>Date: Thu, 25 May 2000 13:52:28 -0700
>To: FoRK
>Subject: [NYT] Rethinking the Economics of Immigration
>
>One of the best articles about immigration, H1B, and Greencards that I have
>seen in a long time.
>
>-Joe
>
>http://www.nytimes.com/library/financial/columns/052500econ-scene.html
>
> Rethinking the Economics of
> Immigration
>
> By ALAN B. KRUEGER
>
> he inscription on the Statue of Liberty is quietly being
> rewritten:
> “Give me your tired, your poor, your huddled masses yearning
> to breathe free; I’ll also take your skilled employees
> under the
> temporary visa program, H-1B.”
>
> The H-1B visa was established in 1990 to permit foreigners with a
> college degree or higher to work in the United States for a
> renewable three-year term for employers who petition on their
> behalf. In 1998, the program was expanded to allow 115,000
> workers, up from 65,000, to enter the United States in fiscal years
> 1999 and 2000. Demand for H-1B visas by employers is high,
> particularly among high-technology companies. This year the limit
> was reached just six months into the year. President Clinton and
> many members of Congress would like to increase the limit to
> 200,000 a year the next three years.
>
> The expansion of temporary work visas should be evaluated in the
> context of overall immigration policy. But immigration reform,
> replacing Social Security, has become the new third rail of
> American politics. So instead of tackling the issue head on,
> Washington has come to rely on temporary work visas as a
> substitute for addressing the economic and social shortcomings of
> current policy.
>
> The United States is in the midst of the “Second Great Migration.”
> The first occurred between 1880 and 1924, when 26 million
> immigrants arrived on our shores. The second began in the late
> 1970’s: more immigrants have come to the United States since
> 1980 than in the previous 60 years.
>
> Workers admitted under the H-1B program are not immigrants, but
> experts in the field expect that most of them will end up staying
> permanently in the United States.
>
> In addition to workers with H-1B visas, hundreds of thousands of
> other foreigners are admitted to work temporarily in the United
> States under visa categories covering intracompany transfers,
> individuals with extraordinary ability, registered nurses and
> nonprofit
> religious organizations. A fast-growing category is the Nafta
> TN visa,
> which offers an unlimited number of temporary visas for
> professional workers from Canada and soon Mexico.
>
> In a new book, “Heaven’s Door,” George Borjas, a Harvard
> economist, proposes that the United States adopt a Canadian-style
> point system, in which applicants for visas are assigned points on
> the basis of characteristics like their ability to speak English,
> work-force skills, family ties, refugee status and ethnic
> diversity.
> Those whose total points exceed a certain threshold would be
> admitted. Going even further, Professor Borjas favors setting the
> threshold so that the number of immigrants entering the United
> States falls from about 900,000 to about 500,000 a year. The total
> number can be debated. If nothing else, this policy would be
> transparent.
>
> Who should become an American? The question is profound,
> involving more than economics alone. But economic considerations
> obviously play a role.
>
> Theoretically, the economics of immigration is straightforward. If
> more workers are admitted to the country — as permanent
> immigrants or temporary workers — the earnings of native American
> workers competing with them for jobs should fall. At the same time,
> the price of goods and services they produce should decline, and
> the profits of businesses should rise.
>
> The winners are employers, consumers and the immigrants
> themselves. The losers are workers in the same job market as
> immigrants.
>
> Economic research has not been able to estimate with any
> confidence the wage decline for native workers that results from
> immigration. Much solid research finds no effect. This suggests to
> me that any effect is likely to be small.
>
> Professor Borjas’s evidence indicates that the skills of legal and
> illegal immigrants have slipped relative to those of natives
> since the
> 1970’s. A third of employed male immigrants are high school
> dropouts. At the same time, the labor market increasingly demands
> more high-skilled workers, as suggested by the long-term rise
> in the
> number of workers with college degrees and their sharply increased
> pay compared with that of those with high school degrees.
> Therefore, it would be economically beneficial to admit relatively
> more highly skilled permanent immigrants — not to mention that
> skilled immigrants are less likely to take advantage of the
> safety net.
>
> If immigration reform is off the table, it makes economic sense to
> increase the number of skilled immigrants by issuing H-1B visas —
> through what might be called heaven’s backdoor. Yet economic
> principles also suggest that the playing field between H-1B workers
> and the rest of the work force should be leveled.
>
> American workers are protected from exploitation on the job by
> three defenses: exit, voice and regulation. Exit entails the
> ability to
> move to a better job if one is available; voice results from
> representation by labor unions and other organizations; and
> regulation is a labyrinth of standards enforced by government
> agencies.
>
> These protections are deficient for H-1B workers.
>
> They cannot easily switch jobs because they must find another
> employer willing to petition the Immigration and Naturalization
> Service on their behalf. Even if they manage to do that, they must
> wait months for a reply. H-1B workers are also unusually beholden
> to their employers, the ones who can sponsor them for permanent
> immigrant status.
>
> They lack voice because no organization effectively represents
> them.
>
> And they have less regulatory protection than other workers
> because the Labor Department is precluded from investigating their
> conditions of employment unless a complaint is filed.
>
> Evidence suggests H-1B visa holders suffer as a consequence.
> Even though 70 percent of them are in well-paid computer-related
> and engineering fields, a 1996 report by the Labor Department’s
> inspector general found that 19 percent of H-1B workers are paid
> less than the salary they were promised.
>
> Legislation to increase the number of H-1B visas should provide
> protection from exploitation.
>
> This also would help native workers and improve economic
> efficiency.
>
> What could be done? Permit H-1B workers to change jobs freely
> after they are admitted to the country. Authorize the Labor
> Department to conduct random investigations of their employment
> conditions. Finally, require the immigration service to process
> applications for permanent, employment-based immigration more
> quickly, which would reduce the need for H-1B visas in the first
> place.
