Immigration Reform

Noel Marie Laplume

11/01/10

Sometimes the solution can be as bad as the problem. In the past few years, the federal government has been roiled by revelations of widespread flaws in the way it implements policy to contain illegal immigration. In 1986 Republican president Ronald Reagan signed into law the Immigration Reform and Control Act (IRCA) which was meant to be a first and “one time only” comprehensive immigration policy that would rid the country of this hindrance. It made any immigrant who had entered the country illegally before 1982 eligible for an amnesty- a benefit that conferred legal status to an estimated total of 3 million people. Before this, an amnesty was only given on a case-by-case basis, and never given to a large group of individuals. The IRCA sought to preserve jobs for those legally entitled, created strict penalties for employers who hired undocumented workers, and increased border protection as well. Now, after nearly 25 years since the bill became law, the rate of illegal immigration has far from subsided.

The estimated number of undocumented people residing in the U.S. has quadrupled to an estimated 12 million people since the amnesty. The end result is that illegal labor has continued to find a way into the country. The main reason why Reagan’s policy- and every other one since- has failed at containing illegal entrants is because it has not taken into account the economic incentives that drive illegal immigration, which not only benefits the undocumented workers who desire to work and live in the U.S. but also employers who want flexible, low-cost labor. The methodology currently in place seeks to increase immigration enforcement without attempting to counteract the long queues and system backlog that prevents immigration applications from all around the world from moving smoothly and efficiently. Because the granting ofvisas is biased in favor of applicants with family members who are already in the United States, and the admissions criteria for the other types of visas are too arbitrary to serve most prospects who would like to work and live here in the immediate future: too many people resort to entering illegally instead. That is why for over a decade, the net inflow of illegal immigrants has been close to 500,000 individuals per year, since it has proven easier than trying to do it through the legal route.

There is a widely held belief that legal immigration is largely good for the country and illegal immigration is bad. In Congress there is a consensus that if the U.S. could simply reduce the number of illegal immigrants in the country, “either by converting them into legal residents or deterring them at the border, the country’s economic welfare would be enhanced.” A report by Professor Gordon H. Hanson of the University of California, San Diego, approaches the issue through the lens of economics by focusing on the costs and benefits of legal and illegal immigration. On a national level, the study reflects that it cannot be said with much conviction whether the aggregate impact of immigration on the U.S. economy is positive or negative. As a matter of fact, it suggests that immigration has a small overall impact on the economy since high-skilled immigrants have a small positive impact in terms of GDP, while the immigration of low-skilled immigrants, either legal or illegal, has a small negative impact. He concludes that containing illegal immigration through border and interior security will only lead to “a net drain” on the economy; asserting that the only effective policy will be one that is designed to offset the economic advantages of illegal labor. Thus, even if it were possible for illegal immigration to be completely contained, the huge expense of sealing the mentioned borders and enhancing security at the ports of entry is not justifiable since it far surpasses the economic gains it could bring.

Because immigrants pay federal income and withholding taxes, the federal government appears to enjoy a net fiscal surplus from immigration, both legal and illegal, since it helps increase revenue and incurs a relatively small financial expense- something which is usually borne at the state and local level. States, in contrast, pay most of the costs of providing public services. Floridians spend more than $1.5 billion annually on education for illegal immigrant children and for their U.S. born siblings. The uncompensated cost of incarcerating illegal aliens in Florida’s state and populous county prisons like in Miami-Dade amount to about $60 million a year. And despite the fact that many unauthorized immigrants pay taxes, those contributions do not completely offset the expense. This uneven burden sharing is central to the political opposition that has led many states to implement restrictions on immigration policy- even if their authority to do so rests on the federal branch of government.

The most debated issue surrounding immigration reform is whether to offer illegal immigrants a way to legalize their status. Generally, opponents to legalization use the surge in illegal immigration after the IRCA amnesty as evidence that it does not solve the problem since it does nothing to discourage future immigrants from entering the country illegally. The problem is that with the high illegal population level that there is today, any attempt to diminish its size through mass deportations would require a prolonged effort. Considering that it would be difficult to justify such a drastic move from a humanitarian and practical standpoint, it would reduce the labor force by 5% and the low-skilled labor force by approximately 10% or more. The negative effects of losing this labor is that it would likely increase prices for many goods and services; decrease the incomes of employers that will need to hire workers at a higher cost, and last but not least, upset the delicate market balance that industries and companies need to have in order to remain profitable. Moreover, this policy does not assure that more people will not enter the country illegally in the future.

On the other hand, if illegal immigrants were allowed to remain in the country and obtainlegal residence visas, the short-run economic cost would likely be minimal since they would be ineligible to receive much of the public assistance since it is reserved for U.S. citizens, a process that would take at least five years. For the immigrants themselves, the IRCA amnesty suggests that legalization would lead to higher wages and a greater opportunity for them to advance occupationally. It is estimated that between 1989 and 1992, the average hourly earnings for newly legalized immigrants rose by 6% thanks to the amnesty. A report by the Center for American Progress and the American Immigration Council estimates that “comprehensive immigration reform that legalizes currently unauthorized immigrants and creates flexible legal limits on future immigration” would yield at least $1.5 trillion in added U.S. GDP over a decade. Besides raising wages, the policy institutes also reported that it would create jobs and increase consumption since their purchasing power would go up. The “New Times” magazine reported that a new amnesty would generate $4.5 to $5.4 billion in additional net tax revenue because workers would feel safe to come out of a shadow economy. Given that the estimated 12 million people would feel more confident in their future here, the country would see higher rates of home ownership and higher college attendance rates. Therefore, an amnesty for the illegal immigrants that are already in this country, coupled with a sound mechanism for the steady entry of future immigrants into this country is the best solution to the immigration problem we currently face.

The contentiousness surrounding immigration may explain why it has taken so long for Congress to face. If policymakers decide to bloc illegal immigration without creating other avenues for legal entry, the market forces will continue to create incentives for unauthorized immigration, thus further fueling the vicious cycle. As Congress again wrestles with immigration reform, one would hope that it will pay attention to the achievements and failures of IRCA amnesty by designing a framework that allows those present in the country illegally to attain legal status, affording them a chance to dynamically participate in the U.S. economy; as well as by implementing a sound mechanism for the steady entry of future immigrants to prevent the backlog that encourages people to enter illegally. Otherwise, the United States is likely to find itself with even larger illegal population in the very near future with serious socio-political and economic consequences for the welfare of the nation.