Thursday, December 23, 2010

The Economic Case For Immigration Reform

This week's Economist had an interesting article about the illegal immigration of Mexicans to the United States.  The central focus of the article is not on the "big picture" questions regarding immigration reform.  Instead, it framed the discussion around the lives and experience of several migrant farm workers who came to the U.S. seeking a better life.  I came away from the article with a new appreciation for what many of these people go through just to be able to pick strawberries for $3 a day.  It really got me thinking about the whole immigration reform debate in a new light.  Are these people really costing legal American citizens their jobs?  Are these people really leaching off of the "system" without paying their fair share?  After some thought, I think many opponents of immigration reform have it backwards.  Immigration reform isn't the problem.  It's the solution.

Now before anyone starts leaving nasty comments about how I have no idea what I am talking about, please read my thoughts to their conclusion.  If you still disagree with me, then feel free to leave your thoughts, and I will listen to your point of view.

First, let's look at the "problem" of illegal immigration purely from an economic point of view.  There are two economic arguments to which opponents of immigration reform point:

1. Illegal immigrants take jobs away from Americans and with unemployment where it is, we can't afford to let them take our jobs. 

The Economist article talks about a "test" that the United Farm Workers (UFW) union performed.  They launched a website which invited American citizens to take the jobs of migrant farm workers and work in the fields.  At the end of the test, only seven Americans accepted this offer.  The conclusion was that illegal immigrants were doing a job that no American would want to do anyway, so no Americans are losing their job.

Now opponents might say that farm work only represents a small fraction of the jobs that illegal immigrants do.  There might be other jobs that Americans are willing to do, but because illegal immigrants are cheaper, they can't get these jobs.  If you hire an illegal, you can pay them below the minimum wage, and you don't have to pay for Social Security, workers compensation, unemployment insurance.  Illegal immigrants won't complain about working conditions, and they won't file any lawsuits if they are treated unfairly.  That is why illegals are bad for American workers.

Many opponents have used this line of reasoning to argument against immigration reform.  However, if you stop and think about it logically, this sounds to me like an argument in favor of immigration reform.  After all, if these immigrants were allowed to work in the U.S. legally, they would have to be paid a fair wage, and they would be protected by the same labor laws as American citizens.  Employers couldn't threaten them with deportation if the workers complained.  In a nutshell, immigrant workers would be on a level playing field with Americans because they would be employed openly and not in the shadows.  From a labor market standpoint, giving these workers legal status would only help American workers to compete.

The second economic argument against immigration reform goes something like this:

2. Illegal immigrants use public services such as schools and health care without paying any taxes.

The Economist article paints a picture that is in contrast to this perception.  Illegal immigrants go out of their way not to consume public services.  Their fear is that if they go to a health clinic that the people there will discover that they are illegal and turn them over to the authorities.  Whether this is true or not is immaterial; it only matters what immigrants believe.  For them, any contact with public officials exposes them to the possibility of deportation, which is something that they want to avoid at all costs.

That being said, it isn't totally true that illegals don't pay taxes.  Yes, they do not pay income taxes, but they do pay other taxes.  They pay a sales tax when they buy groceries at the market.  They pay gas taxes when they fill up at the gas station.  They pay tolls when they drive on the roads.

Now, even if we assume that illegal immigrants are consuming services without contributing to the system, again this sounds like an argument in favor of immigration reform.  The reason why they don't pay any taxes is precisely because they are illegal.  If they were allowed to work here legally, their employers would be obligated to withhold income taxes, Social Security taxes, Medicare.  It is possible that immigration reform would help cut our deficit because now the U.S. Government would have a new stream of revenue!

On top of these two economic arguments against immigration reform which are really arguments in favor of it, there is one additional argument in favor of immigration reform:

Immigration re-energizes America.

Consider the environment from where these illegal immigrants are coming.  They come from areas where opportunities for a better life are limited.  Most people from these areas are content with this, but some have ambitions beyond what life has dealt them.  Many of the people in this second group dream about making a change, but only a small select few actually act upon this urge.  These driven individuals are willing to brave treks through the desert, limited food and water, bandits, and barbed wire to reach their goal.  They are willing to perform backbreaking work for literally pennies an hour just for a chance at a better life. 

I don't know about you, but these are the exactly the kind of people that America needs. These are the people who make the United States strong.  These are the people who cherish opportunity as something tangible, rather than something to be taken for granted.  I would rather have an ambitious person like this than some of the freeloaders who are allowed to live here by virtue of the fact that they were lucky enough to be born within our borders.  Immigrants can and will contribute to society if we only give them a chance to do so.

The bottom line is that some sort of immigration reform makes cents (and dollars too!).

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