The U.S. once banned Chinese immigrants — and it paid an economic price

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1:24This is The Indicator from Planet Money. I'm Waylon Wong. And I'm Darian Woods. In downtown San Francisco, there is a museum, the California Historical Society. It has all kinds of artifacts that tell the story of the state. One of these items is a kind of photo album from the late 1800s, and inside are small photographs of Chinese people who were living in Sierra County in the northern part of the state. Erin Garcia is the museum's director of exhibitions and engagement. She says this This album was compiled by a local justice of the peace as a form of surveillance. He pasted the pictures of the Chinese residents of Sierra County two by two to a page and noted their name, where they live, their occupation, their age, height, and also any identifying marks.

2:17Things like crooked right finger or mole over left eye, things like that. Some of the entries have updates like gone to China 1904 or gone to China not to return. These people were among the tens of thousands of Chinese immigrants who left the U.S. during what's known as the Chinese Exclusion Era. It's a decades-long period when federal laws restricted Chinese immigration. Lawmakers used an economic rationale. The immigrants are taking our jobs. Banning Chinese workers was supposed to benefit native-born workers. But did that happen? Today on the show, an economist explains how the Chinese exclusion laws affected the economies of Western states and what that means for our current debate over immigration and jobs.

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3:50Just go to linkedin.com slash nprpod. That's linkedin.com slash nprpod. Terms and conditions apply. Only on LinkedIn ads. This message comes from Amazon Business. With smart business buying, get everything you need to grow in one familiar place. From office supplies to IT essentials and maintenance tools. Ready to bring your visions to life? Learn how at AmazonBusiness.com. In 1880, the Chinese were the biggest group of immigrants in the western U.S. They accounted for around 20 % of all immigrants in the region. This was a time of open borders. Basically, if you had enough money to make the trip, you could come to the U.S.

4:34And Chinese immigrants arrived in the west in two big waves. first during the California gold rush of the 1850s, and then to build the Transcontinental Railroad about a decade later. The new arrivals were mostly working-age, able-bodied men. Nancy Chen is a professor of economics at Northwestern University's Kellogg School of Management. The interesting thing about the Chinese is that they were very organized in the way they came to the U.S. She says that most of the Chinese immigrants came via U.S.-based companies run by Chinese merchants who spoke English. They recruited workers in China, handled all the paperwork, and hired out teams of laborers to American employers.

5:17They were able to go to very peripheral places and be productive. A whole group or a company of men would go to the frontier where they're building railroads or taking down trees or reclaiming land, and they would be self-sufficient. For example, the workers figured out their own housing and food. And so American employers really like working with them because, you know, you pay a price and then it's not much hassle. But the Chinese workers also faced racism and suspicion. Nancy says anti-Chinese sentiment gained momentum in the 1870s. There was a recession in the U.S. that hit Western states more than Eastern ones.

5:59When economic opportunities are less plentiful, I think there's often, and unfortunately, this desire to pin it on someone. Lawmakers in Western states started to restrict how Chinese immigrants could work and live. They were banned from owning farmland or getting access to fishing grounds. State and federal legislation also made it difficult, if not impossible, for Chinese men to enter interracial marriages or bring over their wives from home. These policies snowballed into the Chinese Exclusion Act of 1882. The law banned all Chinese-born laborers from entering the U.S. for 10 years. It also prevented Chinese already in the U.S.

6:39from becoming citizens. And these restrictions were extended and tightened over time. The stereotypical immigrant story for America is you come from a country to America for better opportunities. And the Chinese Exclusion Act basically made that impossible to do for the Chinese. The exclusion laws also enabled an atmosphere of targeted racist violence. In what's now Wyoming and Oregon, white men massacred dozens of Chinese laborers. So Chinese immigrants left the U.S. in large numbers. And of course, there were very few new Chinese migrants. Nancy and several researchers recently published a working paper about the economic impact of the exclusion policies on the Western US.

7:24They calculated that the Chinese Exclusion Act reduced the Chinese labor supply by 64%. And remember, competition for jobs was one of the main justifications for the law. So Nancy wanted to study what happened to white US-born workers in Western states. And, you know, honestly, we thought we would find that they benefited. We thought this was going to be a story of winners and losers. But what we found was this was a story of losers and losers. Here's what Nancy means. She found that the white male labor supply in the West was reduced by 28 percent. Basically, in places that Chinese immigrants vacated, white workers also left.

8:05And there weren't enough new workers moving from eastern states to fill the gap. A possible reason for the decline in white workers, Nancy says, is that the loss of the Chinese immigrants might have drained some towns of their economic vitality. The Chinese got really into services. They would run a bar, a hotel. Everyone eats there. Everyone sleeps there. The Chinese leave, they shut down the motel, they shut down the bar, they shut down the restaurant. All of a sudden, your town is a lot less attractive for everyone. Economists have observed these kinds of spillover effects with modern immigration, too.

8:38We talked about this in yesterday's episode, and we'll link to it in the show notes. During the Chinese exclusion era, one sector where local white workers did appear to swap in for departing Chinese workers was mining. But Nancy says that's an exception to the broader trend. Like, take manufacturing. There, her paper documents a slowdown, and this happened both in terms of output and in the number of businesses. Overall, Nancy says the numbers suggest that the Chinese Exclusion Act was a drag on economic growth in the Western U.S. until at least 1940. The act wasn't repealed until 1943. That's after China joined the Allies in World War II.

9:18Today, the issue of immigration and competition for jobs is central in the presidential election. Former President Donald Trump has talked about launching the largest deportation program in American history if he's elected. Nancy says her research on the Chinese Exclusion Act shows the danger of enacting wide-sweeping policies. The legislation wasn't explicitly a deportation program, but it did lead to Chinese immigrants leaving the U.S. in large numbers. The law had far-reaching consequences that Nancy says weren't anticipated by lawmakers. Even if we believe that immigration policy is there to serve the economic interests of American citizens, we want to think through the immigrants that we want to ban or that we want to reduce?

10:03What are they doing? Is it something that Americans value? And if they go, who's going to do the job? And at what price will they do it for? And what will Americans have to pay for that?

10:20This episode was produced by Cooper Katz McKim with engineering by Kweisi Lee. It was fact-checked by Angel Correras. Kate Kincannon edits the show and the indicators of production of NPR.

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