Immigration and the Labor Market

By Ramya Vijaya, Ph.D. (Professor of Economics) and Tatiana Shukovsky (Stockton undergraduate student majoring in Economics)

May 2025

In this report, we examine the role of immigrants in the labor market in New Jersey. As a follow-up to a previous report and data dashboard published by the Hughes Center–which analyzed immigrant workers’ participation in the labor force, their top occupations, and more for 2022–we evaluated the latest county-level data for 2023 to identify any changes. In addition, we have added a new variable to the dashboard that explores the rate of immigrant entrepreneurs in the state. However, before reading about New Jersey trends, it’s important to first address some common preconceived notions about immigrant workers.

Debunking Common Misconceptions About Immigrant Workers

Myth: Immigrants take away American jobs.

Fact: Immigrant workers tend to compete with other immigrants for jobs and the roles in which they work often complement or support the jobs of native-born workers. They also have higher-rates of self-employment.

Immigrant workers tend to complement or support native-born workers’ jobs, as opposed to displacing them.Immigrant workers are often in jobs that don’t have other takers or roles that require skills that are in short supply. Both trends help support native-born workers by providing important services and helping to expand industries, creating new jobs. We can see this in the New Jersey data, where immigrants are concentrated in vital service occupations like nursing and housekeeping. Moreover, immigrants are not only workers but also consumers, and their contribution to consumption increases the overall economic pie. You can find more about this in a New American Economy Report , a Pew Research study , and in a “Hughes Center Conversations” podcast episode on immigration .
Immigrant workers also have higher rates of entrepreneurship. Immigrant workers are more likely than native-born workers to be self-employed and start their own firms. This is clearly indicated in the New Jersey data. Further economic research has also shown that immigrants are more likely to have started a business at every scale of operation. You can read more about this in an American Economic Association article and this NBER summary report .

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Myth: Fewer immigrants will improve outcomes for native-born Americans.

Fact: Deportations can negatively impact the wages and employment of native-born workers.

using past deportation data has shown that reducing the supply of immigrant workers can have negative impacts on the employment and wages of native-born workers in key sectors like childcare. With fewer immigrant workers, some childcare centers are unable to remain in operation, which reduces jobs for native-born workers and also decreases the labor force participation of some native-born women.

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Myth: An influx of immigrant workers depresses wages.

Fact: The consensus among economists is that immigrant workers do not have much of an impact on the wages of native-born workers and in some cases even help increase the wages of some categories of native-born workers.

One of the main reasons immigrant workers do not negatively impact wages is because they do not compete directly for the same jobs. You can review some of the most well known studies or summaries of studies in a National Bureau of Economic Research (NBER) report , in a report by the CATO Institute , and in an essay in The Catalyst, a journal published by the George W. Bush Institute . You can also listen to an episode of NPR’s “Planet Money” podcast that discusses this topic .

Myth: Immigrants use up a lot of government benefits but don’t contribute.

Fact: Immigrants contribute more in terms of taxes and use less in terms of benefits, making a net positive contribution at the federal level.

Nearly all immigrants pay taxes. Even undocumented immigrants pay taxes using individual tax identification numbers since they do not have social security numbers. But many immigrants are not eligible for benefits like social security and other social welfare payments. Undocumented immigrants cannot access these without social security cards. Even documented immigrants are only eligible after lengthy residence requirement periods. Moreover, immigrants have higher labor force participation rates, as seen in the New Jersey data, and often work more, therefore contributing more to taxes, proportionately. In some cases, at the state and local level, immigrant tax contributions can be lower than the cost of educating their children. But this varies greatly by state, and we have to factor in that as adults, the contribute much more in taxes than their parents or other native-born individuals. Read more about this topic in an Immigration Impact article , a National Academies of Sciences, Engineering, and Medicine report , and a CATO Institute article .

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Myth: The U.S. economy will be better off in the long run without immigrants.

Fact: Current population trends paint the opposite picture. Declining birth rates and an aging population make immigrant workers even more indispensable for the U.S. economy in the coming decades.

According to projections by both the (BLS) and the U.S. Census Bureau the growth rate of the working age population in the U.S. is going to decline in the next decade. At the same time, the labor force participation rate is also going to decline since an aging population will be working less. All of this means that the ratio, that is the number of seniors dependent on the working age population, is projected to increase rapidly unless there is steady immigration. Since immigrants tend to arrive when they are younger and also tend to have higher labor force participation rates, they are crucial to mitigating the upcoming demographic cliff in the U.S.

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Latest Data on Immigrant Workers’ Contributions to the N.J. Economy

In the latest update to our New Jersey data dashboard, we see that foreign-born workers accounted for 30.05 percent of the state’s labor force, an increase of 1.1 percentage point from the previous year.Counties like Hudson, Middlesex, Passaic and Union continued to depend rather heavily on immigrants with more than 40 percent of their labor force consisting of foreign-born workers. Moreover, foreign-born workers continued to have higher labor force participation rates than native-born workers. In 2023, 70.96 percent of immigrant workers were either employed or actively looking for work, compared to 65.24 percent of native-born workers. New Jersey’s labor force participation rate among foreign-born workers has also improved, climbing a notable 1.5 percent (+1.07 percentage points) since 2022. Labor force participation rates for immigrant workers were higher than native-born workers in 16 out of the 18 New Jersey counties where data was available. Thus, as evidenced by the data, immigrant workers make invaluable contributions to strengthen the economies of these New Jersey counties.

Foreign-born workers made up 35.28 percent of New Jersey entrepreneurs.In a new addition to our analysis, we find that ‘self-employed’ immigrant entrepreneurs are a significant part of local economies. In counties like Hudson and Union, more than 50 percent of self-employed workers are foreign-born. Moreover, another six New Jersey counties (Passaic, Middlesex, Essex, Mercer, Bergen, and Somerset) rely heavily on immigrant-owned enterprises, with foreign-born workers accounting for more than 40 percent of entrepreneurs in these geographies.

Foreign-born workers are employed in a wide variety of essential New Jersey sectors.Some of the most common occupations among immigrant workers are software developers, truck drivers, other managers, registered nurses, janitors, construction laborers, and housekeeping cleaners. Foreign-born software developers remain important to the respective workforces of Hudson County and Middlesex County, where it is the most common occupation for immigrant workers. It is the second most common occupation among foreign-born workers in Bergen County, Mercer County, Monmouth County, Morris County, and Somerset County. In 2023, more than 44 thousand foreign-born workers were employed as software developers in these seven New Jersey counties alone. Additionally, in the eighteen New Jersey counties where data was available, over 46 thousand truck drivers were immigrants.