Immigration and wages: current immigration policy is costing Americans both dollars spent on social services and lowered wage rates. A wiser policy, on the contrary, would benefit workers.

In 2004, economist Todd G. Buchholz--author of the book New Ideas from Dead Economists--published a new book, this time about the loss of jobs in America. In Bringing the Jobs Home, Buchholz pointed out that immigration can either be a blessing or a curse to a nation and that it is up to policymakers to structure immigration laws in such a way as to help rather than hurt the nation. Sad to say, Buchholz observes that current U.S. policy hurts the nation.

At present, U.S. immigration policy turns away many skilled workers who ardently desire to enter America legally to begin new lives. Meanwhile, though official policy prohibits the immigration of undocumented workers, millions, often with low levels of education and few skills, have entered the United States illegally and have been allowed to stay. Not only have the American people incurred substantial costs in the form of social-services payouts as a result, but the arrival of so many unskilled laborers has cost American citizens wages and jobs.

Immigration Options

According to Buchholz, absent the H1-B visa program, which is a special case liable to abuse, a sane immigration policy would attract skilled, highly educated immigrants and limit or prevent the mass immigration of unskilled laborers. Instead, in his opinion, current policy makes two mistakes. "First," he writes, "we do too little to entice skilled people to come to the United States. Second, we actually chase away smart people who could add to our national culture, national spirit, and, yes, national wealth."

The cost of these mistakes to the nation is substantial. Not only do we give up the benefits associated with the arrival of highly skilled and educated people, we currently absorb the hefty costs that come with the arrival of the unskilled. According Buchholz, "a college educated immigrant who shows up on our shores delivers a +$198,000 impact on our fiscal picture" because he or she pays taxes but does not consume entitlement dollars disbursed by the state "for their birth, early health care or schooling."

Moreover, they create jobs. According to Buchholz, "educated immigrants are more entrepreneurial and far more likely to create new jobs than cost old ones." To support his argument he points to Hungarian immigrant Grf Andrs, the scientist who, better known as Andy Grove, helped build Intel into a world leader in the semiconductor industry. "If not for Andy Grove," Buchholz notes, "there might not be an INTEL INSIDE sticker on your computer, and America's dominance of advanced semiconductors might have flickered and displayed a FATAL ERROR message."

On the other side of the coin, mass immigration of unskilled labor brings high costs to society while also depressing wages. An immigrant "with less than a high school education costs other taxpayers about $13,000," Buchholz points out. Meanwhile, they drive down wages for existing citizens "by about 1 percentage point to 3 percentage points."

A recent study from the official Canadian agency, Statistics Canada, has provided evidence supporting Buchholz' contentions. According to Canada's National Post, the study "found that a significantly higher proportion of immigrants to Canada than the U.S. are highly educated." As a result, wages for high-skilled labor in Canada have declined slightly because of the greater supply of high-skilled workers, but the immigration of such workers to Canada has not hurt the middle-class worker at all. In fact, "Low-skilled workers in Canada have also gained relative to high-skilled workers," the report found, reducing income inequality north of the border. The situation is different in the United States where mass illegal immigration has brought in a flood of low-skilled labor. According to the National Post report, in the United States, "immigrant labour is concentrated among low-skilled workers depressing their wages."

The Greenspan Plan

Does this mean that the United States should begin to allow the unlimited immigration of the skilled and highly educated? There are those, including former Federal Reserve Chairman Alan Greenspan, who think so. Speaking in Washington on March 13, Greenspan indicated that, in his opinion, a high rate of pay for professionals is unjust. "You cannot have a system that we have unless the people who participate in it believe it is just," the former Fed boss said. His answer is mass immigration of skilled labor. "Our skilled wages are higher than anywhere in the world," he said according to the Bloomberg News and the Boston Globe. "If we open up a significant window for skilled workers, that would suppress the skilled-wage level and end the concentration of income."

Ending "the concentration of income" sounds positively Marxist and is certainly not in keeping with the free-market philosophy Greenspan often claims to up hold. Nor should the U.S. government turn its policies toward eroding the wages and damaging the livelihoods of portions of the American population. There is certainly no constitutional mandate for that kind of social engineering.

When crafting immigration policy, it would be wise to remember that a free people living in an independent, sovereign nation have the right to determine with whom they wish to associate, and that that right extends to defining and regulating immigration policies that would prove beneficial to the nation as a whole. Such a wise immigration policy would not allow the unlimited immigration of skilled labor in order to depress wages for professionals. Nor would such a policy reward millions of unskilled illegal immigrants with access to the benefits of living in America while turning away highly educated immigrants who seek to enter the country through established legal channels in order to start businesses and build a better life. That's the kind of policy--as the country has found out the hard way--that reduces the standard of living for everyone. Instead, as Buchholz points out, a well-regulated immigration policy would admit those skilled immigrants "who demonstrate a knack for or interest in starting businesses." Doing that, he says, would "open up to them the promise of the American dream--without erasing that promise from the minds of those born in the U.S.A."

Alan Scholl is the director of mission and campaigns for the John Birch Society.