Given this reality of supply exceeding demand for educated workers, one has to wonder how exactly making it easier for highly educated immigrants to come to America will make things better for the people already in America. Won't such a policy, in an economy which already does not need millions of college grads, serve only to depress the wages of all those with college degrees? Even if we grant the contention that most of these underemployed have no skills, what will happen to doctors and engineers as foreign talent enters the job market and competes for those jobs? Will their wages not decline?
Not, writes Ozimek: “…ceteris paribus, wages in labor markets with a million workers or more are a third higher than wages in markets with 250,000 or less workers.” It has to do with “thick” markets, he explains, or the phenomenon where everyone is made better off when there are a lot of buyers and sellers in a market: thus, by opening the door to immigrant geniuses, we will attract most of the very smart people in the world, creating a dynamic that forces talent to come to the US because this will be the place where you have to be in order to accomplish anything worthwhile. All this activity will then generate a lot of wealth, and the wealth will trickle down to the rest of the economy. We will all be made better off.
Recently, economists have published a number of studies purporting to show that immigration, in general, stimulates investment, a factor that increases economic growth. Giovanni Peri, an economist at the University of California at Davis, found that immigration also causes wages to increase “ about $5,100 in the yearly income of the average U.S. worker in constant 2005 dollars. Such a gain equals 20 percent to 25 percent of the total real increase in average yearly income per worker registered in the United States between 1990 and 2007.”
But look at California, a state with one of the highest numbers of immigrants, including high numbers of immigrant geniuses who work in the IT sector. Despite the suggestion by economists who would have you believe that immigration increases wages and economic growth, California is not an island of economic growth and higher wages in a recession economy. In fact, California has one of the highest unemployment rates in the country. But shouldn't California be immune, if it is the case that immigration increases wages? Why isn’t the thick market working to save California from economic problems? More importantly, why aren’t the immigrant geniuses already in Silicon Valley enough?