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Sep 30, 2016 - 2:45pm

How America’s Immigration System Failed and Why We Need to Fix It

Senior Editor, Digital Content

Immigration is an understandably touchy subject. It involves not only jobs and the economy, labor competition, but also culture and national identity.

It feels like immigration reform is an issue that’s always been around and won’t go away.

How did we get in this situation, why do we need to fix this problem, and where should immigration reform go? This explainer should help answer some of these questions.

What’s the issue?

America has long welcomed immigrants to our shores. “A nation of immigrants” isn’t a cliché, so much as it is a fact since before our country’s founding.

Immigrants come here looking for economic opportunity, freedom, and a better life for themselves and their families. They’ve crossed oceans to work, learn, and live. Our country has benefitted from this influx of cultures and ethnicities, and immigrant workers have made lasting contributions to our economy.

But our immigration system hasn’t kept up with the ever-changing world economy. Today, jobs go unfilled because companies can’t find the workers with the skills they need. Our outdated and ineffective system now welcomes some immigrants and blocks entry to others often with little consideration of what skills they bring and what roles they would fill in the economy.

At the same time millions of hardworking people are here without authorization living in the shadows. Many of them have been here for years living quiet, peaceful lives with their families.

It’s a system that’s in desperate need of repair.

How did we wind up with such a broken immigration system?

For starters, Congress hasn’t passed significant immigration reform legislation since 1986. Both parties have let this legal inertia go on while our economy and demographics have changed and the public clamored for solutions.

To top it off, the Obama administration compounded the problem in recent years by issuing a patchwork of executive orders that made actually fixing the problem more politically toxic.

Why do we need immigrants?

The main reason is the United States faces a troubling demographic problem.

As a result of improved health care, our country is getting older. Ten thousand Baby Boomers are turning 65 every day. Many of them are retiring and leaving the workforce.

Living longer and healthier is great news for those getting older, but we need people to replace those who retire. Despite fears that robots will take away all of our jobs, the need for workers won’t be going any anytime soon.

There will be 35.3 million job openings through 2024--mostly due to retirement. Combine that with an economy that’s expected to create 9.8 million additional job openings and a U.S. birthrate that is declining, it’s obvious that the U.S. economy will need more workers.

Immigration is an important piece to this demographic puzzle.

Aren’t immigrants a burden on our country?

Just the opposite. Immigrants make an unmistakably positive contribution on the American economy.

A report from the National Academies of Sciences, Engineering, and Medicine (NAS) found that “Immigration is integral to the nation’s economic growth.” They generate demand for goods and services “in key sectors such as housing, which benefits residential real estate markets.”

Their labor contributions “reduce the prices of some goods and services” for native-born Americans in “sectors including child care, food preparation, house cleaning and repair, and construction.”

Immigrants also spawn innovation. According to the NAS report, “high-skilled immigrants raise patenting per capita, which is likely to boost productivity and per capita economic growth.”

When immigrants aren’t working as employees, they’re being entrepreneurs, starting businesses—both large and small--that create jobs.

Take grocery stores, shops, restaurants, and other Main Street businesses Americans encounter daily. According to one study, 28% of these businesses are owned by immigrant entrepreneurs. Between 2000 and 2013, immigrants accounted for 48% of overall business ownership growth.

We see something similar when it comes to large businesses. Successful companies that we all have heard of or use have immigrant founders.

One study estimates that the Fortune 500 companies that were founded by immigrants generate $1.7 trillion in annual revenue and employ more than 3.6 million people worldwide.

By filling empty job openings, spurring innovation, and having a strong propensity for job-creating entrepreneurship, immigrants contribute a lot to our economy.

But aren’t immigrants taking jobs from native-born Americans?

No, immigrants don’t “steal” jobs from American workers.

The fallacious argument is based upon the assumption that there are a fixed number of jobs in our economy. Experience shows us this isn’t true.

When a factory in town closes, the folks that used to live in town and work on the assembly line are not the only ones that suffer.  Suppliers, vendors, and local businesses also suffer because they lose business. 

On the flip side of that coin, when a new R&D facility opens up, and new people move in, jobs aren’t just created designing new aircraft, mobile phones, or pharmaceuticals at that facility.  Other businesses--Main Street businesses in particular--are created because of the increased economic activity brought about by the increased investment. In other words, there wouldn’t magically be 11 million new jobs if someone waved a magic wand and made 11 million immigrants in the U.S. disappear. In fact, you would likely see our labor force and output decline as a result of removing the entire undocumented workforce.

Workers aren’t widgets. They’re people with unique skillsets.  In general, immigrants who come here to work have different skills, live in different places in the U.S., have different education levels, and work in different fields than native-born workers. For instance, native-born workers work in higher-paid jobs that require better English-language skills than many immigrant workers have.

A strong piece of evidence that immigrants aren’t stealing jobs is researchers haven’t found a correlation between immigration and high unemployment at the regional, state, or county level.

But don’t immigrant workers drive down wages?

Once again, a common argument, but it doesn’t stand up to what is happening in the economy. In fact, quite the opposite.

A co-author of the NAS report on the economics of immigration said, “We found little to no negative effects on overall wages and employment of native-born workers in the longer term.”

In fact, immigrant workers help boost wages, as studies on both the national and state levels have shown. This is because immigrant skills complement and improve the productivity of native-born workers, increasing their wages.

It’s a win-win for both groups, and a plus for our economy.

But don’t immigrants take more from government services than they generate in taxes?

It’s a myth that immigrants come to the U.S. only to collect welfare. The fact is undocumented immigrants work and pay taxes. More than half have federal taxes automatically taken out of their paychecks--$13 billion in payroll taxes in 2010--and pay sales taxes like everybody else. On the local level, undocumented immigrant households paid $11.6 billion in state and local taxes in 2013.

At the same time, undocumented workers can’t get federal benefits like Social Security, Medicaid, food stamps.

Researchers looking at what’s happening in states like Arizona and Florida, find that, on average, immigrants pay more in taxes than they receive in benefits.

So how do we fix the system?

For starters, our elected leaders need to resist the temptation to talk past each other and focus on scoring political points against the other side.  It is long past time that our leaders worked together to address very serious issues. The only truly effective, long-term solution to the many problems associated with our immigration system is Congress and the president working together to pass meaningful, commonsense legislative reforms. Partisan demagoguery and divisive executive actions will not get the job done.

What specifically should Congress do to improve our immigration laws?

First and foremost, Congress has to address national security. That’s what Americans demand.

Second, we need a system that works for a modern economy with all its economic demands and demographic changes mentioned above.  This includes addressing the green card backlogs in our employment-based immigration system and creating effective temporary worker programs for workers of all skill levels.  Addressing these two key issues will not only allow employers to innovate and create jobs, but effective temporary worker programs for the lesser-skilled occupations are essential to preventing unauthorized migration in the future.

Further to that end, Congress must put in place a worker employment verification system that works for businesses of all sizes in all industries to curb unauthorized employment, commonly referred to as the “job magnet” that drives unauthorized migration to the U.S.

And finally there has to be a process that sets forth strict eligibility criteria for allowing the otherwise law-abiding people individuals who are not authorized to be in the U.S. an opportunity to earn a legal status.

Isn’t that process “amnesty?”

For most people, requirements like paying fines, taxes, and spending a considerable amount of time in some sort of probationary status before you can even apply for a green card isn’t letting anyone off the hook. It’s a tough and fair solution that continues our traditional respect for law and order because this is necessary to eliminate an unfortunate and prominent feature of our current immigration system: A population of 11 million people who are not authorized to be in the country. 

This issue simply cannot define our immigration system moving forward, and while it may not be the optimal solution for some, it’s certainly more realistic and humane (and significantly less costly) than rounding up and deporting every undocumented worker and their families.

It’s also a solution that 84% of Americans favor.

Okay, so what’s the bottom line?

For years, we’ve seen the effects of our broken immigration system. We can’t wait any longer to fix it. The president and Congress must work together to solve these very real and very urgent problems.

With meaningful immigration reforms, we can promote both national security and economic growth and solve problems that the American public has long asked for their leaders to address.

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About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.