Orlando's Outlook: Revisiting immigration reform as we approach Thanksgiving

11-17-2017

Bottom line As we reflect upon the approaching Thanksgiving holiday, we Americans have a lot for which to be thankful this year. To be sure, the ongoing polarization and chaos in Washington continues to dominate the daily news cycle. But economic growth is now running at its strongest pace in three years, corporate profits haven’t been this robust in six years, the unemployment rate at only 4.1% is at a 17-year low and the S&P 500 has rallied nearly 25% over the past year to record highs. And the dollop of sweet whipped cream on top of our delicious slice of fundamental pumpkin pie is that a successful passage of tax reform could very well make these positive gains sustainable.

Immigration reform, however, is one deeply contentious issue we’ve been unable to resolve, and we find that troubling on many levels. In our view, there’s sufficient common ground to achieve all of our competing goals: grow the economy and protect American jobs; improve border security to keep America safe; and extend compassion to immigrants who are looking for a better life for themselves and their families, much like our own forbearers did generations ago. These are not mutually exclusive goals.

So in the spirit of Thanksgiving, we’re reminded of the inscription on the Statue of Liberty in New York harbor:

Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

To spread the light of liberty world-wide for every land.

Happy Thanksgiving, everyone!

Organic U.S. population growth slows At 326 million people, the U.S. population grew only 0.7% in 2016, according to the Census Bureau, which represents the smallest annual expansion since the Great Depression in 1937 and trails the world average of 1.1% growth. That’s in sharp contrast to the much faster average annual growth pace of 1.8% we enjoyed during the baby boom era of the 1950s. The fertility rate in the U.S. is now at 1.82 live births per woman, which is below the replacement rate of 2.1.

In conjunction with a decline in productivity to a cyclical trough of less than 1%, we can begin to understand the demographic components to the slowdown in GDP growth that we’ve experienced over the past decade.

President Donald Trump’s tax-reform plans are designed to reverse the sharp decline in productivity, through lower corporate tax rates, deregulation, repatriation, the immediate expensing of investment in capital equipment and more infrastructure spending.

But a successful immigration policy is critical to supplement the slower fertility rate, so we will have enough workers to achieve Trump’s goal of adding 25 million new jobs over a decade, which translates into a monthly average gain of 208,000 nonfarm payroll jobs. So as baby boomers retire and the fertility rate in the U.S. continues to slow, immigration could help to provide a sustainable way to achieve our economic goals.

Low-skill workers are very important There are 11 million undocumented illegal immigrants in the U.S., nearly 3.4% of our total population. These illegal immigrants play an important economic role, as some eight million of these people work difficult jobs (while paying their taxes) that many Americans simply don’t want: agriculture, meat processing plants, hospitality (hotels and restaurants), child and elder care, housekeeping, landscaping and lawn maintenance, and construction. So while some critics contend that these illegal immigrants are taking jobs from native-born Americans, the reality is that these jobs would largely go unfilled if there was mass deportation, which would harm overall economic growth.

In addition, these illegal immigrants brought along 800,000 of their children with them into the U.S. at a very young age. These so-called “Dreamers” are protected from deportation under a renewable two-year program called the Deferred Action for Childhood Arrivals (DACA) program, which then-President Barack Obama signed as an executive order in 2012. Catholic Charities estimates that 97% of these protected young immigrants are actively attending school or are working, with many graduates going on to become doctors, nurses and attorneys. Trump rescinded DACA last September, but is giving Congress six months to draft replacement legislation for his signature, before he revisits the issue next March.

Congress may reintroduce the Development, Relief and Education for Alien Minors (DREAM) Act, which was first proposed in 2001 and which could create legal status and a path to citizenship for these young immigrants. Trump has said that he may sign the DREAM Act if Congress passes it, although this could become a bargaining chip for leverage to pass his tax reform proposals.

Welfare state expansion? Critics are also concerned that these immigrants largely cost the U.S. more than they’re worth, in the form of additional welfare costs compared with their economic output. But a study released by the Department of Health and Human Services (HHS) in September concluded that refugees generated $63 billion more in government revenues over the past decade than they cost.

Build that wall The federal government estimates that some 200,000 of these 11 million illegal immigrants (less than 2% of the total) have criminal backgrounds and are thought to be a potential threat to the country’s security. For that reason, in exchange for a more generous immigration policy, some on the right are looking for more funds to build a southern border wall along Mexico, more immigration agents and border police, additional immigration judges and lawyers, more detention space to hold immigration detainees while their cases are adjudicated and the denial of federal funds to so-called “sanctuary cities.”

We need to attract and retain high-skill workers, too There’s an estimated half-million high-paying, high-tech jobs in the U.S. that are unfilled right now, because we don’t have enough qualified candidates. In addition, three-quarters of the candidates for masters and Ph.D’s in STEM (science, technology, engineering and math) majors at U.S. universities are foreigners, with 46% of them from India and China. When these foreign-born high-achievers graduate from Stanford or MIT with their Ph.D.’s, we typically deport them, which is a missed economic opportunity, in our view. We believe that a more effective policy would be to staple a green card to their diplomas and encourage them to stay here to take one of those open high-tech jobs, or perhaps start a new company with plenty of available venture capital funds.

The H-1B program allows higher-skilled, foreign-born workers who have a specific skill set to come to work in the U.S. to help companies by filling these crucial job openings. But the program has some obvious flaws that need correction, on which the Trump administration is currently working. Absent the problems, however, these high-achieving foreign-born workers are a source of income for their U.S. companies, and they contribute to society by paying taxes and providing support for social security and disability insurance, even if they might not stay long enough to ultimately collect the benefits from these programs.

Conclusion A bipartisan immigration policy that is both fiscally prudent and socially responsible can achieve multiple objectives simultaneously, such as boosting economic growth, job creation and wages, keeping the country safe and being compassionate to individuals who want to come to America for a better life. 

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