America’s status as a nation of immigrants is being challenged by globalization, which is making both migration and terrorism much easier. The biggest challenge for policymakers is distinguishing illusory immigration problems from real problems. One thing is quite clear: The favored approach of recent years—a policy of benign neglect—is no longer tenable. Members of Congress recognize this and deserve credit for striving to craft a comprehensive law during this session.
Illegal immigration into the United States is massive in scale. More than 10 million undocumented aliens currently reside in the U.S., and that population is growing by 700,000 per year. On one hand, the presence of so many aliens is a powerful testament to the attractiveness of America. On the other hand, it is a sign of how dangerously open our borders are.
Typical illegal aliens come to America primarily for better jobs and in the process add value to the U.S. economy. However, they also take away value by weakening the legal and national security environment. When three out of every 100 people in America are undocumented, there is a profound security problem. Even though they pose no direct security threat, the presence of millions of undocumented migrants distorts the law, distracts resources, and effectively creates a cover for terrorists and criminals.
In other words, the real problem presented by illegal immigration is security, not the supposed threat to the economy. Indeed, efforts to curtail the economic influx of migrants actually worsen the security dilemma by driving many migrant workers underground, thereby encouraging the culture of illegality. A non-citizen guest worker program is an essential component of securing the border, but only if it is the right program.
An honest assessment acknowledges that illegal immigrants bring real benefits to the supply side of the American economy, which is why the business community is opposed to a simple crackdown. There are economic costs as well, given America’s generous social insurance institutions. The cost of securing the border would logically exist regardless of the number of immigrants.
The argument that immigrants harm the American economy should be dismissed out of hand. The population today includes a far higher percentage (12 percent) of foreign-born Americans than in recent decades, yet the economy is strong, with higher total gross domestic product (GDP), higher GDP per person, higher productivity per worker, and more Americans working than ever before. Immigration may not have caused this economic boom, but it is folly to blame immigrants for hurting the economy at a time when the economy is simply not hurting.
The increase in the immigration flow has corresponded with steady and substantial reductions in unemployment from 7.3 percent to 5.1 percent over the past two decades. And the unemployment rates have fallen by 6 percentage points for blacks and 3.5 percentage points for Latinos.
Whether low-skilled or high-skilled, immigrants boost national output, enhance specialization, and provide a net economic benefit. The 2005 Economic Report of the President (ERP) devotes an entire chapter to immigration and reports that “A comprehensive accounting of the benefits and costs of immigration shows the benefits of immigration exceed the costs.” The following are among other related findings:
Immigrant unemployment rates are lower than the national average in the U.S.
Studies show that a 10 percent share increase of immigrant labor results in roughly a 1 percent reduction in native wages—a very minor effect;
Most immigrant families have a positive net fiscal impact on the U.S., adding $88,000 more in tax revenues than they consume in services; and Social Security payroll taxes paid by identified (undocumented) workers have led to a $463 billion funding surplus.
The macroeconomic argument in favor of immigration is especially compelling for highly educated individuals with backgrounds in science, engineering, and information technology. The increasing worry about outsourcing jobs to other nations is just one more reason to attract more jobs to America by insourcing labor. If workers are allowed to work inside the U.S., they immediately add to the economy and pay taxes which does not happen when a job is outsourced. Therefore, capping the number of H-1B visas limits America’s power as a brain “magnet” attracting highly skilled workers, thereby weakening U.S. firms’ competitiveness.
Still, critics of this type of insourcing worry that jobs are being taken away from native-born Americans in favor of low-wage foreigners. Recent data suggest that these fears are overblown. While the nation’s unemployment rate generally has remained just above 5 percent over the past year, unemployment in information technology now stands at a four-year low of 3.7 percent.
While the presence of low-skill migrant workers can be construed as a challenge to low-skill native workers, the economic effects are the same as the effects of free trade—a net positive and a leading cause of economic growth.” The consensus of the vast majority of economists is that the broad economic gains from openness to trade and immigration far outweigh the isolated cases of economic loss. In the long run, as has been documented in recent years, the gains are even higher.
A simple example is instructive in terms of both trade and immigration. An imaginary small town has 10 citizens: some farmers, some ranchers, a fisherman, a tailor, a barber, a cook, and a merchant. A new family headed by a young farmer moves to town. His presence is resented by the other farmers, but he also consumes from the other business in town—getting haircuts, eating beef and fish, having his shirts sewn and pressed, and buying supplies at the store, not to mention paying taxes. He undoubtedly boosts the supply side of the economy, but he also boosts the demand side. If he were run out of town for “stealing jobs,” his demand for everyone’s work would leave with him.
The real problem with undocumented immigrant workers is that flouting the law has become the norm, which makes the job of terrorists and drug traffickers infinitely easier. The economic costs of terrorism can be very high and very real, quite apart from the otherwise positive economic impact of immigration.
The problem is here to stay and the US has to deal with it. One strategy that we think would help to make it less danger and expensive is to promote a real economic explosion along the border between Mexico and the USA. If we could set up some kind of demilitarize zone but in economic terms where people looking for jobs could find them, the flow of people challenging the American authorities would be minimum. Why don’t we set up a real creative partnership to create the zone of hope and realities? Let build a big supply side economic refuge on that neutral zone not big walls to divide us.
