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CHAPTER 30

IMMIGRATION: HOW WELCOMING SHOULD LADY LIBERTY BE?

The Costs and Benefits of Relatively Open Borders

Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tossed, to me:

I lift my lamp beside the golden door.

From “The New Colossus” by Emma Lazarus (1883)

These words, emblazoned at the base of the Statue of Liberty, remind us that the United States is a proud nation of immigrants, whereas the terrorist attacks of September 11, 2001, confirmed that its relatively open borders have costs as well as benefits. Since 1820, more than 70 million immigrants have entered the United States. Foreign-born individuals make up 11 percent of the United States’s population, 14 percent of its workforce, 23.7 percent of its doctors,¹ 2.3 percent of its prison inmates,² and 15.1 percent of its unemployed.³ Immigration issues are complex, and entire books are devoted to relevant details that must be omitted here, but this chapter provides an overview of the pros and cons of immigration and of policies to limit the number of immigrants who will be greeted by what Lazarus describes as Lady Liberty’s “beacon-hand” of “world-wide welcome.”

¹ See www.ama-assn.org/ama/pub/category/211.html.

² See www.ojp.usdoj.gov/bjs/pub/ascii/pjim03.txt.

³ See www.nupr.neu.edu/3-03/immigration_march.pdf.

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Criticism of immigration centers on the drawbacks of population growth, competition for jobs, and overburdened public assistance programs. Although the birthrate among native-born Americans is about 13 per 1,000 people per year, the average among immigrants is 28 per 1,000.⁴ Some fear the threat to the status quo posed by immigrants with different social values, languages, and cultures. Anti-immigration sentiment has buoyed support for like-minded political parties in Austria, the Netherlands, Italy, Denmark, France, and Australia. The mix of French- and English-speaking immigrants in Canada has compelled the adoption of bilingual education programs for children and laws that require labels in both French and English on all products.⁵ The prospect of similar measures to serve the growing number of Spanish speakers in the United States is met with resistance.⁶

⁴ See www.fairus.org/site/PageServer?pagename5iic_immigrationissuecenters7d78.

⁵ See www.mac.doc.gov/nafta/7602.htm.

⁶ See http://spanish.about.com/library/weekly/aa110502a.htm.

Rapid mass migration, like the flood of emigrants from Europe to North America that took place between 1870 and 1913, can provoke nationalism and increase competition for resources. The Carrying Capacity Network (CCN) considers the current level of immigration into the United States to be “immense,” listing among the repercussions traffic congestion, air pollution, water and energy shortages, overcrowded schools, declines in purchasing power, a lower quality of life, tax increases, and soil erosion.⁷ These claims are arguable but come from respected sources. The board of the CCN includes such celebrated environmentalists and ecological economists as L. Hunter Lovins, Herman E. Daly, and Robert Costanza.

⁷ See www.carryingcapacity.org.

Despite expenditures of $16 billion annually on border and transportation security,⁸ an estimated 8 million illegal immigrants live in the United States, and that number grows by about 500,000 per year.⁹ Illegal immigrants place additional stress on budgets for schools, medical care, public transportation, criminal justice systems, and public infrastructure. The burden of illegal immigrants falls disproportionately on border states, most notably California and Florida. The Federation for American Immigration Reform (FAIR) estimates that $1.83 billion is spent per year in Florida on the education, health care, and incarceration of illegal immigrants and their children.¹⁰ The same immigrants pay $920 million in taxes, for a net cost of $910 million per year.

⁸ See www.whitehouse.gov/omb/budget/fy2006/dhs.html.

⁹ See www.cis.org/topics/illegalimmigration.html.

¹⁰ See www.fairus.org/site/PageServer?pagename5research_flcoststudy_html.

FAIR provides estimates of immigration-related impacts in nonborder states as well. Consider what FAIR identifies as some of the environmental and quality-of-life impacts of immigration in Ohio:

  Population: In 2000, foreign-born residents made up 339,000 of the state’s 11.4 million population, and immigration created 16 percent of the state’s population growth in the 1990s.

  Traffic: The average commute in Ohio increased by 11 percent during the 1990s, from 21 to 23 minutes. Traffic congestion causes the loss of an estimated 250 million hours of Ohio motorists’ time each year.

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  Open space: Development claims 73,000 acres of open space in Ohio each year.

  Housing: There are 74,000 households in Ohio designated as severely crowded by U.S. Census Bureau standards, and the price of homes rose 30 percent between 1995 and 2001.

  Air pollution: Electricity utilities serving Ohio produce about 375,000 tons of nitrogen oxide per year, the equivalent of the emissions from 19 million automobiles.

  Poverty: Fourteen percent of Ohio’s immigrants and 19 percent of its non-citizen immigrants live below the poverty level. The ample availability of low-skilled immigrant workers depresses wages in the state.

  Education: Elementary and high school enrollments increased by 6 percent between 1990 and 2000, and schools in Cincinnati and Columbus face overcrowded conditions, including the use of trailer classrooms.

Visit www.fairus.org to see FAIR’s summary of immigration-related problems in your state.

About 80 percent of immigrants have less education than the average American and earn correspondingly lower wages. Lower household incomes mean greater reliance on social services, including welfare and food stamps. Current legislation prevents immigrants from collecting food stamps for at least 5 years after entry into the United States, and immigrants can’t collect Supplemental Security Income (SSI) from the federal government until they achieve citizenship, which takes at least 5 years.¹¹ However, there are exceptions for immigrant children within the food stamp program, and most immigrants have been in the country for more than 5 years. U.S. immigration policy caters to potential immigrants with family connections, to refugees, and to workers who have been invited by U.S. employers. An alternative would be to follow the lead of Canada, Australia, and New Zealand by placing more weight on the economic potential of workers and less on family connections when selecting visa recipients. This would place a lighter burden on social services and bring in more workers ready to contribute to gross domestic product.

¹¹ See http://aspe.hhs.gov/hsp/immigration/restrictions-sum.htm.

The first human inhabitants of North America are thought to have crossed a land bridge from present-day Russia to Alaska roughly 50,000 years ago.¹² The first Europeans crossed the Atlantic about 1001. Thus, every American is either an immigrant or a descendant of immigrants, without whom the benefits of this great melting pot of ideas, customs, and productivity would be unrealized.

¹² See www.cnn.com/2004/TECH/science/11/17/carolina.dig/.

Foreign-born workers are to thank for more than half of the U.S. job growth between 2000 and 2003¹³ and for more than 90 percent of the job growth in 16 states between 1996 and 2000.¹⁴ Consider Charlie Woo, who emigrated from Hong Kong to the United States in 1968 to pursue an education and a new life. In 1979, he opened a toy wholesaling business in what the Los Angeles Community Development Agency considered a “dead warehouse district.”¹⁵ Woo’s Megatoys company became the centerpiece of Toytown, the business district that now employs 4,000 workers and earns $500 million in annual revenues. Entrepreneurial immigrants such as Woo bring new ideas, energy, and jobs to the marketplace. Immigrants also fill jobs in rural locations where labor is scarce and in low-paying blue-collar industries, such as textile manufacturing, meatpacking, poultry processing, and crop harvesting, that go largely unfilled by U.S. citizens. In so doing, they contribute to U.S. growth and prosperity.

¹³ See www.eurekalert.org/pub_releases/2004-01/nu-nia010804.php.

¹⁴ Abraham T. Mosisa, Bureau of Labor Statistics, Monthly Labor Review, May 2002. Available on-line at www.bls.gov/opub/mlr/2002/05/contents.htm.

¹⁵ See www.aworldconnected.org/article.php/300.html.

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In many ways immigration represents an ideal source of labor. Beyond providing hard work for low pay, immigrant workers tend to respond to market forces by supplying their services when and where they are most needed. There is evidence that the supply of both legal and illegal immigration fluctuates with business cycles. The Homeland Security Department’s Office of Immigration Statistics reports that the number of people caught attempting to cross the southwestern border between the United States and Mexico increased by about 50 percent during the prosperous late 1990s and fell sharply during the recession of the early 2000s. The flow of working-age immigrants into the country also assists “pay-as-you-go” entitlement programs, such as Social Security and Medicare, which collect from current workers to pay for current retirees. Immigration policies such as the H-1B visa program,¹⁶ which admits immigrants who can fill positions for which no available U.S. citizen qualifies, lower the average age of the U.S. population and increase the proportion of people who are working and paying taxes rather than receiving benefits from entitlement programs.¹⁷

¹⁶ For details on the H-1B visa program, see www.uscis.gov/graphics/howdoi/h1b.htm. It is also discussed again later in this chapter.

¹⁷ See www.census.gov/prod/2004pubs/p20-551.pdf for statistics on the age of foreign-born and native-born residents. Among the foreign-born there are relatively few children and elderly individuals.

Economists Rachel Friedberg and Jennifer Hunt studied the effects of immigration on host countries and found no evidence of economically significant reductions in employment among native-born workers.¹⁸ These researchers also concluded that a 10 percent increase in a country’s share of immigrants reduces wages for natives by, at most, 1 percent. Alan Greenspan, former chair of the Federal Reserve, sees immigration as beneficial, saying that “unless immigration is uncapped . . . the continuous reduction in the number of available workers willing to take jobs . . . would intensify inflationary pressures or squeeze profit margins, with either outcome capable of bringing our growing prosperity to an end.”¹⁹ Working in tandem, labor force growth and productivity growth allow an economy to grow faster with less inflation, thereby reducing the Fed’s need to curtail inflation by raising interest rates and slowing growth.

¹⁸ “The Impact of Immigrants on Host Country Wages, Employment, and Growth,” Journal of Economic Perspectives, Spring 1995, pp. 23–44.

¹⁹ See www.bc.edu/bc_org/mvp/fincon/greenspanspeech.html.

Harvard economist George Borjas notes that lower wages as the result of immigration need not be a problem at all. Because low wages increase profits for firms and lower prices for consumers, he writes, “If these gains are much larger than the reduction in earnings suffered by less-skilled workers, it should be possible to set up a redistribution scheme that makes everyone in the United States better off.”²⁰ Borjas estimates that immigration into the United States depresses wages by $152 billion annually but increases profits by $160 billion.²¹ In theory at least, we could use taxes and transfer programs, such as food stamps and welfare programs, to redistribute some of the gains from corporate profit earners to workers who bear the brunt—primarily those who lack high school diplomas.²²

²⁰ See www.slate.com/id/2346/entry/2110392/.

²¹ See Heaven’s Door: Immigration Policy and the American Economy (Princeton, NJ: Princeton University Press, 2001).

²² See www.cis.org/articles/1998/sacPublicInterest.html.

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The pace of immigration reform changed with the terrorist attacks of 2001. Entry by temporary immigrants became more difficult, and ongoing efforts to liberalize immigration were tabled. This included President George W. Bush’s proposed guest-worker program to legalize the status of about 4 million unauthorized Mexican workers in the United States. Also suspended was a proposed increase in the number of H-1B visas granted to skilled immigrant workers each year. The H-1B visa is a 3-year, once-renewable permit for foreign professionals hired by U.S. employers. In 2001, the number of such visas was temporarily raised from 115,000 to 195,000 but then reverted to the 1992 level of 65,000 visas.²³ In 2004, President Bush renewed his call for immigration reform, proposing a new temporary visa to legalize the status of 10 million unauthorized workers and a liberalization of policies for invited H-1B workers and temporary workers seeking permanent resident status.

²³ See http://uscis.gov/graphics/services/tempbenefits/cap.htm.

In the wake of the 9/11 terrorist attacks, a wave of legislation related to immigration was enacted: the USA Patriot Act,²⁴ the Enhanced Border Security Act,²⁵ and the Homeland Security Act.²⁶ By increasing the cost and difficulty of entering the country, these laws provide a glimpse of the effects of more restricted immigration. Groups claiming damage from the new procedures include U.S. companies trying to attract customers from overseas, refugees seeking asylum from oppressive regimes, and educational institutions trying to capitalize on the United States’s reputation for academic excellence. Universities are among the institutions that must consider complex visa issues when trying to hire the best employees and attract the best students. Stricter requirements helped reduce the number of student visas issued in the United States from 299,000 in 2001 to 220,000 in 2003. In 2003, the number of refugees resettled in the United States also fell to a 25-year low of about 28,000, and in 2004 it remained below the Bush administration’s goal of 70,000 per year.²⁷

²⁴ See www.epic.org/privacy/terrorism/usapatriot/.

²⁵ See www.house.gov/judiciary_democrats/hr3205secbysec.pdf.

²⁶ See www.whitehouse.gov/deptofhomeland/analysis/.

²⁷ See www.refugeesinternational.org/content/article/detail/1141/.

As for the burden that immigration places on the border states, a line must be drawn between legal and illegal immigration. Although $910 million may be spent in Florida on illegal immigrants (net of their tax payments), this is not a reason to criticize policies for legal immigration. Illegal immigrants have violated U.S. law, and solutions necessarily involve law enforcement. One relevant question is whether the costs of expanded efforts to patrol the borders exceed the benefits, but reform in law enforcement is a separate issue for another book. Border states absorb much of the expense of educating immigrant children, but as explained in Chapter 28, investments in education are a primary determinant of the productivity and wealth of a region. Thus, Florida’s $1.51 billion expenditure on the education of illegal immigrants is likely to contribute significantly to the state’s $500 billion share of gross domestic product.

Immigrants don’t simply fill a need for blue-collar workers. They also help remedy the severe shortage of medical personnel, particularly in rural areas. The U.S. Department of Health and Human Services estimates that the demand for health-care professionals currently exceeds the supply by 126,000 nurses, 16,000 doctors, 8,500 dentists, and 4,000 mental health workers.²⁸ The American Immigration Law Foundation (AILF) points out that the “enhanced use of immigration policy” would further ease these shortages.²⁹ At present, according to the AILF, 1.1 million immigrants account for 13 percent of health-care providers in the United States, including one-quarter of all physicians; 17 percent of nursing, psychiatric, and home health aides; 15.8 percent of clinical laboratory technicians; 14.8 percent of pharmacists; and 11.5 percent of registered nurses.

²⁸ See www.ailf.org/ipc/ipf031104.asp.

²⁹ See www.ailf.org/pubed/healthcare.shtml.

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Perhaps the best way to sort fact from fiction in the debate over immigration is to weigh the claims against theory and evidence. Despite immigration in record numbers, U.S. crime rates have declined markedly during the past 25 years³⁰ and the standard of living has remained among the highest in the world by virtually every measure.³¹ The U.S. unemployment rate hovers around a low of 5 percent, indicating that immigrant workers are creating jobs or filling labor needs.

³⁰ See crime rates per 100,000 population at www.disastercenter.com/crime/uscrime.htm.

³¹ See http://en.wikipedia.org/wiki/Standard_of_living_in_the_United_States.

Economic theory and data support the contention that ample supplies of manual labor suppress wages for low-skilled jobs. The relative lack of interest among U.S.-born workers in migrant agricultural work and other forms of unpleasant manual labor diminishes the harm to natives, as suggested by the Friedberg and Hunt research mentioned previously. The concurrent benefits are enjoyed by producers and consumers of food, clothing, and other critical goods and services that low-skilled workers provide, and by immigrants, who would generally earn less in their home countries.

Pollution and stresses on natural resources do indeed grow with population, but remember that immigration is a transfer of people from one place to another, not a source of population growth for the planet. The most serious pollution problems, including climate change, acid deposition, and ozone depletion, are global problems, and it makes little difference where the pollutants are released. The depletion of natural resources is likewise a global problem, although immigrants who adopt the American lifestyle will use more resources, but have fewer children,³² than do people in the countries from which most immigrants come—Mexico, China, India, the Philippines, and the Dominican Republic. If we so desire, the productivity gains³³ and the sharing of ideas achieved with immigration will allow us to devote more funds and better policymaking efforts to the ubiquitous issues of resource scarcity and pollution.

³² The exception in terms of birthrates is China, where the birthrate is similar to that in the United States.

³³ See, for example, www.nli-research.co.jp/eng/resea/econo/eco0008b.pdf.

The central message of this book, and of economics as a whole, is that the wisdom of actions depends on heedful comparisons of costs and benefits, many of which lie below the radar of conventional wisdom.³⁴ Immigration is no exception. Appropriate policymaking requires an understanding of the contributions and burdens of people who follow the immigrant path of the founders of the United States. The benefits of immigration include job creation, inflation control, and diversity in skills and ideas. Increased expenditures on education, infrastructure, and public assistance are among the burdens.

³⁴ The term conventional wisdom, meaning generally accepted explanations or ideas, was coined by economist John Kenneth Galbraith.

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Income disparities among nations, and skills gaps within nations, intensify the interest in immigration. Natural tendencies to avoid competition for jobs and steer tax dollars away from expenditures on immigrants collide with desires to pay low prices and fill large needs for manual laborers; health-care professionals; and workers with skills in science, math, and technology. Relevant policies touch the lives of would-be immigrants and virtually every U.S. citizen. The best decisions on pending policies will come not from emotional or political decisions but from cost–benefit analyses that go beyond direct tax and profit measures to cover every facet of Lady Liberty’s promised welcome.