Is Massive Immigration an Unmitigated Blessing? An Interview on Immigration With Harvard Economist George Borjas

Probably no issue was as important as immigration in mobilizing support for Donald Trump, particularly among voters in the South and Midwest. Trump’s own appeal was on strictly nativist terms.  According to Trump, Mexico was sending rapists and other criminals across the border, and illegal immigrants were flocking surreptitiously to the polls.  But Democrats and liberals would be wise not to dismiss as nativism the concern that many voters have with the huge influx of illegal immigrants and of unskilled legal immigrants into the the country over the last 50 years. There is a real question about whether our immigration policy has has contributed to wage stagnation and inequality.  Democrats’ failure to address this question – except to insist that everyone benefits – has contributed to the party’s isolation from voters who used to be part of their majority.

George Borjas, a professor at Harvard’s Kennedy School, is one of the country’s leading experts on the economics of immigration, and he is someone who has addressed this  question forthrightly.  He was born in Havana, Cuba in 1950 and emigrated to the United States with his mother in October 1962, on the eve of the Cuban missile crisis.  He got his undergraduate degree from Saint Peter’s College in New Jersey and his doctorate from Columbia.  He has sometimes been described as a “conservative,” because he has long insisted that large-scale immigration of low-skilled workers is not an unmitigated blessing, but his views on the subject are very close to those that were held until recently by the labor movement leaders and politicians sympathetic to the labor movement.  His views, in my opinion, are an important corrective to the current liberal and Democratic view of immigration.  His most recent book, which is well worth reading, is called We Wanted Workers: Unraveling the Immigration Narrative. I wanted to ask him what he thought of the current debate in Washington about immigration reform and illegal immigration.

Judis:  Let’s talk about the Cotton-Perdue Reforming American Immigration for a Strong Economic (RAISE) Act for that has recently been introduced and that President Trump has endorsed.  It has four main features.  It gives priority to skilled over unskilled immigrants.  It reduces annual immigration from one million to about 500,000.  It limits who is eligible for immigration through family reunification. And it caps the annual number of refugees to 50,000.  Why don’t you take the provisions one by one beginning with the priority given to skilled immigrants.

Borjas: From an economic perspective, let’s talk about who gains and loses.  Think of the native population. By that I mean, people who are here already. We are considering this law, the Cotton-Perdue Act, and we want to find out which kind of immigrants would be most beneficial for this pre-existing group. I think once you phrase it that way, from an economic perspective, it’s hard not to argue that the new people who would be best for people already here would be skilled migrants.   And that’s for two reasons.  One is that skilled immigrants would complement what we already have, particularly the capital stock. There is a lot of discussion of capital skill complementarity – for example, it is more valuable to match skilled workers with the demands of an information economy —  and that complementarity is pretty important. But perhaps more important than that, new immigrants bring in new skills and new knowledge that we lack. And that knowledge can make us more productive.

From an economic perspective, then, it’s hard to argue that high skilled immigration would not be more beneficial.  In fact, every major immigrant-receiving country is in the market for high skilled immigrants.  The more important question is whether to use an economic perspective in enacting any type of immigration reform.  There is a more fundamental question of values, of who we are, and the answer to that is far from clear.  There is something to be said for our own history. That is, we gave a chance to many, many disadvantaged people to come to America throughout much of our history. That’s a sensible humanitarian argument, and it is far hard to argue against it.  

Since 1965, we have admitted a lot of low-skilled immigrants, and one way to view that policy is that we were running basically the largest anti-poverty program in the world.  That is actually not a bad thing at all. Except someone is going to have to pay the cost for that.

This is the question that most progressives don’t want to face up to.  They really want to believe that immigrants are manna from heaven.  That everybody is really better off and that everybody is happy forever after. What they refuse to confront is the reality that nothing in the world is like manna from heaven.  In any policy change, some people benefit a lot and some people don’t. And this point also applies to immigration, which has created the dynamics of where we are now.

The costs of immigration

Judis: Who does benefit and who doesn’t benefit?

Borjas: The way I’d phrase it is that the people who benefit are the people who use immigrants, and the people who don’t are those who compete with immigrants.  People who tend to benefit are the employers who hire them. They make higher profits.  The people who compete with the new immigrants are both the older immigrants and natives who are low-skilled. It’s a simple supply-demand argument. The question then becomes:  How do we compare the value of having run this huge anti-poverty program with the losses being suffered by the native workers and the inequality being created by that type of immigration?  

Judis: What kind of losses are suffered?  Lower wages, unemployment, higher taxes? And how is inequality affected?

Borjas: The largest loss is probably the wage drop suffered by the workers who now face more competition in the labor market. My rule of thumb is that if immigration increases the number of workers by 10 percent, the wage of workers probably drops by about 3 percent. It is not a huge drop, but it is certainly not zero. And we should all find it particularly worrisome when this wage drop is imposed on workers who can least afford it. And this obviously tends to aggravate the forces that lead to greater inequality in our economy. The other big loss that we need to think about in terms of low-skill immigration is the increased cost of government services that we provide to them. According to the latest National Academy report, this number could easily exceed over $50 billion a year.

Judis:  Some people have argued that immigrants are filling jobs that Americans won’t take, so there really aren’t any losses suffered by native workers.

Borjas: You hear that argument all the time. This summer, the newspapers were reporting that in Cape Cod, because of a shortage of immigrants, employers had to go out and offer higher wages. This real-world response is worth thinking about. The argument isn’t that natives won’t take jobs that immigrants will.  The argument is really that there are jobs that natives won’t take at the going wage. That’s a very different argument. In the absence of immigrants, employers will respond. And the usual response is to make a more attractive job offer. If you and I go to Cape Cod and demand a hamburger, believe me, somebody will provide it.

Judis:  When the Cotton-Perdue bill was introduced, some commentators argued that it was a betrayal of America’s older commitment to immigration that was based on values not economics.  But couldn’t you argue that America’s immigration policy in the 19th century was based on labor needs?  At that point there was a huge need for unskilled labor for the new factories that were going up as part of the industrial revolution.

Borjas: Those immigrants created the manufacturing sector. Something like three-fourths of the employment at Ford in 1914 was foreign-born. Think about what that means.  There was an incredible need for that kind of labor.  And luckily for those immigrants the manufacturing sector became unionized soon after. That means that immigrants ended up in a sector that was growing for decades and was paying high wages and offering job security, and they had jobs that could be passed down to their children and grandchildren. That was how they became part of the middle class.   The question is whether you expect the jobs that immigrants are holding now to have the same trajectory. I don’t have a crystal ball. But it doesn’t look good.

Judis: And it doesn’t look good because unskilled immigrants are coming into a situation where there isn’t a great demand for low-skilled labor?

Borjas:  Exactly, and no unions to protect them.  And if you go back to the 20th century, we basically put a moratorium on immigration in the 1920s. Then the Great Depression. And those two things combined to reduce immigration to a trickle.  That gave time, a lot of decades, for these things to work through the system.  We don’t have the same situation today. The union sector is not what it used to be, and it is far from clear which kinds of labor market institutions or industries will give today’s low-skilled immigrants the same future opportunities that the manufacturing sector once did.

People always like to project forward from the past to the future. They say that if immigration worked out in the 20th century, it sure will work out in the 21st. But it was a highly different circumstance back then, so we really have no idea if how things evolved then tells us much about how things will evolve now. We need to have more humility about projecting from the past what is going to happen to immigration today.

Amnesty is not the answer

Judis: Let’s go back to Cotton-Perdue.  What about reducing the number of immigrants to 500,000?

Borjas:  The numbers issue, let me be totally blunt about this. There is no single economic study that predicts what the right number of immigrants should be. The political instability created by the high levels of immigration over the last twenty years suggests to me that we’ve gone beyond the line of what is best. That we are on the too much side, rather than on the too few side. 550,000 is the number that the Jordan commission came up with twenty years ago.

Not many people are proposing that we have completely open borders. That means that if you are in a reasonable span of the political spectrum, you are going to favor some kind of limit. So one question becomes how many, and the other question then becomes which type.  Most of the cuts in Perdue Cotton bill come from cuts in the family preference system as it applies to extended families.  You go to the United States, that spouse of yours comes, then the siblings come, and their spouses’ parents, and so on. That kind of branching out is really hard to justify as a rational immigration policy. The way to go from a million to half a million immigrants is by getting rid of all these extended family connections.  

I am not sure what is right.  But do you really want to have policy in place where the entrance of an immigrant provides a path for the entrance of the immigrant’s wife’s sister’s husband’s parents? That’s not clear. I would say we need a much more reasonable way of establishing who can come in and who can’t.  And what I would say is that in so far as no one in the reasonable political spectrum is really advocating open borders, we have to decide on a number, and it is hard to do that by relying on evidence from economic studies.

Judis:  Let’s talk about illegal immigration. You say in your book that the comprehensive bill and the debate over amnesty that it provoked is a sham.  You say that a lot of the people who are here can become legal through family reunification. Is that right?

Borjas: This may not hold if the Cotton-Perdue bill goes into effect, but suppose that you are an illegal immigrant today.  The way the system is set up right now is that if you come into this country illegally, and you marry someone who is a US citizen or who has a green card, and you have children who are US citizens, all these family connections will eventually, although not right away, allow you some kind of entree into the green card line.  

One way of getting rid of the debate about what do about the illegal immigrants who are already here is just to ignore them for awhile. Let nature takes its course. People will get married and have children. Maybe at some point we can accelerate the speed at which these family preferences grant you the right to a green card. That is a much better way to handle this than a wholesale amnesty.  

But when you address the illegal immigration problem you have to make sure you don’t have to face it twenty years from now. You have to look at the underlying conditions. That was the mistake we made in 1986, when the Reagan administration granted the first amnesty. My feeling is that we should do something to reduce the flow right now, and once we are sure of that, let nature take its course as a way of handling the illegal immigrants already here. We don’t really need to do much.

Judis: And what do you think of Trump’s ideas about building a wall as a way to keep out illegal immigrants?

Borjas:  A wall could be a great symbol, but it’s not going to stop illegal immigration completely. Signals matter in this world. But I think only half the illegal immigrants in the United States actually crossed the Mexican border, so that means a lot of people come through Dulles or JFK or LAX and they come in with a legal visa, and they stay. This is a big country, and they get lost. The wall is a signal, but it may not be the answer to the problem, The key question is: do these kind of signals have a huge impact. They may.  I don’t know.

Judis: What is a more effective way to reduce illegal immigration?

Borjas: I think something like E-Verify. (ed. note: E-verify is an internet base system allowing employers to verify whether someone is eligible to work in the United States.)  Perhaps there could be an executive order or legislation mandating that every new worker has to be approved by E-Verify. Something like that would be faster and more effective. And then the government can go out and make examples of a few firms that have broken the law, and if you hit big targets, and make them really pay for breaking the law, that has a cultural impact on everybody.

Judis: What is your opinion of the debate over DACA, Deferred Action for Childhood Arrivals, the program that allows the children of undocumented workers to be eligible to work for a two-year period?

Borjas:  From a humanitarian perspective, it’s very hard to argue against it. They were children when they came to the United States illegally. They may have little attachment to where they came from, because they left there when they were very young. I was like that. I came here as a kid. It’s a very emotional thing. I could never say, “let’s kick them all out.” How could it possibly be right to send them back to what many of them might see as a foreign country? But, on the other hand, we should never have been in this position to begin with.  Ignoring our borders for so long, not enforcing the law, has created all these moral conundrums. It has created a situation where we can’t discuss this rationally anymore.

Judis:  I want to ask you a final question about who is most hurt by low-skilled legal and illegal immigrant.  I have seen studies that the groups that are disproportionately hurt by unskilled immigration are African Americans and first-generation immigrants. These are groups that liberals who oppose any new curbs on immigration claim to champion.  Is that right?  Are these groups hurt?

Borjas:  Yes, basically, if you look at the last thirty years, we have let in a disproportionately large number of low-skilled immigrants.  Many of them are high school dropouts. So the question is who are the native high school dropouts that have to compete with these immigrants. Many of them are African Americans and Hispanics who are immigrants themselves.  Those are the people who are being hurt by current immigration.

The debate over immigration is very similar to the trade debate, We talked about trade for thirty years — that it was a great thing, that everybody was supposed to gain — but we now know that that is untrue. Some people were left behind, and it’s a pretty big political problem. Immigration is the same way, not everybody will gain, and the people who lose out from low-skilled immigration. are the people we are trying to protect in many other ways. So from one perspective low skilled immigration is attenuating the beneficial impact of everything else we do to help these people.