Migrant-Induced Migraines

As if the issue of immigration weren't complicated enough, emotionally-charged appeals of politicians and pundits make the prospect of sensible discussion all the more grim. One of the more inane appeals--espoused by the political far-right--argues that anyone who has entered the country without going through the prescribed channels has broken the law and should thus be deported. But as a democratic society, we write the law and in doing so we define what is legal and what is not. So if we the people determine that the 11 million or so illegal immigrants should be here inasmuch as their presence benefits society, it does us no good to deport them for breaking a law that had not served our interest as citizens. This rational proposition harkens back to the lessons of the Greek tragedy Antigone. Sure Antigone had broken the law in burying her treasonous brother, but is one not obligated to confront a law one deems unjust? Before answering that question, one must first establish what makes a law "just." As an economist, my criterion of choice is efficiency. Applying efficiency to the issue of immigration requires us to structure the law in such a way so as to do the most good for the most people, where the people at issue are the current population of American citizens.

Defining the Policy Problem

U.S. immigration policy can be thought of as a mechanism, comprised of various organizations, serving simultaneously to identify who should be permitted to enter the country and to establish an incentive/deterrence system that insures only those people do enter. The U.S. Citizenship and Immigration Services (USCIS, formerly Immigration and Nationalization Services) processes petitions for various forms of residence, while Border Patrol guards do what their title suggests. It is crucial to realize that neither role can be thought of in isolation. For instance, suppose it were agreed upon that the U.S. would be better off without Mexican immigrants. If preventing all Mexicans from crossing the border illegally required a wall costing $70 billion to construct, we would be better served by allowing a few to come across as long as the cost to American citizens of them doing so did not exceed $70 billion. This simple example illustrates the need--from the standpoint of efficiency--to consider the feasibility of deterring those deemed less worthy of immigrating.

Those most worthy of immigrating--from the standpoint of efficiency--are those who contribute the most to society whether viewed from an economic, cultural, intellectual, or technological standpoint. Existing immigration laws have generally succeeded in granting entry to those with exceptional skills for work-related purposes. Examples include professional athletes, world-class artists and musicians, academics, and researchers in high-tech fields. In these cases, the prospective resident or her employer must demonstrate a unique skill possessed by the foreign person not found within the domestic workforce. Demonstrating value is much more difficult in the case of low-skilled workers, typically from Mexico and central America, whose productive ability is easier to substitute from within. But ease of substitution does not make the work done by migrants any less valuable. A reliable supply of food, for instance, is more vital to the country than professional sports, but a well-known athlete like Maria Sharapova can much more easily gain resident status than a tomato grower from Guatemala.

Some Pros and Cons of Migrant Workers

It is generally agreed amongst economists that migrant workers contribute positively to the economic well-being of the United States. This would be the case whether or not they are willing to work for lower wages than domestic workers. The reason is, an employer will never pay a worker more than the price he can get for the worker's output. And the price a consumer is willing to pay for that output will never be more than the value to her of consuming it. Thus the employment of additional workers necessarily creates value for consumers. Labor leaders, seeking to limit immigration, counter that the willingness of immigrants to work for lower wages hurts employment prospects and suppresses wages for domestic workers. But to the extent that domestic labor is hurt, the gains to society, to be discussed, necessarily outweigh the losses of those hurt by foreign competition. Following the argument of the labor leaders to its logical conclusion, if an influx of foreign labor drives down domestic wages, it will reduce the cost of producing goods affected by the wage decrease. If output levels remain constant after the wage decrease, the losses to domestic labor will exactly be offset by gains to consumers in the form of lower prices and to business owners in the form of greater profits. But lower production costs allow firms to expand output and serve a broader market, creating gains in excess of the losses incurred by domestic laborers. In addition, income earned by migrant workers increases demand for products and services--some domestic--thus creating employment opportunities for those displaced. These are all benefits we would expect from an increased supply of any resource, low-skilled labor being one such resource. Given that the economic gains from immigration exceed the losses, our goal should be the distribution of gains to those hurt by it, not--as labor leaders would argue--preventing such gains from accruing by restricting immigration.

Of course the effects of immigration extend beyond the labor market and beyond markets for goods and services. Critics argue that migrant workers place additional strain on the provision of publicly provided goods and services such as schools, hospitals, roads, and the police force while they fail to contribute their fair share. Though such arguments are not without merit, it should be noted that immigrants who avoid paying income taxes must still pay sales tax on products they purchase and property tax either directly as owners or indirectly as renters. They are also less likely, ceteris paribus, to commit crimes as getting caught results in immediate deportation. And while they may exacerbate urban congestion, immigrants add to diversity and culture within their community.

Evaluating Immigration Policy

These issues are not easily reconciled. Some, like the effect of immigration on crime, job creation, and the provision of public goods, are amenable to empirical analysis at least to some extent. Others, like urban congestion and diversity, are more amorphous and largely a matter of taste. But they all must be taken into account when devising the efficient policy.

If our only concern were the economic impact, I would say the current laws have allowed for too little immigration. Since every immigrant at work creates value for the consumer of the final product, maximizing gains--to the extent it is our aim--would require granting entry to anyone coming here to work. Opening the borders would eliminate the incentive to enter the country illegally and reduce the cost of border patrol. It would presumably also solve the problem of undocumented residents as those residents currently without legal documentation could more easily obtain it without fear of deportation. Immigrants seeking work would continue to cross the border as long as the gain, in terms of increased pay, outweighed the cost--both financial and psychological--of the move. Eventually, competition for jobs will force wages down in the U.S. while a lack of competition will bid wages up in Mexico to the point where it is no longer beneficial to immigrate.

Such a neoliberal solution addresses the economic need for low-skilled labor and solves the problem of border patrol. Nevertheless, it ignores those effects external to the labor market, resulting in either too much or too little immigration. For someone concerned with the provision of public goods and/or urban congestion, the free-market approach induces too much immigration. The solution would then require continued involvement of the USCIS to limit legal immigration and Border Patrol to prevent the illegal form. Since the cost of staffing these agencies is hardly negligible, it would have to be the case that the level of immigration under the free-market approach was sufficiently costly for a more intrusive policy to be worthwhile. Conversely, for those valuing cultural diversity or believing immigration leads to a net gain in domestic jobs, the free-market approach results in too little immigration. Immigration policy would then have to concern itself with providing additional incentives to potential immigrants or employers of immigrants. Examples may include subsidies to employers or the granting of residency to the families of working immigrants. Those current seeking to extend additional rights/privileges to immigrants should be warned, however, that any privilege which reduces the incentive of an immigrant to continue working once in the U.S. may run counter to efficiency by reducing his or her economic value to society.

The article began by asking the question, "Is the current immigration policy just?" As the preceding discussion demonstrates, determining the appropriate level of immigration is a difficult task. It may be that 11 million represents too many or too few immigrants. But regardless of the number, the fact that they are here illegally represents a failure of either the USCIS to determine those worthy of entry or of Border Patrol to deter those who are not. For this reason, it is appropriate that our elected representatives address the issue. Whether or not they make immigration more or less difficult or more or less fair is a decision to be made through thoughtful discussion and deliberation, and not as is often the case, through hard-line grandstanding.