THE ROAD TO REFORM
As recently as 18 months ago, a visitor could have spent a week in the United States, watching television and reading the newspapers, and come away with virtually no clue that immigration was a major issue. Today, it is at or near the top of most voters' lists of problems facing the nation -- one that, in many people's minds, outweighs every other threat save international terrorism. This shift has been driven in large part by politicians and the media. The U.S. immigration system has been broken for a long time, and little -- including the number of immigrants arriving in the country -- has changed dramatically in recent years. There is little doubt that the system needs fixing. But just how big a problem is immigration? Is it in fact a crisis that threatens the United States' security and identity as a nation? And does it, as today's bitter debate suggests, raise so many fundamental questions as to be all but unsolvable?
As of this writing, Congress appears to be at an impasse, after nine months of intense debate and the passage of two major bills (one in each chamber) still unable to agree on a piece of legislation. The president has made clear that immigration reform is his top domestic priority, and legislators from both camps spent the summer insisting on the need for change. And yet, as the 109th Congress draws to a close, it seems unlikely that members will make a serious effort to resolve their differences before going home to face voters in November.
In fact, the nation is far less divided on immigration, legal or illegal, than the current debate suggests. In the last six months, virtually every major media outlet has surveyed public attitudes on the issue, and the results have been remarkably consistent. Americans continue to take pride in the United States' heritage as a nation of immigrants. Many are uneasy about the current influx of foreigners. But an overwhelming majority -- between two-thirds and three-quarters in every major poll -- would like to see Congress address the problem with a combination of tougher enforcement and earned citizenship for the estimated 12 million illegal immigrants already living and working here. A strange-bedfellow coalition -- of business associations, labor unions, and the Catholic Church, among others -- has endorsed this position. In Washington, the consensus behind it is even more striking, with supporters spanning the spectrum from conservative President George W. Bush to left-leaning Senator Edward Kennedy (D-Mass.), from mavericks like Senator John McCain (R-Ariz.) to party regulars like Senator Bill Frist (R-Tenn.) and all but a handful of congressional Democrats. But even this broad agreement may not produce a solution this fall.
Congress' failure to act is largely a product of political circumstances. The high-stakes midterm elections in November put an unusual premium on the opinions of the 20-25 percent of voters who depart from the emerging national consensus. Mostly male, white, and lacking college degrees, these naysayers believe immigrants are bad for the economy; they want to build a wall along the southern border and adamantly oppose allowing illegal immigrants to become citizens. Only about half are Republicans, and they account for no more than a quarter of the GOP. But many Republicans in Congress, particularly in the House, are convinced that this group is more intense -- more concerned, more motivated, more likely to vote on the basis of this single issue -- than anyone else likely to go to the polls. So the naysayers have become the tail wagging the dog of the immigration debate, and they may succeed in blocking a solution this year.
Still, such circumstances will not last forever. The political stars will realign, perhaps sooner than anyone expects, and when they do, Congress will return to the task it has been wrestling with: how to translate the emerging consensus into legislation to repair the nation's broken immigration system.
The term of art for what the consensus favors is "comprehensive immigration reform." But the shared understanding is far more than a grab bag or a horse traders' deal with a little something for everyone. The president and Senator Kennedy, for example, are both convinced that far from being a threat or a crisis, immigration is a boon to the United States -- that the newcomers bring a welcome vitality, and that openness and optimism are a critical part of the nation's character. Neither man sees danger in the growing role immigrants play in the economy; both see today's influx as a force to be harnessed for the United States' benefit. And although troubled by the illegality currently associated with immigration, both believe that reform must go beyond reasserting existing law in the face of lawlessness. Any effective overhaul must also bring the immigration system more into line with the changing realities of a global world.
The most important of those new realities is the global integration of labor markets. Today's immigrant influx -- second in volume only to the wave that arrived a hundred years ago -- is not some kind of voluntary experiment that Washington could turn off at will, like a faucet. On the contrary, it is the product of changing U.S. demographics, global development, and the increasingly easy international communications that are shrinking the planet for everyone, rich and poor. Between 2002 and 2012, according to the Bureau of Labor Statistics, the U.S. economy is expected to create some 56 million new jobs, half of which will require no more than a high school education. More than 75 million baby boomers will retire in that period. And declining native-born fertility rates will be approaching replacement level. Native-born workers, meanwhile, are becoming more educated with every decade. Arguably the most important statistic for anyone seeking to understand the immigration issue is this: in 1960, half of all American men dropped out of high school to look for unskilled work, whereas less than ten percent do so now.
The resulting shortfall of unskilled labor -- estimated to run to hundreds of thousands of workers a year -- is showing up in sector after sector. The construction industry creates some 185,000 jobs annually, and although construction workers now earn between $30,000 and $50,000 a year, employers in trades such as masonry and dry-walling report that they cannot find enough young Americans to do the work. The prospects for the restaurant business are even bleaker. With 12.5 million workers nationwide, restaurants are the nation's largest private-sector employer, and their demand for labor is expected to grow by 15 percent between 2005 and 2015. But the native-born work force will grow by only ten percent in that period, and the number of 16- to 24-year-old job seekers -- the key demographic for the restaurant trade -- will not expand at all. So unless the share of older Americans willing to bus tables and flip hamburgers increases -- and in truth, it is decreasing -- without immigrants, the restaurant sector will have trouble growing through the next decade.
Fortunately for the United States, economic changes south of the border are freeing up a supply of unskilled labor to meet these growing needs in a timely way. Some of the circumstances generating the flow are positive (the move from subsistence agriculture to economies that require investment capital, including at the family level); others are not (the failure of Mexico to provide enough jobs for its working-age population). But even if Mexico were to become Switzerland overnight, the fact is that the United States would still lack unskilled laborers and would have to find them elsewhere.
The market mechanisms that connect U.S. demand with foreign supply, particularly from Latin America, are surprisingly efficient. Immigrants already here communicate to their compatriots still at home that the job market in, say, Detroit is flat, while that in Las Vegas is booming -- and this produces a just-in-time delivery of workers wherever they are most needed. The vast majority of the immigrants who make the trip to the United States do so in order to work: if you are going to be unemployed, it is better to be unemployed at home in Mexico than in New York or Chicago. Not even legal immigrants, who account for about two-thirds of the total influx, are eligible, during their first five to ten years in the United States, for the kind of welfare transfers that could sustain them without work. Illegal immigrants receive virtually no transfers. Labor-force participation among foreign-born men exceeds that of the native born: the figure for illegal immigrant men is the highest of any group -- 94 percent. And immigrants are less likely than natives to be unemployed.
These facts are stark, and those who buy into the comprehensive vision see no point in quarreling with them. Rather than seeking to repeal the laws of supply and demand -- or trying futilely to block them, as current policy does -- reformers want an immigration policy that acknowledges and makes the most of these realities.
COMPETITION OR COMPLEMENTARITY?
Critics of the comprehensive model dispute these fundamental economic assumptions, and some of their questions are serious enough to require answers. Do immigrants lower American wages, as the naysayers contend? Would Americans fill these jobs, at a higher wage, if foreigners were not available? Is it only employers who profit from the influx? And do the fiscal costs associated with immigration outweigh any macroeconomic benefit? If the answer to any of those questions were yes, the case for comprehensive reform would be far less compelling than it is. (Why change the law to accommodate a market reality if that reality is not good for the United States?) But the critics' case does not stand up.
Of all the economic consequences of immigration, the easiest to calculate is the fiscal effect -- whether immigrants consume more in government benefits than they contribute in taxes. Although this is one of the most disputed and emotional aspects of the immigration debate, in fact the net effect in most states is close to a wash. True, much of the immigrant population is poor and unskilled, which inevitably reduces their tax contribution. But most nonetheless pay as much to the government as comparable poor and unskilled native-born workers do, and even illegal immigrants pay sales and property taxes, thus contributing toward their childrens' schooling. To be sure, in states with lots of newcomers, the burden on native-born taxpayers can still add up: according to one estimate, in California in the mid-1990s the bite was $1,178 per native-born household. But in most states today, the cost per native household is no more than a couple of hundred dollars a year. And on average, this is offset by what immigrants pay in federal taxes. According to estimates, two-thirds of illegal immigrants have income tax withheld from their paychecks, and the Social Security Administration collects some $7 billion a year that goes unclaimed, most of it thought to come from unauthorized workers.
Immigrants' overall contribution to U.S. economic growth is harder to measure, although there is no doubt among economists that newcomers enlarge the economic pie. Foreign workers emerging at the end of the day from the meatpacking plant or the carpet factory buy groceries and shoes for their children; on Saturday, they buy washing machines and then hire plumbers to install them. The companies where they work are more likely to stay in the United States, rather than move operations to another country where labor is cheaper. Readily available immigrant workers allow these businesses to expand, which keeps other Americans on the job and other U.S. businesses, both up- and downstream, afloat. Economists call this shifting the demand curve outward, and no one disputes that it results in a bigger, more productive economy.
Just how much do immigrants expand the economy? One conventional way to measure this would be to calculate their spending power, but it is difficult to isolate immigrant purchases. And even if we could, that would not reflect the growth that occurs when, say, suppliers of irrigation equipment, fertilizer, and trucks sell more of their products to a farmer whose business is expanding thanks to immigrant workers. Still another way to quantify the immigrant contribution is to look at the percentage of new jobs they fill. Over the last decade, it was more than half of the total -- and two-thirds in regions such as the Midwest and the Southwest -- making them effectively responsible for half of the nation's economic expansion in that period.
Some of the best efforts to measure the elusive immigrant growth dividend look at states or regions rather than the nation as a whole. A recent report on immigrants in North Carolina -- which has one of the fastest-growing foreign-born populations in the country -- estimated their contribution to economic expansion and compared it with the more easily measured fiscal consequences. The bottom line: newcomers filled one-third of North Carolina's new jobs in the past decade, and they were responsible for $9.2 billion in consumer spending and $1.9 billion in saved wages -- a total growth dividend of $11 billion, which dwarfed the $61 million (or $102 per native-born taxpayer) that the newcomers cost the state when taxes and services were netted out.
But even these calculations may significantly underestimate the immigrant contribution to the U.S. economy. Economists disagree on whether economic growth is in fact good or bad for a society. Many believe that it produces economies of scale and overall strength, both economic and other kinds, for the nation. Others feel it burdens and clogs the economy. The critical question is whether growth makes life better for individual workers, augmenting their productivity and increasing their incomes. And according to most economists, this is what happens when immigrants complement, rather than substitute for, native-born workers. In other words, the more different the foreigners are -- the less interchangeable with Americans -- the more they add. This, too, has yet to be adequately measured. A much-cited nine-year-old estimate by the National Academy of Sciences suggests that complementarity could add as much as $10 billion a year to U.S. incomes. But according to some economists, immigrants may be even more different (and thus account for even more added income) than many realize.
Think about a typical company. If all the employees were the same, adding more would expand the business but not -- once maximum economies of scale were achieved -- make other workers better off. But the picture changes dramatically if the employees have different skills. Then, adding more low-level workers would mean not only more opportunities for foremen but also that these supervisors would be more productive and earn more. In the case of immigration, this benefit comes not just within companies but also across the economy.
Immigrants are different from native-born workers in myriad ways. Roughly a quarter are more skilled and a third less skilled. On the whole, they are younger and more mobile (think of the construction workers who raced to New Orleans in the wake of Hurricane Katrina). They generally know the language less well and are less familiar with the culture. (Remember, complementarity is beneficial even when the added workers are less productive.) They often work harder and for longer hours, and in some cases they take jobs many Americans no longer want to do. But rather than undercut the native born, immigrants who are genuinely different make Americans better off. More low-skilled construction workers mean more jobs and higher wages for plumbers, electricians, and architects. More service workers allow skilled Americans to spend more of their time doing more productive work: instead of staying home to cut the grass, the brain surgeon has time for more brain surgeries. And over time, the higher return for higher-level work creates incentives for more Americans to become plumbers, electricians, and architects, thus making the entire economy more productive.
Complementarity also affects wage levels. Opponents of immigration ask why employers do not simply pay American workers more and avoid the need for foreign labor. But many industries cannot pay more, because they would be undercut by imports from abroad. Even in sectors such as construction and hospitality, in which the work must be done in the United States, it hardly makes sense to lure an American to a less productive job than he or she is capable of by paying more for less-skilled work. Meanwhile, because they complement rather than compete with most native-born workers (and this in turn attracts additional capital), immigrants raise rather than lower most Americans' wages.
Immigrants do compete with one category of American workers: native-born high school dropouts. But not even the most pessimistic economists think that the resulting downward pressure on wages affects more than ten percent of the U.S. labor force or that the drop in those American workers' earnings has been more than five percent over the last 20 years. Moreover, these unskilled native workers benefit in other ways from immigrant complementarity, because they pay less for goods such as food and housing.
Finally, rather than taking jobs from Americans, immigrants often create jobs where none existed before: look at the explosion of lawn-care businesses or the proliferation of manicure parlors in recent decades. (This is the new, complementary labor force attracting capital and making it productive in new ways.) And even if there were fewer immigrants in the United States, wages for low-skilled work would not necessarily rise. On the contrary, in many instances the jobs would simply disappear as the capital that created and sustained them dried up or the companies mechanized their production.
So how big is the real growth dividend? No one knows, in large part because it is so difficult to measure the extent and effects of immigrant complementarity. A back-of-the-envelope calculation suggests that eight million laborers working 2,000 hours a year at $9 an hour -- an average wage based on employers' reports -- would generate $144 billion worth of economic activity. Add the National Academy of Sciences' conservative estimate of the native-born income these immigrants make possible because they are different -- an additional $10 billion -- and the total contribution comes to $154 billion, or more than the gross state product of Kentucky and 1.2 percent of what is now a $13 trillion U.S. economy. A similar estimate of all immigrants' contributions -- legal and illegal -- comes to $700 billion, or 5.4 percent of GDP. And neither of these figures takes the full measure of the way the newcomers complement American workers.
Perhaps the most telling way to assess the immigrant contribution is to ask what would happen if the influx stopped or if those already here left the country. Those who favor comprehensive reform believe this would be disastrous -- in some regions, they say, whole sectors of the economy could collapse. Restrictionist opponents counter that a cutoff would mean at most a temporary inconvenience for a few employers, who would soon wean themselves from their dependence on foreign workers. Perhaps. But even if some businesses could adjust somewhat, there would be no averting the demographic nosedive to come -- the ever-slowing growth of the native-born work force. And either way, there is no reason to forfeit immigrant-driven economic expansion or the improved standard of living that comes with it for all Americans. Whether the nation benefits a great deal or just a modest amount, the newcomers still make life in the United States better -- and not just with the work they do. They also renew and reinvigorate the country's spirit with their energy, hard work, and old-fashioned values. Surely, rather than go without all of this, it makes sense to find a better way to manage the immigrant influx, so that Americans reap more benefits with fewer costs.
CONTROL WITHOUT A CRACKDOWN
Comprehensive reformers start with these assumptions about the economic benefits of immigration and build out from there to design policy. Their basic idea is that the U.S. immigration system should be market-based. For the past decade or so, market forces have brought some 1.5 million immigrants, skilled and unskilled, to work in the United States each year. But annual quotas admit only about a million, or two-thirds of the total. Enforcement of these limits is poor in part because the nation is ambivalent about how much it wants to control immigration and also because it is all but impossible to make unrealistic laws stick. And as a result, some half a million foreign workers, most of them unskilled and from Latin America, breach the border every year or overstay their visas to remain on a job. It is as if American cars were made with imported steel but the government maintained such restrictive steel quotas that a third of what was needed had to be smuggled in. The only plausible remedy is more generous quotas combined with more effective enforcement.
Reformers understand the need to retake control, both on the border and in the workplace. Restrictionist opponents maintain that the way to do this is simply to crack down harder, enforcing the laws already on the books. The problem is that the United States has already tried that, tripling the size of the Border Patrol and quintupling its budget over the past decade, to virtually no avail: roughly the same number of immigrants still manage to enter the country each year, albeit by different methods and in different locations. Reinforced efforts and new, more creative tools, particularly in the workplace, can have some effect, as the Department of Homeland Security has shown in recent months. And if immigration were truly harmful for the United States, the government probably could shut it down with enforcement alone. But the cost would be the creation of a virtual police state, with an electric fence and armed guards on the border, roadblocks on every highway, regular raids on all U.S. businesses, a Big Brother-like national tracking system, and extensive use of ethnic profiling. Short of such drastic measures, which still might not succeed in stemming supply and demand, it makes more sense to revise the law to make it more realistic and then use modest enforcement means to ensure it holds.
This is the paradox at the heart of the comprehensive consensus. The best way to regain control is not to crack down but to liberalize -- to expand quotas, with a guest-worker program or some other method, until they line up with labor needs. The analogy is Prohibition: an unrealistic ban on alcohol was all but impossible to enforce. Realistic limits, in contrast, are relatively easy to implement.
Not only is such reform the only way to restore the rule of law; it is also one of the best ways to improve border security. As one veteran Border Patrol agent in Arizona put it, "What if another 9/11 happens, and it happens on my watch? What if the bastards come across here in Arizona and I don't catch them because I'm so busy chasing your next busboy or my next gardener that I don't have time to do my real job -- catching terrorists?" The government needs to take the busboys and the gardeners out of the equation by giving them a legal way to enter the country, so that the Border Patrol can focus on the smugglers and the terrorists who pose a genuine threat.
The third leg of the comprehensive vision -- legalizing the illegal immigrants already here -- is the most controversial, and without it, reform legislation would undoubtedly pass much more easily. But this, too, is an essential ingredient. It makes no sense to build a new immigration policy on an illegal foundation; neither new quotas nor new enforcement will stick as long as there are 12 million illegal immigrants living and working in the country.
Some opponents of reform insist that the government deport these unauthorized residents. Others maintain that more strenuous law enforcement would persuade them to leave voluntarily, by making it difficult or impossible for them to work, secure loans, attend school, or obtain driver's licenses. In fact, neither of these approaches is likely to succeed. Many of these people have lived in the United States for years, if not decades. Many own homes and businesses and have given birth to children who, because they were born in the United States, are U.S. citizens. A drive to deport them would cost billions and strike much of the public as unacceptably draconian. As for an attrition strategy, it would only drive immigrants further underground, deeper into the arms of smugglers and document forgers.
The only practical solution is to give these unauthorized workers and their families a way to earn their way onto the right side of the law. This should be done not just for their sake but also because it is the only way to restore the integrity of the immigration code, bring the underground economy onto the tax rolls, and eliminate the potential security threat posed by millions of illegal immigrants whose real names no one knows and who have never undergone security checks.
This, then, is the essential architecture of comprehensive reform: more immigrant worker visas, tougher and more effective enforcement, and a one-time transitional measure that allows the illegal immigrants already here to earn their way out of the shadows. Together, these three elements add up to a blueprint, not a policy, and many questions and disagreements remain. But on one thing everyone who shares the vision agrees: all three elements are necessary, and all three must be implemented together if the overhaul is to be successful. Think of them as the three moving parts of a single engine. There is no tradeoff between enforcement and legalization or between enforcement and higher visa limits. On the contrary, just as enforcement is pointless if the law is unrealistic, so even the best crafted of laws will accomplish little if it has no teeth, and neither one will work unless the ground is prepared properly.
AFTER THE IMPASSE
The bill passed in the Senate last May reflects the essential architecture of comprehensive reform. The critical question for the future is how to protect the design as it makes its way through the political process -- particularly in the House. Debate is sure to center on five key issues.
Arguments about immigration inevitably come down to numbers, and this one is no exception. The goal of comprehensive reform is not to increase the total number of immigrants who enter the country each year, nor to open up new sources of supply (new sending countries); it is merely to replace the current illegal flow with a comparable lawful influx. Still, when the issue came up in the Senate, fear of higher numbers led legislators to set a new quota well below the size of the existing flow: not the half million or so who now arrive illegally each year, but only 200,000 workers. This may sound like a trivial matter, or the limit may even seem wise: Why not start the experiment prudently? But few mistakes could do more to undermine reform. There is little point in overhauling the system if the new ceilings are not realistic -- a halfway reform that would result in more hypocrisy and more failed enforcement. (That would be like repealing Prohibition for those over 40 years old but not for the rest of the drinking-age population.) The definition of a realistic immigration system is one in which the annual legal intake is more or less equal to the flow generated by supply and demand: not the 5,000 visas currently issued to year-round unskilled workers but something closer to the 400,000-500,000 needed to keep the economy growing.
Second, some legislators, particularly House Republicans, insist that any new slots be strictly temporary: workers would be admitted, perhaps without family, for a period of two or three or six years and would then go home, with no possibility of appeal or adjustment. The Senate legislation, in contrast, although nominally a temporary-worker program, would allow workers to stay permanently if, at the end of their temporary stints, they went through a second round of processing to adjust their status. The Senate approach is the sounder of the two, although perhaps the misleading label "temporary" should be reconsidered. Some migrants want to work in the United States for a short time, earning cash for their families, and then return home. Others know from the start that they want to settle permanently. Still others start out as short-timers and change their minds along the way. The bottom line: in this case, too, no policy can hope to work if it is not realistic. A successful program must accommodate the ways real people behave, not ignore human nature. That means a policy that creates incentives for migrants to return home when their temporary-worker visas expire -- and also incentives for them to become citizens if they decide to settle in the United States.
A third issue sure to come up -- one of the most misunderstood in the immigration debate -- is the balance between high-skilled and low-skilled workers. In fact, there is no reason to choose between the two categories: both are needed. Remember the theory of complementarity: depending on the circumstances, more busboys may do as much as more engineers to make the economy more productive. Today, the United States is short on both, and this means that more of both would make American workers better off. As is, perhaps 25 percent of the annual intake is moderately or highly skilled and the rest are unskilled, and conventional wisdom holds that Congress should recalibrate this balance. But there need be no tradeoff between the two groups -- each should be considered independently -- and no arbitrary limits in either case. What is important is that the quota for each category be consistent with the flow generated by supply and demand.
Fourth, some of the most charged disagreements of the past year were about enforcement issues: whether or not to build a fence, whether to make felons of unauthorized workers or of those who provide them with humanitarian assistance. But in fact, of the three essential elements of comprehensive reform, enforcement is the least controversial, at least among policymakers serious about fixing the system. It is well known what works best on the border: little can be done that is not done already, although it could be augmented by more technology. And it is well known what is needed in the workplace: a national, mandatory, electronic employment-verification system that informs employers in a timely way whether the job applicants standing before them are authorized to work in the United States or not. Such a system need not be Orwellian: the basic elements are biometric identity cards and a computer database. And the process should operate much like ordinary credit card verification but be backed up by significantly stepped-up sanctions against employers who fail to use the system or who abuse it.
The only real question about enforcement is how exactly to introduce it. Many conservatives do not believe the Bush administration is serious about retaking control, either on the border or in the workplace, and as a result they want the enforcement provisions of any bill to be implemented before the temporary-worker program or the legalization drive. This is not an ideal solution -- comprehensive reform will succeed only if all three arms coexist and complement one another. But if it is politically necessary -- and carefully designed -- an enforcement "trigger" could be incorporated into a workable reform package. As for workplace enforcement, the challenge there is to get a workable system up and running in a timely way, rather than rushing to implement something that does not work.
The fifth issue on the table, sure to be the most bitterly argued of all, is whether the illegal immigrants already here should be allowed to become citizens. House hard-liners will insist not. "It is bad enough," they will say, "that we are letting these lawbreakers remain in the United States. We must draw the line somewhere -- we must not reward them with citizenship." The problem with this approach, principled as it may seem, is that it would create a permanent caste of second-class workers, people trusted to cook Americans' food and tend their children but not to call themselves Americans or participate in politics. They would live in permanent limbo, at risk of deportation if they lost their jobs, afraid of bargaining with employers, and unlikely to make the all-important emotional leap that is essential for assimilation. Surely, this is not the answer for a proud democracy such as the United States. Indeed, it is hard to imagine anything worse, for the immigrants or for American values.