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The US labor market has been slow to recover from the deep recession of 2007–2009. As of September 2011, there were almost seven million fewer jobs than before the downturn. Policymakers have debated numerous ways to increase employment, from government spending to tax policy to training and education initiatives. But relatively little consideration has been given to immigration reform as a way to boost the economy, even though immigration policy affects innovation and job growth. Instead, the immigration debate has become painfully deadlocked, with widespread agreement that the current system is broken but little consensus on how it should be fixed. In these challenging times, more should be done to identify incremental changes to immigration policy that could be made immediately to boost employment for US workers and accelerate the country’s economic recovery.
To better understand the potential for immigration policy to help rejuvenate the US economy, policymakers need answers to basic questions such as whether the foreign born take jobs from the native born or instead create more jobs, on balance, and what types of immigrants generate the most jobs for native-born workers. Although numerous studies have explored how immigration affects natives’ wages, there is relatively little research on how immigration affects employment among US natives. This study seeks to fill this gap and answer the question of what specific changes to immigration policy could speed up American job growth.
There are two basic theories of how immigration affects natives’ labor market outcomes. One is that immigrants have the same skills as US natives and the two groups “compete” for jobs. In this view, immigration reduces natives’ employment. The other theory is that foreign-born workers “complement” US-born workers. That is, immigrants and natives have different skills, and immigration diversifies the workforce. Immigration results in more productive companies, stronger economic growth, and higher employment among US natives.
This study focuses on two groups most frequently identified by policymakers and employers as vital to America’s economy: foreign-born adults with advanced degrees and temporary work visa holders. (For simplicity, all foreign born are referred to here as immigrants, regardless of their visa type.) In trying to establish whether these groups help or hurt job prospects among US natives, the study uses hard numbers—annual data from the US Census Bureau and applications for temporary workers—to perform a state-level comparison that answers the question, “In states with more immigrants, are US natives more or less likely to have a job?” This study also looks at the fiscal effect of the foreign born by comparing the benefits they receive to the taxes they pay.
The analysis yields four main findings:
1. Immigrants with advanced degrees boost employment for US natives. This effect is most dramatic for immigrants with advanced degrees from US universities working in science, technology, engineering, and mathematics (STEM) fields. The data comparing employment among the fifty states and the District of Columbia show that from 2000 to 2007, an additional 100 foreign-born workers in STEM fields with advanced degrees from US universities is associated with an additional 262 jobs among US natives. While the effect is biggest for US-educated immigrants working in STEM, immigrants with advanced degrees in general raised employment among US natives during 2000–2007:
• An additional 100 immigrants with advanced degrees in STEM fields from either US or foreign universities is associated with an additional eighty-six jobs among US natives.
• An additional 100 immigrants with advanced degrees—regardless of field or where they obtained their degrees—is associated with an additional 44 jobs among US natives.
2. Temporary foreign workers—both skilled and less skilled—boost US employment. The data show that states with greater numbers of temporary workers in the H-1B program for skilled workers and H-2B program for less-skilled nonagricultural workers had higher employment among US natives. Specifically:
• Adding 100 H-1B workers results in an additional 183 jobs among US natives.
• Adding 100 H-2B workers results in an additional 464 jobs for US natives.
• For H-2A visas for less-skilled agricultural workers, the study found results that were positive, but data were available for such a short period that the results were not statistically significant.
3. The analysis yields no evidence that foreignborn workers, taken in the aggregate, hurt US employment. Even under the current immigration pattern—which is not designed to maximize job creation, has at least eight million unauthorized workers, and prioritizes family reunification—there is no statistically significant effect, either positive or negative, on the employment rate among US natives. The results thus do not indicate that immigration leads to fewer jobs for US natives.
4. Highly educated immigrants pay far more in taxes than they receive in benefits. In 2009, the average foreign-born adult with an advanced degree paid over $22,500 in federal, state, and Federal Insurance Contributions Act (FICA, or Social Security and Medicare) taxes, while their families received benefits one-tenth that size through government transfer programs like cash welfare, unemployment benefits, and Medicaid.
The results here point directly to several policy proposals that would boost US employment. These policies would require neither new taxes nor new spending cuts. Specifically, policymakers could create jobs by doing the following:
• Giving priority to workers who earn advanced degrees from US universities, especially those who work in STEM fields. The results show that the most dramatic gains in US employment come from immigrants who earned advanced degrees at US universities and are employed in STEM fields. Changing permanent and temporary immigration policies to favor holders of advanced degrees from US universities in STEM fields is an obvious step given the demand for highly skilled workers and the extensive investment the country already makes in such students. Without a clear path to stay in the United States, these foreign students will fuel innovation and economic growth in countries that compete with the American economy.
• Increasing the number of green cards (permanent visas) for highly educated workers. This study shows that foreign-born workers with advanced degrees create more jobs for US workers than immigrants overall. Yet only 7 percent of green cards are currently awarded to workers based on their employment. The United States can increase the number of immigrants with advanced degrees in the US workforce by increasing the number of green cards distributed through employment-based categories.
• Making available more temporary visas for both skilled and less-skilled workers. The findings here suggest that expanding the H-1B program for skilled temporary foreign workers would increase employment for US natives. Similarly, this study suggests that the H-2B program for seasonal, less-skilled workers in fields other than agriculture leads to significant employment gains for US natives. But both these programs are severely limited under current law. Only 85,000 H-1B visas and 66,000 H-2B visas are available each fiscal year, and the process for obtaining H- 2B visas is often prohibitively difficult and costly. This study found a positive but not statistically significant relationship between H-2A temporary agricultural visas and employment among US natives. Further study is warranted to explore whether H-2A visas should be increased as well.
America is currently mired in a period of the slowest economic growth seen in several generations, with persistently high unemployment, anemic job growth, and little bipartisan agreement on how to address these pressing problems. Action is required if America is to get back to work. Immigration policy can, and should, be a significant component of America’s economic recovery. Targeted changes to immigration policy geared toward admitting more highly educated immigrants and more temporary workers for specific sectors of the economy would help generate the growth, economic opportunity, and new jobs that America needs.
Madeline Zavodny is a professor of economics at Agnes Scott College
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