Legalization Would Boost Economy During Recession

by Dave Bennion

Published January 27, 2009 @ 08:00AM PST

Raúl Hinojosa-Ojeda writes that immigration reform is not only a human rights issue, but could give a boost to the economy even in a recession, just like the last legalization did. (pdf)

Legalization increases short-term incomes, job creating consumption and net tax revenues in the low wage segments of the labor market, as well as sets the long-term foundation for an expanding middle class and a more sustainable economic recovery. The experience of the Immigration Reform and Control Act of 1986 (IRCA) is very instructive in this regard, producing both wage and consumption gains, and enhanced tax-revenue collection in the midst of a recession of the late 1980's and early 1990's, as well as decades of very high rates of educational, home and small business investments by newly legalized families. If Congress and President Obama legalized the current 10-12 million undocumented persons in the U.S. an economic stimulus of $30-36 billion in personal income, 750,000-900,000 new jobs, and $4.5 to $5.4 billion in net tax revenue would result!

. . .

Almost immediately, IRCA-based legalization had the effect of giving rights to more workers, raising the low wage floor of the economy, reducing the demand for easily exploitable immigrants, reducing illegal crossings and apprehensions (-- without huge expenditures on a border wall).

Furthermore, the question is not whether we have reached the point of diminishing returns from enforcement-only policies, but how long ago.

Massive security-related expenditure growth now yields lower numbers of apprehensions as migration from Mexico to the US (both undocumented and legal) has been dropping due to security measures, the climate of repression in immigrant communities, and the declining regional economy. The unintended consequences of further pursuing the current enforcement only approach include generating a vulnerable underground economy and maintaining an artificially low wage floor, actually encouraging the demand for vulnerable undocumented workers.

I hope that on immigration reform, Obama listens to the voices that are making the most sense, not just the ones yelling the loudest.

This comes by way of Greg Siskind, who predicts that H-1B nonimmigrant worker visa petitions for highly-skilled workers will drop due to the recession. He points out that anyone who thinks the H-1B is a free ride-for immigrant workers or for their employers-doesn't know much about the process:

H-1Bs are expensive - often $6000 or more when you factor in legal fees and hefty government filing fees. That is money most companies would rather spend elsewhere. H-1B applications take time - often at least six months of waiting for a visa number to become available after filing an application. They're a pain in the neck from a bureaucratic standpoint - posting requirements, public access files, representations to the US government, etc. The typical communications issues one would expect with foreign workers often add additional challenges. And you have uncertainty regarding the long term prospects for retaining the employee since getting a green card is often an expensive proposition with no guarantees of success.

Even if H-1B filings drop, though, all the available visas could still be used up on the first day they are made available, as they were the last two years. But raising the H-1B cap could be a tricky proposition in this recession.