Gang of Eight’s big win for the economy

By Madeline Zavodny

After months of leaks and posturing, the Gang of Eight has released its immigration reform bill. The bill reflects many compromises yet is unlikely to satisfy everyone. Critics will charge that the bill is amnesty for illegal immigrants, or that their path to citizenship will take too long; the bill admits too many immigrants, or too few; the bill values skills over family ties, or gives too much preference to immediate relatives.

But this bill may be as good as immigration reform can get. It increases border and — more importantly — interior enforcement, and it ties the path to citizenship for most undocumented immigrants to progress along the border. It reduces chain migration. It increases the number of employment-based green cards and the number of H-1B visas, allowing more skilled workers to enter the U.S. It also creates new programs for low-skilled workers to replace the deeply flawed H-2A and H-2B temporary worker programs.

These changes have the potential to dramatically boost immigration’s contribution to economic growth. Research shows that highly educated immigrants make critical contributions to the high-tech economy: they patent at twice the rate of U.S. natives and they founded one-quarter of startups between 1995 and 2005. Admitting more of these immigrants helps ensure that the U.S. has the inventors, innovators and entrepreneurs who are the lynchpin to economic growth.

The best part of the bill is that it effectively more than doubles the number of green cards available to employment-based workers by exempting accompanying relatives, PhD-holders in STEM fields and several other categories of highly skilled workers from counting against the cap. The merit-based green card category the bill creates also may prove to be an important pathway for skilled workers. The bill’s increase in the cap on H-1B temporary visas is good since those visas are the gateway through which many skilled immigrants enter the U.S. or remain here after finishing their studies. But green cards are the Holy Grail for most would-be immigrants, so making more of them available to skilled workers is key.

The other important parts of the bill from the standpoint of economic growth are the new programs it creates for low-skilled temporary workers. These workers fill an important niche in the labor force, taking dirty, dangerous and dull jobs that few Americans are willing to do. Admitting these workers relieves bottlenecks in the economy, complements U.S. workers, slows the movement of jobs overseas and lowers prices for consumers.

The new programs would allow workers to move employers more easily and to remain in the U.S. longer than the current H-2A and H-2B programs. Unfortunately, however, the bill retains some of the most costly and cumbersome parts of the current programs, including requirements to recruit U.S. workers and high wage floors. Worse yet, the new agricultural program would cap the number of visas (unlike the current H-2A program) while the new W visa for non-agricultural workers has a cap so low that it threatens to stifle growth and raise prices.

Some other parts of the bill are inefficient or just plain odd. For example, the bill creates a commission charged with designating shortage occupations. There is no clear way to measure labor market shortages, and it’s hard to imagine that a new bureaucracy is a good idea. The point system for the new merit-based green card program may sound good on paper, but point systems quickly become outdated and have a hard time picking the immigrants who will be most successful. The bill would allow spouses of H-1B visa holders to work only if the worker’s home country provides reciprocal treatment to spouses of U.S. workers, but spouses and minor children of W visa holders would be allowed to work regardless of their home country’s rules.

The Gang of Eight’s bill totals 844 pages. Any bill that long and this complicated seems sure to contain at least one provision that alienates every potential supporter. But this legislation has the potential to massively improve U.S. immigration policy. After some tweaks, it would replace an antiquated, inefficient system with one that unleashes immigration’s power to boost economic growth.

Madeline Zavodny is a professor of economics at Agnes Scott College in Decatur, Georgia, and a research fellow at the Institute for the Study of Labor in Bonn. She was formerly an associate professor of economics at Occidental College and a research economist at the Federal Reserve Bank of Atlanta and the Federal Reserve Bank of Dallas. Her research on the economics of immigration has been published in the Journal of Labor Economics, the Journal of Development Economics, Demography, Industrial and Labor Relations Review, Research in Labor Economics, and the Journal of Policy Analysis and Management.

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