Is there a better way? I have three main recommendations:
First, we should legalize as many as possible of the unauthorized immigrants already here. That will reduce their vulnerability to exploitation, improve their mobility within the labor market, increase their contributions to tax revenues, and, by increasing family incomes, reduce high school drop-out rates and boost college-going rates among children of unauthorized immigrants.
Second, we need to reduce the necessity to migrate to the U.S.
illegally. That means providing a temporary-worker option for as
many as possible of prospective migrants who do not wish to remain in the U.S.
permanently, and substantially increasing the number of employment-based,
permanent-resident visas that we issue, especially to low-skilled
workers. Much of today’s unauthorized immigration is manufactured
illegality: It is a direct function of a set of immigration laws and
policies that unduly restrict the number of legal-entry opportunities for
foreign workers based on their occupations. Currently, only 140,000
employment-based visas are available to people of all nationalities each
year. And of those, only 5,000-10,000 go to low-skilled workers.
Last year, only 3,200 employment-based visas were issued to Mexicans, in a year
when more than 400,000 Mexicans were added to the U.S. work force through
Third, we need to help create alternatives to emigration for a larger
number of potential migrants in Mexico. Narrowing the U.S.-Mexico
wage gap will be a multi-decade project. Only when the Mexican labor
force ceases to grow, sometime after 2015, will there be upward pressure on
wages in Mexico. Apart from changing demographics, narrowing the income
gap will require deeper economic reforms in Mexico: improving the tax effort,
modernizing labor laws, opening up the state-run energy and electricity sectors
to private investment, and so forth.
NAFTA was supposed to have reduced the U.S.-Mexico income gap, but has had
the opposite effect. Per capita GDP has risen in Mexico, but it has risen
much faster in the U.S. Today, annual per capita GDP in the U.S. is more
than 6 times that of Mexico. NAFTA created jobs in Mexico’s manufactured-export
sector, but competition from cheaper U.S. imports has put millions of small
farmers out of work, and the non-agricultural jobs that have been created do
not pay enough to enable most Mexican families to lift themselves out of
poverty. It is the real wage difference, more than anything else, that drives
migration to the United States.
In our research in rural Mexico, we have found consistently that the leading
motive for migration is higher wages in the United States than in Mexico.
Only 4-5% of migrants interviewed in most studies reported that they were
openly unemployed before going to the U.S. In our fieldwork earlier this
year, we found that only 1% had been unemployed before migrating for the first
Micro-development programs, targeted at the areas that send most migrants to
the U.S., have the capacity to create better-quality jobs, in the
places where they are needed to discourage emigration. I am referring to
programs to support small-business development; to create new a financial
services infrastructure that facilitates saving and reinvestment of money
remitted by Mexicans working in the United States; and programs to expand
physical infrastructure – roads, telecommunications, irrigation facilities, and
The U.S. is no longer in the business of “Marshall Plans.” But a
creatively designed and binationally financed program of targeted development,
perhaps administered by the World Bank or the Inter-American Development Bank,
is an idea that deserves much more serious consideration. This is the
kind of development assistance that the northern EU nations channeled in
massive amounts to Spain, Greece, and Portugal, before and after these
countries joined the European Union. It made possible a step-level
increase in GDP growth in these countries, reduced the north-south wage
differential by half, and eventually turned all of the southern-tier EU
countries into net importers of labor.
This far-sighted approach to immigration control worked in Europe, and it
could work in North America, if we would stop treating unauthorized immigration
as a matter of crime and punishment and start looking seriously at measures
that would actually decrease the supply of would-be migrants. The developmental
approach has gotten short shrift in both Washington and Mexico City, but it is
the only approach to immigration control that is likely to reduce illegal
migration significantly in the long run. There is virtually complete
consensus among academic immigration specialists on this point.
Immigrant Contributions to U.S. Economic Strength and Fiscal Health
There are numerous potential threats to future U.S. economic strength and
fiscal health, but immigration is not one of them. On the contrary, the fact
that we are so successful in the global competition for labor is one of our
greatest strengths. That competitive edge is perhaps most evident in terms of
highly-skilled immigration. In our ability to attract and retain
high-skill immigrants, we currently rank fourth in the world, behind Australia,
Canada, and Switzerland, but far ahead of Britain, France, Germany, and Japan.
We could be doing better in the global competition for highly skilled
immigrants if we did not set an artificially low limit on this kind of
immigration. In several recent years, all 65,000 H-1B temporary visas
that were made available have been exhausted on the first day of each fiscal
year. The Senate’s immigration reform bill would raise the cap on
temporary, high-skilled/professional immigration to 115,000, but most experts
consider even that number to be inadequate.
We are conspicuously successful in attracting low-skilled immigrants, and it
is important to recognize that the influx of these workers is making possible
higher rates of growth in numerous labor-intensive industries than would
otherwise be possible. Construction, the hospitality industry, and food
processing are the most obvious examples.
Most economists believe that large-scale immigration – both low-skilled and
high-skilled – is essential to assure robust economic growth, dampen
inflationary pressures, and finance intergenerational transfer systems like
Social Security and Medicare. Because of low fertility rates, our total
labor force growth has already fallen from 5% a year in the 1970s to less than
1% since 1990. And without immigration, our labor force would be
shrinking by 3-4% a year.
The contribution of immigration to labor-force growth was most evident
during the economic boom of the late 1990s, but even now, with a national
unemployment rate of 4.6% — and 3% in Sunbelt cities like San Diego, Las Vegas,
and Phoenix – we are below what is conventionally defined as full
employment. If immigrants were not entering our labor force in very large
numbers, we’d be seriously overheating the economy.
The longer-term implications of immigration for the U.S.’ economic strength
and position in the world should not be underestimated. Like all other
OECD countries, we have a population-aging problem. We are getting our
young, entry-level workers largely from immigration. The contrasting age
pyramids for our immigrant and native-born populations tell the story:
35% of our male foreign-born population in 2000 were in prime working age
groups, compared with only 24% of the native-born population.
The “dependency ratio” in developed countries in general is set to rise
steeply in the next 10 years and beyond. By last year, there were 142
potential labor-force entrants for every 100 potential retirees, but in less
than 10 years, there will be only 87 labor-force entrants for every 100
retirement-age people. Europe and Japan have a huge problem, not just
because of well-below-replacement-level birth rates but because, for political
reasons, they don’t have expansionary immigration policies. There are already
very large fiscal imbalances in the health-care and pension systems of these
countries. As UC-Berkeley economist David Card recently observed,
“They’re going to end up on the back burner of the global economy,” at least in
part because their immigration policies are too restrictive.
Immigration at present levels will save the U.S. from labor force decline in
the short-to-medium run, but it won’t be enough eventually, because the birth
rate among Latino immigrants – our highest-fertility group – is already falling
sharply. It’s still well above whites and blacks, but the trend is