Who Are You Rooting For, Mr. President?

Harvard economist George Borjas recently gave an overview of the economic impact of immigration on the United States in a lecture at the Cato institute (see the issue brief on the subject).Borjas’ insightful analysis is backed-up by scientific data yet many choose to dismiss his work if not ignoring it altogether.  As he explains, the immigration policy of the U.S. is not determined by facts and numbers. No matter how accurate and telling figures are, policy-makers are guided by their own sets of values, or shall I add, agendas.It comes down to this: If policy-makers cared more about the immigrant then they do the American worker, they would design a policy that allows large-scale immigration despite the highs costs on American workers. The opposite is also true: if the American worker was top on the list, the U.S. immigration policy would be more geared towards controlling immigration flows. According to Borjas, it all boils down to one question: Who are policy-makers rooting for?We are all familiar with the current’s administration immigration policy. What is not openly declared, however, is the type of country those in charge want the United States to be (or rather become). What we don’t have is a clear answer to a simple question.  And so today, I ask, who are you rooting for Mr. President?It is crucial to keep in mind a number of Borjas’ key points:

• High-skilled workers settle in places where skills are most valued. A country attracts highly-skilled workers when it gives a high rate of return to skills in comparison to other countries. A country that subsidizes low-skilled labor will attract low-skill workers. This is what the U.S. is doing nowadays, opening its doors to unskilled labor.
• We are witnessing today a slowdown in the economic assimilation of immigrants. The larger the immigrant group, the slower the assimilation. Large-scale immigration today leads to the formation of “ethnic enclaves.” What immigrants needed to do in the past to improve their economic status (like learning English, moving to a different town, changing occupations) is no longer necessary. Current immigrants believe they are doing well WITHIN these enclaves.What we learn from this is that immigrant groups that are largest in size in the U.S. assimilate at a slower rate. This applies to Mexican immigrants, the largest immigrant group in the U.S. today.
• Today’s immigration generates losers and winners. The losers are the American workers. The winners are both the immigrants and the employers of immigrants. It is a simple equation: when immigrants come in, the wage of competing workers goes down. Look at it from a supply and demand perspective says Borjas: immigration’s supply of workers leads to the price of labor going down. Conversely, for a particular group of labor that does not include immigrants, the price of labor goes up. So, American workers are the big losers today. American employers of immigrants share the winning stand with the immigrants.

Knowing all this, which immigration policy should one advocate? As Borjas stresses, immigration policy is not guided by economics. It has to do with the kind of country we want and the people we care about the most, the low skilled American worker or the low-skilled immigrant?Immigration policy comes down to one simple question:Who are you rooting for? That is a question President Obama needs to answer.