Can We Still Afford to Be a Nation of Immigrants?

Comparing yesterday's immigration with today's, a historian is struck by the unprecedented nature of our present situation
What Does the Future Hold?

If the causes of present-day immigration are familiar, what will be the consequences for today's immigrants and tomorrow's America?

I have suggested that three historical circumstances eased the accommodation between immigrants and the American society of a century ago—the relatively small number of immigrants present at any given time, the needs and vitality of the economy, and the plural and distributed character of the immigrant stream. How do those factors weigh in an analysis of immigration today?

With respect to numbers, the historical comparison gives a basis for confidence that the answer to our original question—Can we still afford to be a nation of immigrants?—is yes. The U.S. Census Bureau reports that as of 1994 foreign-born people represented 8.7 percent of the American population, or just a bit more than half the proportion they made up in the census of 1910. (Comparable recent numbers for Canada and Australia, incidentally, are approximately 16 percent and 22 percent.) So, with reference to both American historical experience and contemporary experience in other countries, the relative incidence of current immigration to the United States is rather modest. Surely the United States at the end of the twentieth century is resourceful enough to deal with an immigrant inflow proportionally half what American society managed to deal with quite successfully in the early years of this century.

With reference to the needs and vitality of the economy, the historical comparison is more complicated. Economic theory suggests that immigration is a bargain for any receiving society, because it augments the labor supply, one of the three principal factors of production (along with land and capital), essentially free of cost. The sending society bears the burden of feeding and raising a worker to the age when he or she can enter the labor market. If at that point the person emigrates and finds productive employment elsewhere, the source society has in effect subsidized the economy of the host society. That scenario essentially describes the historical American case, in which fresh supplies of immigrant labor underwrote the nation's phenomenal industrial surge in the half century after the Civil War.

The theory is subject to many qualifications. Unskilled immigrant workers may indeed increase gross economic output, as they did from the Pittsburgh blast furnaces to the Chicago packinghouses a century ago, and as they do today in garment shops and electronic assembly plants from Los Angeles to Houston. But as productivity has become more dependent on knowledge and skill, the net value of unskilled immigrant labor has decreased, a point that informs much of the current case for restricting immigration. Yet it is important to note that argument on this point turns on the relative contribution of low-skill workers to overall output; the theory is still unimpeachable in its insistence on the absolute value of an additional worker, from whatever source, immigrant or native. Nevertheless, large numbers of unskilled immigrants may in the long run retard still higher potential outputs, because the inexpensive labor supply that they provide diminishes incentives to substitute capital and improved technology for labor, and thus inhibits productivity gains. On the other hand, just to complicate the calculation further, insofar as the host society continues to need a certain amount of low-skill work done, the availability of unskilled immigrants may increase the economy's overall efficiency by freeing significant numbers of better-educated native workers to pursue higher-productivity employment. And overhanging all this part of the immigration debate is the question of whose ox is gored. Low-skill immigrants may benefit the economy as a whole, but may at the same time impose substantial hardships on the low-skill native workers with whom they are in direct competition for jobs and wages.

Of course, the theory that immigration subsidizes the host economy is true only insofar as the immigrant in question is indeed a worker, a positive contributor to the productive apparatus of the destination society. Even the crude American immigration-control system of the nineteenth century recognized that fact, when it barred people likely to become social dependents, such as the chronically ill or known criminals. The issue of dependency is particularly vexatious in the United States today for two reasons. First, the 1965 legislation contained generous clauses providing for "family reunification," under the terms of which a significant portion of current immigrants are admitted not as workers but as the spouses, children, parents, and siblings of citizens or legally resident aliens. In 1993, a typical year, fewer than 20 percent of immigrants entered under "employment-based" criteria.

Because of family-reunification provisions, the current immigrant population differs from previous immigrant groups in at least two ways: it is no longer predominantly male and, even more strikingly, it is older. The percentage of immigrants over sixty-five exceeds the percentage of natives in that age group, and immigrants over sixty-five are two and a half times as likely as natives to be dependent on Supplemental Security Income, the principal federal program making cash payments to the indigent elderly. Newspaper accounts suggest that some families have brought their relatives here under the family-reunification provisions in the law expressly for the purpose of gaining access to SSI. Thus it appears that the availability of welfare programs—programs that did not exist a century ago—has combined with the family-reunification provisions to create new incentives for immigration that complicate comparisons of the economics of immigration today with that in the nineteenth century.

But on balance, though today's low-skill immigrants may not contribute as weightily to the economy as did their European counterparts a hundred years ago, and though some do indeed end up dependent on public assistance, as a group they make a positive economic contribution nevertheless. It is no accident that today's immigrants are concentrated in the richest states, among them California (home to fully one third of the country's immigrant population), just as those of the 1920s were. And just as in that earlier era, immigrants are not parasitic on the "native" economy but productive participants in it. The principal motivation for immigration remains what it was in the past: the search for productive employment. Most immigrants come in search of work, and most find it. Among working-age males, immigrant labor-force-participation rates and unemployment rates are statistically indistinguishable from those for native workers. The ancient wisdom still holds: Ubi est pane, ibi est patria ("Where there is bread, there is my country"). Not simply geography but also that powerful economic logic explains why Mexico is the principal contributor of immigrants to the United States today: the income gap between the United States and Mexico is the largest between any two contiguous countries in the world.

One study, by the Stanford economist Clark W. Reynolds, estimated the future labor-market characteristics and prospects for economic growth in Mexico and the United States. For Mexico to absorb all the new potential entrants into its own labor markets, Reynolds concluded, its economy would have to grow at the improbably high rate of some seven percent a year. The United States, in contrast, if its economy is to grow at a rate of three percent a year, must find somewhere between five million and 15 million more workers than can be supplied by domestic sources. Reynolds's conclusion was obvious: Mexico and the United States need each other, the one to ease pressure on its employment markets, the other to find sufficient labor to sustain acceptable levels of economic growth. If Reynolds is right, the question with which I began—Can we still afford to be a nation of immigrants?—may be wrongly put. The proper question may be Can we afford not to be? (For another perspective on this question see this month's article by George J. Borjas.)

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