The state of the world at the close of 2012
has not helped prioritize immigration reform as a short-term goal of the US
government. The self-imposed fiscal
crisis, gun violence, Syrian civil war, political chaos in Egypt and the
continuing economic problems in Europe are all issues that crowd legislators’
agendas. However, the wheels of reform
may have been set in motion by the demographic political imperatives looming in
the next election. Put simply, the
Republicans feel out of touch with growing Latino and Asian populations and
there are murmurs
that immigration reform could be a key issue. The political impetus for this push is
clearly to win the hearts and minds of these growing segments of voters. However, the economic impetus for immigration
reform may be far more compelling.
A recent Economist article examining the
oncoming “demographic
squeeze” bears ill news for the US. While
US population growth is still faster than every developed country and trails
only India and China in percent growth, decreases in fertility,
immigration and population aging are all taking their toll on the US
economy. Consumers of US news can see
this manifest in the ongoing Social Security and MediCare crises and the diminishing
ability of today’s workers to supports today’s pensioners. The US is not alone in facing the Malthusian
risk associated with economic and social development. With fewer young people
and larger elderly populations living longer than ever, the ability of the
state and the economy to support the current structure is cast in serious
doubt. Dire demographic forecasts have
been made about China.
The European
Union may turn to promoting immigration in order to escape the trap of an
ageing population and ballooning public debt.
The US hardly needs to promote immigration. What policy makers need to do is facilitate
immigration.
The work of economist Giovanni
Perri would be a great first stop for legislators worried either about
Malthus or reelection. In his recent
policy paper Dr. Perri proposes a market-based regime for employment
visas. This would replace the
first-come, first-served and lottery systems now being used. By allowing employers to bid on employment
visas, market efficiencies would distribute these scarce resources to most
interested employers. This is only the
first step in what Dr. Perri sets out as a three phase plan for comprehensive
immigration reform.
Phase one includes an auction for temporary
employment visas, like the H-1B and H-2.
This visa auction places employers at the center of the decision-making
process while reducing transaction costs such as legal fees. A minimum price could be set by the
government to cover the costs of the auction and the tracking database, which
Dr. Perri estimates could easily be set at $7,000 for the three-year H-1B. Immigrants coming to the US on these visas
would not be tied to any particular employer and could circulate freely in the
labor market as employers barter for immigrants and their visas on a secondary
market. By treating these employees as
normal members of the labor pool, employment visas would no longer need to be
encumbered by the byzantine labor verification system. This process requires employers to prove that
a position filled by an immigrant employee cannot be filled by a native worker
and is a long, drawn-out bureaucratic exercise.
Phase two calls for the simplification of
visa categories. The current system for
employment visas involves a wide array of visas (H, I, L, Q, R and TN) that are
valid for differing periods of time.
The
second phase of this comprehensive reform plan calls for collapsing all of
these categories into three simple classes: C, NC and S. These new groups would be aimed at college educated
work, non-college educated work and seasonal work respectively. The first two new visas would be valid for
five years while the last would be valid for twelve months. This visa revamp would also abolish the
distinction between “temporary” and “permanent” visas. All visas would be considered provisional with
the option of applying for permanence at their expiration. Dr. Perri argues that this incentivizes
rational self-selection among immigrants to decide if they wish to save and
return to their countries of origin or if they wish to remain in the US. The ability to seamlessly incorporate
immigrant workers with five years or more of experience into the labor market
as legal permanent residents would be a boon for employers, workers and the
economy as a whole.
The third phase proposes expanding the
provisions of the first two phases to the wider immigration regime. Thus a new balance should be struck between
family- and employment-based visas. Adult
children and siblings of US citizens should be diverted into the employment
visa system. National quotas should be
eliminated and provisional visas should be granted to graduates of four-year
universities in the US. Along with these
expansions, the current undocumented population should be folded into the
system through a regimented process towards residence.
Dr. Perri offers convincing arguments and
sufficient detail for a well-balanced debate over the merits of his
proposals. As an economist, his affinity
for hard numbers and modeling lends itself to a tone of reasonableness that has
long been absent in the immigration reform debate. The political pitfalls of pushing through
this type of reform may still be daunting, but the demographic and economic
impetus for the changes outlined in this plan will only drive the need for its
serious consideration. Anyone looking
for some content to insert into their comprehensive immigration reform package
should certainly consult with Dr. Perri.
