Robert Hahn is director of economics and professor at the Smith School, University of Oxford. Peter Passell is a senior fellow at the Milken Institute and editor of The Milken Institute Review. They co-founded Regulation2point0.org, a web portal on economic regulation.
The U.S. debate over immigration reform got a little bit nastier recently with publication of a Heritage Foundation report concluding that immigrants – documented or not – who haven't finished high school are going to cost taxpayers a lot of money. We are deeply skeptical about the assumptions underlying the numbers. It just goes to show that if you slice and dice the issue enough, you can cobble together an economic justification for whatever policies you prefer. Our real problem here, though, is that Heritage has missed the bigger picture.
According to the analysis, taxpayers will pay about $6.3 trillion more in benefits – medical, educational, income supplements, etc. – than the country will collect in taxes over their lifetime if the 11 million or so undocumented living in the United States gain legal status. Heritage attributes the gap to their lack of human capital, which will force most of them into insecure, low-paying jobs.
The report notes, however, that the cost would be much lower if these workers remain undocumented, which would keep them from accessing the full-range of government social programs. The right policy response, lead writer Robert Rector explained, is pretty straightforward: "We feel that the best immigration system is one that focuses on bringing high school [graduate] immigrants in."
Back up for a moment. If we had our 'druthers, we'd move toward an open border policy, allowing workers to move freely across national boundaries and bring their skills where the jobs are. A number of solid studies have suggested that such a policy would accelerate growth without tanking local wages. (Check out, for example, "Borderless Economics" by Robert Guest).
The plain fact is that immigrants generally create income in both the country they migrate to and the one they've left behind by increasing productivity at both ends and by remitting cash to the old country. But we're not naive enough to think that will actually happen anywhere, anytime soon, because open immigration does create winners and losers – and the losers (along with people who mistakenly fear they will lose) have immense influence on policy, at least in the short run.
Failing that, we're all for some type of merit-based immigration system – a concept that the Heritage report also embraces. But we take a somewhat more expansive view than Heritage about what merit means. It makes perfect sense to create incentives to attract highly skilled workers, especially for specialties in short supply. But we also think attracting a broad cross section of human talent has a value that can't be measured easily.
In our minds, one of the biggest benefits immigrants bring is enthusiasm, passion and entrepreneurial spirit – and you don't need to be a high school grad to possess those. The last time we visited, the Statue of Liberty didn't only welcome "the best and the brightest."