A Few Thoughts on Immigration Reform

April 18th, 2013 at 8:59 am

Here are a few observations on the new immigration reform proposal, with an emphasis on a part that I think is particularly important and largely overlooked given the emphasis on citizenship: the consideration of labor market impacts and the introduction of mechanisms to control them.

Before getting into some policy analysis, let’s consider why the reform of our immigration policies is even happening at all, at least in the Senate…there’s this little matter of the House of Reps.

Still, in a Senate that is demonstrably and seriously out-of-sync with the public (gun control), how is this legislation advancing?

To state the obvious, it all comes down to one number: 27%, the share of the Latino vote claimed by Mitt Romney.  That’s not a bad thing—it’s democracy at work, again, unlike guns.

–The path to citizenship in the proposed bill sounds more like an obstacle course, which is, I guess, expected given the competing politics.  Here’s the WaPo’s useful primer, but it’s basically a 13-year process with lots of hurdles (and charges, amounting to about $2,000) along the way.  One condition is that “provisional residents” be continuously employed.  But what about downturns?  Is there a provision for involuntary unemployment?  How do we track this?

I’m not surprised that advocates are raising concerns about the conditions for citizenship, but the fact that it’s in there at all is clearly a milestone.

–One part that interests me has to do with labor market impacts.  There’s some fundamental confusion about this.  Many critics claim that the citizenship path, which they deride as “amnesty,” will increase the supply of labor and thus lower wages.  But putting aside the fairly complex economics literature on this phenomenon (where wage impacts come down to whether immigrants are substitutes or complements to native workers) that’s far less obvious than it sounds.

First, these folks are already here.  They’re within our borders, in the labor force (or outside it trying to get in); they’re not net new additions.  To the contrary, giving them legal status—making them provisional residents—should decrease their exploitability, improve their bargaining clout a bit, and thus help on the wage side (marginally, I’m sure, but that’s the right “sign”).

–Second, the critics better point would be that granting a path increases new migration, which would add new immigrants, undocumented and otherwise, to the labor supply.  Here, a few things to consider.  The question of whether legislation like this is a magnet for increased immigrant flows is less conclusive than you might think, in part because there are few natural experiments.  Opening up legal immigration does increase flows, but that’s conditional on a) job opportunities, and b) the points or quota systems in receiving countries.

Here, the new legislation reflects some clear consideration of this issue of labor market impacts.  The citizen path itself is closely tied to border security.  We’ll see if that sticks—the failure to secure our southern border undermined the 1986 reform.  In fact, absent border control, immigration reform is pretty meaningless.

-The proposed legislation includes requirements that employers use verification systems to ensure against hiring undocumented applicants, something that is only spottily applied now.  Importantly, many advocates of reform now accept this condition as part of the deal.

–And while I’ve worried, and continue to worry, about guest-worker programs, especially H-1B (temporary visas for high-skilled workers; a system rife with abuse), the legislation takes a solid stab at reform here as well.  From WaPo primer:

Employers who count H1-B holders as more than 75 percent of their workforce would be banned from hiring more foreign workers starting in 2014. That percentage cutoff would drop to 65 percent in 2015 and 50 percent in 2016.

Re lower-skilled immigrants, the proposal includes a good idea touted by former labor secretary Ray Marshall re adjusting guest-worker caps based on observed labor shortages:

A new “W-visa” program for low-skilled guest workers, capped at 20,000, would start in 2015. The cap would rise to 75,000 by 2019…The workers must be paid the prevailing wage and cannot be employed in metropolitan areas where unemployment is above 8.5 percent barring special exemptions from the Secretary of Homeland Security. Employers cannot fire American workers 90 days before or after the hiring of guest workers.

A new federal bureau, the Immigration and Labor Market Research Bureau, would be charged with determining worker shortages and adjusting those caps accordingly to align with the state of the national labor market, but would not be able to increase the cap above 200,000 a year…

Again, this doesn’t work absent border control.

So, there will be critics on both sides of this, and many of their critiques will be valid.  But it looks to me like a case where politics and demographic change have generated some true democratic change…oh, yeah…we still have to contend with the House.  Stay tuned.

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11 comments in reply to "A Few Thoughts on Immigration Reform"

  1. Fred Donaldson says:

    If the unemployment rate is currently 4.85% in Mexico, why would skilled or qualified workers want to come to the U.S. and compete for legal jobs here?


  2. Kevin Rica says:

    FRD Assassinated Almost 70 Years After His Death!

    This legislation is awful.

    It contains an indentured servants provision! That is exactly what the W (blue card) provision is. Work 5 years at a fraction of market wages and you get a bonus. A green card.

    Question: If we are legalizing 11 million illegals — why do we need new migrant workers?

    Answer: Because farmers have been given a right to import “such persons” at a fraction of the necessary market wage — an agricultural subsidy. And when I say “such persons” I am thinking of:

    Section 9. Clause 1. The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.

    Let farmers pay market wages. You can’t talk about improving wages or the distribution of income and exempt employers from paying higher wages and benefits. You can’t have it both ways.

    So what if there is:

    A new federal bureau, the Immigration and Labor Market Research Bureau, would be charged with determining worker shortages and adjusting those caps accordingly to align with the state of the national labor market, but would not be able to increase the cap above 200,000 a year…?

    Labor shortages are what increase wages in a market system. Suppress them and wages cannot increase! This legislation is all about cheap labor!

    Jared – if you forgot that – then maybe my headline should be “The Body Snatchers Got Jared Too!”

    None of this other stuff is necessary to allow the 11 million (or 20 million) to stay. In fact, if you allow them to stay, then less “importation of such persons” (cheap, below-market labor) is necessary.

    Let the 11 million in and then let no one in unless their employers offer the job at a middle-class wage and benefits first. Then, if no American or legal immigrant accepts, they can come and take the job on those terms. If not, the American or legal immigrant gets it. That way, we don’t need silly math models to replace a simple empirical test. If you believe the papers that they are not depressing wages, you should jump at it. If you don’t, you admit that there are plenty of Americans to do the job at a decent wage.

    Jared – Come back! If you fight the body snatchers – you can be free!


    • Jared Bernstein says:

      I knew you’d say that! And, like I said, there are valid critiques here. Yours are always exclusively through the lens of labor supply, where more labor means lower wages. I think that’s too simplistic and fails to reflect a) the literature on immigration’s impact on wages, and b) the less static analysis of the demand that immigrants also create. But, as you know, I also think you have a point, even if it puts you in the same boat with Ann Coulter (!) who was making this point the other night on Kudlow (at least I think she was–it was a largely incoherent rant).

      But put all that aside for a moment. You need to recognize that this is happening for reasons that have little to do with labor market economics. In that context, you should take some solace, and give Ray Marshall (working with EPI and the AFL, I believe) a lot of credit for getting consideration of these labor supply issues in the proposed legislation.


      • Richard A. says:

        When it comes to guest worker programs and occupation specific immigration, Republicans (as a party) are far worse than the Democrats. Too few seems to understand this. Pure amnesty would never make it thru the House without this anti-labor guest worker nonsense.


        • Kevin Rica says:

          Rich,

          You’ve hit on a campaign motto for the body snatchers in 2014:

          “The Republicans Are Even Worse!”

          That will turn the tide in an off-year Congressional race.


  3. Richard A. says:

    “Employers who count H1-B holders as more than 75 percent of their workforce would be banned from hiring more foreign workers starting in 2014. That percentage cutoff would drop to 65 percent in 2015 and 50 percent in 2016.”

    It is primarily US STEM workers who are being victimized by the H-1B visa. Few businesses even have a labor force where 50% or more of its workers are STEMs.


  4. Scott Monje says:

    So the basic purpose seems to be to square the circle of (1) currying the favor of existing Hispanic voters, (2) increasing the pool of cheap labor, and (3) preventing, or at least delaying for many years, the creation of new potential Democratic voters. Of course, increasing the working-age population helps with Social Security and Medicare funding (especially if they’re not permitted to collect later).

    That provision about continuous employment is particularly interesting. How long does the interruption have to be before employment becomes discontinuous? And once it is deemed discontinuous, does that throw you off the path to citizenship or throw you out of the country?


  5. Kevin Rica says:

    I have a question about the details of this legislation. I haven’t read all the details and have a full-time job (and then some) so I won’t have the time.

    Does anyone know how this will affect employment costs?

    I understand that the 11+ million parolees (how do you refer to them now?) will not be eligible for benefits under the Affordable Healthcare Act. That act imposes serious costs on employers of legal workers. Employers are doing what they can to avoid it, including avoiding new full-time hires.

    If the parolees aren’t covered, can employers avoid the expense by replacing the current employees with parolees?


    • save_the_rustbelt says:

      This is a little loop hole problem not much talked about.

      Apparently immigrants, by not being eligible, are not included in employee count, creating a massive incentive to fire citizens and hire immigrants.


  6. Smith says:

    Just addressing the H-1B comment:
    “–And while I’ve worried, and continue to worry, about guest-worker programs, especially H-1B (temporary visas for high-skilled workers; a system rife with abuse), the legislation takes a solid stab at reform here as well. From WaPo primer:”

    ‘Employers who count H1-B holders as more than 75 percent of their workforce would be banned from hiring more foreign workers starting in 2014. That percentage cutoff would drop to 65 percent in 2015 and 50 percent in 2016.’

    The changes are a sop to Durbin and Grassley whose more extensive legislation was blocked.

    Friends of labor and workers and those concerned about inequality should not support a system that creates two classes of labor. One class consists of free labor, and the other is bound to their employer, who they must please under the threat of deportation. The true liberal welcomes the same number of immigrants, but actually fights for a free and competitive labor market. Immigrants were critical to the formation and success of the labor movement, because they could organize, strike, and fight for their rights without fearing arrest and deportation for violating work visa laws. Immigrants not bound to their employer were also able to start new businesses, which temporary workers absolutely can not. It’s also worrisome not to see any evidence of employment projections of openings, rates of capital adjustment to increased labor, or effects on the current elevated levels of unemployment. But notwithstanding the absence of consideration of what current unemployment levels suggest for any rational and flexible policy, can two different systems of labor endure, in this case one part deportable, one part free? Lincoln said no. (see also migration of business to southern right-to-work states for modern evidence)


  7. save_the_rustbelt says:

    U.S. workers are in competition with both low wage foreign workers and low wage immigrants.

    This is good for politicians and rich white people, but a hell storm for US workers.

    But the Very Serious People do not care.


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