The Unintended Consequences of U.S. Immigration Policy
A summary of an AnalysisOnline interview with Dawn McLaren, Research Economist, L. William Seidman Research Institute, W. P. Carey School of Business, Arizona State University, and portions of her paper,
“What Do We Really Know about Illegal Immigration?”
Reported by Michelle Hopkins
In August, in the absence of Congressional approval of his immigration strategies, President Bush outlined a 26-part action plan to address immigration “within the boundaries of existing law” by tightening border security, bolstering worksite and interior enforcement, reforming guest worker programs, expediting background checks, and providing better citizenship assimilation.
As sweeping as the Administration’s plan appears to be, it gives pause to some economists, including Dawn McLaren of Arizona State University’s W. P. Carey School of Business. Taking an historical view of U.S. immigration policies and connecting those policies with their – often unintentional -- consequences, McLaren observes that much of today’s debate ignores the benefits of the immigrant presence.
Consider the changing demographics in the U.S. and in Mexico, she offers:
“The small size of the ‘baby-bust’ generation, born from 1965 through roughly 1980, has meant that relatively few American-born have been able to enter the workforce to meet the demands of the (huge) baby-boom generation. The result has been a labor shortage, particularly in certain occupations filled by the young and/or untrained, such as construction work and landscape maintenance,” said McLaren.
Some immigration opponents contend that illegal immigrants are taking jobs that would otherwise go to Americans. Advocates of more relaxed immigration policies respond that Americans are unwilling to work for the same low wages as illegal immigrants. Both sides miss some of the fine points, noted McLaren.
Low Wage Jobs: Geography and Age Are Factors
Oftentimes, it is not a matter of wages being too low to satisfy unemployed American workers; they may live in other areas of the country, away from where the jobs are, and they are not willing to disrupt their social network of family and friends. However, Mexican immigrants have a greater willingness to do so, leaving family and friends in Mexico while they come here to work, McLaren explained.
It is not surprising with the labor shortage that exists in the U.S., and then abundance of laborers in Mexico, that people would move in the direction of the jobs, she noted. More than sheer numbers, it is also a matter of age demographics.
“In Mexico and Latin American countries, the number of young people aging into the workforce has been greater than the number in the older generations. Along with low wages and, in some cases, a poorly performing local economy, young people in these countries have been ‘pushed’ from their home country. At the same time, they have been ‘pulled’ to the U.S. by its prospects of jobs and a better standard of living,” she explained.
“We need our immigrants. Immigration is what built this country, isn’t it? Immigration helps by filling the jobs we can’t. If we want to produce certain things and we have a more skilled workforce, we need less-skilled immigrants to come and do the jobs that we don’t want to put people into who have Ph.D.s,” she said.
McLaren notes that illegal aliens are here to work – and they do work. They also pay taxes and Social Security, which they will not get back. Losing them means losing that revenue, too, she said.
Backlogged, Red-Tape Jungle
In fact, although it may run contrary to the widely accepted view of who illegal immigrants really are, McLaren said that about half of them are people who came into this country following the legal procedures. They got work visas and simply overstayed the terms of the visa. And there may be many more “illegal” immigrants who have tried to follow U.S. requirements, but have gotten caught up in the log-jam.
“Visa applications are backlogged 15 to 20 years, in some cases,” McLaren said. “Our system right now has no controls because what’s happened is that we don’t process these visas. We leave them sitting around in piles. We say on the one hand, ‘Go ahead and apply. We want you. We want immigrants to come here,’ and, on the other hand, “By the way, we are going to leave your application sitting here for so long. We’ll get to it. See you later.’ Because we are not being responsive in that manner, we’ve created a problem for ourselves with illegal immigration,” she said.
Immigrants Boost GDP
In addition to filling jobs that Americans decline (because of pay or location), illegal immigrants are undeniably adding to U.S. economic growth, McLaren said.
“Population growth, no matter where that population growth comes from, no matter what type of population growth it is, leads to economic growth,” she noted. “Immigrants help drive the economy forward in particular ways that are very useful to us, depending on who comes in.”
This view is ignored, however, not just by President Bush’s plan to aggressively step-up worksite immigration enforcement by giving employers 90 days to resolve discrepancies between Social Security records and employee work papers, but also by a new Arizona law. In July 2007, Arizona Governor Janet Napolitano signed a measure that can result in revocation of the business license for any employer with a second violation for having an illegal immigrant on the payroll.
Employer Verification Difficulties Likely
One means of attempting to authenticate legal status is the Immigration and Naturalization Service online program E-Verify (formerly Basic Pilot). As U.S. and Arizona requirements take effect (as well as those of other states), it’s not unreasonable to think the program will be stretched beyond capacity, and employers will shoulder the burden, McLaren noted.
“Basic Pilot (now called E-Verify) now has about 15,000 businesses nationwide who have access to use it. We’ve got many, many more businesses in Arizona. Ten times, twenty times more businesses that will need to use that system, starting in January. Is the federal government going to provide the computer server space? Are they going to provide the access for people to do that? And if businesses can’t (verify the legal status of employees using this system), what do they rely on then? And then you have to think about proving that you’re a U.S. citizen. Well, one way you can do that is with a birth certificate. Birth certificates are not uniform across the United States. How is an employer supposed to know if a birth certificate is legitimate or not? Already we have U.S. citizens who are being deported by mistake,” said McLaren.
Unintended Consequences: Examples
Could it be possible that not all consequences were explored (or even knowable) before the wheels of policy making started turning? McLaren says it wouldn’t be the first time. In addition to not even having a firm grasp on the numbers (“Estimating the number of illegal immigrants is tough. Plus we have no idea how many illegal aliens leave the U.S. each year,” she says), the U.S. has a history of implementing policy and then having to deal with its unintended consequences, noted McLaren.
“During our current labor shortage, however, no change to immigration policy had been made – and, as a result, a large number of illegal immigrants have been meeting the demand for labor from U.S. employers. Had the U.S. modified its immigration policy to reflect the increased need for labor by American companies, the issue of illegal immigration is unlikely to have occurred,” said McLaren.
Another example of unintended consequences, she added, is the North American Free Trade Agreement (NAFTA) that lifted barriers between the U.S., Mexico and Canada, beginning in 1994. Among its many provisions, said McLaren, NAFTA created maquiladoras (which actually have their roots about 30 years before NAFTA), or factories near the U.S.- Mexico border, to manufacture goods primarily for export to the U.S.
This was convenient for American businesses, but it ignored the fact that Mexico’s population centers were in the central and southern part of the country. When maquiladora activity slowed due to competition from China, these Mexicans were so close to the border, it made more sense to cross to seek work than to go back home, McLaren explained.
Some other American policy actions with unintended consequences, as noted by the Arizona economist, are:
The 1986 Immigration Reform and Control Act required employers to collect copies of documents from employees and spawned an industry providing false green cards and Social Security cards.
The idea of withholding U.S. driver’s licenses from illegal aliens to discourage them from staying in the U.S. didn’t do that. Instead, it increased the number of uninsured drivers on the road and increased insurance costs for all Americans.
Past efforts at increasing border security have not stopped the illegal immigrant flow. But it has made it more difficult and costly to cross the border (as much as $2,000 now compared to $300-$500 in years past) – and created an industry of human traffickers, bringing with it more danger, violence and loss of life.
An informed electorate can aid the effort to reduce unintended (negative) consequences, according to McLaren, who urges the citizenry to carefully consider the immigration stands of political candidates.
“Would they (their stands) be something that adapts to what the market needs or wants, or are they going to be trying to manipulate the market?” asks McLaren. “Sometimes you can win a little bit and sometimes you can lose a little bit. Sometimes, there are unintended consequences, but market forces are a bit like gravity: they’re unavoidable.”
In the public discourse on immigration, Americans need to remember there are many ways the federal government could choose to address immigration – from putting more soldiers on the border to reducing the visa application backlog to authorizing employers to get visas for the workers they need.
“All of these policies will have costs and benefits that will be borne in different ways,” she concluded.
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