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Instead of Cutting Legal Immigration in Half Over a Decade, Let’s Increase It
I want to make sure I understand this. President Trump is supporting an immigration bill from GOP Senators Tom Cotton and David Perdue that would replace, as The New York Times explains, “a system that favors family ties in deciding who can legally move to the United States with one based on skills and employability.”
So more a merit-based system that gives an edge to those who have advanced skill and restricts those who don’t.
I campaigned on creating a merit-based immigration system that protects U.S. workers & taxpayers. Watch: https://t.co/lv3ScSKnF6 #RAISEAct pic.twitter.com/zCFK5OfYnB
— Donald J. Trump (@realDonaldTrump) August 2, 2017
The end result here, according to The Wall Street Journal paraphrasing a Cotton aide, is that “the legislation would decrease overall immigration to about 638,000 in its first year—a 41% drop—and to about 540,000 by its 10th year—a 50% reduction. The number of employment-based green cards issued each year would remain at 140,000.”
A few things:
First, the US is hardly an immigration outlier here, whether it’s the average annual inflow of immigrants as a percent of population or the stock of immigrants as a percent of the population.
Second, it’s not unreasonable to suggest that “the impact of immigration on average native-born workers remains small and inconsistent, with no evidence to show a large detrimental impact on less-educated workers.”
Third, economists strongly agree that the average US citizen would be better off if a larger number of highly educated foreign workers were legally allowed to immigrate to the US each year.
Fourth, a demographic-driven slowdown in US labor force growth means real GDP growth is likely to be slower in the future than in the past.
Fifth, slower labor force growth means we need faster productivity. And “evidence also shows that immigrant scientists and entrepreneurs play a disproportionate role in driving the technological advances that power productivity growth in the United States.”
So given all that, isn’t this bill off point? How about a bill to sharply boost overall immigration with an emphasis on attracting many, many more immigrant scientists and entrepreneurs? This from McKinsey: “The nation could generate tremendous impact on productivity in the near term and beyond 2020 by increasing the annual flow of high-skilled immigrants.”
And as I have also noted:
Roughly half of U.S.-based unicorns — technology startups worth at least $1 billion — were founded by immigrants, with India the top nation of origin. As venture capitalist Paul Graham tweets, “This is a good time to remember that without immigration the U.S. will only have 5 percent of the top people in each field.” And more to the point regarding the Trump ban, as The Atlantic notes, “Iranian-Americans founded or hold leadership positions at Twitter, Dropbox, Oracle, Expedia, eBay, and Tinder.”
If a smart person with a good idea wants to do great things, shouldn’t America be the place that helps make that ambition happen?
Published in Economics, Immigration
No thanks. Rubio lost. America first.
Agreed. If we switch to a merit based system I see no reason why we wouldn’t want the best of the world to move here. Let’s steal the best the world has to offer and Make America Great Again. America First!
So the laws of supply and demand don’t apply to low-skilled/less-educated workers. Increasing the supply doesn’t decrease the price. Good to know.
I question a lot of what you consider a given.
Yes . . . for our citizens. I’d like to see a moratorium on legal immigration for a couple of decades. Skilled legal immigrants that come here to work (think H-1B visas here) are taking jobs American workers are already doing because the companies that bring them in want cheaper labor (IT is the big culprit). This must stop.
As for unskilled labor (illegal or legal), the pro-immigration rally cry has been, “They do jobs Americans won’t do.” Baloney. Americans will do the jobs if the price is right. Also, the ambitious immigrants want to do the same thing our unskilled citizens want-that is, to develop skills and move up the ladder. They eventually do jobs Americians will do, like construction, the service industry, etc. This must stop also.
You assume that native born workers stay in low-skilled/less-educated positions.
There seem to be a lot of economists who confuse the short term effects of immigration and long term. Right now we have high unemployment, (i.e. people who aren’t working, not the silly definition of not looking for a job), and weak wage growth so the short term impact of more immigrants is negative. We should want to pull our own workers back into the work force. They’re not some abstraction called growth. Indeed that should be a major priority, not for economic growth but out of basic humanity. We don’t want them on welfare, killing themselves with over doses, nor remaining single and fathering children because they are poor bets as spouses. These things are all real among the long term unemployed or never employed. A lot of our potential workers can’t compete with immigrants from almost anywhere else until they’ve gotten a job and worked, in some cases for years. The long term may be positive but we can’t know. There are too many unknowns , moreover we can’t see the long term but the disastrous short term is right in front of us. This is a good approach but it should be complemented by efforts to end minimum wages and get the Feds out of welfare. A dearth of new unskilled immigrant workers will drive wages up and make minimum wages less harmful, but we shouldn’t wait. We know they are deeply harmful as is dependence.
If you have an idea of how to create more jobs other than through growth I’m all ears.
‘No evidence of impact’ is hardly the same thing as ‘evidence of no impact’… Especially if you have not really looked for any evidence. Seek not. Find not.
How about we:
Otherwise, your proposal smells like all the lies we’ve previously been told by people who have no desire to enforce any immigration law.
I think the answer to that question is that people with jobs create more jobs. The real problem isn’t people coming here that work. The problem is people come here that won’t work and end up sucking the money out of our wallets to support them.
But you can’t say that. Heaven forbid we criticize the welfare state.
Not at all. Consider two states of the world.
state 1. there is a tranche of native born low skill workers. And no low skilled immigrants.
State 2. There is an identical tranche of native low skilled workers. In addition, we import a group of unskilled immigrants. Ok then, assuming demand for unskilled workers is the same in state 1 and state 2 , the pool of unskilled labor is larger in state 2 and hence wages lower.
It matters not whether the native tranche gets smaller or bigger over time. As long as we are adding additional immigrants to that level, supply is larger than it otherwise would have been and hence wages lower.
I don’t buy this at all. We have the best universities in the world, correct? Then why don’t we train more Americans to be the best of the best?
There is definitely a strong political inclination to lower the standard of merit based high. I think the economics of the proposal make sense but it is true that we’ve been burned before on immigration.
Because our Universities are training Americans to be Communists?
Just a guess.
Tranche? Is that a word we really want to use? We’re all adults here. Let’s be more sensible.
:)
Indeed, but college isn’t for everyone. Some just don’t have the ability. Plus @jamielockett has a point. Low skilled today doesn’t mean low skilled tomorrow. High school kids and college kids need jobs too.
You have completely ignored the impact of immigration on the demand side. If both supply and demand increase, the wages would not be reduced.
But if you restrict immigration, you are essentially imposing a form of price control on labor that artificially increases prices, while at the same time depressing demand. That results in capital misallocation.
Huh? Tranche from French, means slice or portion or pool. It’s used in investments and economics all the time.
Because they can’t handle the material at these universities.
Indeed. I’ve ignored the impact of increasing amounts of low wage unskilled labor on the demand for low wage unskilled labor. I’ve done so because I don’t know any low wage unskilled people who employ other low wage unskilled laborers. If the supply of unskilled labor called forth its own demand then there would be no impetus for immigrants to leave their homes.
This is true. And I’m OK with that. As a worker, I don’t want wages driven to zero … Capital mis-allocation be damned.
Really? Low wage unskilled people don’t buy things? They don’t go out to the movies? To dinner occasionally?
In what world would wages ever be driven to 0? Oh, I know, a world where wages are artificially inflated and workers are replaced with machines.
Sure, but not in amounts that shift the demand curve for low skilled workers. Moreover, that money would also be spent by native workers who received s higher wage. So on the spending front it’s more or less a wash.
I am so glad you mentioned this. My unemployed IT friends who have been replaced by H1B holders at 60% of the former prevailing wage do not know the impact is small. They are also unwilling to give up their families and live crammed with 7 other people in a two bedroom apartment. When their time is up they go back to India with a nest egg to start their own firm and a new batch of H1B holders replaces them.
America does not need more immigrants.
Are we not already there to some extent? In fact haven’t people like James been telling us that robotics are going to come anyway? What are we to do with all these immigrants when robotics in the workforce increase? What of the native born?
Do you have evidence of that? This assumes low skilled workers stay low skilled and low wage for the entirety of their careers.
Like that’s not coming anyway.
Think of it this way. Let’s suppose I could demonstrate that slavery represented a more efficient allocation of capital than human freedom. Certainly Southern plantation owners were making that very argument. You going to support that because it represents a more efficient allocation?