Why does Immigration Divide America? Improtant Perspective by IR/PS Professor Gordon H. Hanson
12/01/2005
Paula Cichocka,
In the recently published Why Does Immigration Divide America? Public Finance and Political Opposition to Open Borders, Gordon H. Hanson, professor of economics in the Graduate School of International Relations and Pacific Studies at the University of California, San Diego, assesses the fiscal consequences of immigration, which are reflected in public opinion toward U.S. immigration policy. He argues that broadened political support for reforming U.S. immigration policy could come with reducing the fiscal costs associated with immigration by, for example, a slower phase-in of the rights of immigrants to draw on public assistance and other public benefits. With a lower tax bill tied to immigration, there would be more political space to address legalizing existing illegal immigrants and expanding legal entry visas for foreign workers. Professor Hanson shows how immigration generates benefits for the U.S. economy by allowing U.S. capital, technology, and natural resources to be used more efficiently. These benefits help explain support for more open immigration policies by U.S. business, though workers who feel that competition from immigrants reduces their wages often oppose such policies. Seen in this light, the politics of immigration resemble the politics of international trade. While lower barriers to either immigration or trade has the potential to generate benefits for the United States as a whole, greater openness is opposed by less-skilled American workers who feel it undermines their economic livelihood. Yet, says Hanson, there are important ways in which immigration differs from trade. Immigrants pay taxes, use public services and vote; imports do none of these things. Many recent immigrants have little education, causing them to earn low incomes and to make frequent use of Medicaid and other government welfare programs. High levels of illegal immigration exacerbate this problem by reducing the share of immigrants that contribute to U.S. tax revenues and expanding the population that draws on expensive forms of public services, such as emergency medical care. The fiscal consequences of immigration are evident in public opinion toward U.S. immigration policy. Joining less-skilled workers in opposing immigration are high-income individuals in states that make large fiscal transfers to immigrants. What makes high-income earners opposed to immigration is not being in a high-immigration state per se but being in a high-immigration state that also provides generous public benefits to immigrants. The political coalition against immigration is thus broader than the political coalition against free trade – it includes low-income workers who fear immigration’s labor-market consequences and high-income workers who fear its fiscal impact. Current U.S. immigration policy is based on an uncomfortable compromise, says Hanson. U.S. business gets access to the foreign labor that it wants but must make do with one-third or more of these workers being illegal immigrants. A high level of illegality exposes U.S. taxpayers to greater costs, creates uncertainty in the supply of foreign labor, and dampens the incentive of immigrants to invest in acquiring skills or bettering their communities. Political divisions about immigration stymie attempts at reform. Business blocks attempts to improve enforcement against illegal immigration; anti-immigration groups block attempts to legalize the 10 million illegal immigrants residing in the country. One strategy to reform U.S. immigration policy would be to strike a compromise between those for and against open borders. To soften opposition to immigration, the United States could reduce its fiscal burden. By phasing in immigrants’ rights to draw on public benefits more slowly over time, the fiscal burden of immigration would be shifted away from U.S. taxpayers. Welfare reform in 1996, which delayed the right of immigrants to use many types of public benefits until they had been in the country for five years, is a precedent for this approach. Hanson’s book points to a way to implement a rights-based approach to immigration reform by making it part of an expanded temporary immigration program, in which new immigrants entered the country on temporary visas with limited rights to draw on public benefits and over time earned the right to apply for permanent legal residence. In the interim, employers would be responsible for financing their health care, unemployment insurance, and retirement benefits. The incentive for employers to pick up the tab for benefits to immigrants (the incidence for which would partly fall on the workers themselves) is that, through an expanded temporary immigration program, they would acquire access to a stable supply of foreign labor. A temporary immigration program with a well-defined path to permanent legal residence would also provide a means of legalizing the existing stock of illegal immigrants in the country. The building consensus that US immigration policy is broken creates a political opening to address the issue. Continued inaction would be costly. Among other consequences, it would allow a large and growing segment of the US labor force to remain in a legal grey area, lacking the protections afforded by the law. Creating a strategy to reform immigration policy requires understanding, first, the economic consequences of immigration and, second, how these consequences shape public views on the number of foreigners who should be admitted to the United States. Why Does Immigration Divide America not only provides a detailed answer to this question but specifies practical solutions for policymaker consideration. Established in 1986, UCSD's Graduate School of International Relations and Pacific Studies (IR/PS) is the premiere and only U.S. professional school offering business-savvy training with a focus on policy, economics and technology in the Pacific Rim. IR/PS is shaping the Pacific Century by training its leaders, creating ideas and supporting networks to build a Pacific community. More information on the graduate program and its faculty can be found on its web site at: http://irps.ucsd.edu. IR/PS Media Contact: Paula Cichocka, (858) 534-1465, pcichocka@ucsd.edu
