Immigration Reform- part 6: The Labor Market

There is the belief that the hiring of illegal immigrants depresses the wages for all Americans. Ironically, that is an argument used by such disparate interests as the US Chamber of Commerce and organized labor. Practically every study completed indicates this is not true because not too many Americans aspire to pick vegetables, be laborers or landscaper helpers. Any program that would increase competition for those jobs would naturally decrease the flow of immigrants heading here in search of jobs. While it is true that the government cannot force people to work in any particular job, they can withhold government largesse and entitlements. Under this scenario, Americans entitled to welfare or Medicaid would not be denied, only have their benefits decreased by an amount commensurate with the lower skilled job turned down. This would create competition for these jobs between American workers and illegal immigrants.
The hiring of illegals only decreases overall wages by no more than 2%. One study determined that the hiring of illegals depressed wages 1.1 to 2.2% from 1990-2004 when compared against the least educated American worker. However, when one factors in the economic efficiencies via lower overall prices, the real wages of the least educated American worker actually increased 0.7 to 3.4% because they had greater buying power. In 2005, the median income of an American worker with a high school diploma was 40% higher than that of a high school drop out. This underscores the fact that EDUCATION, not immigration or any other factor is the key to increasing wages. Hence, the arguments of organized labor are nonsense.
Another possible way to help dry up the labor market for illegal immigrants is to use low to medium risk prison labor. Prisoners are currently paid wages incredibly below minimum wage standards. Consider this scenario. Farmer John needs 50 people to pick beans in his fields for the next three months. He has three options: he can hire a “union” worker at $10 and hour, an undocumented worker at $7 an hour, or use (under supervision) prison labor at $3.50 an hour. He is going to be paying 50 workers one way or the other. The obvious choice is the $3.50/hour worker. There are so many advantages- the farmer sees an increased profit due to lower labor costs, food prices are lowered, and there is less need to use undocumented workers, thus squeezing them out of the labor market and into voluntary deportation. Additionally, the prisoner’s wages would be split three ways- to victim compensation, to a savings account for something when they get out and they can retain some as they currently do. Also, this could be used as a vehicle to decrease prison over-crowding with low risk violators, or even in lieu of probation.
Still, even accounting for the implementation of this idea, most likely there would still be a need for low skill labor. That is one area where Conservatives and Liberals can reach agreement- visa reform. Today, the majority of the current 27 or so visa possibilities deal with keeping families intact. After World War II as people migrated to cities and we converted to a manufacturing economy, it created a need for agricultural workers. Under the Bracero program, the US allowed the immigration of workers to fill these jobs provided they had an employer sponsor. The flow of migration was rather orderly and decreased illegal immigration 95% during the lifetime of the program. All that changed in 1964 under Johnson when our immigration policy changed from one of meeting economic need to one of keeping families intact. Part of this was due to a Cold War strategy of welcoming people fleeing Communism. Once here, they petitioned to bring in family members. As a “family values” policy it was a success, but it failed to account for labor needs and worker visas were all but eliminated. We should get back to a Bracero type program by decreasing the amount of family visas granted by 50% and limit them to the nuclear, not extended, family.
At least one-third of those visas should be converted to H1-B visas to bring in high-skilled workers. As Bill Gates noted in 2007, we run the risk of losing our technological advantage in the world. We already pay the highest skilled workers the highest wages in the world. By diverting more visas to this program, we would draw people away from Australia and Canada, two countries that have targeted high skilled workers in their immigration reform laws. This would fill the immediate need for these workers until our educational system is reformed. Second, because there would be a greater pool of skilled workers, it would put downward pressure on wages in this area and decrease some income disparities.
The remainder of the visas would be diverted to attracting low skilled workers- approximately 350,000. Both labor and employers note that approximately 400,000 workers are needed. Assuming one could get 50,000 through prison labor, we could get the remainder from this visa reform. The visas would be good for three years, be portable, and have no employer sponsorship. After the three years, the person would return to their home country. This would restore circularity in migration and end the notion of chain migration (a natural outgrowth of the family-based system now in place).
The number of visas could be automatically adjusted yearly based on economic metrics compiled by the BLS for low skill job needs nationally. If the needs are being met, then the number of visas would be adjusted downward. However, there should be a floor and a cap.
One of the problems with the Bracero program was employer sponsorship. That led to many examples of well publicized employer abuses of workers which ultimately sealed its demise. Learning from past mistakes, the visa should be portable. Naturally, organized labor would insist on paying the prevailing union wage. That would be self-defeating and a recipe for disaster. If such was the case, no employer would hire these people. The labor market should dictate the wages- not unions.
Obviously, another problem is the length of time currently used to process a visa. Tweaking of the Visa Waiver Program to allow 12-month stays to accomodate seasonal labor needs should be considered. The backlog cases of those seeking US citizenship needs to be expedited. That leads into a major complaint of people regarding immigration reform- amnesty- and putting the current illegal population to the head of the line. If there is no line, or even a very short line, then that argument is moot. In fact, that will be the subject of part 7- amnesty, or comprehensive immigration reform. And since Newt Gingrich thrust the issue back into the mix, a variation on his proposal would make the greatest sense from a cost-effectiveness and humane treatment standpoint that is fair to all and one that would go a very long way towards Republicans regaining the confidence of the Hispanic community. Although I loath the fact that any political party panders to special interest groups or engages in identity politics, the Hispanic community needs to realize that their interests are best served through Republican policies. This is a subsection of the population whose inherent values, when all is said and done, lie closer to those of the GOP. They are, essentially, right of center. They are hard working and come here for jobs. Through private sector job creation and educational reforms, we lay the groundwork to allow Hispanics- indeed, ALL people- to truly live the AMERICAN dream. In this way, they are truly assimilated into American society and brought out of the shadows.