Wealth of Nations May 2007

The Baffling Politics of Immigration

Disagreement over immigration cuts through every ideological alignment, setting brother against brother, and activist against activist.

The strangest thing of all, of course, is that this gathering moral panic about immigration is happening in, of all places, the United States—a country that offers definitive proof of the strength and vitality of a nation powered by immigrants. The country needs to look no further than its own history to see that the principal fear aroused by the incomers—namely, "they are taking our jobs"—is false. Yes, millions of new immigrants, legal and illegal, are in the country. But look at the unemployment rate. What is the problem?

What ought to be the easiest point to grasp always gets overlooked: The number of jobs in the economy is not fixed. As the population has grown, the number of jobs has grown with it. This is not a lucky coincidence, something that could have gone either way. New workers add to the supply of labor and, owing to the fact that they spend their incomes, to the demand for labor as well. To a first order of approximation, every new worker creates the demand for one new job. That is why the working-age population of immigrants and nonimmigrants alike can soar, while total employment soars right along with it.

Such are the attractions of the United States as a place to live and work, some controls are necessary. An unimpeded surge of immigrants really would pose problems. And it is right that once controls are in place, they should be enforceable and enforced. The fact remains that politicians of both parties are vastly exaggerating the difficulties. Compared with other countries, the United States has a huge advantage: It succeeds, to a very unusual degree, in assimilating its immigrants and putting them to work. European countries find it difficult to do either—for cultural and historical reasons, presumably, in the first case, and because of overextended welfare states in the second. If America moves to a regime that makes it harder for people living here to become American, and that makes it more difficult for immigrants to get work, those advantages will be compromised. America's immigration problem will start to look like Europe's, which is not a good idea.

Aside from creating their own demand for labor, immigrants also meet a pre-existing need for low-skill workers. To get a sense of the tonic that a crackdown on illegal immigrants would be for the economy, look at the other end of the labor market—the market for highly skilled immigrants.

Such people work in formal settings visible to the authorities, so illegal immigration cannot expand to meet excess demand. Controls are tight. The standard permission for a highly educated worker to sign on with an American company and reside in the United States is the H-1B visa. Numbers are severely restricted, and the annual quota typically kicks in each year in a matter of weeks. Once the quota is filled, there is no more immigration that year (except for a lucky few, through an even more demanding application process, but don't get me started on that). It is a strict regime with very little evasion—just what the get-tough people want to see across the board. Do the results look good?

Ask Microsoft, or any number of other high-tech American enterprises—ask the very companies on which America depends for its competitiveness and future economic prospects. They are in despair over this restricted immigration regime. They simply want to hire the best engineers and other skilled personnel they can find, regardless of where they come from. Piling absurdity on absurdity, many of these sought-after employees have been trained in American universities, partly at America's expense. Give them Ph.D.s and then make them leave. How's that for industrial policy? What could make more sense than to let those people stay and work—not to mention (Heritage Foundation, you will like this part) pay lots of taxes?

If they cannot come in, a mixture of two things will happen. America's leading companies will be put at a disadvantage in global markets—or else they will take the jobs to the workers they want, by moving parts of their engineering and other leading-edge activities to new units overseas. In fact, this is happening. It surely ranks as one of the stupidest errors that American economic policy makers have ever made. And that, again, is saying something.

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