America. - And welcome to a special edition
of Ripple Effect: Meet the Authors.
00:00:54
authors. I'm your host, Dan
Loney. In each episode this month, the podcast will feature
Wharton faculty authors in
00:01:00
lively, fast-moving conversations
about their latest books and research. We're going to be
covering a diverse range of
00:01:07
topics, bringing you the latest
insights and knowledge that you can apply to your life and to
work. Hello, and welcome to The
00:01:15
Ripple Effect: Meet the Author
series. I'm your host, Dan Loney. Today, a pleasure to
speak with Zeke Hernandez about
00:01:21
his book, <i>The Truth About
Immigration</i>, that book about why successful societies welcome
newcomers. Zeke, great to see you
00:01:29
again. How are you? I'm good. Thanks for
having me, Dan. You make the case in the book
that we need to kind of broaden
00:01:35
the conversation on the economic
benefits of immigration. You say that— that most people are stuck
on this perennial issue of
00:01:44
whether immigrants take jobs or
lower wages. Give us a sense of what you're trying to bring
forward with the book.
00:01:50
Yeah. You know, I've been researching
this for nearly 20 years, and also speaking to a lot of
audiences about this. And what
00:01:57
I've observed is that the big
problem in the way that we talk about immigrants in the economy
is that we never get past
00:02:04
questions that are about whether
immigrants are harmful to us, like do immigrants take jobs or
lower wages? And that's an
00:02:10
important question. But when you
look at the data, you realize that immigrants not just don't
do harm, but they are net
00:02:17
positives in a very, you know,
in a very extreme sense. They bring a lot of good. And it's very--
so it's very different to say
00:02:24
that something is not bad than
to say that something is — is good, right? Like below zero
versus above zero. And so we
00:02:30
just need to broaden the lens to
see the big picture. And then those questions that people
commonly ask, we'll kind of
00:02:37
understand them in the right
perspective. So let's kind of start very high level. What
goes into a successful economy,
00:02:44
what goes into a successful
business, since this is a Wharton audience, right? Well, just
think of the inputs you need.
00:02:50
You need, of course, people and
talent. But you need investment, you need ideas and innovation.
You need customers, you need new
00:02:57
technologies, you need all kinds
of things that are inputs into a successful economy and a
successful business. The short
00:03:03
of it is that the research tells
us that immigrants contribute positively to all of those
ingredients, right? And so we
00:03:09
have to broaden the conversation
by thinking about that. And a successful economy and a
successful business doesn't just
00:03:15
have a lot of those ingredients,
a lot of those inputs, but it has a great variety of those.
And the way we get both a higher
00:03:22
quantity and a higher variety
of those two things is because of the movement of people.
People that come from different
00:03:27
backgrounds bring more and a
greater variety of those two things. So that's— that's the big
picture. And if we— if we frame
00:03:32
the conversation that way, then
we can really understand the economic effect immigrants have.
00:03:38
So to a degree, there's been
somewhat of an underselling of the value that immigrants have
on an economy. - Completely,
00:03:46
right? Because typically, if you—
if you read the headlines, or the popular conversation, or
especially the political
00:03:53
conversation, the most positive
we tend to get is "Oh, immigrants fill job shortages." Right?
There's a shortage in this
00:03:59
particular industry, we need
foreign-born talent. And so whether it's nurses,
construction workers,
00:04:04
manufacturing workers, people
with STEM skills, immigrants fill those shortages. And so
they kind of plug holes in the
00:04:10
economy. And that's, of course,
a really important function. But we never get to, like, the win-
win, in that immigrants create
00:04:17
all these incredible
innovations. Immigrants bring more investment. Immigrants do
all these things that are not
00:04:21
just plugging holes, right? And
so yeah, we're totally underselling the issue. And I'm
sure we'll have a conversation
00:04:26
about what those positives are.
- Well, exactly. And so let's continue
there. Because I think you can
00:04:34
look at a variety of different
avenues right now of where the value of immigration can be in
this country. And I guess when
00:04:41
you even think about the
dynamics of who is— makes up the workforce right now, a lot of
conversation about the older
00:04:49
generations, who are moving
closer towards retirement and will be in the workforce in the
next few years. Well, you have to
00:04:56
replace those people. And part of
that will be around immigration. Yeah, yeah. And it's even more
than that. Because it's not just
00:05:03
people that are retiring. We— we
lose 700,000 people in prime working age to death every year
in this country. 700,000. Right?
00:05:12
Working age people. We don't
even replace that many through our— through our legal
immigration system. Right? And
00:05:18
so you have to plug in the holes
left by retirees and people who are working age who are leaving
the workforce for, you know, for
00:05:24
tragic reasons. Right? And— and
that's just the beginning. This sounds somewhat similar, I
guess, to the debate about
00:05:32
diversity in the office, or on a
board of directors. That the more options you present in that
situation, the better the final
00:05:41
product can be. In this
instance, the more options you have in a workforce,
potentially, the better the
00:05:47
bottom line will be for
companies moving forward. Yeah, absolutely. Right. This is
not just an economy wide thing,
00:05:53
but a business thing. We— we have
evidence that when firms hire people from different national
backgrounds, they perform
00:05:59
better. They're also more
innovative. But here's the— I think the part that is really
insightful is that those people
00:06:06
from different international
backgrounds make native workers more creative and more
productive. Here's one example.
00:06:13
Immigrants in the US are 18% of
the inventive workforce, meaning people who patent. Okay? 18%.
But they account for 36% of all
00:06:23
patents in the United States.
Now, that number you can break it down in two in a way that's
really interesting. 23% of
00:06:30
patents are patents where the
immigrants are directly the inventors on record. - Right.
- But the other 13% is native
00:06:37
inventors patenting more
because they work with immigrant inventors. Why? Because the
immigrant inventors bring new
00:06:44
ideas, they bring new networks,
they bring new ways to solve problems. And so that's what I
mean by a win-win, right? Is— is
00:06:50
that it's not that natives are
losing at the expense of immigrants. They're both better
off because of those— those
00:06:57
differences and that variety. You talk a little bit in the book
about the connection between
00:07:01
immigration and job creation and
investment, and maybe even more so the investment side.
Tell us about what you see
00:07:07
there. Yeah, that's such an important
question, because that's one of the most misunderstood aspects
of what immigration does to the
00:07:14
economy. So let's do a simple
example. You know, we're sitting here in Philadelphia. Just a few
miles from here in a place
00:07:24
called Hometown, Pennsylvania— a
small town, 3500 people. Last year EMD Electronics announced
the expansion of a facility that
00:07:32
would create 200 high-skilled
manufacturing jobs. These were jobs to create parts that are
really critical for chips,
00:07:38
right? So this is the kind of
jobs that everybody wants in America. And Hometown seems like
a weird place, right, for a high-
00:07:44
tech facility to grow and create
200 jobs. - Right. - Okay. But then you realize that EMD Electronics is
a subsidiary of a German
00:07:53
company. And you're like, okay,
what does that have to do with anything? Well, it turns out
that Hometown, a long time ago,
00:07:59
was founded by German
immigrants, right? And it's not a coincidence that today, a
German company is investing and
00:08:06
thriving and creating jobs in
Hometown, Pennsylvania. So we have a lot of research showing
that where immigrants go, firms
00:08:13
make investment. Okay? And this— and these effects last for generations. So where
there's a lot of, say, Germans,
00:08:19
historically, a lot of German
investment will follow. And it's true for Mexican firms. It's
true for Korean firms. It's true
00:08:24
for every nationality. And so
this is what I call the investment-immigration-jobs
triangle. Immigrants arrive,
00:08:31
they foster investment from
their home countries, those investments create jobs. The
other link between immigration
00:08:37
and investment in jobs is that
immigrants are 80% more likely than natives to start
businesses of all kinds. From
00:08:43
the high-tech Google and Zooms
of the world to the mom and pop restaurants that we all love to
eat in. And at— regardless of
00:08:49
size, regardless of type of
business, immigrant-founded businesses create more jobs than
native-founded businesses. So
00:08:55
whether it's through pulling
capital from their home countries, or investing their
own capital in new businesses,
00:09:00
immigrants create jobs through
that triangle I just mentioned It— it's been a big part
00:09:04
of the story. But all
that you've laid out right there really again does
highlight the need for proper
00:09:11
policy around immigration. And
that obviously has been a debate that's been going for
many, many years now without
00:09:18
enough of a— of a true
conclusion. - Yeah. So I think that another reason
that I wrote this book is that
00:09:26
not just in the United States,
but in every country that's having the debate that we're
having, there's an obsession
00:09:32
with how immigrants come into
our countries. You know, legally, you know, illegally. For
work, for family reasons. And of
00:09:38
course, it's important to know
that. But we're not obsessed enough with what immigrants do
once they're here. Right? And so
00:09:44
we have to separate immigration,
which is what people do when they come, which is what we've
been talking about— they create
00:09:49
all these economic benefits and
cultural benefits that we haven't spoken about. And so
once you understand what
00:09:55
immigrants do, it gives you more
clarity on what our policies be for how many and how people
should come in, is kind of the
00:10:02
point. And so, you know, if
immigrants are just not bad, policy is very different than if
immigrants are net positives and
00:10:09
bring all the benefits we just
talked about. And so, in the United States, the analogy that
I often use is that our
00:10:15
immigration system is just
really outdated. The last time we updated our system here was
in 1990. The economy was $9
00:10:23
trillion in size back then.
Today, it's $25 trillion in size. Okay?
- Yeah.
00:10:29
So we have an
economy that's more than double the size, operating with a— a
system, a speed limit, if you
00:10:36
want to think about it, that is
just too low. Right? Not only do we not replace the number of
working age people who die,
00:10:43
which I just mentioned, but
we're not even providing enough people for all the growing
businesses that we need. And so—
00:10:50
so we just need more and a
greater variety of pathways in. So then with this being a topic
that obviously is playing out in
00:10:57
other countries as well—
- Yeah. — this becomes a global problem that you're talking about, longer
term, with the expansion you just
00:11:05
kind of alluded to not only
needing to happen here in the US, but places like Australia,
the Far East, Europe,
00:11:12
wherever, you know, this is
becoming an issue. Yeah. Yeah. And I'll make a bold
prediction here, right, is that a
00:11:17
lot of rich countries so far
have been what I call immigration choosers, meaning
they've had sort of their pick
00:11:23
of the litter because there's a
lot of people who want to— who want to move to those countries
to make a living and find a
00:11:29
better life and contribute. But
because of demographic trends in most of the world— birth rates
shrinking, people aging, new
00:11:38
people coming from fewer and
fewer countries, I think there's going to be a lot more
geopolitical competition and a
00:11:44
lot of countries are going to
become immigration beggars, right? They're going to be
desperate for— for the talent
00:11:49
and the people they need. So I think we—
you know, we better get our act together before we become
immigration beggars.
00:11:54
You mentioned the element of
innovation. What other areas do you see as important when you
think about the benefits of
00:12:01
having immigrants coming into a
country? Yeah, so I gave the example
earlier of patents, right, and the
00:12:06
36%. And that's— that's what I
call highbrow innovation, right? And we're aware of that.
Not just patents, but we think
00:12:12
of high-tech startups, right? So—
so, you know, Zoom, Google, Intel, like, you name a high tech
startup, it— you know, there's
00:12:19
about at least a 50% chance
that it had an immigrant co- founder. I think the part that
gets underappreciated is what I
00:12:25
call the lowbrow innovations,
meaning the things that we do, we eat, we spend our time on every
day that we completely take for
00:12:32
granted, that we don't realize
were brought by new people. I'll give just— just, you
know, a few examples from kind
00:12:39
of throughout a normal day. You
wake up, you brush your teeth, right? Colgate toothpaste, you know,
immigrant. You go check your
00:12:45
email, right? On your
smartphone. Well, that smartphone wouldn't exist
without the contributions of
00:12:51
immigrants. Maybe you want to
have— you know, what, Mexican food, Italian food? A pizza, a
hamburger for— you know, for
00:13:00
lunch? Well, all of those are
immigrant contributions. You want to go to the movies to see
your favorite movies? Well, you
00:13:05
know, a lot of— a very high
proportion of the actors, actresses, directors, makeup
artists that made that movie
00:13:12
really good are foreign-born.
Walk through your supermarket aisle. Okay? Think of the items
you buy regularly and remove
00:13:20
from the aisles the items that
were brought in by immigrants. And your cart will be at
least half empty. Right? And so
00:13:27
sports, right soccer? - Sure.
- You like to do karate, you like to do yoga, you'd like to go to the
gym to do— you know, Zumba, I
00:13:36
think, right? All of those are
things that were introduced by immigrants. So the point is,
like, a huge proportion of what
00:13:41
you spend your time and money
on, that makes your life richer and more interesting, was
brought in by foreign
00:13:46
contributions. And those are
innovations just as much as a patent is an innovation. - Right.
- That's my point. - Obviously
00:13:52
with all of those areas you just
touched on, you're talking about a potential significant negative
impact from an economics
00:14:01
perspective of not having enough
of the right focus, so that you can push forward in a lot of
those areas as well. - Yeah.
00:14:10
Yeah. I mean, and we have
historical precedents that show that very clearly. We hit the
100-year anniversary of the 1924
00:14:19
National Origins Act in the
United States. It was a biggest restriction of immigration in US
history. It dropped immigration
00:14:25
by over 90% for four decades in
this country. There's good evidence, we have very good
evidence now, to show that this
00:14:32
was really damaging to the
United States. For example, native-born scientists, who were
less exposed to immigrants,
00:14:39
patented nearly 70% less
permanently. - Yeah. - Right? Places in the US that lost the most
immigrants due to those
00:14:46
restrictions, to this day, 20— you know, 100 years later,
receive less investment than they did before
and invest less overseas than
00:14:54
they did before. Businesses in
those places. American workers lost jobs and got lower quality
jobs. So, you know, we know what
00:15:02
happens, because it happened
before. And— and I think we're at a historic moment where we need
to be really clear about what
00:15:10
immigrants do so that we make
better decisions about— about our policies. And this is not
just in a macro sense. This— again to
00:15:19
the— to the business-minded
people that are listening to this, this— this affects the
everyday running of your
00:15:24
business. Where are you going to
recruit talent? Where are you going to get good ideas? How are
you going to find customers? How
00:15:29
are you going to find new
markets? That's all going to be in— to a great degree. Not
only, but to a great degree,
00:15:34
because of foreign-born talent. Here is the book, <i>The Truth About
Immigration</i>.
00:15:38
Where can people pick
it up right now? Everywhere you buy books.
Everywhere you buy books.
00:15:44
Zeke, great to have you with us
today. Thanks very much for your time.
- Thank you so much.
00:15:47
Zeke Hernandez
of the Wharton School. The book again, the title, <i>The
Truth About Immigration</i>.
00:15:53
- Thank you for listening to The Ripple
Effect. We hope you found this episode informative and
engaging. Don't forget to
00:15:59
subscribe and leave us a review
so that we can continue to bring you the best insight from the
Wharton School.