Immigration: Who wins? Who Loses?

Stephen H. Unger

February 27, 2010

For some people, the immigration issue is very simple. Just open our borders and let anyone into the country who wants to come. Some libertarians support this view [1], arguing that the government has no right to exclude anyone. Other libertarians disagree [2]. There are similar splits among people in almost all other political categories, and there are many intermediate positions between abolishing border controls and virtually closing our borders to prospective immigrants. This is definitely not a simple issue. Let's see what the arguments are and consider what a practical solution might look like.

A country of immigrants

Nineteenth century immigrants came here under a variety of circumstances and for different reasons, initially mainly from England, then from Germany and other European countries. Most Irish immigrants in the mid nineteenth century were unhappy to leave their homeland, but were driven out by famine and an oppressive government.

Rather than being pushed out of their own countries, many other immigrants were lured here by deceptive propaganda from corporations seeking cheap labor in cotton mills, mines, on the railroads, etc. The newcomers worked long hours on dangerous, tedious jobs, often under very unhealthy conditions, for minimal wages. They were frequently used as strike breakers. Years later, they, or their children, struggling to improve their job situations, were subjected to similar competition from new waves of immigrants.

Chinese men were brought here for railroad work. They were exceptionally industrious and, since they came without families, from backgrounds of deep poverty, could subsist on wages far lower than Americans could tolerate.

The immigrants who fared best were probably those who went West to settle as farmers, craftsman, or small merchants, sometimes being able to fulfill dreams of owning their own land. Their lives were not easy, but many did eventually prosper.

The story is similar in the early twentieth century, tho the principal countries of origin changed to Southern Europe, particularly Italy, and Eastern Europe, including many Jews fleeing persecution in Czarist Russia. With the closing of the frontier, not many were able to settle on the land.

From the start of the great depression thru the end of WWII, immigration fell drastically, to roughly 50,000 per year. Tragically, the doors were closed to the great bulk of those, mainly Jews, trying to escape from the Nazis.

After 1950, immigration increased again, rising gradually from about 250,000 to about a million annually since the early nineties. In addition, illegal immigration has been estimated at over 500,000 annually since at least 2000. In 1960, 13% of immigrants came from Italy, with no other country contributing more than 10% (Mexico, 6%). This pattern prevailed until about 1980, when Mexico became the leading country of origin at 21%. Since 1990, Mexico has become even more dominant, contributing 30% of immigrants, with no other country exceeding 4%. Immigration from Asia has increased substantially since the mid 1960s.

Especially since WWII, the admission of refugees from persecution has been a function of US relations with the persecutors. So Cubans fleeing the Castro regime found the doors wide open, while many Haitian victims of the Duvalier dictatorship, a US ally, were denied entry to the US. Racism was probably a factor in many cases.

Most immigrants came here to better themselves materially—often to escape grinding poverty. The newcomers included representatives of virtually every occupation. Many changed their line of work after arrival.

There are, and always have been, some people who come here with the intention of earning some money and then returning to their home countries. More about this below. But first let's look at an important example of a negative impact of immigration.

The Beef with Meat Packing

This all changed after the industry was consolidated into a handful of large corporations. They imported poor people, many illegally, mostly from Mexico, who were used as strike breakers to gut the union. This brought wages down to a subsistence level, re-creating harsh working conditions reminiscent of 1900. Unions now cover roughly a third of the workers, down from 80% in the sixties, prior to the anti-union drive [5].

Guest Workers

One solution to this "problem" is to allow people to enter the country for limited time periods, perhaps a few years, as "guest workers". Invitations are advertised in countries with many unemployed, and/or impoverished people who would be happy to work here even for very low wages. This, of course is what happened in the case of the Chinese railroad workers 150 years ago. During the past half century, several guest worker schemes have been implemented in the US. In agriculture, where it is most used, we had the Bracero program [6] and now the H-2A visa. There are several other visa types for temporary employment in other categories. The H-1B is best known for its use in replacing American computer programmers with people from low-pay countries, principally India [7]. The great majority of US guest workers now come from Mexico.

Consequences of Guest Worker Programs

Advances in technology, or living style changes, often reduce the need for certain types of workers. Those workers must then either find new occupations or they must accept lower pay due to the surplus of available workers. Conventional economists have no problem with this, explaining that the lower pay is a market signal that gets people to abandon occupations where they are not needed.

On the other hand, when a shortage of workers of a certain type develops for any reason, the corresponding, symmetric, solution in our "free market" economy would be to increase wages in that field to "signal" people to switch to the needed lines of work. (An alternative would be to develop improved technology, to get the work done. This approach generally means fewer workers, but at higher pay.)

For some reason, free market enthusiasts, principally employers and conventional economists (usually very supportive of their views) prefer other alternatives. The one relevant to our current discussion being to go outside the system and bring in laborers from other countries who are willing to work very hard for very little. And so the guest worker concept is born.

The guest worker solution benefits employers hiring them. It hurts those Americans who would otherwise have been hired at higher pay rates, and who now have to seek other employment. These are usually among the least privileged economically. One might, at first, think that the general public benefits, since lower wages translate to somewhat lower prices. But this point calls for closer examination.

First consider this in terms of equity. Is it fair that the general population should benefit at the expense of the least well-off people? Note that this justification for driving down wage levels would work nicely to justify slavery.

On a societal scale, the guest worker system creates an underclass of very low paid people consisting of the guest workers themselves and those Americans working side by side with them. The latter must accept the same working conditions and pay in order to hold their jobs. Note that, if better, higher paid, jobs were available to the Americans, they would have taken those jobs even if there were no guest worker program.

While many guest workers return to their home countries, as they are supposed to, there are also many who, legally or illegally, remain here. (It is said that "there is nothing more permanent than temporary workers"). Those who go home are usually replaced by new guests. Many come with spouses, or marry while here. Their children who are born here are automatically US citizens. The result is a substantial community of people dependent on the jobs that brought the guests here. Illegal and many legal immigrants are also components of this community.

It takes character and initiative to leave one's homeland and, legally or illegally, permanently or temporarily, migrate to a foreign country. This accounts for the fact that the great majority of the newcomers in all these categories are decent, hardworking people. Nevertheless, the creation of an underclass relegated to doing the dirty work for the general population, in addition to being hard to defend on moral grounds, inevitably leads to serious, costly social problems.

Gross economic and social inequality, low quality education, and inadequate health care combine to cause social unrest. Guest workers are frequently abused by their employers [8]. Trouble often surfaces among the immigrants' children. Some Americans, understandably, tho unjustly, blame the newcomers for taking away their jobs. Increased crime and welfare costs are an inevitable part of the picture. These costs probably exceed the savings due to the somewhat lower prices made possible by cheap labor. The bottom line is that the only gainers in the receiving country are the relatively few, mostly wealthy, people, who profit directly from the lower pay scales.

This is evident in Western Europe, where guest worker programs have generated turmoil in countries otherwise prosperous, well organized, and relatively egalitarian (at least compared to the US) [9].

The countries of origin gain from the currency that the guest workers send back to their families, or bring home (if they choose to return). But they lose in two, perhaps more important, ways. One is that they are losing very good people whose initiative and skills could have contributed directly to the well being of their own countries.

The second point is a subtle variation of the first. If emigration were not an option, then many of those able, energetic, people who currently exercise it would be likely to join with compatriots trying to remedy the economic and political problems that are serious enough to make them willing to leave their native land. Emigration takes the pressure off the governments of those countries to stop oppressing their citizens, control excessive population growth, etc. Exporting supporters of reform makes it much less likely that these problems will be resolved. So emigration generally helps those in power, to the detriment of the general population [10]. Now let's look at some big numbers.

Population sizes and growth rates

For the past 35 years or so, the average fertility rate for the US as a whole has been such that, absent immigration, the population would be quite stable, a very desirable situation [11]. But, due to net annual immigration of about 1.5 million, population continues to increase at a significant rate. Since 2000, it has risen from about 281,000,000 to about 309,000,000 (projected to be well over 400,000,000 by 2050).

Consider some impoverished person in a nation with many poor people. That person would almost certainly be better off materially by emigrating to the US. So it would appear that allowing that person to come here would be to do a good deed. The problem is that there are billions of such people. Many would come here if they could.

The effect of adding hundreds of millions of poor people to our population would be devastating [12]. We already have serious problems of poverty involving tens of millions of people. The first to suffer would be these people, whose chances of finding even marginally adequate jobs would almost vanish. School systems, welfare agencies, police, all would be swamped. But even if we accepted the enormous problems involved in doubling our population in this manner, only a small proportion of the world's poor would be helped. We could do a lot better.

Help Potential Immigrants Before They Immigrate

In a positive way, we might help people in poor countries via funding educational programs, development of appropriate technology, e.g., solar ovens made of locally available material, low head hydro plants, improved simple agricultural tools. Local people should be educated so that they themselves can construct, operate, and maintain whatever new devices are introduced. Care must be taken to prevent corrupt governments from diverting resources into their own pockets.

Apart from being the morally right thing to do, expanding well designed foreign aid programs would be very helpful in reducing pressure on our borders.

The 12 Million People Question

The obvious answer is to return them to their home countries immediately (the great majority are Mexicans). I would favor this approach if I could see some practical way to implement it. But the sheer scale of the problem is staggering. Many have been here for years, with families, including children who are US citizens by virtue of US birth. Just how could we go about identifying and taking into custody such a huge number of people? Where would they be held pending adjudication, bearing in mind that the total US prison population is under 2.5 million? The legal costs alone would be immense.

A simple alternative at the other extreme is to grant amnesty to those illegals who have been working in the country for, say, one year. Administrative expenses, while less than for the previous program, would still be high. What about people trying to immigrate legally, who are following the rules and who are on long waiting lists? Clearly, the fair thing to do would be to let them in immediately. We could not reasonably exclude spouses and minor children of the amnestied people. What about siblings, parents, and the immediate families of siblings of citizens?

An obvious consequence of an amnesty would be that others who would like to enter the country would be encouraged to enter illegally, with a reasonable expectation that they too would eventually be granted legal status. So a general amnesty would come close to abolishing all restrictions on immigration.

I would reject these extremes in favor of a combination of steps that I believe would be more likely to produce a satisfactory solution at a reasonable cost.

The measures proposed above to improve the lot of potential immigrants in their homelands would, if well implemented, substantially reduce the motivation for immigration. They would also give those already here an incentive to go home. We should significantly increase the penalties for hiring illegals, and initiate major enforcement efforts, focusing on large companies, such as corporate farms and large meat packers, that are known to hire illegals routinely. Border controls should be maintained or improved. Those illegals apprehended either at our borders or in the course of enforcement efforts at work places, and those who voluntarily come forward, should be treated humanely and assisted in returning to their homelands. Legal immigration should be restricted to spouses and minor children of citizens, individuals who are personally targets of persecution at home, and a relatively small number of exceptionally talented people in various fields. In particular, the H-2A and H-1B programs should be terminated.

This is certainly not a perfect solution and will not make everybody happy. Doubtless it can be improved, but I believe it includes the essentials. Of course, competent execution is critical.

References

Comments can be emailed to me at unger(at)cs(dot)columbia(dot)edu Don't forget to replace (at) with @ and (dot) with .

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