Mass Immigration Is Holding Back American Modernization

Three recent pieces of writing – a New York Times column by Binyamin Appelbaum, a New York Times guest essay by Johns Hopkins economist Jonas Nahm, and a newsletter from American Compass by Oren Cass and Daniel Kishi – converge on a conclusion that should reshape how Americans think about immigration policy: mass immigration is not just depressing wages. It is actively preventing the United States from modernizing its economy.

The argument is straightforward. Modern manufacturing and agriculture increasingly require fewer workers who are more skilled and better paid. Automation, robotics, and artificial intelligence are transforming how goods are produced and food is grown around the world. But in the United States, the ready availability of cheap foreign labor – through both legal visa programs and illegal hiring – has suppressed the economic pressure that drives this transformation. The result is that American industries remain locked into outdated, low-productivity models while our competitors race ahead.

America Is Falling Behind

Nahm, writing in the New York Times, paints a stark picture of the gap between the United States and China on the factory floor. Tesla’s plant in Shanghai produces far more cars per worker than its California facility. China has constructed more than 30,000 smart factories and now receives more than half of all new industrial robots installed worldwide. Research shows that Chinese factories in sectors from steel to shipbuilding now produce more per worker than comparable American plants.

The challenge, Nahm argues, is not that America lacks the technology. It’s that America has failed to deploy it. Only 18% of manufacturers surveyed by the Manufacturing Leadership Council reported having formal AI strategies for their operations. Two-thirds said they were struggling to scale AI test projects into production. Eight in ten reported shortages of workers capable of using AI-powered manufacturing tools.

Why? Part of the answer is obvious to anyone who has watched American industries organize themselves around imported labor rather than productivity. When businesses can access an ever-expanding pool of cheap workers – whether through the H-2A and H-2B seasonal visa programs, the OPT and H-1B skilled worker pipelines, or the shadow labor market of illegal hiring – the economic case for expensive capital investment weakens. Why automate when you can import?

The Dairy Farm That Proves the Point

Binyamin Appelbaum’s New York Times column inadvertently provides the most compelling illustration of this dynamic. Appelbaum profiles Dale Hemminger, a dairy farmer in upstate New York who installed robotic milking machines in 2007 – after immigration authorities arrested one of his workers. Before automation, Hemminger’s farm produced roughly 800,000 pounds of milk per worker per year. Today, it produces 2.5 million pounds per worker. He employs about half the workforce he once needed, and his remaining employees earn more money, work shorter hours, and do less grueling labor.

Appelbaum presents this as a vision of the future but then spends the rest of his column arguing against the very enforcement that made it possible. He concludes that immigration restriction is essentially futile for agriculture. Cass and Kishi, writing in response at American Compass, point out the obvious contradiction: Appelbaum describes the solution and then argues for preserving the conditions that prevent it.

Hemminger’s story is not an anomaly. It’s a template. The Dutch company Lely commercialized the first robotic milking system in 1992 – more than three decades ago. Today, roughly 25% of dairy farms in Denmark and the Netherlands use automated milking. In the United States, that figure is about 5%. The technology is proven and available. American farmers simply haven’t needed it, because cheap immigrant labor has made the investment economically irrational.

As Cass and Kishi put it: “Restriction creates pressure. Industrial policy ensures our nation can transition.”

Legal Immigration Programs Are the Core Distortion

While illegal hiring is an obvious problem, the legal immigration system is equally responsible for suppressing the pressure to modernize. The scale of legal foreign labor programs has exploded in recent years, and each program contributes to the same dynamic: keeping labor artificially cheap and removing the incentive to invest in workers and technology.

Consider the H-2A temporary agricultural worker program. Visa issuances have grown from roughly 50,000 in 2005 to more than 385,000 today – a staggering expansion that has coincided with stagnant agricultural wages and minimal investment in farm automation. The agricultural industry’s response to every labor challenge is the same: demand more visas. But every additional H-2A worker is another reason for a farmer not to invest in the milking robots, cabbage harvesters, and AI-powered sorting systems that already exist and are in use around the world.

The H-2B program for seasonal non-agricultural workers follows the same pattern, flooding landscaping, hospitality, and food processing with temporary foreign labor that undercuts the wages that would otherwise attract American workers – or motivate employers to invest in labor-saving technology.

In higher-skilled sectors, the Optional Practical Training (OPT) program and the H-1B visa have a similar effect. OPT has grown more than 400% and is now larger than the H-1B program it was originally designed to supplement. Employers who hire OPT workers don’t pay FICA or Medicare taxes, creating a built-in financial incentive to choose foreign graduates over Americans. The result is that fewer than half of American STEM graduates find STEM jobs, while companies continue to lobby for ever-greater numbers of foreign workers. The same dynamic plays out with H-1B: a recent study by Harvard’s George Borjas found that H-1B workers earn 16% less than comparable American workers – which is the entire point for the employers who hire them.

Each of these programs, taken individually, has its defenders. Taken together, they represent a massive, systemic subsidy for cheap labor that suppresses wages, discourages capital investment, and traps American industries in low-productivity business models.

Illegal Hiring Compounds the Problem

On top of the legal visa infrastructure, an estimated 8.3 million unauthorized workers – roughly 5% of the U.S. workforce – compete for jobs across agriculture, construction, food service, and household services. Many work under stolen Social Security numbers, and some employers actively prefer them because they can be underpaid and have no practical recourse. The Penn Wharton Budget Model has projected that sustained enforcement reducing unauthorized employment would raise wages for authorized low-skilled workers by up to 5% – a figure that confirms the current level of wage depression caused by illegal hiring.

The combination of expansive legal programs and widespread illegal hiring creates what amounts to a de facto industrial policy – one that rewards businesses for exploiting cheap labor rather than investing in their workers and their operations. As Cass and Kishi observe, every additional worker, legal or otherwise, reduces the pressure on employers to modernize.

Florida Shows What’s Possible

Florida’s recent experience offers a real-world demonstration of what happens when you begin to remove the cheap labor distortion. In May 2023, Florida mandated E-Verify for all private employers with 25 or more workers. Critics predicted economic disaster. The opposite happened: Florida led the nation in job creation, and average real wages rose 6.4% in the 32 months following passage – growth that had previously taken eight years to achieve.

This is not surprising when you understand the underlying economics. When businesses can no longer rely on cheap unauthorized labor, they face a choice: raise wages to attract legal workers, or invest in technology to increase productivity. Either outcome benefits American workers. In Florida, it appears both are happening simultaneously.

Rethinking “Jobs Americans Won’t Do”

The phrase “jobs Americans won’t do” has long been the cornerstone of arguments for maintaining high levels of immigration. But as Cass and Kishi argue, this framing gets the causation backwards. These are not jobs with fixed, immutable characteristics. They are jobs shaped by policy choices – specifically, by decades of immigration policy that has organized entire sectors of the American economy around cheap, disposable labor.

When dairy farms in the Netherlands pay their workers well and invest in robotic milking systems, nobody says those are “jobs the Dutch won’t do.” When Chinese factories deploy hundreds of robots to produce a car every 76 seconds, nobody says manufacturing is beneath Chinese workers. These countries have organized their industries around productivity and technology. The United States has organized too many of its industries around a cheap labor subsidy that immigration policy provides.

The transition will not be painless or instantaneous. Automation requires capital investment, and not every task can be mechanized today. But the Hemminger example shows what becomes possible when enforcement removes the distortion. A struggling dairy farm did not collapse – it was transformed into a higher-productivity, higher-wage operation. That is the future that immigration reduction can help deliver across the American economy.

The Path Forward

The case for reducing immigration has always rested on protecting American workers from wage depression and job competition. That case remains as strong as ever. But the modernization argument adds a new and urgent dimension: mass immigration is not just hurting workers in the short term. It is undermining America’s long-term economic competitiveness by removing the incentive to invest in the technology, automation, and higher-wage business models that our global competitors are already embracing.

Congress should reduce legal immigration levels, end programs like OPT that subsidize the hiring of foreign workers over Americans, reform the H-2A and H-2B programs that have metastasized far beyond their original purpose, and mandate E-Verify nationwide to eliminate the illegal hiring that compounds the problem. These are not anti-business policies. They are pro-modernization policies – policies that would create the conditions for American businesses to invest, innovate, and compete, while ensuring that American workers share in the gains.

As Nahm warns, the rest of the world is not waiting. China, Germany, Japan, and South Korea are all investing aggressively in factory automation and AI-driven manufacturing. The United States has the technology and the talent to lead this transition. What it lacks is the economic pressure – because mass immigration continues to provide the cheap labor safety valve that lets American industries avoid it.

It’s time to close the valve.