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If Trump Were Serious About Immigration
When looking back at the 2016 election, historians will undoubtedly be able to identify the principal fault lines that drove the tectonic shifts we’ve seen, particularly among Republicans. However, I’m not yet throwing in the towel on the idea that Donald Trump can be denied the nomination. I think his ascendence would be a disaster for the party and our nation, given that the best evidence available indicates that Trump will perish bigly in a ball of electoral flames like Sinclair in The Rocketeer. 
That said, it seems clear that the proximal causes of these ructions revolve around immigration policy. Trump has promised to address this matter and some of his positions aren’t terrible. However, they miss the fundamental issue that bedeviles us. The reason why we have an immigration problem does not lie in the lack of a wall, but in economics.
As we all know, demand tends to create supply. We see this on a daily basis in the the drug war. Why does America have a problem with violence related to drugs despite their prohibition? Mainly, because narco-terrorist gangs are rational actors in the market, and supply their customers with the products they badly desire. Sadly, Americans want drugs and are willing to pay premiums that exceed the risks of criminality, with the inevitable outcome being violence among the gangs and with law enforcement. If demand for drugs were less, there would be correspondingly fewer problems with drug-related violence.
The labor market is little different. There is a demand for hard-working people who are willing to be paid less than prevailing legal market wages. There also happens to be a convenient (though illegal) route for bringing them here.
The issue with both drugs and immigration is one of demand, not supply. So long as we (and through us, Trump) address only the supply side of the matter, we will fail to get the results we want.
Trump’s prescription for addressing immigration’s supply side is to choke it off by erecting a physical barrier at the border. It would simultaneously serve as a powerful symbol of our resolve … and an ironic symbol of our economic illiteracy.
The United States of America is the third largest nation in the world by population. We are also the fourth largest nation by geographic area. There’s a lot of space, with a long series of borders for people to enter and a lot of area where people can hide. That plan to track down and deport 12 million illegals? Good luck with that.
I concede that a wall would make it marginally more difficult to enter the country and would likely reduce illegal immigration somewhat. It would not, however, address the underlying cause of the problem: i.e., the demand for workers who don’t carry the regulatory and wage baggage that Americans are encumbered with.
Outside of some generic discussion about repealing Obamacare, Trump doesn’t bother to address some of the issues that exist with employment regulation (which is a tax on employment hidden from employees) in the form of payroll taxes, unemployment insurance, health insurance mandates, and various costly regulatory burdens that have given rise to the human resources profession. Such people add little value to the bottom line of a company but are, nonetheless, required in order to maintain regulatory compliance with the latest federal and state laws as a company approaches some critical mass of size.
Given all this, many businesses are willing to skirt the law and hire illegals not only to avoid the higher salary demanded by Americans, but mostly to avoid the regulatory headaches that come from hiring them.
To demonstrate the absurdity of this situation, by the time you have hired and employed a person working for just $7.75/hr, (annual salary $16,000) the total annual cost of employing that person balloons to well over $20,000 once you’ve factored in insurance, taxes, and other regulatory costs.
It should go without saying that the practical effect of hiring illegal workers is not only to deprive Americans of potential employment, but to simultaneously drive down average wages within that sector. Moreover, since businesses are in competition with one another, it’s hard for one company to remain above the fray and place themselves at a huge competitive disadvantage by hewing strictly to the rules. In short, legal American labor has been made artificially expensive and uncompetitive not because of any failure of the worker, but — in large part — because of the regulations and taxes imposed upon his labor. Breaking the law, unfortunately, pays dividends in excess of the potential costs. Hence, illegal immigration.
On all this, Trump is largely silent and shows no apparent understanding or interest in developing a plan to de-magnetize employers from drawing in illegals.
Returning to the demand side of the of the ledger — which can and should be addressed as well — a better solution than the wall might conveniently sits in our wallets or filing cabinets: the Social Security Card.
When applying for employment, our SSN is one of the first pieces of information our potential employers look at. It provides employers key insight into a potential employee’s life, employment history, credit, and criminal background.
Bizarrely, SSNs lack even the most rudimentary security features. Various state and federal-issued ID cards already incorporate biometric security features, and it’s high time that a similar scheme were implemented for Social Security. The benefits would be many-fold.
Perhaps President Trump (!) could, upon his ascendance, propose that Congress immediately craft legislation requiring that the Social Security Administration to improve the security features of its IDs to include mandatory biometric data capture associated with our SSNs. This could be accomplished via a variety of means — fingerprint or retina scan, facial recognition or even vascular pattern recognition — many of which are already in place on our drivers’ licenses.
This information could be curated by some third party that the government contracts with (such as Visa, or another company that specializes in carrying out millions of secure data transactions daily with minimal error rates) in order to guarantee its security and accuracy. Then, Congress could upgrade and mandate the E-Verify system to check a potential employee’s SSN (now paired with biometric data)in order to ensure their legal presence.
This — in combination with stiff administrative penalties for violating these employment requirements and addressing the supply-side matters — will quickly wring most of the illegal labor out of the employment system. Mitt Romney’s self-deportation would quickly begin to outpace actual deportations without the need to pursue costly and inefficient legal hearings against illegals. Having an American birth certificate and a verified Social Security ID would level the playing field and give Americans the leg-up they want in the market.
Is Donald Trump fundamentally serious about these matters? My suspicion is that he is not. If we were, he could use the immense microphone to call attention to them – to communicate to the American people that he has a clue and has done his homework on the issues that matter to them.
As it currently stands, it seems as if he would prefer to continue his current path of insubstantial demagoguery. What a shame.
Published in Domestic Policy, Economics, Immigration
I disagree. It was the problem in his mouth at the moment of his splenetic venting, and people latched onto it, but I think he could have chosen almost any topic and achieved the same result.
You forget the biggest demands:
Let me clarify the last because this is another instance of stupid or dishonest politicians who talk about legalization with out citizenship. Noncitizen immigrants actually are better electorally for the Democrats than are citizens in one regard. When legislative districts are apportioned, they include noncitizens in the apportionment. If a district would normally have 100k voters, the Democrats could leverage their voters by bringing in immigrants. 100k citizen democrats can be spread out over 5 or more districts filled out by noncitizens. Thus we see instances of gerrymandered Republican districts often having five or more times the voters of gerrymandered Democrat districts. The Democrats gain seats without actually having to pander to the people filling out their districts as much as they would have if those people voted.
I’m not sure. Is there another issue which has such a fervent following that he could have tapped into? The number of people who believe that immigration and border security are their number one issue are relatively small – but they really believe it to be the single most important issue.
The trade stuff sort of falls along the same axis in that you have the “foreigners bad” sentiment up and down the Trump coalition.
I think he tapped into the fervor way more than the issue. If it were about an issue (or issues) he would have lost more support the longer he went on about it.
Exactly. He tapped into the “I’m getting screwed!” feelings. His support seems, to me at least, to be less about unrigging the game than about rigging it in favor of his supporters. He’s done the “be more like democrats” shtick the establishment is always being accused of, but he’s taken it to a level unimaginable a year ago.
He’s promising to fight and win and divide the spoils among his followers — just like democrats always do. Conservatism has always promised to give each person a shot; Trump promises to give each person a share.
BTW, I agree with the rest of your post. The right has always been leery of a national ID card, but if the states can’t/won’t handle the matter then perhaps it is a fit duty for the federal government. I recommend we shut down HHS, HUD, EPA, DOE, etc. to pay for it.
This is not an April Fools’ Day post.
Sorry to disappoint.
I briefly contemplated a post where I announced my support for Trump… but I knew nobody would believe that.
Bonus points for the picture of Timothy Dalton from The Rocketeer.
A sadly unappreciated movie.
The other way to address incentives is to either make America less attractive to immigrants, or to make other countries more attractive to them.
Reducing America’s attractiveness: Poor economy, onerous regulations, lower government handouts to illegals. Of these, only the last sounds like a good idea to me, which helps explain why Obama has focused on killing the economy and business climate.
Make other countries more attractive to workers: Help them become more like the America of Yore: more freedom for workers and employers, more economic dynamism, etc. In other words, export the American dream. We can do this, in part, by lowering trade barriers so people in Africa, for example, can more easily do business and make their livings without leaving Africa. We could do it with Cities of Refuge in the Middle East or other trouble spots.
I think the answer to this question is explained here.
Which clarifies another reason why Democrats would be in favor of raising the minimum wage even if it increases unemployment.
It also increases the incentive to hire illegals and should increase migration that can be exploited politically.
Chilling article is chilling.
Good ol’ Leftist desired social outcomes. Let the government decide who is righteous and who is damned. May those ever wise and all seeing guardians determine everyone else’s lot. We will all be equal, some will just be more equal than others.
I think your analysis of the economics and incentives is spot on, but you still mis-state the problem. The reason we have an immigration problem is because society can’t agree about the nature of that problem, or if it’s a problem at all. Certainly enough people think it’s a problem that politicians need to pay lip service to it, but most of them still think their best strategy is to rail against it without actually doing much about it. I can’t say they’re wrong to conclude that.
If we ever do decide to do something about it, the next problem is that most people will refuse to deal with the demand issue. It won’t be lack of recognition or understanding. This will be just like the war on drugs and abortion. People support going after the ones who make money from it, but everybody else is a victim and should be treated gently. Efficacy is secondary to “fairness”.
Great post, Maj. Appreciate your drawing attention to the fact that much of the economic discomfort is a demand-driven problem (aided of course by bad policies).
But I’m a little more pessimistic about how easily the situation could be rectified. The problem is that the difference in pay which is acceptable to a Mexican worker compared with a typical American worker may still be too great to meaningfully tip the scale towards domestic labor even if we got rid of most of the regulatory “bloat” of hiring a legal worker.
Thought experiment: imagine that we could rid of all of the regulatory impediments to hiring, including minimum wage – what would be an hourly rate for an American worker in the fields currently dominated by illegal Latino workers? I.e., what is the price point in raw salary at which an illegal becomes less attractive?
I imagine the answer would be very low – perhaps even $5/hr or less. Are there really millions of Americans who will work at the same productivity as their illegal Latino counterparts for this wage? Or would this situation lead to even more social unrest and class hatred?
I do not know which of the other candidates, Democrat or Republican, have addressed this matter from the angle with which you do. It’s an excellent point you make regarding the extra costs for an employer beyond basic wages. But what would you do? Certainly there are many regulatory procedures which could be eliminated. But the main costs of Social Security, Medicare, and health care could not be eliminated for most employers, nor would we want them to.
I love your ideas concerning the Social Security card itself. it remains the predominate method of ID with our government. As such it also opens the door for much mischief when it pertains to identity theft. And yet our number and birth date are requested on so many forms with so many companies and agencies that we leave ourselves open for the taking, with regards to our identity.
Yes. When they say illegal immigrants do the work Americans won’t do, what they really mean is they do the work that Americans aren’t allowed to do.
I am a strong proponent of freedom, which means that I think America should allow workers of all kinds in to work. But only if those workers have no recourse to public funds, and seek to assimilate by learning English, etc. There are natural incentive adjustments that we should be making anyway. No immigrant is entitled to anything.
I want people within our borders who want to be Americans, and to make an honest living.
“perish bigly” might be the best two-word combination I’ve read in the past several days.
I would say this is a chicken-and-egg question.
One of the main reasons we as a society can’t clearly define whether illegal immigration is a big problem is precisely because of the economics – despite all of the fingerpointing at big business and chambers of commerce, the biggest beneficiaries of illegal workers are middle class American consumers.
Almost everyone living in a region with a high percentage of illegal workers knows at least one cherished small business that would become unprofitable were it not for illegal workers – either in the kitchen, the housekeeping department, the janitors, etc. Heck, many middle class homeowners would not have been able to afford to renovate their home or add on that porch had their contractor not used illegal workers.
The reason so many people start staring at their feet when it comes to illegal immigration isn’t because big business and La Raza have bribed every politician (even though they have), it’s because most middle class citizens feel the benefits of illegal immigration in their pocketbook every day.
The question is not exactly price but also productivity. I have no doubt in my mind that we have American workers that could be paid at relatively considerable wages and add more value to a firm than many low skilled illegal immigrants.
But if we were to remove all those regulations then even the minimum wage would be gone and workers would be able to negotiate their wages with employers. I have a feeling that the regulatory costs (which estimates put in the trillions of dollars) imposed on labor in the USA is considerable and that once eliminated native workers would definitely have a leg up against foreign workers.
Native workers would most likely be more productive (even if marginally more costly) and thus equal to their value in wage, they would take less time to find and move and they probably speak English.
I am all for this as well, but we can’t have a federal safety hammock and have this work.
The minor problem is that illegal immigrants may somehow access public assistance.
The major problem is the citizens collecting the assistance that will not do the jobs the illegal immigrants are happy to take. I’ve no issue if someone doesn’t want to do certain jobs, but there should not be a public assistance check reinforcing that choice or making it less uncomfortable.
Well done. Greed is a powerful lure. We sometimes forget the object of greed is not just material wealth, but also power. While material wealth can be counted or assessed in absolute terms, power shared can be an illusion. The mob calls for the revolutionary leader who will change the status quo but secretly, perhaps not so secretly, they think they will now be in charge and those “Establishment” types will get theirs!
This is precisely my question, and I’m somewhat skeptical.
Most of the jobs taken by illegal Latin American workers are low- to unskilled jobs, so there is little opportunity for American workers to gain an edge through education. Language is certainly an issue, but once the Latino workforce reaches a certain size then having a bilingual foreman becomes a trivial matter.
In the end, it probably comes down to the factors of reliability and dedication. And having put in my own time washing dishes and scrubbing toilets in the hospitality industry, I’m not convinced that the average American in this position is so vastly superior to the average Hispanic worker to command a much higher wage.
I agree that the language alone would contribute to productivity.
I still contend that this experiment cannot move forward in the presence of federal welfare state.
This is a critical point.
When Cape Cod saw a massive influx of Brazilians in the 1980s, it was made possible because the Brazilians were content to have twenty people living in a three-person dwelling.
This is the standard-of-living issue with immigration, which is how this issue should be framed for states, cities, and towns. It is not a racism issue. It is a numbers and ethnicity issue.
Furthermore, when the immigrants’ English-language skills are poor to nonexistent, they don’t participate in local education (they can’t, truthfully) so the schools’ achievement levels drop because of the lack of parental involvement in the kids’ education and in the schools themselves.
Crime goes up also because if the mix of immigrants includes illegal immigrants, the illegal immigrants don’t report crimes–they can’t for fear of deportation.
Also, the lower working class and middle class tends to move out of an area after a while when it reaches a tipping point of immigrants. That’s how ethnic neighborhoods and cities evolve.
Very well said. However, I’m still skeptical this could work in practice without social unrest.
If unskilled workers’ only choice is to accept a backbreaking job for a measly $6/hr while kids with college educations are making at least $40,000/year or more writing emails in an air-conditioned cubicle, we will end up with the same class warfare battle currently on display, if not worse.
This is why I think we need to strengthen programs like EITC if we are to ever reduce our dependence on illegal foreign labor. Like all welfare programs, EITC is ugly and has many warts.
But the other ugly truth is that we’ve reached a point in this country where working one’s [butt] off just to live below the poverty line is considered undignified and even unacceptable. So if some welfare is inevitable, it should at least be conditioned on people actually working.
I’m late to the conversation, but I feel the need to dust-off my hobby horse: A major part of any solution long-term solution to illegal immigration is to help Latin America develop. If it’s possible to build a good, vibrant, prosperous life there, there’s no need to climb fences and break American laws.
Majestyk,
I think that your economic analysis is spot on, and your solutions look good. Are they enough, though?
ctlaw makes an excellent point: The Dems have a big political incentive for getting in as many immigrants – legal and otherwise – as possible. The thing about a wall is that it’s there regardless of who is in the White House making executive decisions about which laws to enforce and which to ignore.
Also, BrentB67’s point about the welfare state draw needs to be addressed.
I think this is very situation dependent.
An anecdote: while in college, I worked at a resort in Austria. The front office, cooks, waitstaff, etc. were all Austrians/Germans, but the prep cooks, dishwashers, housekeepers, etc. were Hungarian. None of the Germans spoke Hungarian, and only one of the Hungarians spoke German.
Because this was the EU, the Hungarians were legal, had to be paid at least minimum wage, and our employer had to abide by all of the same regulatory hurdles as if he had hired Austrians (indeed, more effort was actually needed to hire Hungarians due to visa paperwork). But my boss hired the Hungarians every single year.
Of course this is just one anecdote, and it’s easy to write it off as not applicable to the US. But the moral is universal – even holding all of the financial/regulatory burdens equal, a language barrier is less of an issue to an employer than finding dedicated, hard-working unskilled labor.
And in most wealthy countries, the only people willing to do menial labor are those at the bottom of the socioeconomic scale who often arrived at that position through issues which make them unattractive employees – while foreigners willing to do those same jobs often have a much higher motivation and dedication.