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Shakedown: The Continuing Conspiracy Against the American Taxpayer

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The Immigration Solution.

By Steven Malanga
The New New Left: How American Politics Works Today

City Journal

Steven Malanga
The Right Immigration Policy
Not amnesty or guest workers, but newcomers who would strengthen us
Autumn 2006

We Americans are having the wrong immigration debate, couched in the wrong terms. Those who oppose open borders, and especially unlimited flows of low-skilled workers from Mexico, are accused of being anti-immigration. Anyone who doubts that it’s good for America to have an amnesty for illegal immigrants and a “guest worker” program that will produce even more low-wage, low-skilled immigration is quickly branded a modern-day nativist and Know-Nothing.

But it’s possible to oppose all those things and still support healthy levels of immigration. The right debate should be about what kind of immigrants America should be admitting. It should ask how immigration can best benefit our economy and citizens. Countries with booming economies, countries that are, like the United States, immigrant magnets—Australia and Ireland, for instance—have set their immigration priorities in precisely this way, creating much more rational systems than ours. Managed as part of our broader economic policy, immigration can provide America with badly needed skills, boost productivity, and raise our living standard.

But we’ll never get to an immigration system that serves our national interest until we stop debating the issue in terms set down 50 years ago.

Open-borders advocates are right to say that immigration made America great: we are indeed, as the cliché goes, a nation of immigrants. But it’s important to understand why previous generations of immigrants succeeded in America, how they helped the country grow, and how today’s immigration differs. The popular image of the 24 million who came during the first great migration, from the 1880s to the 1920s, is that they were Europe’s “tired” and “poor” masses, desperately escaping political or religious persecution and stagnant economies, making their way here with a few threadbare possessions. But what’s forgotten is that many were also skilled workers. A 1998 National Academy of Sciences study noted that the immigrant workers of that era generally met or exceeded the skill levels of the native-born population, providing America’s workforce with a powerful boost just when the country was metamorphosing from an agrarian into an industrial economy.

Even though nativists agitated to bar these Southern and Eastern European immigrants because they were not Anglo-Saxon, it was not until after World War I that Congress—stunned by the growing radicalism of European workers in the wake of the Russian Revolution and by postwar turmoil in Europe—finally enacted immigration quotas based on national origin, with the purpose of shifting the balance of immigration back to Northern European countries. Those quotas helped cut immigration in half, though it was the Depression that truly ended the great migration, turning America into a net exporter of emigrants during the 1930s, as 60 percent of those who came for a better life left when the economy soured, according to the National Academy of Sciences study.

For 40 years, the 1920s laws largely governed and limited immigration (with certain exceptions for refugees), until new legislation in the mid-1960s unintentionally precipitated the waves of low-skilled immigration that we now see. The new law, which the Kennedy administration introduced as a civil rights measure that would abolish the supposedly racist national-origin quotas and give preference to immigrants with family members already in the United States, would, supporters claimed, make U.S. immigration policy fairer but would have little impact on levels of migration. Instead, the law had far-reaching unanticipated consequences, dramatically increasing the immigration of unskilled workers from poorer countries. From the 1950s to the 1970s, immigration from Asia soared tenfold, and from Africa fivefold, while newcomers from Central and South America doubled.

Today, when success in our economy requires ever more skills and education, the vast majority of immigrants arrive without the skills or the education to fit in easily anywhere except at the lowest economic rung. A study by Harvard economists George Borjas and Lawrence Katz noted that 63 percent of Mexican immigrants are high school dropouts who on average earn 53 percent less than native workers when they enter the United States. Because such immigrants start so far behind, this income gap can persist for decades, research shows. Moreover, because so much of today’s immigration now hails from just a few countries (Mexican immigrants now represent 30 percent of America’s foreign-born population, whereas no two ethnic groups during the first great migration accounted for 25 percent), immigrants increasingly group in insulated communities of their own, where their children adopt the cultural attributes of their home country rather than those of America. High school graduation rates among the American-born children of Hispanic immigrants are much lower than the average in the rest of the native-born population, while census surveys have begun to record growing numbers of native-born Hispanics who don’t have English-language proficiency—nearly 3 million in the 2005 American Community Survey.

Meanwhile, the benefits of so much low-wage immigration to our economy are minimal and increasingly outweighed by the costs. Low-skilled immigrant workers have crowded into service jobs that do little to make America more competitive internationally or more productive: they deliver our pizzas, cut our lawns, wash our cars. True, these immigrants push down prices of services for middle-class Americans, but they also depress the wages of low-skilled native-born workers, according to Borjas and Katz, and recent studies show that they probably raise the unemployment levels of native-born blacks and Hispanics. Not surprisingly, a 1997 study by economists for the National Academy of Sciences estimated the net benefits of immigration at only $10 billion in our $8 trillion economy, while the next year an NAS study of the social costs of immigration reported that in California each native-born family paid nearly $1,200 more in taxes to support government services that went to immigrants. Those costs will only grow as the number of immigrants in America increases. The Heritage Institute’s Robert Rector has estimated that each immigrant high school dropout will cost U.S. taxpayers $85,000 over his lifetime. Enacting amnesty for illegals already here, as well as creating a new guest-worker program, Rector calculates, would eventually add some $46 billion a year in social costs—including welfare—to the federal government.

As America has grappled with its increasingly costly immigration, other developed countries have transformed the way they think about immigration, placing more emphasis on economic considerations and the cultural capital that immigrants bring with them. Like the United States, Australia for much of its history had an immigration policy based on race and nationality. But the country’s slowing economic performance in the mid-1980s prompted the government to rethink its policies. The result: a skills-based immigration approach that welcomes workers who have the experience and training in jobs that the economy needs, posted on the so-called Australian Migration Occupations in Demand List. The new policy recognizes that from an economic point of view, not all workers are equal. Among the most sought-after workers in recent years have been accountants, nurses, and tradesmen, including mechanics and electricians. To qualify for a visa to work at a job on the MODL, potential immigrants must show that they have the right skills, workforce experience, English-language proficiency, and age. Those over 45 cannot gain permanent skills-based residency, because their contribution to the Australian economy will be too brief to offset the social costs that they will impose on society.

The policy has led to a dramatic shift in the nature of Australian immigration. Whereas in 1993 70 percent of all immigration was based on family relations, today 70 percent of Australia’s permanent visas go to skilled workers. As a result, Australian immigrants do far better than American immigrants. A 2006 study by the Australian Productivity Commission (roughly the equivalent of our Government Accountability Office) shows that on average Australian immigrants earn about 6 percent more than the median income of the native-born population, because immigrants typically have higher levels of education and skills. Even Australian immigrants in the country for less than five years earn 4 percent more than the native-born. By contrast, because the preponderance of low-skilled workers pulls the average down, American immigrants earn 20 percent less than the median native-born worker. The shift toward welcoming more skilled immigration has prompted the Australian government to declare that it is winning the worldwide contest for better-trained workers: “We are beating the U.S., Canada, and New Zealand,” Australia’s former immigration minister (and now attorney general), Philip Ruddock, has boasted.

Other countries have adopted a similar skills-based approach. Canada, for instance, gives would-be immigrants additional “points” for advanced educational degrees and for knowing both French and English. But because the country does not try to match immigrants to specific jobs shortages the way Australia does, some highly educated immigrants—especially those from Asian and Latin American countries, according to a recent study—find it difficult to get jobs in their professional fields once they arrive in Canada. Moreover, Canada’s emphasis on education without reference to what the labor market needs has prompted frustration in industries like construction, which has shortages of skilled workers. As a result, immigrants in Canada, on average, earn less than native-born workers.

Ireland has taken yet a third approach, letting employers select candidates for visas and prohibiting immigrants from shifting jobs once they arrive, unless they can find another business to sponsor them. Ireland’s approach aims to manage surges of immigration that result from the dramatic growth of the country’s economy, thanks to the heroic tax cuts and deregulation of the early 1990s. From being an exporter of emigrants for much of its history, Ireland became a net importer of immigrants as capital rushed in from around the world and unemployment rates fell from nearly 16 percent to about 5 percent by the end of the decade.

As newcomers poured into the country, Ireland reshaped its policy to prevent unskilled workers from flooding its labor markets. So that employers don’t import immigrants in occupations where workers are already plentiful, aiming to drive down wages, Ireland won’t grant visas in job categories for which market surveys deem the labor supply adequate. Virtually all the jobs for which the country currently won’t grant work visas—from hotel workers to retail salespeople to clerical staff—are low-skilled. Ireland requires that employers try to fill vacancies in those jobs from Ireland itself or with workers from other E.U. countries, who can migrate to Ireland without restriction. As a result, 25 percent of the country’s immigration hails from E.U. members Latvia, Lithuania, and Poland.

The other half of a sound immigration policy is to eliminate the magnet effect of modern welfare programs. Developed countries uniformly prohibit illegal aliens from receiving social benefits, and many restrict those benefits for legals, too. Australia, for instance, prohibits legal immigrants from participating in social programs for two years. Immigrants in Canada who qualify for a skilled-worker visa must show a bank account of at least $9,420 (Canadian) before entering the country, to ensure that they won’t become an immediate burden on the welfare system. Canadian residents who want to sponsor a relative under the country’s family reunification program must also prove that they have the resources to support the immigrant. (America makes a similar demand that those who sponsor immigrants pledge to support them in case of need, but it doesn’t require sponsors to honor the promise.)

Similarly, Ireland restricts legal immigrants from receiving many social welfare benefits. Moreover, in 2004 Irish citizens voted to amend their constitution to stop granting automatic citizenship to children born in the country of foreign parents, after widespread reports that immigrants were flying to Dublin to give birth, because Irish law allowed the parents to take up residence in the country with their citizen-child thereafter. Now at least one parent must be legally resident in Ireland for three out of the four years before the child’s birth for their baby to become a citizen.

Welfare-benefit restrictions are an acknowledgment that the economic calculus of immigration has changed dramatically. Before the welfare state, which developed countries have all embraced to some degree, immigrants came to a country like the United States because its free-enterprise system gave them an opportunity to succeed—but not a guarantee. Those who failed often returned home, and one reason why studies showed that immigrants did so well during the first great migration is that those who came were the most enterprising and those who stayed were the most skilled at adapting to our economy.

But today, the modern welfare state has turned the self-selection process upside down, offering immigrants from very poor countries incentives to come to America and sponge off the taxpayers, reaping where they did not sow. Today’s immigrants are more than twice as likely to use government programs as native-born Americans. As Nobel laureate Milton Friedman has said: “It’s just obvious that you can’t have free immigration and a welfare state.”

The experience of other countries provides clear guidelines for the kind of immigration policy that the United States should adopt. And as early as the 1990s, a bipartisan congressional commission on immigration reform sketched out some of the reform’s essential principles. It concluded, based on recommendations from leading economists, that the United States should stop admitting unskilled workers into the country, because there was no widespread need for them, and that such immigration was not “in the national interest.” It further recommended that the country should not institute any guest-worker programs for industries like agriculture, because such programs “effectively expand rural poverty” by importing large numbers of very low-paid workers. The commission also recommended that the U.S. reduce total immigration levels by one-third to assimilate better those who are coming and to reduce the costs of immigration on our society. Though the Republican-controlled Congress and President Clinton initially accepted the commission’s work, both parties backed off when political opposition arose from an unusual alliance of business interests, open-borders ideologues, ethnic and racial activists, and Mexican politicians.

Nonetheless, the U.S. should now try to push through the reforms that the commission’s economists suggested and that the experience of other nations has proven to be beneficial. The first step is to acknowledge that our family unification policy, our current immigration law’s centerpiece, not only does not serve our economy but goes way beyond preserving the nuclear family. Current law allows not only the spouses and minor children of permanent residents and American citizens—both native-born and naturalized—to come here, but also their adult sons and daughters, as well as the parents and adult siblings of citizens. This chain of relations accounts for some 600,000 legal visas a year and has prompted a backlog of some 4 million visa applicants. By restricting the family unification category to the spouses and minor children of citizens, the United States could cut family unification visas in half.

Reducing family visas would allow for a shift toward skills-based immigration without increasing the number of newcomers. To determine what kinds of workers would receive skills-based visas, the United States would shift away from its current system in which those visas—totaling only 77,000 last year—now almost entirely go to highly educated workers, such as technology specialists, whom companies request, but not to skilled tradesmen who might also be in short supply. Under a revised system, while companies could continue to request visas for workers they need, the U.S. would also award visas based on the model of Australia’s Migration Occupation Demands List, compiled through labor-market surveys. In Australia, that list currently is heavily weighted toward trades like automotive electricians, boilermakers, machinists, toolmakers, and welders. The U.S. Labor Department’s list of more than 200 of the fastest-growing job categories includes many similar trades, but potential immigrants with those skills have virtually no way of getting into the country legally unless they are high on the family reunification list. An immigration policy designed to strengthen the U.S. economy would bump workers in such fast-growing trade categories to the top of visa lists. By reorienting immigration toward more skilled workers, the United States would probably diversify its immigration flow and could eliminate its so-called diversity category, which grants 50,000 visas a year to winners of a lottery.

For these changes to have much impact, the nation will have to get much tougher on illegal immigration, now about a quarter of all immigration and almost entirely unskilled. Though hardening the border is important, the real key is to lessen the economic incentives to sneak into the U.S. by ensuring that businesses don’t hire workers they know to be illegal and that government doesn’t provide them with services and benefits. The 1990s commission on immigration reform recommended establishing a national database for employers to verify the Social Security numbers of their workers. Now is the time to do it.

Though eliminating economic incentives will stem the flow of illegals and send many home, stricter enforcement also means more deportations. Although open-borders proponents argue that the United States can never deport all of the estimated 11 million immigrants here—something it would never be necessary to do—it is nevertheless a fundamental principle of policing that failing to enforce laws spurs more illegal activity, while stepped-up enforcement discourages it. Canada has followed this policy, beefing up its Border Services Agency and increasing deportations, estimated to rise to about 10,000 this year in an illegal population of about 200,000. By comparison, the U.S. deports some 50,000 annually out of its 11 million-strong illegal population.

Reducing economic incentives, of course, entails eliminating government benefits to illegals. Though the federal government bans illegal aliens from receiving many benefits, several states and cities have made themselves immigrant havens by providing government services through a don’t-ask, don’t-tell policy. New York City, for instance, offers immigrants, regardless of their status, such benefits as government-sponsored health insurance, preventive medical care, and counseling programs. Some states have moved to ensure that illegals receive in-state tuition discounts to state colleges, even though out-of-state American citizens don’t qualify for those discounts. Although the states administer many of these services, they are often supported by funding from the federal government, which should move to withhold all funds from state and municipal programs that openly provide services to illegals. Immigration is a federal issue, and individual states and cities cannot have their own policies.

Finally, the United States should begin a debate on whether to stop granting citizenship to anyone born here of foreign parents—a right that no E.U. country grants. The right springs from the first sentence of the Fourteenth Amendment, passed after the Civil War to ensure that states did not deny citizenship to former slaves. The framers of the amendment did not mean it to apply to the children of noncitizens who happen to be born here, though the Supreme Court has interpreted it that way, because its language does not specifically exclude those children. America has never had a discussion about whether we want to extend citizenship to these children, and now is the time to begin that conversation. Currently, the children of our 11 million illegal aliens automatically become citizens with the right to apply for visas for their parents and siblings to immigrate here legally. And they have the right to government benefits, including “child-only” welfare payments, which vary greatly by state but can amount to up to $500 a month for two children in California.

Reordering our immigration policies in this way would give a big boost to our economy. Not only do skilled workers create more wealth than unskilled ones, but studies consistently show that economies make more productive use of skilled workers, since businesses invest more in new machinery and equipment when skilled labor is available. And of course better-paid, skilled workers are unlikely to need taxpayer-funded social programs. Meanwhile, lower-income Americans, who now suffer from the depressing effect that unskilled immigration has on their wages, would also benefit, because their pay would rise.

Such a policy shift would also diversify our stream of newcomers, as it did Australia’s, and help ensure that immigrants continue to assimilate economically and culturally. Today’s family-based immigration policy has resulted in millions of Hispanic immigrants living in insulated, unassimilated ethnic communities, where their children retain the characteristics of their immigrant culture, including out-of-wedlock childbearing and a low valuation of education. A reformed immigration policy would result in fewer such enclaves, where the ethnic capital handed down by one generation to the next is out of step with what it takes to succeed in the American economy.

America’s current immigration policy doesn’t satisfy the majority of our own citizens, who say in polls by a two-to-one margin that they would like to see immigration levels decreased. Our immigration law is also out of step with how other countries that are economic powerhouses have ordered their own policy. Our debate revolves around a law that is an anachronism, formulated 50 years ago to sanitize U.S. policy of any hints of racism or nativism and resulting in far-reaching, unintended negative consequences. Now it’s time to move the discussion into the twenty-first century.

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