What was the trend of immigration in the 1920s?

Under the motto e pluribus unum (from many, one), U.S. presidents frequently remind Americans that they share the immigrant experience of beginning anew in the land of opportunity.1 Immigration is widely considered to be in the national interest, since it permits individuals to better themselves as it strengthens the United States.

For its first 100 years, the United States facilitated immigration, welcoming foreigners to settle a vast country. Beginning in the 1880s, an era of qualitative immigration restrictions began as certain types of immigrants were barred: prostitutes, workers with contracts that tied them to a particular employer for several years, and Chinese. In the 1920s, quantitative restrictions or quotas set a ceiling on the number of immigrants accepted each year.2

Immigration law changed in 1965. Qualitative and quantitative restrictions were maintained, but national origin preferences that favored the entry of Europeans were dropped. U.S. immigration policy began to favor the entry of foreigners who had U.S. relatives and foreigners requested by U.S. employers. During the 1970s, the origins of most immigrants changed from Europe to Latin America and Asia: Between 2000 and 2009 over three-fourths of the 10 million immigrants admitted were from Latin America and Asia.

U.S. immigration has occurred in waves, with peaks followed by troughs (see figure). The first wave of immigrants, mostly English-speakers from the British Isles, arrived before records were kept beginning in 1820. The second wave, dominated by Irish and German Catholics in the 1840s and 1850s, challenged the dominance of the Protestant church and led to a backlash against Catholics, defused only when the Civil War practically stopped immigration in the 1860s.

The third wave, between 1880 and 1914, brought over 20 million European immigrants to the United States, an average of 650,000 a year at a time when the United States had 75 million residents. Most southern and eastern European immigrants arriving via New York’s Ellis Island found factory jobs in Northeastern and Midwestern cities. Third-wave European immigration was slowed first by World War I and then by numerical quotas in the 1920s.

Between the 1920s and 1960s, immigration paused. Immigration was low during the Depression of the 1930s, and in some years more people left the United States than arrived. Immigration rose after World War II ended, as veterans returned with European spouses and Europeans migrated. The fourth wave began after 1965, and has been marked by rising numbers of immigrants from Latin America and Asia. The United States admitted an average 250,000 immigrants a year in the 1950s, 330,000 in the 1960s, 450,000 in the 1970s, 735,000 in the 1980s, and over 1 million a year since the 1990s.

Almost 110,000 foreigners enter the United States on a typical day. Three major entry doors exist: a front door for immigrants, a side door for temporary visitors, and a back door for the unauthorized. Almost 3,100 foreigners a day receive immigrant visas or green cards that allow them to live, work, and become naturalized U.S. citizens after five years. Over 105,000 tourist, business, and student visitors arrive; some stay only a few days, while others stay for several years. Finally, over 1,500 unauthorized foreigners a day were settling in the United States until the 2008 recession reduced their number sharply. Half of the unauthorized eluded apprehension at the Mexico-U.S. border, while the others entered legally through the side door but violated the terms of their visitor visas by working or not departing.3

During the 1990s, contentious debates arose about the relationship of immigrants and their children to the U.S. educational, welfare, and political systems; and more broadly, whether the immigration system served U.S. national interests. Since then, the immigration debate has centered on preventing the entry of terrorists, controlling unauthorized migration, and dealing with U.S. employers who request foreigners to fill jobs.

Today, unauthorized migration is the main policy concern. The number of unauthorized foreigners peaked at 12.2 million in 2007, fell by almost 1 million during the recent recession, and may have increased again with economic recovery. Debates over how to prevent unauthorized migration and deal with the unauthorized already living in the United States are polarized. Many Republicans, especially in the House of Representatives, prefer an enforcement-first approach—more agents and fences on the Mexico-U.S. border and a requirement that U.S. employers submit data on newly hired employees to prevent unauthorized workers from getting jobs. President Obama and many Democrats prefer “comprehensive immigration reform” that includes more border and interior enforcement to discourage entry and employment, but also a path to legal immigrant status.

In 2006 and 2013, the U.S. Senate approved comprehensive immigration reform bills that included a path to legalization. The Senate’s Border Security, Economic Opportunity, and Immigration Modernization Act of 2013 would:

• Step up enforcement to deter illegal migration.
• Provide a 13-year path to U.S. citizenship for unauthorized foreigners who arrived in the United States before Dec. 31, 2011, and remained continuously since their arrival.
• Create new guest worker programs for low-skilled farm and nonfarm workers.
• Increase the number of temporary work visas available to foreigners with college degrees coming to the United States to fill jobs.

The House approved an enforcement-first bill in 2005 and has opted for a piecemeal approach to immigration reform in 2013, with bills that increase border and interior enforcement and expand guest worker programs for farm and information technology (IT) workers.

1. Exceptions are Native Americans, slaves, and those who became U.S. citizens by purchase or conquest, such as French nationals who became Americans with the Louisiana Purchase, Mexicans who became Americans with the end of the Mexican War, and Puerto Ricans who became U.S. citizens after the American victory over Spain in 1898.
2. Susan Martin, A Nation of Immigrants (Cambridge: Cambridge University Press, 2010).
3. U.S. immigration statistics distinguish between Entries Without Inspection (EWIs) and overstayers, those who entered legally and violated the terms of their entry or did not depart. About 55 percent of the 11 million unauthorized foreigners in 2012 were EWIs.

A common refrain in discussions of immigration policy is the concern that high rates of immigration result in fewer job opportunities and lower wages for U.S. workers. As economic historians, we seek to study the effects of past immigration restrictions in order to produce hard evidence that might inform policy moving forward. What happens to regional labor markets when immigration is cut? Do immigration quotas improve labor market prospects or raise wages for U.S.-born workers? These are important questions that demand rigorous evaluation.

In a new working paper (PDF) with Philipp Ager of the University of Southern Denmark, Elior Cohen of UCLA, and Casper W. Hansen of the University of Copenhagen, we measure exposure of U.S. regional labor markets to national immigration quotas set in the 1920s—quotas that ultimately cut immigration to the U.S. by more than 80 percent. We find that these strict immigration quotas did not result in higher wages for U.S.-born workers. Instead, wages fell for U.S. workers in labor markets that were most affected by the decline in immigrant numbers while ongoing industrial and labor market transitions were accelerated. In rural areas, the farming industry moved toward automation. In urban areas, labor markets moved toward higher-skilled manufacturing.

While some of these effects are what policymakers at the time intended, others—for example the decrease in wages—are not. The closing of the border to mass migration in the 1920s was one of the most fundamental changes to U.S. immigration policy in the past century. Our analysis of the effects of these changes provides an important cautionary tale of how immigration policies can produce unintended consequences for U.S. workers and labor markets.

Our research setting

Before 1920, immigration from Europe to the U.S. was almost entirely unrestricted. In the 1920s, Congress passed a series of immigration quotas. The quotas were applied on a country-by-country basis and therefore restricted immigration from Southern and Eastern Europe more than immigration from Northern and Western Europe. Ultimately, immigration to the U.S. fell from around 1 million people a year to 150,000 people a year.

Because immigrants from certain countries tend to settle in areas with established networks of others from their home country, some U.S. labor markets were more “exposed” to the 1920s immigration quotas than others. Labor markets that had larger clusters of Russians or Italians, for example, were more affected by the policy than areas with clusters of Irish and Germans. All of this gave us a valuable setting for understanding how immigration quotas have historically affected exposed regional economies.

Unintended consequences of the 1920s quotas—and different effects in rural and urban areas

Our paper is a case study that examines the regional labor market effects of one period of severe immigration restrictions. While the labor market and economic conditions of today are of course very different than those of 100 years ago, the research illustrates how policies to reduce immigration can have unintended consequences.

In the 1920s, policymakers reduced immigration with several cultural and economic goals in mind. One economic goal was to reduce the number of low-skilled workers in the U.S. economy, therefore allowing manufacturing to evolve in the direction of higher-skilled, higher productivity manufacturing activity. Another was to boost wages of U.S.-born workers—and in particular white U.S.-born workers. Jeremiah Jenks, an economist at Cornell and member of the bipartisan Dillingham Commission for the study of immigration in Congress, wrote in 1912 that “it is undoubtedly true that the availability of the large supply of recent immigrant labor has prevented an increase in wages which otherwise would have resulted during recent years from the increased demand for labor.”

The first goal of the commission was achieved. In urban areas exposed to the immigration quotas, many foreign-born workers were replaced by U.S.-born workers who were higher-skilled. The new arrivals filled only 50 percent of low-skilled blue-collar positions previously held by immigrants, contributing—as policymakers wanted—to a shift toward more skill-intensive manufacturing practices. However, policymakers did not anticipate that it would be Mexican migrants (who were unrestricted by the quota policy) and not U.S. workers that would ultimately move in to those vacant low-skilled positions in U.S. cities.

The post-quota job prospects were less optimistic for U.S.-born workers in rural areas. In rural areas, new quotas resulted in fewer workers, but those workers were not replaced with U.S.-born workers. Instead, land owners largely invested in capital and technology to replace them, forcing many U.S.-born workers to move out of rural areas.

An additional unintended consequence was the effect on wages, as we find that the immigration quotas established in the 1920s didn’t boost wages for workers anywhere. In both the urban and rural areas that lost the largest number of immigrant workers, occupation-based earnings of the U.S.-born actually declined after border closure by 0.5 percent for every 1 percentage point difference in quota exposure in urban areas and by 0.3 percent for every 1 percentage point difference in quota exposure in rural areas. Ironically, the new workers that moved in to U.S. cities post-quota created more competition than the immigrant workers policymakers had tried to expel, thereby pushing down wages for workers who’d been there all along.

Conclusion

Taken together, our findings suggest that policymakers debating immigration quotas or other restrictions—for example the debate around the 2017 RAISE Act—need to consider the possibility of unintended consequences. Though some argue that immigrants “take jobs” from U.S. workers, and therefore U.S. workers will benefit if immigration is restricted, our research suggests the economic effects of restricting immigration are not so straightforward. While lost immigrant workers can be replaced by new workers (for example through outsourcing), they can also be replaced by new capital (for example through automation), which in turn might also replace U.S.-born workers.