Immigrants Nail Innovation

To understand the benefits of low-skilled immigrants, Tim Fernholz looks to California’s manicure industry:

For every five Vietnamese who entered, two non-Vietnamese workers were displaced—but the authors are quick to note that most of that effect came from workers choosing not to enter the profession, rather than people who already worked as manicurists losing their jobs. Why was this possible? Because the immigrants were—wait for it—innovators in the manicure space.

They developed the idea of the standalone nail salon that reduced costs, “making a once-exclusive service commonplace.” That meant more nails to paint, not just more workers per nail. The benefits of immigration accrued to people who got their nails painted, to the new immigrants, and even to the remaining non-Vietnamese manicurists.

While nail-care business might not be the perfect stand-in for all low-income work, it does reflect what economists find more broadly: When new immigrants come, it does mean new competition for similarly-skilled local workers, but the new immigrants may also create opportunities that lead to more investment, which maintains wage growth and leads to economic growth. Indeed, with more immigration, average wages seem to rise, not fall.