New Data Steer Immigration Debate and Policy

Reams of new economic data that seem to dispel many of the long-held fears tied to immigration are clearly forcing Congress to stop dragging its feet on the complicated and controversial issue.

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“I think people were quite unaware of the benefits legalization could have to the economy,” said Adriana Kugler, a professor of public policy at Georgetown University and a former chief economist in the Obama administration’s Labor Department.

“I think people were quite unaware of the benefits legalization could have to the economy.”

Adriana Kugler, former Labor Department chief economist

Kugler said the immigration debate has historically tended to focus on “the costs and burdens to the economy.” These “costs and burdens” ostensibly caused by influxes of low-skilled immigrant workers who, according to widely-held conventional wisdom, dilute the labor pool, displacing American workers and slashing the wages of those who manage to keep their jobs.

But recent data suggest otherwise.

“There’s been a lot of work and data generated in recent years proving the opposite – that immigration in fact provides benefits to the economy,” said Kugler.

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Indeed, Kugler cited a recent study which estimated that if all 11 million undocumented workers currently living in the U.S. were quickly granted legal status they would contribute $1.4 trillion to U.S. GDP over the next decade.

A Marked Change In Perspective

Proof of a marked change in perspective on immigration may have arrived late last week when big labor, in the form of the AFL-CIO, and big business, in the form of the U.S. Chamber of Commerce, reached an agreement on a guest worker plan for low-skilled immigrants.

If both sides didn’t believe immigrant workers could somehow benefit the ailing U.S. economy there wouldn’t have been a well-publicized agreement.

Politicians seeking a bipartisan legislative deal on comprehensive immigration reform said the agreement between the two traditional foes may be the last piece of the puzzle needed to attain a long-awaited deal in Congress.

Big labor has always opposed any proposal that would allow new low-skilled foreign workers to enter the U.S. legally in order to compete with U.S. workers for low-paying jobs in the construction, food service and janitorial sectors.

AFL-CIO President Richard Trumka is on board, however. “We have created a new model, a modern visa system that includes both a bureau to collect and analyze labor market data, as well as significant worker protections,” he said in a statement.

While Wall Street traditionally doesn’t get as fired up about immigration reform as, say, interest rates, some financial analysts have taken note of ways in which comprehensive immigration legislation could potentially benefit the ailing U.S. economy. Moreover, analysts have noted the growing costs of enforcing the current system and how those costs are contributing to the ever-widening U.S. deficit.

“Immigration is often couched as a social issue, especially in American politics. And while that may be the ‘red meat’ both parties use to energize their respective bases, the truth is that the current debate on the topic has important economic ramifications as well,” said Nicholas Colas, a market strategist at ConvergEx Group, in a note to clients.

Current Policies a Growing Burden on U.S. Budget

ConvergEx makes a strong case that enforcing current immigration policies is placing a growing burden on the U.S. budget. The U.S. Border Patrol’s budget, for instance, has grown 149% in the past decade, to $3.5 billion in 2012 from $1.4 billion in 2002.

“Enforcing the current system isn’t cheap,” the note concludes. “A billion here and a billion there, and pretty soon you’re talking real money.”

The ConvergEx analysts also support a streamlined legalization process that gives priority to high-tech and highly educated workers, one that allows U.S. employers to more easily hire and retain these employees. The proposal likely to be introduced in the Senate next week does exactly that.

ConvergEx says a more streamlined approach would save time and presumably money. What’s more, the analysts praised the likely reform plan for making highly skilled immigrants “and their perceived value to the U.S. economy” the top priority.

Finally, the analysts cite the same study recalled by Kugler that suggested $1.4 trillion would be added to the U.S. economy if those 11 million undocumented workers are legalized by the end of the year.

The “bottom line,” according to the analysts, is that “immigration reform could add an extra couple of points to GDP growth over the coming years. And increase tax revenues.”

Immigrants’ Economic Ripple Effect

The latter point is one pounded again and again by immigration advocates: quite simply, that adding legalized workers to U.S. payrolls increases the taxes paid by those workers and thus increases U.S. revenue. It’s simple arithmetic.

But Kugler also noted how the higher wages earned by all those newly documented workers would ripple through the economy, benefiting such sectors as housing, retail and financial services.

Kugler also suggested that foreign workers allowed into the U.S. to take low-skilled, low-paying jobs such as landscapers and day-care workers will help their employers increase their productivity by performing jobs those employers would otherwise have to take care of themselves.

So, a small business owner who hires one immigrant worker to mow his lawn and another to watch his children a few hours a day has more time to invest back into his business, which in turn could grow that business and ultimately create new jobs.

In sum, for a number of reasons (not least shifting political demographics) the debate over immigration seems to have turned markedly away from the old scare tactics of the past to a more measured argument over how best to take advantage of the millions of people who desperately want to work legally here in the U.S.

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