Immigration Policy: The Deal We Need

By Alfredo R. M. Rosete

The immigration debate in the United States has gotten stuck on the issue of more or less law enforcement. The immigrant-welcoming side calls for an end to family separation, a path to citizenship, and, sometimes, the abolition of Immigration and Customs Enforcement (ICE). The immigrant-fearing side accepts family separation as a deterrent, calls for a border wall, and for the mass deportation of undocumented immigrants. The wall-building, immigrant-deterring rhetoric is a far cry from the founders who counted, among their many grievances against the British crown that “He has endeavoured to prevent the population of these states; for that purpose obstructing the laws for naturalization of foreigners” (from the Declaration of Independence).

The founders have a point, and the economics of immigration is largely on their side. Economists who study immigration have reached an unusual degree of consensus, and their findings explain why policies that espouse enforcement and exclusion can end up hurting immigrants and citizens alike rather than helping either group. Instead of exclusionary policies, progressive social policies can help in generating win-win solutions for both immigrants and citizens.

Current Economic Research

It is no secret that mainstream economics is not always friendly to progressive policies. However, there is considerable synergy between progressive politics and the mainstream economics of immigration. The idea is that immigrants do not simply take a share of a pie that has a fixed size. By locating in the US, they innovate, work, and consume, making the pie larger for everyone. In other words, our country is not “full,” as Trump has quipped, since immigration can help our country grow.

The first avenue through which immigrants make the pie larger is through the skills they bring. Current economic research is often preoccupied by the “skill-mix” of immigrant populations-the proportion of immigrants who are “skilled” and “unskilled”. Skilled immigrants have an education that enables them to produce marketable and lucrative goods or services. These include software engineering, healthcare, or financial services. Unskilled immigrants are those who do not have this type of education and are therefore relegated to lower paying occupations such as farming, construction, and janitorial services. (Note that while the term “unskilled” sounds rather derogatory, it does not mean that construction, farming, and janitorial services are occupations without skill. Instead, it has more to do with whether the skills were learned in formal schooling or on the job. Unfortunately, this term is sticky.)

Early in the Trump administration, there was a proposal to create a point system that accounts for various educational and professional accomplishments of a visa applicant. This is essentially an effort to ensure that immigrant populations have a skill-mix favoring those in the skilled category. This is appealing for three reasons. First, if they qualify for high paying jobs, then, they are less likely to need welfare payments or social assistance. Secondly, adding more qualified people to the population means that there is a greater chance that they will be more creative, innovative, and entrepreneurial. That is, they not only qualify for existing jobs but can also create new jobs. Finally, qualifying for high paying jobs also means that they would have money to spend, generating opportunities for economic growth. However, such a policy would miss the potential gains from admitting even unskilled immigrants.

There is evidence that even if the skill-mix in the immigrant population skews toward the “unskilled”, there are still gains in admitting them. A 2012 study by UC Davis Economist Giovanni Peri, for example, shows that the arrival of unskilled immigrants allows firms to re-arrange production so that workers of different types can specialize in a number of tasks. This allows workers, native or immigrant, skilled or unskilled, to become more effective in their work. Moreover, numerous studies by economists and sociologists also suggest that even unskilled immigrants contribute to economic growth and economic activity through entrepreneurship.

There is also evidence which suggests that the sheer growth of a population due to immigration can also raise economic growth. One of the most popular studies on immigration is the Mariel Boat lift. This is when an influx of Cuban refugees arrived in Miami in 1980. MIT economist David Card (1990) found that despite the large influx of “unskilled” labor in Miami, the wage effects were almost negligible. Following Card’s study, a 2008 paper found evidence that wages did not fall after the Mariel boat-lift because immigrants create an aggregate demand effect. That is, immigrants eat, buy housing,and need clothes. Thus, producers who have to meet this demand must also hire labor. This raises the demand for labor which can offset the possible fall in wages due to an increase of the labor force. A 2013 study also finds that rural counties in the United States that absorbed more Hispanic immigrants grew faster than those counties that did not. Though the authors did not specify the cause behind this correlation, it is quite unlikely that a large influx of “skilled” Hispanic labor is responsible for growth in rural counties since “skilled” labor more often locates in cities What is more intuitive is that with a rise in the Hispanic population comes a rise in entrepreneurship, demand for housing, and consumer goods.

The lesson here is that the common inclination to attract the best and the brightest does not necessarily preclude also taking in the tired, the poor, the huddled masses yearning to be free. While it is intuitive to suggest that a receiving country like the US should select the best and brightest immigrants, the evidence points out that there are gains from immigration that are not attributable to skill alone. The first is that the immigrants add to the pool of consumers that in turn, spur the growth of businesses. Secondly, immigrants do not just add to the pool of possible workers. They also add to the pool of possible entrepreneurs that employ themselves and others.

Politics vs. Economics:

Given the economics of immigration, then, why is enforcement and exclusion such a politically powerful policy principle in the United States? The first is racism. It is no secret that, in the United States, pigmentation is often taken as an indicator of inability to adapt to Western culture and customs or to obtain financially lucrative skills. As there is no good justification for a belief that melanin causes ineptitude it would be unfortunate to set policy according to such poor reasoning.

A more rational reason is that businesses and innovations take off only after a period of time. Firms need to adjust management strategies so that they can take advantage of the changing skill mix in the labor pool. Immigrants who establish businesses will not immediately hire. Thus, voters who express anti-immigrant sentiment may be worried about the scarcity they will face today and not the possible abundance of the future. They may not be willing to wait for gains from immigrants’ consumption, talent, and entrepreneurship. The resistance to immigration can be especially fierce for citizens who are currently in states or counties which have suffered from factory closures and de-populated towns. A fresh episode of layoffs and abandoned houses can cause fears that opportunities and communities are shrinking. The prospect of having more people seeking jobs when you or someone you know has just been laid off can heighten the fear of scarcity and instability.

However, if this fear is used to inform policy, then results may actually prevent the realization of gains from immigration. These policies include measures that surveil the immigrant population, making life in general more difficult.

One of the policies that certain US states and locales have adopted is allowing local law enforcement to act as immigration enforcers. This can create problems for members of racial and ethnic groups that law enforcement perceives as having a higher proportion of unauthorized immigrants. That is, if I am a programmer or small business entrepreneur of Hispanic descent and I live in a place where law enforcement can, de-facto, enforce immigration, there is a probability that I will get harassed. I will then prefer to locate in a place where the likelihood of harassment is minimal. The exclusionary policy, then, creates a deterrent for “high-skilled” immigrants. Further, this may also deter less skilled immigrants who could use their talents in rural areas but instead, crowd in urban centers. In short, policies that enable law enforcers to harass immigrants creates an unpleasant environment, preventing certain areas from benefiting from the growth potential immigrants could have brought.

Another possible consequence of making life difficult for immigrants is that the fear of harassment and deportation has adverse effects on immigrants’ ability to study or obtain social services for which they qualify. There is some evidence to suggest that the threat of their parents’ deportation contributes to lowering academic achievement for the children of immigrants. Further, even if their children are citizens, immigrant parents are hesitant to bring their children to public health centers for fear of harassment and deportation. All in all, these measures simply reproduce a vulnerable population who need to put time and energy into avoiding law enforcement and government agencies.

From the perspective of Labor, a perpetually vulnerable population of people is not good for working class Americans. Vulnerable populations do not have many alternatives and are less likely to create an uproar about wages or working conditions. This makes them cheaper and more compliant for capitalists. If so, then, they will always be used as a threat against workers who have the political power to bargain for better wages. To protect themselves against wage cuts, American workers would do better by ensuring that immigrants have legal rights.

Finally, the marginalization of immigrants can also cause what can be called their “enclave-ization”. That is, if immigrants are unable to transact with a majority of society out of fear, then, their economic and social activities may remain in their neighborhoods. This limits their opportunities, reinforcing the perception that immigrants are incapable of upward mobility and assimilation. In effect, measures that maintain the vulnerability of immigrants actually create the conditions for which they are perceived as ‘other’ and burdens-to-society.

Doing Immigration Better

The economics of immigration demonstrates that immigrants can actually spur economic growth through skill, entrepreneurship, and simply working. However, the policies that stem from racism, fear, and a pervasive idea of scarcity prevent them from maximizing their potential contributions to society. Even Bernie Sanders, a staunch progressive, says that we cannot have a policy of open borders since we cannot accommodate the potentially massive influx of the world’s poor. As the economics literature suggests, a reasonably sized influx can be a source of growth. To ensure this, progressive policies need to be put in place.

The first is to ensure that immigrants have legal rights as workers and as human beings living in the United States. They should be able to join unions, obtain driver’s licenses and should be protected from harassment by law enforcement. Such measures would alleviate some of the vulnerabilities that they face, enabling them to bargain on similar terms as citizen workers. Further, the addition of a non-vulnerable labor pool can add to the strength of labor movements, especially if immigrants come from diverse experiences of labor action and resistance. While there are moral and political reasons to support the legal rights of immigrants, not doing so weakens labor’s bargaining position against capital, enabling capitalists to pay lower wages.

Ensuring immigrants’ legal rights also eases the process of acquiring new skills since they will be less afraid of applying to schools for fear that their status might be discovered. There is evidence to suggest that skill, training, and education uptake by immigrants rises at a higher rate than US citizens after legalization. While this can enhance the workforce through skill acquisition, it can also raise the demand for education, generating employment for teachers.

Second, instead of hiring more immigration enforcers, the government can invest in its infrastructure development and rehabilitation. It is no secret that the United States’ roads and bridges can use some repair. An infrastructure program can spur economic growth through government and private investment. Further, it can generate employment for citizens, alleviating some of the job competition from immigrant populations.

These policy measures do not entail any redistribution of resources from citizens to immigrants. All that is needed is an improvement in the legal rights of immigrants. Any resources that are reallocated away from enforcement would benefit all inhabitants of the United States regardless of their origin. If all that is needed to unleash the growth potential of immigrants is ensuring that they are not harassed or threatened, then, doesn’t this sound like a great deal?

Alfredo R. M. Rosete is a professor of economics at Warren Wilson College.

Sources: Peri, G. (2012). The effect of immigration on productivity: Evidence from US states. Review of Economics and Statistics, 94(1), 348-358; Bodvarsson, Orn, Joshua Lewer, and Hendrik Van den Berg (2008), “Measuring Immigration’s Effects on Labor Demand: A Reexamination of the Mariel Boatlift,” Labour Economics 15(4):560-574; Coates, D., & Gindling, T. H. (2013). Is Hispanic population dispersion into rural counties contributing to local economic growth?. Contemporary Economic Policy, 31(4), 649-668; Chaudry, A., Capps, R., Pedroza, J. M., Castaneda, R. M., Santos, R., & Scott, M. M. (2010). Facing Our Future: Children in the Aftermath of Immigration Enforcement. Urban Institute (NJ1); Watson, T. (2014). Inside the refrigerator: immigration enforcement and chilling effects in Medicaid participation. American Economic Journal: Economic Policy, 6(3), 313-38; Méndez, F., Sepúlveda, F., & Valdés, N. (2016). Legalization and human capital accumulation. Journal of Population Economics, 29(3), 721-756.




Our Annual Labor Issue Is Out!

0916cover-large-for-blogOur September/October Annual Labor issue is printing now, and the full-color pdf has been sent to electronic subscribers.  (Not a subscriber? Click here to subscribe.)  We have posted our lead feature, Class Struggle By Other Means: Tennessee, Volkswagen, and the Future of Labor, by Chris Brooks, and also John Miller’s “Up Against the Wall Street Journal column, “Equal Pay” Is Not So Equal.

This issue features a gorgeous cover collage and several interior illustrations by Brian Hubble.

Here is the pg. 2 editorial note from this issue:

If You’re Not Moving Forward, You’re Moving Backward

The U.S. labor movement has been in a rut for decades. Its problems, to be sure, are not all of its own making; it got into its predicament with no little amount of shoving from employers and the state. But the leadership of the “official” union movement has often been the movement’s own worst enemy.

Conservative business unionism, a lack of attention to or enthusiasm for new organizing, and a cozy relationship with employers and the state contributed to a long downward slide from the 1950s on. Over sixty years later, we’re still not out of the rut. The unions’ tactics of “friendly” relations with employers and government officials simply do not cut it—not even in industries that used to be union strongholds.

In this issue’s lead feature, Chris Brooks takes us to the auto industry, and the case of Volkswagen in Tennessee, against a backdrop of lavish government giveaways for companies and austerity for the working class. Instead of organizing aggressively around issues like the crushing pace of work, the United Auto Workers (UAW) staked itself on labor-management cooperation, loudly proclaiming its commitment to company “competitiveness.” Brooks calls for a more militant approach, based not only on facing up to conflict with employers and the government, but also on championing a broader agenda for the working class as a whole.

There are several other ways, highlighted in this year’s Annual Labor Issue, in which the labor movement’s future depends on its ability to adapt and fight in a changing industrial and political landscape.

Labor lawyer Ira Sills puts an encouraging piece of breaking news—the National Labor Relations Board’s recent ruling that graduate teaching assistants at private universities are, indeed, employees entitled to the protections of the National Labor Relations Act—into a broader historical context. As Sills points out, the NLRB became increasingly “politicized” from the 1980s on, especially with the appointment of anti-labor ideologues who were hell-bent on making things as hard on workers and unions as possible. The unions, accustomed to organizing within the NLRB election system, were not successful in finding other ways to organize. But the successes of graduate employee organization and public institutions and the struggles of graduate employees to organize at private institutions certainly provided some of the impetus behind the recent legal change.

The question of who is regarded as an “employee” has wider implications in the U.S. economy today, especially in light of the rise of contingent or “gig” employment. Economist Anders Fremstad looks at the reality of work today in one the highest-profile segments of the contingent labor market—“sharing economy” companies like Uber and Lyft. Fremstad argues that the “sharing economy” may work for underused physical assets (that, when lying unused, can be rented out at little cost to the owner), it’s a different story when it comes to labor time. Using even spare time for labor takes something away from the “gig” worker, and the huge slice of revenue that companies like Uber take off the top makes it very hard for sharing-economy workers to scratch out a living. Fremstad argues, instead, for alternative types of “sharing economy” enterprises—such as public enterprises connecting workers with consumers, without the exploitive cut taken by private for-profit companies.

Jeremy Brecher tackles the question of labor and the vexing challenge of climate change. He outlines an appealing and feasible program, originated by the Labor Network for Sustainability, that would bring about needed reductions in greenhouse gas emissions while creating more robust job growth than a “business as usual” (fossil-fuel based) scenario. The aim is not just to defuse any possible labor opposition—founded on the canard that environmental regulations are “job killers”—to climate policy. It is also to create the foundation for a new relationship between the labor and environmental movements.
New visions for the labor movement like these—visions of broad solidarity rather than narrow interest, of alternative economic institutions, of active struggle for a sustainable future—show how labor can move forward again.

Also in this issue: John Miller on the gender wage gap, Arthur MacEwan on the supposed threat of artificial intelligence, Gerald Friedman on the bleak jobs picture, and more.