The Next Trillion-Dollar Stimulus? It's Immigration Reform

[xchrom]

http://www.theatlantic.com/business/archive/2012/11/the-next-trillion-dollar-stimulus-its-immigration-reform/265018/

Thanks to the electoral drubbing Republicans took from Latino voters on Tuesday, it's looking increasingly likely Congress might actually tackle comprehensive immigration reform some time this year. House Speaker John Boehner suddenly likes the idea. Even Fox News' Sean Hannity is a convert.

That's delightful news for any number of reasons. If it happens, millions of hard working people will be able to step out of America's legal shadows. But almost as importantly, it might just give the U.S. economy a trillion-dollar shot in the arm, as explained in a report published by the left-leaning Center for American Progress in 2010.

To get that boost, we have to be smart about reform. CAP argues that a truly comprehensive program would create a path to citizenship for people who are already here and set flexible limits for future immigration, so that annual totals rise and fall with our demand for labor. They estimate that those policies would add $1.5 trillion to the economy over ten years, or about 0.84 percent to our annual GDP. Compare that to mass deportations which, by sending millions of individuals packing, would sap trillions from consumer spending and growth.



These calculations are based partly on the impact of the Reagan administration's 1986 immigration reforms, which gave legal status to about 3 million undocumented individuals. That, in turn, gave those workers leverage to bargain with their employers for higher paychecks, while giving them an incentive to learn English so they could advance in the workplace. Estimates vary as to exactly how much newly legal immigrants were able to earn, but they all point to an improvement in their earning power.

[lapfog_1]

1. The Republicans have a problem

If they pass immigration reform AND fail to attract Latino voters... they become completely irrelevant.

[exboyfil]

2. I guess I am looking at this from too much

of a microeconomics level, but I have some comments about this study. Please do not call me a racist for my comments.

1. We currently have a structural unemployment problem with a pool of unskilled labor of U.S. birth or already naturalized citizens. Part of the reason that these potential employees do not take the jobs the undocumented workers currently fill is because of the wage exploitation available to employers that depress the wage (you can pay an undocumented worker less - they have fewer market options).

2. You naturalize this exploited labor pool. They are going to demand higher wages. Employers that employed them would now just get a new group of undocumented workers.

3. If you can prevent 2, why don't you do it now?

4. If you can't prevent 2., then will we just be having this discussion again in 20 or 30 years (ie just like in 1986 when that reform was supposed to fix the issue).

5. If the market conditions dictate that employers can no longer function under the conditions of paying market wages (ie you can prevent 2), then where do we go from there. Will that not lead to fewer jobs being available as importation of fruits and vegetables for example replace domestic production. This opens up a wider argument about trade policy.

6. We live in a country with expensive social services and a social safety net (not as strong as that in Europe but it does exist and will get stronger with the implementation of ACA). We need individuals making a high enough income to overcome the subsidization level associated with this safety net. Will increasing the pool of unskillled workers further strain our social services system? Social services include the $143K per child for K-12 education, subsidization of individuals making less than about $50K/yr with Social Security, subsidization of low income workers under ACA and Medicare, future claims for Social Security and SSI benefits for older family members of younger naturalized family members in this country, and possibly additional participation in the welfare portions of the social safety net (Medicaid, SNAP, TANIF). We also have a component of welfare built into the tax code with the EITC.

7. Even if no new naturalized immigrants take advantage of welfare portions of the social safety net, do they not supplant individuals in jobs that could be done by U.S. and currently naturalized U.S. citizens so that those individuals need to rely on the social safety net.

[SickOfTheOnePct]

3. You'll get no arguments from me on any of your points

They are all excellent points, and should be discussed as we look at immigration reform.

The meme that illegal immigrants do work that Americans won't do is crap - Americans won't do it for $4/hour.

[Honeycombe8]

4. It's complicated. But this has been done before, by Reagan. I'll look up & see

what happened in that instance.

The reason Repubs didn't want to do that is because one of the byproducts of that amnesty by Reagan was...the boom in illegal immigration that resulted. So that's why the Repubs want teh border secured FIRST, THEN give the ones here a path to citizenship.

[Romulox]

5. Wages have continued to plummet since Regan. You make his point. nt

[SickOfTheOnePct]

7. Sealing the border would be easy

If it were done correctly, and it has nothingn to do with fences and walls.

Illegal immigrants come here to work, and if that work goes away, they'll stop coming. The key is to punish, harshly, the businesses that hire illegal immigrants in order to save money.

Right now, there is no real incentive for businesses that hire illegal immigrants to stop doing so. They know that detection and enforcement is spotty, at best, and the penalties are so small that they are seen as a cost of doing business. In other words, even if a business is caught hiring illegal workers, the penalty is still much less than the cost of hiring legal workers would have been. Their profit stays up, even when caught.

My plan is pretty simple - make it financially devastating to be caught hiring illegal workers.

1) Implement a reliable verification system so that employers can verify whether or not an applicant is legally eligible to work in the U.S.

2) When an employer is caught using illegal workers, impose a two-pronged penalty. One prong is to reimburse the worker - five years or actual years worked, whichever is higher, of wages at twice the minimum wage, paid directly to the worker. The worker should still have to return to his or her country, but will leave with a hefty amount of cash to help fund the application process to return to the U.S. legally. The second prong is to impose the same amount above as a fine, payable to the U.S government which would be used to aid in enforcement and pre-fund unemployment accounts for use during economic downturns.

3) Forfeiture, for five years, of ability to obtain any government contracts.

Until employers feel the pain of hiring illegal workers, they will continue to do so, and all of the walls and fences in the world won't keep people out.

[Honeycombe8]

8. I think that was Romney's plan for "self-deportation." Because they wouldn't be

able to get work, etc.

[SickOfTheOnePct]

9. Yes, but with no compensation

And nothing that mentioned "forgiveness", i.e., a way for them to immediately apply to come back.

Legal immigration is vital, and should be encouraged, but illegal immigration should be discouraged, IMO. The downward pressure on wages as well as the ease of exploitation when one is working in the country illegally are both reasons to discourage it.

[Romulox]

6. Nobody can refute your argument; corporations just want cheap labor, and are good

at manipulating emotion in order to get it.