Immigration Skeptics Make The Economic Case For Less Legal Migration

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By Will Racke

A new front in Washington’s immigration wars opened to relatively little fanfare last week when reports surfaced that two Republican senators are working with the White House to craft a bill that would fundamentally change the U.S. immigration system.

The RAISE Act, introduced by GOP Sens. Tom Cotton of Arkansas and David Perdue of Indiana, would mostly end the practice of chain migration and slash legal immigration in half over the course of a decade. (RELATED: White House Backs Senate Bill To Cut Legal Immigration, Move To Merit-Based System)

As a matter of policy, the bill would alter the way America approaches immigration to a far greater degree than any of the Trump administration’s executive orders on deportations, sanctuary cities and the border wall. By placing the focus of the debate on the economics of immigration, Cotton and Perdue are drawing attention to the often overlooked effects of mass immigration on native-born Americans.

The revival of the RAISE Act now gives immigration skeptics an opening to press the case that current legal immigration levels are too high and need to be dramatically reduced for the benefit of American workers.

“A matter of numbers”

Those who say high levels of immigration are bad for native workers base their argument on the most fundamental concept of economics: the law of supply and demand. It’s a formula that most high school students would — or at least should — understand.

At any given level of demand, if a market is flooded with a particular good, the price of that good will fall. In the case of the labor market, the good is workers, and the price is wages.

“It’s just so basic that it’s strange that it’s an intellectual problem,” David North, a former Department of Labor official and current fellow at the Center for Immigration Studies (CIS), told The Daily Caller News Foundation. “The larger the quantity of a good, the less you can get for it. It’s a question of supply and demand.”

The problem, North says, is that the number of jobs in the U.S. economy is not keeping up with the growth of the working-age population. According to a study by CIS research research director Steven Camarota, the number of working-age people in the U.S. increased by 25.9 million between 2000 and 2015, but the number working increased by only 8.4 million during the same time period. That means there were 17.5 million more people out of the labor force in 2015 than in 2000.

“At the heart of the immigration debate is the idea that there are not Americans available for work,” Camarota wrote. “The data collected by the government shows this is not the case. Rather, there has been a dramatic decline in work, particularly among the young and less educated.

“The employment situation in the United States is so bad that it is absurd to suggest that there is a general shortage of workers.”

As North points out, immigration levels have remained at historic highs while the percentage of working-age Americans in the labor force has steadily declined over the last two decades. In July 2000, the labor force participation rate was 66.9 percent. By June 2015, the rate had fallen more than eight percentage points to 62.6 percent.

During that span, the U.S. took in an average of about 1.1 million legal immigrants per year, according to the Migration Policy Institute.

“More than anything else, it’s a matter of numbers,” North explained. “We’re bringing in well over a million people [immigrants] every year. And then we have a population of well over a million non-immigrant workers at any one time.”

Proponents of high levels of immigration frequently argue that more immigrants are needed to offset declining birth rates and an aging native-born population. But some migration policy experts say that argument ignores the reality of labor market conditions in the modern U.S. economy.

Chris Ruark, the research director at NumbersUSA, says it makes little sense to keep accepting large amounts of poor, low-skill immigrants when the U.S. economy is increasingly geared toward high-skill, knowledge-based jobs.

“We have basically a 19^th century immigration system in the post-industrial, 21^st century economy,” he told The DCNF.

Who benefits?

Just as immigration restrictions use a basic axiom of economics to bolster their arguments, advocates of increased immigration justify their position with a simple metric: Gross Domestic Product.

The growth rate of GDP, the total value of all goods and services produced in the U.S., is typically the standard measure of how well the American economy is performing over a given period of time. Because more immigrants consuming and producing necessarily translates to higher GDP, some economists say that mass immigration is the best way to grow GDP, and therefore, a good thing for the economy.

Moody’s Analytics economists Adam Ozimek and Mark Zandi conducted a study for the investigative journalism outlet ProPublica about the effects of immigration on GDP. They found that for every 1 percent increase in U.S. population made of immigrants, GDP rises 1.15 percent.

“You can’t just flip a switch and make the U.S. a richer place,” said Ozimek. “But with immigration, you can flip a switch and massively grow the size of the country.”

On its face, the argument is simple and ironclad. But a deeper dive into the GDP numbers reveals a more complicated picture.

Jorge Borjas, a Harvard University professor widely regarded as one of the country’s top immigration economists, conducted an exhaustive study of the relationship between immigration and the labor market in 2013. He discovered that nearly 98 percent of GDP growth attributed to immigration goes to immigrants themselves in the form of wages and benefits, while the remainder — about $35 billion in 2013 — is an “immigration surplus” that redounds to the native-born population.

The catch, according to Borjas, is that the immigration surplus comes at the expense of reducing the wages of natives in competition with immigrants by about $400 billion a year, while boosting profits or the incomes of users of immigrants by an estimated $437 billion.

It is this regressive transfer of wealth — from poor and poorly educated Americans to the employers of immigrants — that groups like CIS and NumbersUSA point to when they call for reduced legal immigration. CIS’s North argues that because the economic benefits of mass immigration generally accrue to elites in business, government and academia, the national debate about immigration becomes a “lopsided dialogue” that leaves out the economic losers of U.S. immigration policy.

“If you’re a graduate of Harvard college, you’re never hurt by this sort of thing,” North said. “It’s a powerless element in American society that’s hurt by it. And there are powerful elements that profit by it.”

“The important thing is that nobody in the American power structure is adversely affected by too much immigration,” he added.

In order to change the economic dynamics of immigration, reformers say the U.S. must shift from its current model of chain migration based on family ties to a merit-based system that takes into account immigrants’ effect on the domestic labor market.

The U.S. is alone among advanced countries in making extended familial ties the basis of eligibility for immigrant visas. Under current immigration law, U.S. citizens and legal permanent residents can sponsor not only their spouses and minor children, but also their parents, siblings and married adult children.

In an October 2016 study of the U.S. immigrant population, CIS’s Camarota and Karen Zeigler found that on average immigrants have lower levels of income and education than natives, putting them in direct competition with Americans at the bottom of the socioeconomic ladder. As the authors note, the U.S. immigration system creates labor market pressure that weighs more heavily on the poor and uneducated.

“Post-2000 immigrants have increased the supply of dropout workers by 21 percent, compared to 4 to 8 percent in other educational categories,” Camarota and Zeigler wrote. “This means that any effect immigration may have on the wages or job opportunities of natives will disproportionately affect the least educated native-born workers.”

For reformers like CIS and NumbersUSA , the debate over the economics of immigration will only be settled when Americans can collectively answer a simple but difficult question: What is the purpose of immigration?

If hitting 4 percent GDP growth in perpetuity is the answer, the government should maintain or increase immigration levels. But if the purpose of immigration is to increase living standards for all Americans, then reducing legal immigration should be the government’s top priority, argues NumbersUSA’s Ruark.

“Our position is that it [the immigration system] should benefit the American people,” he said. “In the post-industrial information economy what you need are people who have skills who can come in and contribute to the economy. But that doesn’t mean simply setting a standard and saying that anyone who reached that bar can come in, you also have to look at the situation for American workers.”

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