FREE ESSAY ON ECONOMICS OF IMMIGRATION

ECONOMICS OF IMMIGRATION

From the origin of the United States, immigration has been crucial for the economic
advancement and expansion of the nation. The US truly is a melting pot of many cultures
and ideas, and it has benefited greatly from its diversity. However, with a much-reduced
demand for unskilled or low-skilled workers, US policy must adapt so that it can better
maximize the net economic benefits of immigration. While this probably does not include a
universal drop in the number of legal immigrants, it would include the screening of
applicants in such a way that preference is given to more economically beneficial
candidates. It would also include making families totally responsible for their elderly
relatives who migrate to the US, eliminating the refugee portion of immigrants, denying
more, but not all, government services to illegal immigrants, controlling the southern
border with more manpower and better technology, and establishing a national verification
database. The optimal policy from an economic perspective should seek to provide U.S.
businesses with the labor they require without placing added burden on the taxpayers.
Before specific policies can be addressed, it is crucial that immigrants be separated
into four categories: legal, working-age immigrants; legal, elderly immigrants; refugees;
and illegal immigrants. These groups are radically different, and they must be addressed
differently.
Universally cutting legal immigration levels would deprive businesses of labor resources
that have allowed them to grow. It is important to note that legal immigrants increase
the national income between seven and twenty-five billion dollars a year. Businesses
benefit greatly in terms of increased labor availability. Immigrants usually have a
higher percentage of college degrees than people now living in this country, and thus
they contribute greatly to the filling of higher-skilled jobs. Excluding refugees,
thirty-three percent of legal immigrants have a college degree, compared to only 20% of
the native population. Giving further preference to skilled would-be immigrants could be
beneficial to the United States. Some people, such as Senator Alan Simpson, believe that
allowing these highly-skilled workers into the US hurts the economy and the American
worker. Looking at the facts, though, it would appear that this assumption is incorrect.
However, some of the United States? most successful companies are fervently fighting
Senator Simpson?s immigration bill that would cut down on the number of highly skilled
workers allowed to migrate. These companies include Microsoft, Intel, Hewlett-Packard,
Texas Instruments, National Semiconductor, among others. Despite this, current
immigration policy is slanted more towards groups that do poorly than it is towards those
that are successful. In recent years, the United States is taking in more and more less
skilled, legal immigrants, causing a reduction in some benefits immigrants bring with
them, including tax revenues and capital externalities. This policy has reduced the
number of qualified applicants for many firms, especially those in the technology area.
They have greatly benefited from the H-1B visa program, and further expansion of this
program at the expense of less-skilled immigrants would be very beneficial. 
In 1994 almost 738,000 legal non-citizens received Supplemental Security Income, SSI, a
welfare program, up from 128,000 in 1982; a 580% increase in just twelve years.
Population increase can explain some of the growth, but not nearly all of it. The largest
contributor to the jump is the elderly sub-group of immigrants. In the current United
States immigration policy, many elderly immigrants are allowed into the country if they
have family here that will sponsor them. The law requires the family to support their
elderly relatives for a period of three to five years. After that time, the elderly
immigrants are entitled to US welfare programs. In contrast, it has already been shown
that working age immigrants actually has a lower welfare participation rate than natives.
The reason that immigrants as a whole seem to use welfare programs more can be explained
by the tremendous percentage of elderly immigrants now on welfare. While 6.9% of the
native population over the age of sixty-five receive assistance from United States?
welfare programs, 11.1% of legal, non-refugee immigrants over sixty-five years of age who
arrived before 1980 receive welfare, and 25.7% of legal, non-refugee immigrants over
sixty five years old that arrived from 1980 to 1990 receive benefits from US welfare
programs. The United States welfare program, which contains SSI, food stamps, and
Medicaid, among other programs, has become some sort of a global retirement system. The
legal, working age immigrants may not have a negative effect on the state of welfare, but
some of their older relatives do. If trends continue, 328 billion dollars will be spent
from 1995 to 2004 to provide welfare for elderly non-citizens, and annual Supplemental
Security Income and Medicaid cost for these immigrants will reach 67 billion in 2004. It
appears that elderly immigrants drain from the welfare system, and since they are
unlikely to have jobs (they are retired), they are not even close to being able to
contribute enough in taxes to make up for what they take out of welfare programs, in
particular SSI and Medicaid.
Many households face rising costs in healthcare in terms of premiums and taxes to cover
the costs of uninsured patients. Immigration as it is now is only adding to the problem.
As much as 60% of the growth of uninsured people since 1993 is solely due to immigration.

It is often argued that immigration of high-skilled workers hurts American households.
However, foreign-born scientists and engineers do not increase US unemployment nor do
they undercut wages. Even the migration of less-skilled workers does not cost American
jobs. In the 1980?s, more people migrated to the US since the boom between 1900 and 1910,
and job growth increased while unemployment went down. 
The Refugee Dilemma
People who are accepted as refugees are immediately eligible for welfare programs and
given assistance that even surpasses those given to citizens. From an economic
perspective this segment of immigrants tends to be highly inefficient. Although it is
regrettable that people have gone through and continue to go through terrible hardships,
the best course of action in regards to US immigration policy towards refugees might
include treating them the same as any other person applying for the permission to come to
the United States. Present policy towards refugees is probably a failure. It not only
places addition burden on U.S. households who have to pay the taxes, but it also fails to
provide labor talent to businesses. Refugees as a group have low incomes and high costs
for welfare and other social services, as they are more likely to be on welfare than
natives or other immigrants. The money they pay into the government, on all levels, is
insignificant when compared to their use of social welfare programs due to the low
quality of their jobs, when they have jobs. Between the years of 1981 and 1987,
approximately 600 million dollars a year have been spent on refugees (in 1988 dollars).
Broken down, 13.4% of refugees between the ages of fifteen and sixty-five are on welfare,
and 49.6% of refugees over the age of sixty-five receive welfare benefits. These numbers
are incredible realizing that only 3.7% of natives between the ages of fifteen and
sixty-five are on welfare, and only 6.9% of elderly natives, sixty-five and older, come
by welfare. The numbers are unbelievably lopsided. In general, refugees are a drain on
the United States welfare system and on the economy as well. 
Addressing the Illegal Situation
Illegals are the group of immigrants that probably draw the most attention from the
public. The free-rider problem applies to the situation of illegal immigration since
these immigrants make use of public goods while not paying income taxes. One major
problem of illegal immigration involves the fact that illegal immigrants do not spread
out evenly across the nation. They concentrate in certain areas, and the destination
states that they choose, like California, pay a heavy toll. U.S. households, in general,
end up paying an enormous amount of money because of illegal aliens. A study has found
that illegal immigrants drain about 2 billion dollars a year for incarceration,
schooling, and Medicaid from destination states such as Texas, California, and Florida.
In California for example, approximately 1.7 billion dollars was spent entirely on
educating the children of illegals in 1993. These students make up about 10% of the total
student population. These addition students in the public school system causes problems
for the schools in terms taking up scarce resources, and they can influence individual
households with regards to public vs. private schooling. In addition to the costs of
schooling, health care for illegals costs about 400 million dollars. 
A tremendous loophole exists in welfare availability when it comes to illegal immigrants.
All an illegal has to do to get welfare from the US is give birth on American soil. It
does not matter where the child was conceived, nor does it matter that the parents are
committing a crime against the United States and its citizens. Once an illegal immigrant
gives birth on American soil, the child incredulously becomes a citizen, the parents pick
up the money and benefits that their citizen baby is entitled, and then the illegal has a
foothold in the US that costs the taxpayers money. It is very unlikely that someone is
going to deport the parents of a thirteen-month-old baby. Knowing this, the best course
of action might be to change the law, no matter who made it, so that children of illegals
are illegal, and children of citizens and legal aliens are citizens. 
Broad anti-illegal immigration sentiments have grown steadily over the years, especially
in destination states, causing the passage of radical bills such as California
proposition 187. Its purpose is to deny all government programs except emergency medical
care to illegals. One of the problems with the proposition is that it probably would not
keep illegals from coming. It would only make their lives here harder. They would not go
home. Without education, the illegal children would be forced into the streets where they
would have to turn to crime or very harsh, low paying, and often inhumane, jobs. Health
care to illegals is addressed by the Surgeon General, Penny Sylan: ?If people are forced
to wait until an illness has progressed to an advanced stage before they seek medical
care, infectious disease will spread throughout communities and recovery rates will
plummet.? 
Instead of legislation like proposition 187, more effective patrol of the borders, and
the future implementation of a national verification database might more effectively
control and lessen the number of illegals residing in and commuting to the United States.
The US has lost control of its borders. Two-thirds of the births in Los Angeles County
are to illegal mothers, and San Diego border patrol agents estimate that they stop one
out of every three illegals, or thirty three percent. With increased number of border
patrol officers, and increased technology, the US might be able to better control its
southern border. Such initiatives have already shown positive results. Operation
Gatekeeper has proven that better forces can have a positive affect on the number of
illegals that successfully get across the border. Through more agents, better sensors and
detection devices, and barriers like three-tiered fences and ditches, the US can make it
almost impossible for people to come across the border. While denying education and
health care services would only make their lives harder, the establishment of a national
verification database and strategic placement of identification checks could make it
impossible for illegals to function at all in the United States, and thus it might deter
some from trying. The ID would let employers check on the background of potential
employees, and it could make it impossible for illegals to get Driver?s Licenses or other
legal documents. In order for the identification system to be effective, it must be
coupled with very strict and severe laws against employers who would knowingly hire
illegals. Arguments against an ID system say that it would infringe on privacy,
inconvenience legal aliens and citizens if glitches and problems in hardware occur, and
cost a great deal of money to implement. The best course of action probably is to wait a
few years until technology would be widely available to allow bio-metric identification
systems, such as the scanning of fingerprints, to be implemented. The technology is
available now, but by waiting a few years, it would be much more cost effective, as well
as more accurate. These systems could be perfectly accurate and impossible to forge.
Immigration should be available to those who wish to come to the United States to work,
contribute, and be self-sufficient. The needs of U.S. businesses and the best interests
of American households should be the goal of policy. By not reducing the number of
working-age, legal immigrants, and by giving preference to skilled workers, the United
States can maximize the economic rewards of immigration. Through making families
responsible for their older relatives, refusing to accept refugees, and working harder to
expel illegals, the US can minimize its immigration expenses. Immigration has been one of
the cornerstones of US history, contributing greatly to the wealth of the nation. With a
few adaptations in policy, it can once again be greatly beneficial to the nation and its
citizens.
Bibliography
Bibliography
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