Many of the most pernicious anti-market fallacies relate to labor markets and employment. Perhaps the most damaging is what we might call the “fixed pie of jobs” fallacy. The crudest version of this argument is that immigrants coming to the United States “take our jobs.” The underlying premise is that any job a person acquires must have come at the expense of someone else, hence the “fixed pie of jobs.”
What’s interesting about this argument is that it’s almost always applied to immigration but rarely to native population growth. If the claim were true, every child born in the United States (at least in excess of the death rate) would someday take a job from a working adult when he enters the labor market in adulthood . If markets can find work for the native born, why can’t they do the same for immigrants?
To see through the fallacy we need a little economic theory. According to economists, wages are determined by the value of a worker’s marginal product, or VMP. We look at how many units of output are added by hiring that worker and multiply that number by the value of the output to determine the value of the marginal product.