by Jeb Bush
The fact that most immigrants arrive during their working years also tends to diminish the demand on social services, given that most services are consumed by children and senior citizens. The Federal Reserve Bank of Dallas reports that immigrants “have a beneficial effect on the fiscal health of pay-as-you-go government programs such as Social Security and Medicare. Because immigrants are younger than natives on average and have higher fertility rates, immigration decelerates the aging of the population. This slows the ongoing decline in the ratio of workers to retirees and helps maintain the solvency of these programs.”18
Because they are younger than the population as a whole—and because the most robust among them are more likely to emigrate—immigrants also are healthier and consume fewer health-care services than native-born Americans.19 Moreover, most newcomers, legal or illegal, are ineligible to participate in Medicaid, Supplemental Security Income (SSI), food stamps, or many other social welfare programs for an extended period of time. Legal permanent residents must contribute for ten years to qualify for Medicare or Social Security benefits.20 A 1997 study by the National Research Council, widely considered to have reported the most definitive findings on the subject, showed that immigrants on average pay $1,800 more in taxes than they consume in services.21 More recently, a 2004 report by Judith Gans at the Udall Center for Studies in Public Policy at the University of Arizona found that legal and illegal immigrants contributed $940 million more toward social services than they consumed.22
Immigration critics often assert that foreigners take jobs that Americans need and want. In fact, low-skilled workers often fill labor-intensive jobs that Americans are not eager to take;23 and in many instances, highly skilled immigrants take positions for which inadequate numbers of Americans are qualified. In turn, working people create jobs for others through their purchases and taxes, producing a net positive economic impact. A 2006 study found that immigrants reduce the wages of American-born workers with less than a high school diploma by 1.1 percent, while increasing wages by between .7 and 3.4 percent for all others.24
American agriculture, in particular, has a great need for foreign workers even in times of high unemployment. Farmers have attempted without success to attract native-born farmworkers with higher wages and better benefits, largely to no avail. The dearth of American workers seeking such jobs is attributable in large part to higher educational attainment: in 1960, half of all men in the U.S. labor force had less than a high school diploma; today, fewer than 10 percent do. If American farms are unable to fill their labor needs, we will end up relying on other countries for more of our food supply, with a corresponding decline in low-skill job opportunities. That impact is multiplied by the loss in higher-skill, higher-paying jobs in agricultural processing, transportation, and the like.25
The failure to maintain a reliable pipeline for low-skilled labor—or worse yet, efforts to drive such workers out of the country—thus bodes disastrous economic consequences that are all too predictable. When Alabama recently clamped down on illegal immigration through its House Bill 56, it cost the state an estimated loss of $2.3–10.8 billion in annual gross domestic product.26 That includes a loss of 60,000 “downstream” jobs as a result of lost agricultural production, and led to a $260 million decline in state tax revenues.27 Alabama’s deputy agriculture commissioner, Brett Hall, observed that among U.S. citizens, “we just don’t have anybody that can do that work, that backbreaking work.” As a result, a law that was intended to open jobs for native-born Americans instead has led to jobs being filled by refugees from Africa, Haiti, and elsewhere.28
The Alabama example reflects a broader challenge to American agriculture from the lack of a steady labor pipeline. Increasingly, crops that cannot easily be mechanized—such as apples, strawberries, blackberries, watermelons, and peaches—are being grown outside the United States because of the dearth of low-cost labor. Half the world’s apples are now grown in China.29 If we do not fix our immigration system, we can expect our country to lose even more agricultural production to other countries. Similar problems are faced by the hospitality and construction industries.
Immigrants are essential not only to filling jobs but also to creating them. Foreigners are twice as likely to start businesses as native-born Americans.30 The propensity of immigrants to start businesses is essential to America’s future. Small businesses are the backbone of the American economy. Firms with between one and 99 workers employed 35 million people in 2007, accounting for 30 percent of all private-sector employment.31 Yet the rate of business start-ups is in sharp decline. In 1977, there were more than 35 new businesses employing workers for every 100,000 Americans age sixteen and over; by 2010, that rate had dropped to 17 new businesses per 100,000, a 53 percent drop.32 Yet as the number of businesses started by native-born Americans declined between 1996 and 2011, the business start-up rate among immigrants soared by 50 percent.33
If we are to reverse the decline of small business growth, immigrants will play a disproportionate role. Immigrants are a major source of new businesses, accounting for 18 percent of all small business owners—far greater than their share of the population—and generating $776 billion in receipts annually as of 2007.34 Immigrants make up 43 percent of small hotel and motel owners and 37 percent of restaurant owners. They represent an outright majority among owners of taxicab companies, dry cleaning and laundry services, and gas stations, and they own nearly half of all small grocery stores. Among immigrant small business owners, Mexicans make up the largest share, followed by immigrants born in India, Korea, Cuba, China, and Vietnam. Most immigrant business owners do not have a college degree, which illustrates the positive dynamic impact that even lower-skilled immigrants contribute to the American economy.35
Immigrants also contribute to stable and secure communities. “If you want to find a safe city,” says Northeastern University criminologist Jack Levin, “first determine the size of the immigrant population. If the immigrant community represents a large proportion of the population, you’re likely in one of the country’s safer cities.”36 Despite high poverty rates, a huge immigrant population, and its proximity to Mexico across the Rio Grande, El Paso, Texas, is one of the nation’s three safest large cities. Contrary to widespread popular belief, numerous studies over one hundred years have found that immigrants, both legal and illegal, are likely to commit fewer crimes or to be incarcerated than native-born Americans.37 People who come to the United States for job opportunities and who hope to stay are unlikely to commit crimes for which they will risk deportation. At the same time, Standard & Poor’s found that cities with large numbers of immigrants experience improved credit ratings, tax bases, and per-capita incomes.38
The aggregate effect of immigrants—their energy, vitality, talent, and enterprise—is enormously beneficial to the economy, raising the gross domestic product by $37 billion annually, according to a 2007 study by the White House Council of Economic Advisers.39
But the United States is in danger of squandering its long-held competitive edge in attracting immigrants—especially in a global economy, in which attractive economic opportunities can emerge literally anywhere. Some nations, such as France and Germany—which traditionally have restricted immigration—are catching on to the demographic realities and bringing in more newcomers. Other New World countries that are not bound to an ethnic identity, such as Canada and New Zealand, are doing even better. Thus while the United States continues to have the largest number of immigrants in the world, the percentage of immigrants as a share of our total population now is about the same as France and Germany and is below that of Australia, New Zealand, and Canada.40
More than half of recent U.S. labor force growth has come from immigrants; in the future, if we are to have any labor force growth at all, immigrants will have to supply it.41 Immigrants tend to cluster in either low- or high-skilled parts of the economy.42 The United States faces challenges—many of its own making through misguided immigration policy—on both sides of
the equation.
The Bureau of Labor Statistics forecasts that the majority of fast-growing occupations will be those requiring few skills or formal education, in such areas as leisure, hospitality, and health-care support. The domestic labor pool for such positions has shrunk, meaning that supply must be provided by immigrants.43 And of course low-wage, seasonal agricultural jobs traditionally have largely been filled by immigrants, both legal and illegal.
In terms of meeting labor needs and surmounting the demographic challenges of an aging workforce, the continuing desire among Mexicans and other Latin Americans to emigrate to the United States is a blessing. The Pew Research Center found a great degree of self-selection among Mexicans desiring to emigrate to the United States, with young and more highly educated Mexicans far more likely to come here.44 Immigrants from the region also have higher reproductive rates than current Americans; indeed, the only group producing more children than necessary to replace population in our nation is Hispanic women, with a fertility rate of 2.4.45 As a result, Hispanics account for about one-quarter of all U.S. childbirths.46 The bottom line is that a constant flow of young immigrants, and the children they produce, are necessary to revitalize our nation’s aging lifeblood, and Mexico and Latin America are important sources of that vital labor supply.
But changing conditions have the potential to dramatically alter the flow of immigration, both legal and illegal, on our southern border. The main reasons for massive Mexican migration during most of the last century and the beginning of the twenty-first century were substantial population growth and lack of economic opportunities. Both those pressures are easing: the Mexican birthrate is declining and now is barely above replacement level. Meanwhile, economic reforms have led to an improving Mexican economy. In 2010, the Mexican gross domestic product grew by 5 percent, manufacturing grew by 6 percent, and the unemployment rate was 5.5 percent.47 Those numbers are not only far better than the United States, but suggest far brighter economic prospects for Mexicans than in years past.
At the same time that emigration pressures are easing in Mexico, legal immigration into the United States is growing more cumbersome. The number of H-2A and H-2B visas for seasonal work in agriculture, construction, and tourism is limited to a paltry 66,000 per year.48 Temporary work visa holders face such huge backlogs in applications for permanent residence that they often return home.49
The combination of a poor U.S. economy, increased border enforcement, and improving conditions in Mexico has contributed to a stark reversal of Mexican immigration into the United States. The number of Mexicans annually leaving for the United States declined from more than 1 million in 2006 to 404,000 in 2010.50 At least as many have returned to Mexico. “The largest wave of immigration in history from a single country to the United States has come to a standstill,” the Pew Hispanic Center reported in April 2012. After 12 million immigrants over the previous four decades, “the net migration flow from Mexico to the United States has stopped and may have reversed.”51
The decline of Mexican immigration into the United States may appear welcome in a time of economic recession, but it may prove extremely harmful to the American economy over the longer term, depriving entire industries of an essential labor pipeline and the country of a replenishing supply of young wage-earners. It would be painfully ironic if the “problem” with Mexican immigration evolves from too much to too little. But if we do not rationalize our national immigration policy to reflect changing demographic and economic realities, we may be unable to rely on immigrants to reverse the population decline that threatens to choke our economy and impose impossible social welfare burdens on future generations.
REVERSING THE BRAIN DRAIN
The challenges are even more urgent in meeting the need for high-skilled immigrants. American schools simply are not producing sufficient numbers of highly trained graduates in mathematics, science, engineering, and technology. Indeed, a disproportionate number of those graduates are being produced by foreign countries. The disparities are glaring and sobering: 38 percent of Korean graduates earn degrees in science and engineering, along with 33 percent of Germans, 28 percent of French, 27 percent of English, 26 percent of Japanese—and only 16 percent of Americans.52 The number of engineering and science PhDs earned by U.S. citizens actually has fallen by more than 20 percent in the past decade.53
Our educational deficiencies have created what Microsoft executive vice president Brad Smith describes as an economic paradox: “Too many Americans can’t find jobs, yet too many companies can’t fill open positions. There are too few Americans with the necessary science, technology, engineering and math skills to meet companies’ demand.”54 The United States creates 120,000 jobs each year requiring a bachelor’s degree in computer science, yet produces only 40,000 graduates annually with such degrees—not surprising given that only 4 percent of American high schools offer Advance Placement classes in computer science. “If we don’t increase the number of Americans with necessary skills,” says Smith, “jobs will increasingly migrate abroad, creating even bigger challenges for our long-term competitiveness and economic growth.”
Obviously, we need to improve our K–12 educational system in order to produce graduates who can satisfy the demands of a high-tech economy and compete with graduates from foreign countries. But until we do, there is no substitute for attracting and welcoming large numbers of students and professionals from foreign countries, if we are to have any hope of maintaining American prosperity and leadership in the world economy.
Fortunately, we have for many years attracted a vastly disproportionate share of the world’s greatest scientists, engineers, and entrepreneurs. Indeed, more than one-quarter of all U.S. scientists and engineers are foreign-born.55 Richard Florida, author of The Rise of the Creative Class, argues that our nation’s biggest competitive advantage in the world has been “its status over the last century as the world’s most open country.”56
That openness has fueled American leadership in the technology revolution. Microsoft founder Bill Gates has characterized the United States as an “I.Q. magnet.” He told a congressional committee in 2007, “For generations, America has prospered largely by attracting the world’s best and brightest to study, live and work in the United States.” Our nation’s “success at attracting the greatest talent has helped us to become a global innovation leader, enriched our culture, and created economic opportunity for all Americans.”57 Indeed, more than one-third of U.S. Nobel Prize winners have been foreign-born, a proportion that increased to half between 1990 and 2001. In the Silicon Valley, half of all new companies were started by immigrants.58 Google, Intel, and eBay, among many others, all were built by immigrants.59 By 2000, more than half of the PhD-level engineers in the United States were foreign-born.60 Moreover, immigrants are growing ever more central to our knowledge-based economy. In 1999, American-born scientists were granted 90,000 patents, compared to 70,000 from scientists from all other countries. By 2009, more patents were granted to foreign-born scientists (96,000) than to Americans (93,000).61
The economic benefits from high-skilled immigration are enormous. As of 2005, engineering and technology firms started by immigrants in the United States produced $52 billion in annual sales and employed 450,000 workers.62 In a very real way, immigrants are the fuel of America’s economic engine.
Continued American leadership in technology is absolutely vital to future economic growth. In his recent book, The New Geography of Jobs, Enrico Moretti, an economics professor at the University of California, Berkeley, finds that every high-tech job in a metropolitan area produces five service jobs in the local economy, compared to 1.6 service jobs created by every job in the traditional manufacturing sector.63
But if we continue our current misguided immigration policies, the supply of high-skilled foreign workers will dry up. Congress recognized this reality in the 1990s when it began to increase the number of H-1B visas for highly skilled foreigners to 115,000 in 1999 and 195,000 in 2001. But i
n the aftermath of 9/11, the increased numbers were not renewed.64 H-1B visas now are capped at 65,000 annually, with another 20,000 visas for foreign students earning advanced degrees from American universities.65 Those numbers are hopelessly inadequate to preserve America’s leadership role in technology.
Indeed, the quotas for highly skilled foreign workers are so low that in some recent years the slots often were filled within days.66 Nearly all of the H-1B visas are secured by workers who are sponsored by major companies,67 with the result that few highly skilled foreign workers are available to small firms or to start their own companies. Not only are the numbers too small, but the process is complex, with the effect that it often costs sponsoring companies $40,000 to $50,000 in attorney fees to secure a visa for each highly skilled worker.68
The shortage of H-1B visas was worsened with the passage of the American Recovery and Reinvestment Act of 2009. Buried inside was a union-backed provision called the Employ American Workers Act, which restricted H-1B visas for any company that received federal recovery assistance. “Within days of the president signing it into law,” recounts Matthew J. Slaughter, professor and associate dean at the Tuck School of Business at Dartmouth College, “a number of U.S. banks reneged on job offers extended months earlier to foreign-born M.B.A. students.”69 The net result, says Slaughter: “Lost ideas. Lost jobs. Lost taxes.”