Unlike the United States, Canada, Australia, and the United Kingdom have developed “value-added” immigration policies designed to boost GDP and per-capita incomes. These countries accept the proposition that markets are valuable institutions. But they also recognize that in highly competitive globalized economies, markets untempered by moderating policies and institutions will produce declining real incomes for many or most workers and unsustainable inequalities in income and wealth. In Value-Added Immigration Ray Marshall details how these three major U.S. trading partners developed their immigration policies, how these policies work, and what specific features can be adapted for the creation of a high-value-added U.S. immigration policy. Marshall, professor emeritus at the LBJ School of Public Affairs, University of Texas at Austin, served as secretary of labor in the Carter administration.

Executive Summary

The United States, Canada, and Australia have long histories as “immigration nations.” But along with the United Kingdom, which has become an immigration nation in the last 35 years, Canada and Australia have explicit employment-based migration policies that are closely related to other economic and social objectives. In contrast, U.S. employment-based migration policies are chaotic and unconnected to specific national goals. Indeed, despite its importance to the American economy and society, U.S. foreign-worker policy is more implicit than explicit; it falls under the purview of many agencies rather than one single high-level federal agency and it is governed by laws that are not transparent, fair, enforceable, or sensible.

Efforts to reform U.S. immigration laws have much to learn from countries with more coherent, evidence-based, and effective policies. Australia, Canada, and the United Kingdom have developed similar techniques and metrics to better manage employment-based migration. Their systems share the following key characteristics:

• Coherent policies and programs designed to effectively manage and control migration, complement and support value-added economic policies, and minimize wage competition and the displacement of domestic workers.
• High priority for migration policy within the government. In these three countries, migration programs are managed by high-level public officials with strong support from their prime ministers.
• Flexible annual goals or targets for immigration that emphasize economic migration, predominantly employment-based migration. These goals or targets can be altered at any time to reflect changing market conditions.
• Greater emphasis on economic migration and less emphasis on family-based migration. In contrast, the United States has continued to stress family-based immigration over economic migration.
• A two-step immigration system, which first imports temporary workers, then helps them qualify for permanent residency. International students studying in host country postsecondary institutions are particularly valued because they improve higher education, subsidize domestic students, contribute to national economies, and, if they qualify, make valuable permanent residents.
• Admission of foreign workers mainly for vacancies that cannot be filled by domestic workers. Unlike the United States, these countries have laws and regulations requiring employers to limit international recruitment to occupations in short supply or to offer jobs to resident workers before hiring foreign workers.
• Provision to foreign workers of at least the same wages and working conditions received by similar domestic workers. 
• The development of strong migration data and research support processes, both in-house and commissioned. 
• Ongoing labor market research programs to identify and measure skill shortages.
• Points-based systems to give quantitative weights for preferred migrant selection characteristics. These systems are more objective than decisions made by immigration officials, and their flexibility allows the mix of characteristics and total point scores to adjust migration to changing conditions.
• Minimization of the use of temporary low-skilled or “guest worker” programs. Restrictions on these programs recognize the difficulty of preventing the abuse of temporary migrants who are attached, or “indentured,” to particular employers who determine migrants’ wages and working conditions, whether they attain permanent residency, and whether they have the right to return.
• Efforts to integrate migrants into the economy and society. 
• Attention to balancing contending economic forces when crafting migration policies. The evidence from Canada, Australia, and the United Kingdom suggests that opposition to migration usually will rise with unemployment, population density, or sudden uncontrolled surges in migration. Political leaders have worked to prevent resurgent anti-immigrant movements from inciting political and social unrest.

While political, cultural, and institutional differences make it impossible for the United States to precisely copy the employment-based migration policies of these liberal democracies, the country can heed some obvious lessons.

Lesson #1: Adopt a strategic vision for value-added immigration

If the United States wants to maintain and improve incomes, it should avoid low-wage competition in favor of the high-value-added strategies implemented by Australia, Canada, and United Kingdom. Policies to admit foreign workers should seek to improve productivity and innovation and overcome labor shortages, not to depress domestic wages and working conditions, displace domestic workers, or substitute migration for public and private investments in education and training.

Lesson #2: Assign high-level federal responsibility for employment-based migration

Responsibility for employment-based migration should be assigned to a high-level federal official, most logically in the Department of Labor, not scattered throughout the federal government. It would be inappropriate to give this responsibility to the Department of Homeland Security, because employment-based migration is primarily a labor market issue, not a law enforcement or national security issue.

Lesson #3: Appoint a high-level ad hoc commission to recommend measures to improve the efficiency and effectiveness of the employment-based migration system

The present U.S. employment-based migration system is grossly inefficient, primarily because of an inappropriate legislative framework, inflexibility in adjusting migration to labor market needs, poor matches between administrative resources and the magnitude of the problem, and ineffective enforcement of worker protections. From the successes and mistakes of Canada, Australia, and the United Kingdom, the United States can learn how to create smart regulations that enable the responsible agency to assemble the professional personnel, advanced technology, structures, and accountability and incentive systems required for a more effective employment migration system.

Lesson #4: Create a permanent, independent Commission on Foreign Workers

A critical component of an effective employment-based migration system is an independent data, research, evaluation, and advisory body to provide legislators and migration officials with objective, evidence-based, professional advice. An independent commission could establish definitions and measures of such factors as skills shortages, which would inform program design. A commission could also help program administrators ensure that they are collecting data crucial to policymaking, including data on work visa holders and their impact on communities, industries, and the U.S. economy.

Lesson #5: Enact comprehensive immigration reform

The effective management of economic migration requires comprehensive reform of the country’s dysfunctional immigration system. Due to irrational operational control of borders, ineffective work authorization systems, and other failures, the United States has the industrialized world’s largest pool of unauthorized migrants, which undermines legal foreign worker programs. Reforming the system requires a carefully orchestrated combination of carrots and sticks that would enable unauthorized migrants to earn legal status, increase the odds of deportation for ignoring opportunities to earn legal status, and make unauthorized entry into the United States more difficult.

Lesson #6: Reform and improve employment-based migration policies and programs

International experience suggests the following guidelines for an American foreign worker system based on high-value-added principles: (1) admit foreign workers mainly for vacancies that cannot be filled by domestic workers; (2) refuse to allow foreign workers to depress wages and working conditions or displace American workers; (3) refuse to permit the importation of foreign workers to substitute for the education and training of American workers; (4) clarify the enforcement authority for all foreign worker programs; (5) continuously improve the administration of foreign worker programs; and (6) require labor recruiters to be registered and meet minimum qualifications.

Lesson #7: Reform temporary foreign worker programs

Reforming employment-based immigration in the United States includes reforming the country’s existing temporary foreign worker programs. The H-1B, L, H-2, and Exchange Visitor (J visa) temporary worker programs share a common lack of sufficient oversight and do not promote the national interest or protect foreign or domestic workers very well. The H-1B program for foreign workers in “specialty occupations” requiring at least a bachelor’s degree appears to enable employers to pay far below market wages, thus depressing domestic wages. L visas for intra-company transfers are virtually unregulated and used by some corporations to displace American workers and outsource American jobs. Reports of abuses in the H-2 temporary foreign worker programs are widespread, and some categories of the Exchange Visitor Program have become work programs that bear little resemblance to the cultural and educational exchange purposes for which they were designed.

The costs of the status quo call for action

Because the United States has allowed unauthorized migration to become large and deeply entrenched, it is very hard to change. Indeed, many immigrant advocates do not believe unauthorized migrant flows and pools can or should be significantly reduced, arguing that the benefits of such flows far outweigh the costs. But unlawful migration subjects migrants to increasingly serious and often fatal risks; perpetuates marginal, low-wage economic activities; undermines compensation structures and protective labor market institutions; forces migrants and their families to live uncertain and insecure lives outside our polity, social safety nets, and labor laws; generates social conflict that threatens democratic institutions and the rule of law; and will become more intractable the longer we wait to fix it.

The only sensible way to clean up the mess the United States has allowed to spread is to allow unauthorized migrants to earn lawful resident status by registering, taking their place at the end of the legal permanent residents’ line, and paying reasonable taxes and fines. While critics argue that adjusting the status of unauthorized workers would “reward illegal behavior,” this argument would have more credibility if U.S. immigration laws were fair, transparent, enforceable, and sensible. Paying heed to the experiences of three important, industrial nations that have addressed the same challenges more successfully with thoughtfully designed employment-based migration programs seems an obvious step in achieving a sensible migration system in the United States.

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Table of Contents

Preface vii
Acknowledgments ix
Executive Summary xi
Acronyms and initialisms used in this book xv

Chapter 1: The Canadian Employment-Based Immigration System 1

• Basic Canadian immigration policies 2
• Evolution of Canadian policies 2
• Canadian multiculturalism 4
• Economic goals of Canadian immigration policy 6
• The legal and administrative framework 7
• Immigration goals and targets 8
• Illegal immigration 13
• Foreign worker programs 14
• The skilled worker selection process for permanent immigrants 14
• The points system 14
• The Canadian Occupational Projection System 18
• From COPS to Priority Occupation Lists 22
• Economic conditions of Canadian immigrants 23
• Emigration 25
• Temporary foreign worker programs 26
• Foreign students 27
• The TFWP process 27
• Pilot projects 28
• The Seasonal Agricultural Workers Program 28
• Problems with the Seasonal Agricultural Workers Program 30
• Addressing the shortcomings in SAWP 33
• Live-in caregivers 35
• The Non-Immigrant Employment Authorization Program 35
• Acceleration of temporary foreign workers and programs 35
• Low-skilled TFWs 36
• The Low-Skilled Pilot Project 37
• Regional lists of occupations under pressure 38
• Critiques of the Temporary Foreign Worker Program 38
• Union criticisms of the TFWP 38
• Academic evaluation 40
• Government responses 42
• Standing Committee on Citizenship and Immigration recommendations 43
• The Auditor General’s report 46
• The Canadian Experience Class Program 47
• Auditor General critiques of other CIC programs 47
• The Auditor General’s conclusions 49
• CIC’s response 50
• Conclusions 51
• Endnotes – Chapter 1 55

Chapter 2: Australia’s Employment-Based Immigration Policies 61

• Historical background 63
• Population diversity 64
• The politics of immigration 66
• Asylum seekers, refugees, and illegal immigration 67
• Public opinion on immigration 70
• The Australian immigration system 71
• International students 71
• The two-step process 75
• Immigration streams 76
• The Australian points system 78
• Skilled visa categories 84
• The new Skilled Occupation List 86
• Employer-sponsored migration 87
• Canada and Australia compared 88
• Conclusions on Australia-Canada comparisons 92
• The 457 visa and other temporary foreign worker programs 93
• Background of the 457 visa 94
• Statistical profile of 457 visa holders, 2009–10 95
• Criticisms of the 457 visa program 96
• The report of the Integrity Review Commission 99
• The government response to the commission’s report 100
• Employer and employee 457 obligations after the reforms 101
• Conclusions on the 457 visa program 103
• Labour Agreements 104
• Seasonal workers 105
• The Australian Pacific Seasonal Worker Pilot Scheme 106
• The TNS Australia interim evaluation 108
• Conclusions on the PSWPS 109
• Conclusions on Australia’s immigration policies 110
• Endnotes – Chapter 2 113

Chapter 3: The Historical Background of Immigration Policies in the United Kingdom 119

• Liberal immigration policy yields to zero-net-migration growth 120
• Political reaction to rising immigration in the 1960s and 1970s 122
• Entry into the European Community  123
• Continuing political importance of immigration 124
• The flow of refugees 124
• Recent immigration trends 125
• Unauthorized immigration 126
• The politics of immigration today 127
• Integration policies 131
• Prime Minister Cameron’s attack on multiculturalism 133
• Conclusions 136
• Endnotes – Chapter 3 137

Chapter 4: The British Employment-Based Immigration System 139

• Structure of the points-based system 139
• The policy context 140
• The Migration Advisory Committee 141
• Structure and mandates 141
• MAC’s methodology 142
• The ‘skilled’ component 143
• Identifying skilled occupations 144
• ‘Shortage’ concepts 145
• Identifying shortages 146
• The ‘sensible’ component 149
• Determining ‘sensible’ 149
• A ‘sensible’ illustration 152
• MAC confirms its methodology 154
• Conclusions on the Migration Advisory Committee 155
• The operations and purposes of Tiers 1 and 2 of the points-based system 155
• Tier 1, highly skilled workers 155
• Tier 2, skilled workers with a job offer 163
• Key features of Tier 2 164
• Prevailing wages under Tier 2 166
• Tier 2 routes 166
• Evaluation of the RLMT 167
• Enforcement of the RLMT 168
• The intra-company transfer route 169
• New ICT subcategories 173
• Evaluation of the shortage occupation route 174
• MAC conclusions on Tier 2 174
• The coalition government’s cap on foreign workers 175
• Conclusions on the British employment-based immigration system 178
• Endnotes – Chapter 4 181

Chapter 5: Summary, Conclusions, and Lessons for the United States 183

• Summary of employment-based migration in Canada, Australia, and the United Kingdom 186
• Lessons for the United States 194
• Conclusions on lessons from Canada, Australia, and the United Kingdom 220
• Endnotes – Chapter 5 223

About the Author 226
About EPI 227
Other EPI publications by Ray Marshall 228