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Drain or Gain? Joint Economic Committee Weighs Immigration Reform

Is the massive bill from the Gang of Eight a plus or minus for America's pocketbook?

by
Bill Straub

Bio

May 9, 2013 - 12:41 am

WASHINGTON – Conservative activist Grover Norquist declared this week that increased immigration could serve as “a key driver of economic growth” in the nation’s future and dismissed claims contained in a report issued by the Heritage Foundation that welcoming workers beyond America’s borders would cost taxpayers trillions of dollars.

Norquist, president of Americans for Tax Reform, told the Joint Economic Committee that an immigration reform proposal circulating in the Senate likely would result in “an infusion of foreign-born workers to supplement our work force and allow our economy to continue to grow.”

“In addition to making us more competitive globally, immigration makes native-born Americans more prosperous,” Norquist told lawmakers. “American workers and immigrants have mostly different skill sets because immigrants are likely to have different levels of education than native-born Americans – on both the low and high ends of the skills distribution.”

As a result of those different skill sets, Norquist said, new immigrants and native-born residents generally don’t compete against each other in the job market, which would result in lower wages.

“The complementary relationship between immigrants and native-born workers increases overall production rather than fostering direct competition,” he said.

The hearing before the committee focusing on the economic benefits of immigration stands as a preliminary bout in the upcoming fight over immigration reform legislation, also known as the Border Security, Economic Opportunity, and Immigration Modernization Act, which gets its first consideration before the Senate Judiciary Committee on Thursday.

As proposed by a bipartisan group of senators known as the “Gang of Eight,” which includes Florida Republican Marco Rubio, considered a strong candidate for the 2016 GOP presidential nomination, the bill would provide legal status for the estimated 11 million undocumented immigrants currently residing in the U.S. although they would not be automatically eligible for citizenship. It also expands the opportunity for work visas for foreign workers and further strengthens border security.

The measure has drawn opposition from some conservatives who view it as an amnesty for undocumented workers. But Norquist argued that “people are an asset, not a liability” and that growth can only help the economy.

“By bringing millions of able workers out of the shadows, giving them access to greater employment opportunities, and requiring them to pay taxes, this legislation will spur economic growth,” he said. “By facilitating a larger flow of future immigrant labor, both low-skilled and high-skilled, it allows for a demand-driven, merit-based approach to immigration, while freeing up law enforcement to prosecute human traffickers, drug smugglers, and other criminals.”

It also, he said, “creates millions of new taxpayers who will help keep America on sound fiscal footing where demographics are not currently in our favor.”

Steven A. Camarota, director of research for the Center for Immigration Studies in Washington, D.C., was less enthusiastic, asserting that under-educated immigrants represent a drag on the economy.

“Immigration makes the U.S. economy larger,” he said. “However, by itself a larger economy is not a benefit to native-born Americans. Though the immigrants themselves benefit, there is no body of research indicating that immigration substantially increases the per capita…income of natives.”

Camarota also maintained immigrants create an additional cost to local government, stating that “there is general agreement that less-educated, lower-income immigrants are a net fiscal drain.” He also said they carry a dilatory effect on the employment prospects for native-born workers.

“Because the least educated and poorest Americans are the most likely to be in competition with immigrants, they tend to be the biggest losers from immigration,” he said.

Sen. Amy Klobuchar (D-Minn.), vice chair of the Joint Economic Committee, agreed that the legislation would enhance, rather than hinder, economic growth.

“Immigration is a powerful economic engine that boosts innovation and strengthens critical industries from agriculture to high-tech manufacturing,” Klobuchar said. “The fact that we have everyone from Grover Norquist to labor unions advocating for immigration reform underscores its importance and I will continue to push for smart, comprehensive policies that secure our border, bolster our economy and promote opportunity for both businesses and families.”

Rep. Kevin Brady (R-Texas), the panel’s House co-chair, said the objective of immigration reform must be to maximize potential economic benefits for the nation while minimizing the cost to taxpayers “if we wish to remain the world’s largest economy through the 21st century.”

“My belief is that we must close the back door of illegal immigration so that we can keep open the front door of legal immigration,” he said. “My frustration through the years of this politically charged debate is that Congress and the White House have failed to agree on a most basic question: What kind of workforce does America need to remain the strongest economy in the world and what steps do we need to take to ensure we have that 21st century workforce?”

The current system, Brady said, is “by all measurable standards broken,” adding that “the current visa program for low-skilled workers is essentially unworkable.”

Norquist also took the opportunity to question a report from a conservative think tank, the Heritage Foundation, which maintains the immigration bill would cost $6.3 trillion in benefits for undocumented residents over the next 50 years. The study has been criticized by immigration supporters because it doesn’t calculate the fiscal benefits those workers bring to the table.

“Much of the costs they attribute are there anyway — they are for people who are citizens today,” Norquist said. “Forty percent of the cost is for education and 80 percent of the people are citizens now, but they still stick that on as a cost. They added the cost of a five-year-old legal resident into the cost. It got worse, the quality of the work.”

Norquist was joined in support of immigration reform by Georgetown University Professor Adriana D. Kugler, who echoed his claim that those entering the country offer a different skills set from those already here.

“One major fear about immigration is that immigrants take jobs away from U.S. workers and lower their wages,” she testified. “However, recent evidence points in the opposite direction. Since immigrants have different skills and tend to do different occupations, they complement U.S. workers and make them more productive. Moreover, immigrants are more likely to create their own jobs either by becoming self-employed or starting up their own businesses.”

Kugler also assured lawmakers that immigrants won’t impose a burden on local, state, and federal economies.

“The evidence here also points towards immigrants helping to ease fiscal problems,” she said. “Not only is the economy likely to grow as a result of immigrant innovation and entrepreneurship in the longer term, but also in the short term due to increased consumption by immigrants.”

Madeline Zavodny, a professor of economics at Agnes Scott College in Decatur, GA, also expressed support for easing immigration laws but within stricter parameters. While noting that “a growing economy attracts immigrants and immigration, in turn, makes the economy grow,” she asserted that immigration policy “should prioritize those immigrants who are most likely to make the biggest economic contribution.”

“The most highly-educated immigrants make the greatest economic and fiscal contributions,” she said.

Meanwhile, those with low skills, she said, place a strain on local economies.

“Although the net federal impact of current immigrants appears to be small, state and local governments in areas with large populations of low-skilled immigrants experience a sizable negative fiscal impact,” Zavodny said. “Much of these costs are due to educating the children of immigrants since those costs are primarily borne by states and localities. Medicaid costs are also substantial for states with large low-skilled immigrant populations.”

She also argued that it would prove desirable to encourage short-term migration as opposed to permanent residency.

Washington freelancer Bill Straub is former White House correspondent for Scripps Howard News Service.

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All Comments   (10)
All Comments   (10)
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1 year ago
1 year ago Link To Comment
Actually, Norquist borrowed his comments from long standing studies of a particular consortium but sadly, failed to provide the correlating economic numbers of those studies. The metrics of increased population equaling increased national GDP and consumer consumption is not that difficult to understand. Likewise, all the evil 'welfare' dollars go back into consumer consumption and the national GDP.

Would there be a front-end cost? Most likely, just like in any new business startup or any other big social and economic venture. The long term return on investment is what everybody should be discussing and doing so with the most ligetimate data.

What would be most noticeable, should all this occur, is that prices will increase in all those areas where illegal immigrants wages have supressed inflation. Far more dangerous to our national economy and security is unsustaianble arbitrary inflation. This immigration matter if enacted, will certainly contribute to that inflation factor.
1 year ago
1 year ago Link To Comment
“Forty percent of the cost is for education and 80 percent of the people are citizens now, but they still stick that on as a cost. They added the cost of a five-year-old legal resident into the cost. It got worse, the quality of the work.”

So he's saying that these are legal citizens because they were born here, to illegal parents? Perhaps we should fix our system so that the children of illegals born here are not automatically citizens.

1 year ago
1 year ago Link To Comment
Norquist doesn't think that there is direct competition for jobs between lower skilled citizens and illegal immigrants? What planet is he living on? He is right about one thing though-cheap labor will result in increase profits for companies. How that benefits anyone other than the companies is beyond me. We have immigration. If, as a country, we need more of this or that then we can increase the visas in that particular area. We have legal means to achieve our goals. The idea of openning our arms to lawbreakers and giving them the run of our country is beyond disturbing.
1 year ago
1 year ago Link To Comment
This is just genocide of an entire country.
1 year ago
1 year ago Link To Comment
The one and only reason an amnesty is being pursued now is to give the Democrats total power for at least a generation. The RINOs support this because they think they will share some of that power.

What this bill means in reality is millions of votes for the Democrats with millions more flowing in annually because of the "bring your whole family" provisions of the bill, vastly increased social spending, and very likely millions of Americans being fired and replaced by immigrants willing to work for less pay. All that is to say nothing of what will happen to our culture when all these people who say in polls that they believe government is the source of prosperity.
1 year ago
1 year ago Link To Comment
I've long wished Grover Norquist would shut up and go away. Now I really, really wish it.

Bringing illegals "out of the shadows" will not "create millions of new taxpayers who will help keep America on sound fiscal footing." To begin with, America is not at this time on "sound fiscal footing" and this amnesty will do nothing to put us there. To the contrary, unskilled, uneducated people seldom become tax-paying entrepreneurs. Though they may work very hard, they generally are low income earners and as such do not pay taxes. Furthermore, they typically qualify for tax code subsidies and various social welfare programs. They are, as Mr. Camarota says, a "net fiscal drain." And surely Mr. Norquist understands that increases in the labor pool drives wages downward. That's basic economics.

Now, of course, highly skilled and educated immigrants are another matter entirely, but they usually come here through legal channels. This constant jumbling of legal and illegal immigrants to make points that actually apply only to the former group is annoying in the extreme.

1 year ago
1 year ago Link To Comment
Sometime when you have the time, run your wages through an inflaction calcultor and see what its adjusted buying power is. Will probably be equal to the wages of the 50s and 60s.
1 year ago
1 year ago Link To Comment
You beat me to it.
1 year ago
1 year ago Link To Comment
Dollars to pesos it's a loser, just like Rubio the Worm.
1 year ago
1 year ago Link To Comment
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