Immigration Reform Policy and its Implications on the American Labor Market
This paper is going to focus on the implications of immigration on labor market economics with special reference to the United States, since the general global market is very diverse and different variables are different for different markets. The negative implications of illegal immigration into the United States has prompted the government to increase its spending on ensuring that the borders are well protected. It has also been argued that programs that encourage guest workers which the Congress has been considering does not put into account the economic implications that it may have on the country, despite the fact that it benefits the workers that are undocumented and increases their desire to work and reside within the United States, and the employers that are looking for cheap labor that is flexible according to their needs.
Implications of Immigration
Illegal immigration is a concern that has been rising for the United States politicians, especially since the population of these illegal aliens increase by more than 100 over the past decade. The congress has approved of measures that are geared towards ensuring that the United States Mexico border security is tightened to regulate or even stop the flow of illegal aliens entering the country (Hanson 2006). Some of the measures that the congress has taken include the first immigration reform law for the last 20 years (Buchanan 2006). There is this belief that legal immigration is not bad for the country but the illegal immigration is detrimental for the country. Despite these different views and opinions regarding immigrants, it is evident that the reduction in the number of illegal immigrants would go a long way in the improvement of the United States economic welfare. Also to be looked into in this paper is the argument is illegal immigration bad and legal immigration good The implications of an immigration reform on the economic welfare of the country is also an integral part of the market, with special focus on the labor market. Also in this paper, the costs, incentives and benefits of illegal immigration in the context of economic analysis. These immigration reforms would be effectively geared towards targeting individuals who are in possession of skills which are in the shortest of supply in the global market, their tax contributions are enormous and the cost that they pay for public services are highest possible. Allowing immigrants from occupations that are scarce or rare to come by is destined to increase the incomes of the government despite their level of skill upon entry into the country (Cornelius 2001). In the United States, rare labor would not necessarily mean skilled labor such as doctors or programmers, but it could also mean workers from the informal sector such as catering, sanitation and construction whose services have been dwindling within the native labor market. Either way, the national labor market favors these workers, as compared to the other labor markets abroad in terms of wages payable to them.
The economic consequences that immigration policies posses do not account for the other considerations that it could have on other factors such as politics, civil rights and national security. If the government continues to condone high rates of illegal immigration, it could affect the governments ability to enforce regulations on the labor market due to the undermining of the rule of law. The influx of illegal immigrants also makes the employers to relax on their commitment towards the United States labor market institutions, and towards creating a set of workers with a limited ability to be mobile vertically thus creating an uncertain working environment. There is not much evidence proving that legal migration is more advantageous in an economic sense as compared to illegal immigration. As a matter of fact, illegal immigration has shown to respond to the market forces in a couple of ways that the legal immigration does not. Statistics show that the illegal immigrants tend to migrate in to the United States when the economy is in a booming state, and they further tend to move in to areas that are strong in terms of job and opportunity growth (Cornelius 2001). To the contrary, legal immigration is usually subjected to delays due to the stringent selection criteria and the bureaucracy, and thus it is relatively disassociated from the United States labor market conditions. Thus, over the past 50 years, there has not been any response of legal immigration in relation to the United States employment rate. It is also by chance that such admitted legal immigrants have their skills matching those which the industries within the United States require at that particular time. Most of the legal immigrants come in to the United States on the invitation of a prospective employer, and the process of receiving the visa usually delays owing to the fact that it is arduous. Even when they do get to enter the country, such workers are incapable of moving between jobs with ease and this proves to be less beneficial to the economy of the United States (Cornelius 2001).
The Current Immigration Policy
There are three options that a non citizen of the United States can take to live and work within the country. Option number one is to become a legal citizen or resident. The second option is to obtain a temporary work permit or visa and lastly, to enter the country illegally as an illegal immigrant and continue staying there as an unauthorized alien. Each type of such immigration is subject to their own set of principles governing admission and behavior. The United States awards visas for green cards based on a quota system. This was established in 1965 thanks to the Hart-Cellar Immigration Bill. For immediate family members of American citizens, they are guaranteed admission, provided they are exempt from the quotas for entry. There are some other specified quotas that are assigned to other family members of citizens, persons with specific special skills, and individuals seeking political asylum due to persecution from their native countries (Hanson 2006).
The granting of these work permits is normally biased towards individuals with family members within the country. When an individual has stayed within the country for five years as a legal resident, he she can now be eligible to apply for citizenship in the United States. With the citizenship status, comes a lot of privileges such as the right to vote, and the benefits from the government programs. Foreign citizens can work within the United States for a certain period of time provided they have a temporary visa permit. Such visas are allocated to foreign investors who come from countries that the United States has signed a free trade treaty with, temporary workers and transferees from intra companies. There are different visas for different types of individuals for example, the H-1B visas which are available for the high-technology workers in industries. There is also the H-2A visa for the agricultural sector, due to its seasonal nature thus seasonal labor, H-2B for seasonal workers whose work is mainly manual in nature such as construction workers and workers in the tourism industry. The other work visa available are for those with abilities that are extraordinary and gifted such as sportsmen, artists and missionaries. Thus, the highest majority or percentage of temporary visas except for the H-2 visas, go to the individuals that exhibit high levels of specialty in these specialized occupations or those that are highly educated. Though the United States government does not determine the levels of immigrations, they enforce policies that only permit an allowable number of immigrants to enter in to the country. Most of the illegal immigrants enter the country by crossing over the United States Mexico border or by simply overstaying their temporary visas. Initially, especially when there was the Bracero program between 1942 and 1964, workers especially casual laborers in the agricultural sector would be allowed to cross over from Mexico and the Caribbean (Hanson 2006). Today, these workers are more likely to be found working in the sanitation services, construction industry, manufacturing industry especially low end, and catering and food preparation.
Currently, the level of enforcement against illegal immigrants working in the United States work site is relatively low. This is because the law requires that before an employer hires any employees, he she has to confirm if the employee is a legal citizen by asking for legal documents such as the social security number and the green card. So long as the employer believes that the documents presented are real, then he she is not obligated to any other legal implications. The influx of illegal immigrants is normally dependent on the economic conditions with the inflow of them rising during periods when the United States economy is expanding and that of Mexico is in a contraction mode (Hanson 2006). This is true considering that statistics show that when the wages in the Mexican country fall by say 10, in relation to the United States wages, then the attempts that these illegal aliens make to enter the country also increase by about 6. This type of response by illegal immigrants in relation to the economic condition is expected, and thus they come to work within the United States with their main motivation being the different conditions under which they have to work in and the wages expected as compared to their home country. Legal immigration on the other hand responds to the economic conditions at a slower pace. The yearly quotas allocated for green cards are normally fixed and the queues that have to be cleared are also relatively long, thus several years are required making legal permanent immigration inconsiderate of the United States business cycle (Hanson 2006). It is also important to note that since these illegal immigrants are not tied down by their employers if they are employed, then they are capable of changing jobs whenever they want to. This mobility that they poses reflects the informal type of relationship that they have with their employers. Thus it is easy for employers for example in the construction industry to hire illegal immigrant workers without promising them of a new job if the current project being done gets completed. This also applies to such illegal immigrants who are employed in the agricultural sector, who have no guarantee of employment on the same farm in the following year once that growing season is done. In the sanitary, catering and child care industries, the demand for illegal immigrant labor is less seasonal, but that does not mean that the employment relationships are more permanent or secure in nature. Such employees are normally employed at will and thus there is no contract defining the terms and conditions of their employment. Such kind of informality is what makes illegal employment contribute to the manner in which the illegal labor markets are flexible.
The United States Economy and Illegal Immigration
When the skills of incoming immigrants are very scarce, then the gains in productivity from immigration will be greater, for a given flow of labor into the country. The skill of a certain type of worker may be low in the United States owing to the fact that his type of skill is low in the country in comparison to the rest of the world, or due to the fact that the United States demand for this type of skill is high in comparison to the rest of the world, for example scientists. The steady increase in the completion rates of high school has made finding United States born-natives, with low level of schooling hard to find. Though it is important to note that they are still very important in the economy of the United States since they build homes, clean offices, offer catering services, work in farms and fill the jobs in the factories (Camarota 2004).
The migration of workers from Mexico to the United States create a scenario where they move from an area where their relatively high population provides them with low productivity with low wages, to an area where their low population presence presents them with an opportunity for higher earnings. The total economic impact that immigration may have on the economy of the United States may be small but the gains that the households from which these immigrants depend on may be high. It is thus true that illegal immigration has achieved, or is achieving what legal immigration has failed to achieve which is moving a considerable amount of low skilled workers from an area of low productivity to an area of high productivity (Camarota 2004).
Illegal immigration has also managed to bring low skilled workers in to the country when the gains from productivity appear to be the highest from that action of immigration. Mexico has been experiencing severe contractions within its economy, and emigration has been increasing in the event of such downturns in the economy. In the case of highly skilled labor, legal migration is the best way for them to enter the United States. In comparison to the rest of the world, the United States has a high supply of educated labor. The past two decades has seen the United States improve its technology thus increasing the demand for highly skilled labor. Even though the United States in itself is abundantly endowed with educated labor, technological advances induces the need for an increase in the labor market demand for educated workers from all over the world (Camarota 2004). Thus the presence of temporary work visas and green cards based on employment make the immigration of such a skilled workforce possible. The United States economy is provided with workers who are scarce in supply, through illegal, employment based permanent, and temporary immigration. The largest component of permanent immigration which is immigration based on family, is not set by the government in regard to the United States labor market conditions. The nature of legal immigration such as the presence of long queues and lags in the adjustments of visa level tend to reduce the economic importance of this type of immigration. On the other hand, the flow of illegal immigrants is normally connected to the United States and Mexican business cycles.
The Economic Benefits and Costs of Immigration
There are economists that argue that an influx in the number of illegal immigrants is very costly in economic terms, since it lowers the domestic wage and raises the expenditure on public services. If such economic costs become increasingly high, then the economic reason for the introduction of an immigration reform policy would be justified. In general, immigration is beneficial to the residents of the United States as it increases their incomes by allowing the economy to fully utilize on the domestic resources available in a much more effective manner (Cortes 2005). But the diversity in the types of these immigrants in terms of skills, the ability to earn income, size of the family and the right to use public amenities, produces different impacts on the economy. Immigration is also known to affect the incomes of the residents of the United States through the impacts that it has on the revenue collected from tax and public expenditure. Immigrants that have large families and a low income tend to be major drainers of public spending. Immigrants pay a number of taxes, with the low skilled immigrants making small contributions. The high expenditure that these immigrants spend on public amenities could include education, health care, transportation and police and fire services, with those immigrants with larger families spending more on public expenditure. The tax payments of these immigrants minus the value of the public amenities they use gives a rough estimate of the overall impact that immigration has on the United States economy (Camarota 2004).
Immigration is also a source of extra income for the United States economy even though it pushes wages downwards for some of the workers. The productivity of resources that are complemented by labor are raised by the increase in the supply of labor. For example, if the supply of labor in an acre of a wheat field is increased, it will mean that the overall output of that acre will also increase (Cortes 2005).
It is however important to note that these benefits are not equally shared. For instance, the workers who immigrate from abroad cause the possible income to be redistributed among all the workers thus competition within the labor market between residents and immigrants. On the other hand, the low cost of labor also means that the cost of goods and services that are labor intensive also tend to be lower especially in the case of those whose prices are set in the local markets as opposed to the global markets which is much more competitive. This low price of goods and services tend to raise the real income of households especially those that are in the regions with the largest population of immigrants. In the case where the immigrants pay more tax than they use in the services provided to them in the form of government benefits, then the native tax payers receive a net fiscal transfer of funds. On the other hand, if the immigrants were to pay less tax than they receive from the government benefits, then a burden of net fiscal value will be bore by the native taxpayers meaning the native household will be transferring their incomes to the immigrant households (Camarota 2004).
If immigration reform has the ability to replace flexible and mobile illegal employees with non flexible non mobile guest workers, then it would less likely diminish the immigration surplus that the foreign labor market generates for the United States economy. The most dividing issue that surrounds the immigration reform is whether to offer these illegal immigrants an opportunity in legalizing their status. Some of the other views include legalizing of unauthorized immigrants status is seen as a form of rewarding individuals who have broken the law and thus encourages others to do the same. It is thus established that there is no economic reform package even through economic analysis that would improve the national welfare. The short term economic consequences of the legalization of immigrants status is very limited. To the contrary, the fiscal consequences will not be felt for at least the next 10 years after implementation and control would be defined by the type of government benefits which these immigrants are eligible for (Cortes 2005).
Conclusion
It is evident that specific groups of taxpayers, employers and workers are bound to gain or lose if the immigration reforms are implemented through the changing of government policies that govern illegal immigration. The overall economic effects of these reforms do not appear to be as enormous. When viewing the various proposals that are under discussion during the immigration reform, it is important that these policy makers separate the impacts that such a reform would have on the distributive functions from the aggregate effects. As discussed in the paper, the economic implications of this reforms in the economic sense does not produce a substantial amount of gain or loss, thus any new reforms that requires a huge amount of funds will only serve to lower the economic wellbeing of the United States. Illegal immigration is also something that is persistent due to its economic rationale. With the current status of illegal immigration, not implementing an immigration reform that creates other avenues for legal immigrants to enter will be in conflict with the market forces that push for the move of labor from the low productivity low wage areas to the high productivity low wage United States labor market (Camarota 2004).