A major theme of Donald Trump’s presidential campaign was decrying the loss of American manufacturing jobs to other countries and pledging to bring them back. He plans to accomplish this by changing U.S. trade policy. Ironically, open borders, which is anathema to Trump, could be the best way to increase manufacturing in the U.S.
Few Americans work in manufacturing today, mostly because automation obviates the need for large numbers of workers. (See here and here.) However, according to the Economic Policy Institute, manufacturing is a vital component of the American economy: “Manufacturing provides a significant source of demand for goods and services in other sectors of the economy… The manufacturing sector supported approximately 17.1 million indirect jobs in the United States, in addition to the 12.0 million persons directly employed in manufacturing, for a total of 29.1 million jobs directly and indirectly supported, more than one-fifth (21.3 percent) of total U.S. employment in 2013.”
Some argue that the key to bring more manufacturing back to the U.S. is the availability of a skilled workforce in the U.S., given the high tech nature of manufacturing today. However, there apparently aren’t enough American workers with the necessary skills for manufacturers to relocate to the U.S. A Brookings Institution report stated that “employers in the manufacturing sector report difficulty filling available high-skilled positions. Even at the height of the Great Recession in 2010, companies reported 227,000 open jobs. Factory owners note that is difficult to bring manufacturing jobs back when they cannot find the talent they need to expand.”
One of the recommendations of the Brooking Institution report is to have skilled workers from other countries fill these positions. An open borders policy would make it much easier for American manufacturers to find workers for their vacant positions. Manufacturers would literally have a world of workers from which to choose. By helping to fill manufacturing positions, open borders both would encourage manufacturers to return production to the U.S. and discourage them from moving current production abroad. As previously mentioned, the expansion of manufacturing in the U.S. would ripple throughout the economy, creating more jobs for both citizens and immigrants.
In addition to manufacturing, the Brookings Institution report identifies other areas of the American economy which have a shortage of workers. (CNN also notes that there are millions of unfilled jobs in the economy, indicating that often employers can’t find people with the right skills.) These sectors are agriculture, health care, and technology. Finding workers for vacancies in all of these areas would enable companies “to better compete, grow, and create more jobs for American workers.” Again, open borders would facilitate this dynamic.
Filling vacancies through the current restrictive immigration system is difficult. The Brookings Institution notes that the American immigration system “is not designed for today’s economy” and admits immigrants on employment visas at a rate much too low to meet America’s needs. Their report states that “regardless of whether the field requires low or high skill levels, industry officials say the process doesn’t work well and is overly bureaucratic.” For example, “surveys have found that three-quarters of foreign graduates of American universities with degrees in
science, technology, engineering, and math would like to stay in the United States but have few opportunities to do so. They have the skills required to fill the job vacancies noted above, but can’t get timely visas. The result is that many of them return to their native countries, where they innovate, build businesses, and create
jobs that otherwise might have taken place in the United States.”
For those concerned that open borders would harm American workers, the Brookings report argues that immigrants should be seen as complementing rather than competing with American workers. However, there isn’t agreement on this point among economists. Pia Orrenius of the Dallas Federal Reserve Bank states that while many citizens benefit from immigration, including complementary workers, some workers do compete with immigrants and experience falling wages, at least initially. These negative effects mostly impact low-skilled workers. However, other economists contend that immigration has little or no effect on workers without high school degrees. And should some workers be negatively impacted by immigration under open borders, they could be compensated by the government, such as through taxes on immigrants.
The Brookings report on worker shortages states that “a smart immigration system can help prevent (worker shortages) by filling needs so companies can expand operations in the U.S. and don’t have to move them overseas.” Such a system also would encourage some manufacturing in other countries to return to the U.S. Open borders would be a smart way to address U.S. worker shortages, which would strengthen manufacturing and the overall economy while benefitting immigrants themselves.