Are immigrants to blame for America’s economic rut? In his recent cover story for The Atlantic, David Frum points to that belief as a major reason for the dynamics of the Republican primary, particularly Trump’s rise. In his final State of the Union address, President Obama pushed back against those who would answer that question in the affirmative, saying, “Immigrants aren’t the reason wages haven’t gone up enough; those decisions are made in the boardrooms that too often put quarterly earnings over long-term returns.”

Is Obama right?

The extent to which immigration impacts wages is a contentious and layered question. Critics of current immigration policy often cite the work of the economist George Borjas, a professor at Harvard, who finds that in both the long and short run, the impact of immigrants on wages can be deleterious, particularly for low-skilled workers. But Borjas also finds that the opposite can be true, and that the outcome on wages depends largely on the size of demand and the consumer base in a particular area of for a particular product. A recent paper from researchers at Indiana University and University of Virginia advances the finding that immigration can boost the economy overall since an influx of immigrants can actually create jobs in a local economy, as new residents generate demand for everything from housing, to haircuts, to restaurants. The wage effect is a bit less clear, the paper concedes. The research found that an influx of immigrants can cause a decline in wages for tradeable professions (things that can be outsourced like manufacturing or engineering) but can cause an increase in the wages for local workers in non tradable professions (jobs that must be done locally, like waitresses, retail, or hospitality professionals).  

But on the bigger picture, Obama is right: The discussion of just how much wage suppression immigrants might be responsible for is a bit beside the point. The president’s argument during the State of the Union address was probably not that wage redistribution and suppression doesn’t exist, but instead that the level of wage dampening that immigration is actually responsible for in the broader scope of the problem pales in comparison to the wage suppression that has occurred since multi-billion dollar companies decided to prioritize rewarding shareholders first and workers last.

Obama is certainly not the first to draw a connection between corporate priorities and low wages. A recent report from the Brookings Institution found that over the past several decades, the payrolls of the largest companies (by market cap) have gotten much smaller, and not because jobs have en masse gone to immigrants willing to work for less. Jerry Davis, a professor at the University of Michigan and the author of the paper, postulates that the new generation of leaner companies is largely related to changes in how the stock market and shareholders assessed value. “By the 1990s it was widely agreed among executives and investors, and many policymakers, that corporations existed primarily to create shareholder value. Other stakeholders were relevant, but at the end of the day, increasing market value was the dominant objective,” he writes. The result? Massive corporate reorganization to cut back on labor spending via outsourcing, lowered wages, or layoffs.  

The recession, of course, plays a role in the current predicament. “The strength [in corporate profits] is directly related to the weakness in hourly wages, which are still growing at just a 2 percent nominal pace. The weakness of wages and the resulting strength of profits are telling signs that the US labor market is still far from full employment,” Jan Hatzius, the chief U.S. economist at Goldman Sachs wrote in a 2014 research note. That’s because many companies have learned to be leaner, they hire fewer employees, and still benefit from continually growing productivity. And because the country is still not at full employment, they can keep paying workers less. All of this serves to boost the company’s bottom line, while workers are unable to participate in those benefits.

And keeping those profits high is of critical importance to corporate boards who have to report back to shareholders every three months for quarterly earnings reports. Thinning profit margins or missed earnings can tank a stock price, enraging shareholders and leading them to pressure company executives. That, some economists have said, means that companies place much more value on producing quick, quarterly gains, instead of focusing on strategies that produce long-term success (with the possibility of growing pains) and thriving companies that could better care for employees.

The president’s statement points to the idea that such a dramatic and systemic shift in the way large corporations value and reward millions of workers has had a much more drastic impact on the broad national trend of stifled wages over the past decade than immigrants depressing wages in the shrinking low-skill labor market.