Immigration, to Keep the Good Times Rolling

What is the one issue the presidential candidates apparently don’t want to discuss? Immigration (except for Elian Gonzalez, on whom every politician has an opinion).

If it continues, the silence about immigration will cost the country dearly. No other government policy, not even tax cuts or the actions of the Federal Reserve, could have a larger impact on the nation’s future economic growth. Expand immigration to bring in skilled workers, and the boom will go on. Allow the current restrictive rules to stay in place, and the lack of skilled, productive labor will impede growth.

The United States is facing a labor shortage for the next 20 years. The Federal Reserve recently raised interest rates twice to slow growth and cool the demand for labor. Yet slowing growth is the wrong strategy. Between now and 2020, the number of people of traditional working age (20 to 64) will increase by a mere 15%, while the over-65 age group will increase by 100%. The country will need a fast-growing economy to support this dependent, older population. The right strategy--more highly skilled workers--is thwarted by current immigration policy, which would turn away a physicist from India with $5 million in capital to start a business but admit an elderly woman from India with a son or daughter already here.

Two-thirds of newcomers are admitted to the United States solely by virtue of family ties. (Another 16% are allowed in as refugees or asylum-seekers.) The preference for family ties is politically difficult to change because immigrants who become citizens and make a good life here want to bring in their loved ones to share it. I’m not opposed to reuniting families, but it is astonishing that Congress has paid no attention to the needs of the economy, even when family ties are not the issue. For example, the family ties policy has perpetuated a steady stream of newcomers from a handful of countries: India, China, Mexico, Philippines, Dominican Republic, Korea, Cuba and El Salvador. To create more diversity, Congress added a provision in 1990 that 6% of newcomers would be allowed in from other countries, with no family ties needed. Congress could have established age, employability or education standards for that 6%, but instead created a lottery, making it solely a matter of luck. Lucky for the newcomers, maybe, but not for the U.S. economy.

Immigration rules are widening the gap between haves and have-nots. More than a third of adult immigrants entering the country have not completed high school, and nearly half report “no occupation.” The steady supply of unskilled, unschooled newcomers depresses wages for everyone at the bottom of the jobs ladder. The result is that the pay gap between skilled and unskilled American-born workers has increased substantially in recent decades. Almost half that growing inequality is due to immigration, according to Harvard economist George Borjas.

In 1994, California voters approved Proposition 187, barring illegal immigrants from public schools and health services. It was largely invalidated by the courts, but its lasting effect was to increase Latino voter registration by 25% and help elect a Democrat governor.

Now, Republican Party leaders have vowed to win Latino voters. In the presidential race, they have the right candidate to accomplish that. Texas Gov. George W. Bush presents an opportunity for the GOP to come out with a pro-immigration policy to meet the nation’s labor shortage. He has won impressive support from Latino voters in Texas and has a record of helping immigrants.

Bush and his former challenger, Arizona Sen. John McCain, are part of an emerging consensus that more skilled immigrant workers are needed, particularly in the high-technology area, to keep the economy growing. The new GOP cannot be anti-immigration. Pro-immigration is pro-business and pro-prosperity. Responding to appeals from Texas Instruments, Microsoft and other technology giants, Rep. David Dreier (R-San Dimas) and Sen. Phil Gramm (R-Texas) introduced legislation to nearly double the number of visas granted to skilled temporary guest workers to 200,000. Both Bush and McCain support the legislation.

Allowing guest workers is only a first step. U.S. immigration policy needs to be redesigned to fill the labor shortfall at a time when the nation’s own working age population will be too small to support the elderly and maintain the current standard of living. An enlightened pro-immigration policy can avert economic slowdown and prevent the U.S. from fulfilling French philosopher Auguste Comte’s prediction that “demography is destiny.” The question is whether the GOP candidates will address the issue. They have the credibility. Will they have the courage?