Will the immigration bill boost economic growth? – Politico
White House senior adviser Stephen Miller said Wednesday that a bill to halve legal immigration would “add to the economy” — a proposition rejected by most economists.
“This is a historic moment,” Miller said at a White House briefing on the bill, which President Donald Trump endorsed earlier Wednesday. He said it was “the biggest proposed change that would take place in 50 years,” an apparent reference to the 1965 Immigration and Naturalization Act, which greatly expanded U.S. immigration, especially from non-European countries.
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But economists consistently say that economic growth depends on expanding the workforce, not shrinking it, as the RAISE Act (S. 354 (115)) would do. The bill, which faces steep opposition from Senate Democrats and pro-immigration Republicans, was sponsored by Sens. Tom Cotton (R.-Ark.) and David Perdue (R.-Ga.).
Economic growth, as measured by Gross Domestic Product, is an increase in the quantity of goods and services produced by workers; the more workers, the more goods they can produce. And with U.S. population growing at its slowest pace since the Great Depression, the only way the workforce can expand is through immigration.
Economists therefore tend to worry not about there being too much immigration, but rather not enough. “For the past half century,” a 2015 McKinsey report said, “the twin engines of rapid population growth (expanding the number of workers) and a brisk increase in labor productivity powered the expansion of gross domestic product. … This demographic tailwind is weakening and even becoming a headwind in many countries.”
In his remarks, Miller focused on the downward pressure immigration placed on wages for native-born Americans, citing findings by Harvard economist George Borjas about the effects of the 1980 Mariel boatlift, which brought 125,000 Cubans into Florida. “He went back and reexamined and opened up the old data,” Miller said, “and talked about how it actually did reduce wages for workers who were living there at the time.”
Miller said the United States’ current policy for issuing green cards had led to “significant reductions in wages for blue-collar workers, massive displacement of African-American and Hispanic workers, as well as the displacement of immigrant workers from previous years.”
But Borjas, whose study of the Marielitos disputed an earlier one finding no wage effect by Berkeley economist David Card, found a “substantial” decrease in wages only for high-school dropouts — a finding in line with Borjas’s earlier studies of immigration’s impact nationally.
Miller said high levels of immigration have “exacerbated wealth inequality in the country in a pretty significant way.” But the growth in inequality over the past 40 years has been a middle-class phenomenon, with disparities rising between middle and high incomes. Poverty trends (which encompass high-school dropouts) have remained relatively stable during this period.
The RAISE Act would de-emphasize family connections as a consideration in immigration to focus more on potential workers’ skill levels. This would place “upward pressure on wages instead of downward pressure,” Miller said.
But there’s no evidence that the H-1B guest-worker program, which brings skilled workers into the U.S., has raised incomes for comparably skilled native workers. Indeed, Democrats and Republicans alike have complained that it has displaced skilled native workers, which would have the effect of lowering wages.
Miller has conferred with Sen. Dick Durbin (D.-Ill.) and Chuck Grassley (R.-Iowa) about their proposed bipartisan legislation to reform the H-1B visa program. But the Trump administration has yet to endorse it. Asked Wednesday about guest worker programs, Miller said “that’s a separate thing.”
In April, Trump signed an executive order to develop reforms of the H-1B program. But guest workers have proved a problematic issue for the Trump administration due to business pressure to increase their number and the Trump Organization’s own dependence on guest workers. According to BuzzFeed, Mar-A-Lago and Trump’s nearby National Golf Club have requested 230 guest worker visas since Trump launched his presidential campaign.
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