If I am saved by grace and not by anything I do, why does James say that faith without works is dead? I want to understand how those two fit together.

“He hath shewed thee, O man, what is good; and what doth the LORD require of thee, but to do justly, and to love mercy, and to walk humbly with thy God?”

Micah was a country prophet confronting a society that ran an impressive religious operation while its courts and markets crushed poor people. He stages a courtroom scene in which the people offer escalating sacrifices, and God cuts through it with a summary of what he actually wanted. It is not a payment plan. It is a description of how a person lives once they know who they are dealing with.

“Even so faith, if it hath not works, is dead, being alone.”

James wrote to scattered Jewish Christians whose gatherings gave rich visitors the good seats and sent poor believers to the floor. His target is not people who trust grace too much. It is people whose stated faith costs them nothing and changes nothing. He is testing whether a professed faith is alive, not proposing works as a second, alternative route to being saved.