There is much to commend in the 2013 Senate immigration bill, especially the legalization of unauthorized immigrants. Legalization is an indispensable precondition for an effective employment-based immigration (EBI) system governed by the rule of law. Such an outcome is unlikely as long as an extra-legal system is an easy option for employers and unauthorized workers. Legalization, in addition, is the only sensible way to deal with a debilitating problem the United States has allowed to fester for far too long.
Other promising provisions of the Senate bill are the proposals to increase the importance of economic (mostly employment-based) immigration (currently less than 20% of immigrants), create a Bureau of Immigration and Labor Market Research (BILMR), and establish a points system for the selection of immigrant workers.
Of course, the impact of these proposals will depend heavily on EBI’s guiding principles. If immigration displaces American workers and depresses wages, it will lead to higher unemployment, lower wages, and public opposition. If, on the other hand, immigration improves productivity and quality (value added) and promotes broadly shared prosperity, as it should, it could promote sustainable economic growth and public approval.
Immigration adds economic value by providing scarce skills, compensating for declining domestic labor force growth, and contributing to entrepreneurship, creativity, and innovation, all of which are necessary for value-added growth.
Immigration’s positive impacts can be maximized by selecting migrants who complement (and do not substitute for) domestic workers and by facilitating immigrants’ successful social and economic integration. Unsuccessful integration, by contrast, can lead to debilitating social conflict.
Immigration officials can translate these principles into practice by importing migrants to fill shortages, requiring employers to test the domestic labor market before hiring foreign workers, requiring the payment of at least market-level wages, or erecting such presumptive screens as extraordinary qualifications or high compensation levels.
The challenge for immigration authorities therefore is to manage the EBI system in ways that will maximize the advantages and minimize the disadvantages, which requires much better data and research than are currently available. That is why the proposed BILMR is so important.
An independent foreign worker research bureau with a small professional staff could make evidence-based recommendations, reduce political conflict over immigration and increase public support for this important function, provided, of course, that the system was sufficiently transparent and well managed to convince the public that immigration authorities were promoting national interests as well as those of the principal stakeholders.
It is important to specify, however, that the BILMR should not manage migration programs or decide the level and composition of foreign worker flows, actions that balance conflicting interests, a political function best left to Congress and the administration. The bureau should make recommendations that could either be accepted, rejected, or amended, similar to what is now done for refugees and asylees.
There is no better illustration of the need for an independent research agency than the disagreements over whether the U.S. faces labor shortages, disputes caused in part by the absence of an agreed-upon definition of shortage and inadequate data for verification. The slowdown in the population growth of working-age Americans is often cited as presumptive evidence of looming labor shortages. However, this slowdown does not necessarily imply either slower economic growth or the need for more immigrants. A value-added immigration policy would evaluate the sensibility of such alternatives as improving productivity or increasing domestic labor-force participation before importing immigrants.
Some labor market projections also provide presumptive evidence of shortages of college graduates. The McKinsey Global Institute, for example, projects a 2020 deficit of 1.5 million workers with bachelor’s degrees. This does not, however, mean that immigration is the best way to offset this deficit. Before resorting to foreign workers, immigration authorities should explore the sensibility of such alternatives as improving productivity, raising resident college attendance, and increasing the labor-force participation of college-educated residents.
It should, in addition, be noted that one reason for the demand for college graduates is that the declining real wages for these workers has caused a large proportion of them—almost half by some assessments—to be hired for jobs that do not require college-level competencies, thus displacing qualified workers with sub-baccalaureate education, and resulting in unemployment and wasted human resources.
And, despite talk of “looming shortages” and ill-advised recommendations to “staple a green card” to the diplomas of foreign science, technology, engineering and mathematics (STEM) graduates, there is no evidence of a general shortage of these workers. The evidence often cited is the exhaustion of the 85,000 H-1B visas shortly after bidding for them opens each year. This, however, is evidence of a strong demand for indentured foreign workers who can legally be paid less-than-market wages, not a shortage of STEM workers. Indeed, numerous credible studies have found no objective evidence of general shortages of STEM or other college-educated workers. Nor does the evidence support the assertion that visa difficulties force many “best and brightest” foreign graduates to return home. Michael Finn’s research for the National Science Foundation shows that about two-thirds of U.S. foreign science and engineering PhDs stay in the United States for ten years or longer.
Thus, a review of the evidence supports demographer Michael Teitelbaum’s conclusion: “No one who has come to the question with an open mind has been able to find any objective data suggesting ‘shortages’ of scientists and engineers.”
Evidence for shortages of less-educated workers is even weaker. These workers have had persistently high unemployment and declining real wages. And the McKinsey Institute projects 2020 surpluses of 5.9 million dropouts and 800,000 high-school graduates. The real median income of male high-school graduates fell 11.5 percent between 2000 and 2009; it fell 16.5 percent for those with 9 to12 years of education and no diploma.
The usual evidence cited for shortages of less-skilled workers is that, as their incomes rise, Americans, like people in all high-income countries, shun undesirable low-wage jobs. However, as with college-educated workers, sensible alternatives (like improving jobs to make them more attractive to domestic workers, automation, and increasing the labor force participation of domestic workers) should be examined before importing less skilled temporary foreign workers.
Despite the evidence against general labor shortages, there are undoubtedly many jobs where it is sensible to bring in foreign workers because an adequate supply of qualified domestic workers is not readily available at market-determined wages. A properly staffed and independent BILMR could make evidence-based recommendations to Congress and the administration about the size and composition of such flows. The bureau also could conduct or commission research and pilot programs to help improve foreign worker programs and design better labor market definitions and measures. A good place to start this process would be to benchmark and adapt to American conditions the best practices of other immigration nations, especially Canada, Australia, and the United Kingdom.
The U.K.’s Migration Advisory Committee has developed and evaluated a very robust participative system for refining data and measuring labor shortages combining top-down labor market statistics with input from stakeholders, experts, and the public.
The BILMR also has an important role to play in helping immigration authorities create, structure and continuously improve a points system for the selection of foreign workers. International evidence shows points systems to be effective tools to calibrate migration with domestic labor market requirements.
Specific advantages of points systems include:
(1) Achieving greater objectivity and transparency.
(2) The ability to configure points to balance the interests of employers, workers, and the public.
(3) Encouraging public support by making the reasons for importing foreign workers more objective and transparent.
(4) The flexibility to change points to reflect research and experience, facilitate automation of the selection process, and simplify self-evaluation by prospective immigrants.
The evidence from the United Kingdom and other immigration nations strongly supports the conclusions that (a) evidence-based decisions greatly strengthen the efficiency and public acceptance of employment-based immigration and (b) that an independent, professional data, research, and advisory organization significantly improves evidence-based decisions.
The legalization of unauthorized immigrants, greater emphasis on economic immigration, the creation of an independent data and research bureau, and a points system to facilitate the selection of foreign workers would all be important contributions to a much more effective U.S. employment-based immigration system. However, this contribution could be enhanced by three amendments:
(1) Placing a high-level federal agency in charge of all employment-based immigration to improve the management of this important function and facilitate its coordination with related activities.
(2) Adopting clear goals and objectives to guide employment-based immigration. My recommendation would be value-added economic principles and shared prosperity. An EBI system guided by these objectives would clearly be better than the present chaotic system with no explicit goals or one designed to simply increase overall or per-capita economic growth, with no concern for distributional effects.
(3) The BILMR should either be an independent agency or placed in the Department of Labor, not the DHS, where the Senate bill places it. This is so because EBI is a labor market, not a national security or law enforcement, function. And the BILMR’s recommendations should not be limited to the new W visa for less-educated temporary foreign workers, but should extend to all employment-based visas. It is logical to separate the new three-year W visas from existing seasonal agricultural (H-2A) and non-agricultural (H-2B) programs, though these visas should be issued only after careful assessments of alternatives to migration and the availability of Americans.