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Immigration: Economic Realities

By Mathias Mondino

Panelists discussed how current U.S. immigration policies affect business competitiveness, productivity, and worker flows.

Discussants:

  • Joe Gergela, Executive Director, Long Island Farm Bureau
  • Doug Massey, Director, Office of Population Research, Princeton University
  • Laura F. Reiff, Managing Shareholder, Greenberg Traurig LLP
  • Jason Marczak, Director of Policy, AS/COA (Moderator)

 

Summary

Immigrants have always been a key source of labor, entrepreneurship and innovative ideas in the United States. While there is significant diversity in the types of immigrants that are currently coming to the United States—including their country of origin, level of training and documentation status—much of the rhetoric is centered on those without documentation.  

To provide a broader perspective, Americas Society/Council of the Americas and the American Jewish Committee co-hosted a discussion on how immigration policies affect U.S. businesses and the economy. The program focused on the agricultural sector, overall business compliance issues, and how demography is affected by the intended and unintended economic consequences of immigration policy. Panelists also discussed how current U.S. immigration policies affect business competitiveness, productivity, and worker flows.

Economy

While immigrants are often associated with low-skilled labor, 40 percent of the Fortune 500 companies were founded by first- or second-generation immigrants. Laura Reiff cited the example of Intel, which was founded by Andrew Grove (originally Andras Grof), an immigrant from Hungary. According to the President’s Council of Economic Advisors, immigrant entrepreneurs are responsible for starting one-quarter of all high-tech and engineering companies founded in the United States between 1995 and 2005.  

Immigration plays a crucial role in the U.S. economy as a whole, but some sectors, especially agriculture, rely on immigrant labor more than others. Joe Gergela explained that of the 1.4 million farm workers in the United States, 60 percent are thought to be undocumented.  

In New York state, agriculture is a $4 billion a year industry—the second largest industry after finance—and employs around 100,000 workers. These figures are particularly important when considering the potential economic impact of restrictive immigration legislation. For example, Alabama and Georgia are seeing losses in farm revenue after those states passed restrictive immigration bills. Some would argue that a U.S.-born worker would fill an agriculture job vacated by an undocumented worker, assuming there was appropriate monetary compensation. But Doug Massey pointed out that the real issue is not wages, but the nature of the work: hard labor which requires constant relocation to shift with the seasons.     

Visas

The United States’ outdated visa system is another challenge for optimizing the benefits of immigration. Laura Reiff, who works closely with the visa system, said that U.S. work visa quotas are outdated and have failed to adapt to evolving immigration trends and the needs of the economy. For example, the United States allots 20,000 work visas to each country annually without consideration for population size or rates of immigration. The result is that Brazil and China have the same number of visas available as Luxemburg.  

The quota system is increasingly an obstacle for attracting high-skilled workers to the country and then incentivizing immigrants—who come to pursue an education—to stay, work, and innovate in the United States. Reiff pointed out that the United States is particularly feeling the pinch in the science, technology, engineering, and mathematics (STEM) fields, and said that masters and Ph.D. programs are comprised of mostly foreign students. As it stands, the quota system is attracting immigrants to learn at U.S. institutions, but few opportunities exist for immigrants to invest their education in the U.S. economy.  

Demographics

The United States has always relied on immigrant workers. Today, immigrants comprise 16 percent of our labor force and account for one-third to one-half of annual labor force growth. However, the immigrant population is filling a growing demographic gap as well. As Doug Massey explained, the overall fertility rate in the United States is hovering around replacement levels; without immigrants, the U.S. population would be shrinking and the country would be facing similar demographic challenges as Japan and Western Europe. At the same time, immigrants will be increasingly essential for filling high- and low-skilled health care jobs required to support aging baby boomers—from specialized surgeons to home care workers. With this in mind, panelists cautioned against the negative economic effects of restrictive immigration policy, especially those that crack down on employment.  

Tax Revenue

A common misperception is that undocumented immigrants do not pay taxes. But a 2005 report concluded that over a lifetime, an undocumented immigrant will pay $88,000 more in taxes than they consume in government services. The majority of this tax revenue goes to the federal government through mechanisms such as social security and income taxes, although the cost is felt at the state and local levels in areas like education and health care. To resolve this unequal revenue distribution, Massey said that some type of federal revenue-sharing mechanism is needed between the federal and local governments. This would not only make fiscal sense but it would also help to negate the complaints of immigration as an unfair local burden. 

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