By Charles Kenny
July 01, 2013
Last Thursday the Senate passed an immigration reform bill that was dramatic in its scope and potential impact. Its future in the House is in doubt, but discussion around the bill has already made one thing clear: Immigration is no longer an issue of political economy—it’s a cultural one, where opinions are driven by attitudes toward foreigners rather than by pocketbook concerns. Whether that’s good or bad for the prospects of meaningful immigration reform remains an open question, but the speed of the cultural shift on another hotly debated issue—gay marriage—suggests some reason for optimism.
In the runup to the Senate vote, the Congressional Budget Office released an analysis showing that the Senate immigration bill would lead to a population 10.4 million larger than otherwise by 2023. That is a significant number—about 3 percent of the current U.S. population. But the CBO argued that all the economic impacts associated with that larger population are positive. The economy as a whole would be 5 percent larger in 2033, GDP per capita, productivity, and average wages would all be marginally higher, and the bill would decrease budget deficits by nearly $900 billion between 2014 and 2033. The CBO estimates that the relative wages of both skilled and unskilled workers might decline slightly—by a fraction of a percentage point—compared with those in the middle of the skill distribution. But absolute wages would be higher for all workers, whatever their skill level.
The CBO results add to a growing pile of analyses that suggest the impact of immigration on the U.S. is positive overall and has, at worst, a marginal downside for low-income workers. More unskilled migrants don’t take jobs from unskilled native workers, they don’t significantly lower their wages, and they don’t lead businesses to go bankrupt under “unfair” competition. In fact, work for the National Bureau of Economic Research suggests that immigration means more jobs for low-skilled native workers—not least because immigrants create demand for U.S. products and services. The evidence in favor of skilled migration as an unalloyed source of prosperity is even stronger—so much so that pretty much everyone seems be in favor of stapling a green card to the degree certificates of foreign students.
It isn’t just in the U.S., either. Across the developed world, the evidence keeps mounting that more immigration is somewhere between a benefit for the considerable majority of native-born people to a benefit for the vast, vast majority. Again echoing the CBO findings, the Organization for Economic Cooperation & Development looked across its rich-world member countries and concluded that on average, “the fiscal impact of immigration is close to zero”—and slightly positive in countries, such as the U.S., with weaker social safety nets.
Compare the economic impact of immigration with international trade—a real issue of political economy. Although winners outweigh losers, there are still obvious losers from free trade: companies that fold in the face of foreign competition and people who become unemployed as a result. MIT’s David Autor suggests that manufacturing imports from China alone reduced manufacturing employment in the U.S. by as much as 1.5 million jobs from 1990 to 2007. U.S. export industries do employ 10 million people, and cheaper imports are one factor making both U.S. domestic and exporting industries more competitive. Cheap imports also mean Americans can buy more with their money. But it can’t be doubted that trade without compensation creates losers as well as winners—which creates political problems in turn.
For all the rather pathetic attempts of such groups as the Heritage Foundation to suggest otherwise, immigration reform isn’t freighted with anywhere near as many economic downsides. That helps explain why research from Berkeley’s Jack Citrin and colleagues—as well as others—has long suggested that attitudes toward immigration reform are not driven by personal economic circumstances but by feelings about the state of the national economy and attitudes toward immigrant groups in general. Immigration is a social issue, not an economic one. That doesn’t make it a non-issue, of course—far from it. But it does suggest it’s better to start thinking about the politics of immigration as akin to such things as abortion rights or gay marriage rather than labor law or trade deals.
If you are in favor of immigration reform, it isn’t immediately clear if that is good or bad news. Sure, economic special interests can be a powerful force against change. On the other hand, cultural special interests successfully block efforts to move toward rational gun laws, for example. But the evolution of public attitudes toward gay marriage—which a majority of Americans now support—demonstrates that cultural shifts can be dramatic and rapid when circumstances are right. Perhaps U.S. citizens will start realizing that more people aspiring to become Americans is no threat to the institutions of America, just as they have come to accept that more people wanting to get married—some to people of the same sex—is no threat to the institution of marriage.
Ultimately, immigration reform’s greatest positive impact is on migrants themselves and the developing countries they come from. The CBO estimates that undocumented workers who obtained legal residency would see a 12 percent wage hike. Harvard economist Lant Pritchett has estimated that if all rich countries increased their labor force through migration on a slightly smaller scale than that suggested by the Senate bill, it would add $300 billion to the welfare of citizens of poor countries—give or take, that’s a little more than twice the value of annual global aid flows. So if cultural attitudes change from viewing immigrants as aliens to be fenced out to seeing them as fellow human beings to be welcomed, the impact on both American and global quality of life will be immense.
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