Immigration reform needs consensus on flow of foreign labor
The US must adjust the future flow of immigrants – low-skilled guest workers and educated foreigners alike. Immigration reform must include incentives for legal immigration, recognize the employment needs of US citizens, and create a flexible system that can adjust over time.
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There is little controversy now over the notion that the US economy will benefit from permanently attracting more highly educated immigrants or keep immigrants educated in the US. Those workers will start businesses, pursue patents, and power the technology sector. But strong disagreements remain over immigration at other parts of the skill spectrum, especially at the bottom.Skip to next paragraph
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After studying a large body of economic research and literature, I’ve concluded that less-educated immigrants do indeed compete with the least-skilled American workers, particularly males, and especially when unemployment is high (like right now). But the overall harm on American workers is minimal.
Over time, the negative impact of such immigrants on the employment and earnings of Americans is quite modest. This is especially true in low-wage industries (like agriculture, restaurants, and hotels) where Americans have little interest in working, even if wages rise somewhat; or in those sectors where the supply of skilled workers is perpetually low, as in nursing. And as baby boomers begin to retire in larger numbers, the effects of this competition should grow even weaker.
Meanwhile, the economic benefits of immigration, even at the low end, can be substantial – by lowering consumer prices and raising product availability in many important sectors (such as health and elder care, housing, and food); by improving the nation’s long-term fiscal outlook, which is quite grim; and by making it easier for some groups, like highly educated women, to enter the labor force (by providing them with less expensive home cleaning and child-care services).
A flexible system
Third, because net economic benefits and costs of immigrant labor vary over time, the need for flexibility is important when considering the amount and type of foreign labor to allow.
During periods of labor-market weakness – which span the past five years and might well last for most of the decade – it makes sense for legal flows to be more limited, while they should be allowed to grow whenever the market regains its strength. Legal immigrant flows should also be tailored at least somewhat to different levels of labor-market tightness at any time in different occupations or sectors and different regions, with larger flows allowed where greater tightness is observed.
It is promising that in today’s immigration debate, these principles seem to have largely guided unionized labor and business. Recently, the labor union umbrella organization, the AFL-CIO, and the US Chamber of Commerce agreed on the broad outline of a guest-worker program. But many details remain to be worked out, and the competing arguments and needs of many constituent groups remain to be heard.
Getting the future flows of immigrants right, especially from an economic point of view, grabs fewer headlines and generates less passion than fights over legalizing the undocumented and generating effective enforcement. But it is a critical piece of the immigration puzzle, if Congress is to generate reform that helps the economy and survives politically over time.