Nobody would be investing in labor intensive industry because it doesn't return as well, so there would be a huge oversupply of labor, so prices would already be at their floor.
Economic systems aren't typically describable with terms like "nobody." There's an equilibrium in investment levels between capital- and labor-intensive sectors, and that equilibrium is moving. If there was a huge oversupply of labor, then it'd make it more compelling to invest in labor-intensive sectors, which would both shift the equilibrium and eliminate the oversupply (which is what has already happened/is happening every hour of every day, thus there's no massive oversupply).
Let me echo back what I understand to be your argument: “If there were accelerating returns to capital moving the equilibrium of labor/capital-intensiveness mix, then there would be no demand to further reduce the cost of labor”
My argument is: regardless of where that equilibrium is at any given point in time, it will almost never be 0% labor-intensive, and anyone engaged in labor-intensive production would always have a preference for even lower-cost labor.
So the answer to the question of, “why do businesses want immigration despite a more capital-intensive mix of production” is “because cheaper labor is better regardless of how much labor you need.”
You're replying to basically a strawman I wrote. I didn't say that is what's happening, I said that's what would be happening if investment was all going into capital and not labor intensive industry as OP said.
Not confused at all, the person with the fallacy that wage intensive activity is insignificant in importance is. Clearly as you say returns are balanced, and the balance that has been arrived at is desperately crying out for more and cheaper labor.
EDIT: Oh, OP is you! No wonder you're getting touchy. Your original comment is wrong.
