All posts by Alex Nowrasteh

Alex Nowrasteh is immigration policy analyst at the Cato Institute. See also: Cato Institute page listing Nowrasteh's work Page about Alex Nowrasteh on Open Borders All blog posts by Alex Nowrasteh

America Does Not Have A ‘Genius Glut’

9 Comments

This post was originally published on the Cato-at-Liberty blog here and is republished with the permission of the author.

On Friday, Ross Eisenbrey of the Economic Policy Institute wrote an op-ed in the New York Times titled “America’s Genius Glut,” in which he argued that highly-skilled immigrants make highly skilled Americans poorer. 

A common way for highly-skilled immigrants to enter the United States is on the H-1B temporary worker visa. 58 percent of workers who received their H-1B in 2011 had either a masters, professional, or doctorate degree. The unemployment rate for all workers in America with a college degree or greater in January 2013 is 3.7 percent, lower than the 4 percent average unemployment rate for that educational cohort in 2012. That unemployment rate is also the lowest of all the educational cohorts recorded. 

Just over half of all H-1B workers are employed in the computer industry. There is a 3.9 percent unemployment rate for computer and mathematical occupations in January 2013, and an unemployment rate of 3.8 percent for all professional and related occupations. For selected computer-related occupations from the Bureau of Labor Statistics’ “Quarterly Census of Employment and Wages,” real wage growth from 2001 to 2011 has been fairly steady:   

 

 11 percent of H-1B visas go to engineers and architects but wage growth in those occupations has been fairly steady too:

 

Mr. Eisenbrey concludes that those rising incomes would rise faster if there were fewer highly-skilled immigrants. 

The unemployment rates for engineers and computer professionals are low but not as low as they used to be. There are a whole host of factors explaining that, but highly-skilled immigration is not likely to be one.  

Mr. Eisenbrey also claims that American firms hire H-1B visa workers because they are paid lower wages. Complying with certain regulations prior to hiring an H-1B can cost a firm $10,000, filing and other fees can cost additional thousands of dollars, and legal fees can be steep. The cost of hiring H-1Bs is high.

Contradicting Mr. Eisenbrey’s story about H-1Bs lowering American wages, IT workers on H-1Bs actually earn more than similarly skilled Americans. According to survey data, H-1B workers are more willing to work long hours and relocate to a job, making them more productive and raising their wages. Additionally, H-1B engineers are paid $5,000 more a year than American born engineers. If the goal of employers was to hire cheaper workers through the H-1B visa, they’re going about it in an odd way. The high regulatory costs and wages of employing H-1B workers incentivizes firms to hire foreign workers when they are expanding and can’t find American workers fast enough.  

Mr. Eisenbrey’s doesn’t touch on other characteristics of highly-skilled immigrants such as their high rates of entrepreneurship, inventiveness, or skill complementarity. If the New York Times chooses not to run one of my letters to the editor about those topics, I will be writing about them in the upcoming weeks.

The Good and Bad of the Immigration Reform Blueprint

Leave a comment

This post originally appeared on the Cato-at-Liberty blog here and is reprinted with the author’s permission.

Today, the so-called Gang of Eight senators revealed a blueprint for an immigration reform bill. Details in the actual legislation will matter a great deal but these are initial impressions based on the blueprint. The good and the bad.

Good:

  • Earned legalization for non-criminal unauthorized immigrants. After paying fines, back taxes, undergoing a criminal background check, and other firm penalties, unauthorized immigrants will be able to stay in the United States and eventually earn a green card. This will increase their wages over several years much faster than if they remained unauthorized. 
  • DREAMers will not face the same penalties as unauthorized immigrants who intentionally broke U.S. immigration laws, which is a positive step.
  • Legalization for unauthorized immigrant workers in the agricultural industry will be fast-tracked. This is especially important because the majority of farm workers in most states are unauthorized immigrants.
  • Removing some regulatory barriers and increasing quotas for highly skilled immigrants. This will likely include an increase in the number of employment based green cards and removing the per-country quotas that produce wait times for Indian, Chinese, Mexican, and Filipino workers. Currently, numerous firms and immigrants are dissuaded from even trying to obtain employment based green cards because of the enormous wait times.

Bad:

  • Increases the amount of resources spent on border security. The size of the border patrol is double of what it was in 2004. The number of border patrol agents is seven times greater than what it was in the 1980s with about nine times as many on the southern border. More technology and aerial drones on the border will be wasteful and not produce results.
  • Strong employment verification system like E-Verify. As I wrote here, here, and here, E-Verify is an intrusive big government workplace identification system that does not even root out unauthorized immigrants. In Arizona, which has had mandatory E-Verify since 2008, many unauthorized immigrants have moved deeper into the black market, some industries fire numerous unauthorized workers but don’t hire natives to fill the spots, and the business formation rate dropped because the penalties for intentionally or knowingly hiring unauthorized workers are so draconian.
  • Increases regulations for guest worker visas. Current guest worker visas for agricultural workers are so overregulated that they are barely used. Adding more regulations will only make the visas more unusable and incentivize American farmers and employers to hire unauthorized workers.

A viable guest worker program will increase economic growth in the United States. Guest worker visas are not as good as green cards for lower-skilled workers, but they are the only viable option at this moment. The devil is in the details but this blueprint does not provide for enough future low-skilled immigration.     

Immigrants Did Not Take Your Job

5 Comments

This piece was originally published at the Cato-at-Liberty blog here and is reproduced with permission from the author. The original version features footnotes that have not been included here. Also, links to relevant Open Borders material have been added to the post.

Mark Krikorian, executive director of the anti-immigrant Center for Immigration Studies (CIS) [Open Borders note: CIS describes itself as pro-immigrant. The fine print is discussed here] and author of the book The New Case Against Immigration: Both Illegal and Legal, criticized a remark I made to Washington Times reporter Stephen Dinan about a new CIS memo.

The memo, which can be found here, claims that immigrants are taking most of the jobs created since President Obama took office. I told the Washington Times that the memo “makes a mountain out of a molehill” because it ignores key economic explanations that have nothing to do with demonizing immigrants. Steven Camarota, one of the authors of the memo, even agreed that one factor I mentioned could explain his findings.

In response, Mr. Krikorian wrote that I should, “Tell that to the 23 million Americans who are unemployed, forced to settle for part-time work, or gave up looking for work altogether.”

My response is that the CIS memo is so flawed it should not be taken seriously.

Location, Location, Location

The memo looks at native and immigrant concentrations in different sectors of the U.S. economy. It points out that immigrants have made gains in some sectors where there is are high native-born unemployment rates. But the memo fails to take into account one very important factor when studying labor markets: labor mobility. This issue is so important that Harvard economist George Borjas, the most respected economists who is skeptical of the gains from immigration, called it “the core of modern labor economics” and criticized his fellow scholars for overlooking its importance. The authors did not heed Professor Borjas’ criticism. Continue reading Immigrants Did Not Take Your Job →

Immigrants are Important for Disaster Reconstruction

Leave a comment

This piece was originally published at the Cato-at-Liberty blog here and is reproduced with permission from the author.

Hurricane Sandy walloped the East Coast yesterday. The strongest part of the storm focused its wrath on coastal cities, ravaging New York, Atlantic City, Ocean City, and others in the storm’s path. In the coming days, focus will turn from rescuing people to rebuilding the devastated areas.

Immigrant workers, especially in the building trades, are an essential component of any reconstruction. People living in places hit by Sandy are going to demand an influx of laborers to rebuild and replace their destroyed property.

During and after Hurricane Katrina in 2005, hundreds of thousands of people from Louisiana, Mississippi, and Alabama left their homes behind. For many from New Orleans, Houston became their new home. In contrast, around 100,000 immigrant workers quickly moved into the Gulf Coast area to take advantage of the labor market opportunities offered by the reconstruction in the aftermath of Katrina.

Many Americans also moved into the Gulf Coast region to rebuild with the immigrants. But in the year prior to Hurricane Katrina, Hispanic immigrant workers accounted for about 40 percent of the total growth in the construction sector-–the majority of whom were unauthorized immigrants. A year after the rebuilding began in New Orleans, an estimated quarter of all construction workers were unauthorized immigrants.

A tornado in Tuscaloosa, Alabama in April 2011 left 43 dead and tore a path almost a mile wide through the city. Immigrant Hispanic workers in Alabama responded with alacrity. “Hispanics, documented and undocumented, dominate anything to do with masonry, concrete, framing, roofing, and landscaping,” said Bob McNelly, a contractor with Nash-McCraw Properties. Three months after the tornado, Tuscaloosa issued 1069 business licenses with 81 percent of them related to businesses repairing storm damaged.

There is no economic silver lining to a disaster, despite what The New York Times thinks, but fortunately there is a mobile workforce capable of responding to natural disasters to aid in reconstruction. After dealing with the Tuscaloosa reconstruction, McNelly said that he prefers Hispanic immigrants workers. “It’s not the pay rate. It’s the fact that they work harder than anyone. It’s the work ethic,” he said.

Immigrant workers are the economic early responders to natural disasters. They are typically younger so they do not own houses and mortgages tying them down to certain areas. As a result, they move quickly based on labor market demands allowing reconstruction to start quicker and complete faster. Immigrant workers, mostly Hispanics in the building trades, will flock along with others to the areas devastated by Hurricane Sandy. As in previous natural disasters, they will be an important component of any rebuilding.

Lifting the Cuban Travel Ban Is Good for U.S.

4 Comments

This piece originally appeared at the Cato-at-Liberty blog here and is reproduced with permission from the author.

This morning the Cuban government announced reforms of its 52 year old travel ban. In mid-January, the Cuban government will cease requiring exit visas and invitations from foreign nationals so Cubans can leave. It’s unclear how the new plan will be applied in practice. The Cuban government’s announcement might not be as welcome as people hope, but this is a substantial change in rhetoric. My colleague Juan Carlos Hidalgo wrote about how such an approach would affect Cubans here.

Assuming the travel ban is mostly or entirely lifted, this policy change will also affect Americans in numerous ways.

First, the United States has a unique immigration policy for Cubans. Known as the “wet foot/dry foot policy,” if a Cuban reaches American soil he or she is allowed to gain permanent residency within a year. If a Cuban is captured at sea, he or she is returned to Cuba unless they cite fears of persecution. This means that most Cubans who want to leave, with the exception of violent or other criminal offenders, will be able to stay in the United States if they are able to make it to American soil. No other nationality in nearly a century, except the Hungarians in the 1950s, has been subject to such a generous policy.

Because of their unique legal-immigration status, the Cuban-born population living in the United States was excluded from estimates of unauthorized immigrants and very few of them are likely in violation of any immigration laws.

Second, the United States is the number one destination abroad for Cubans. Additionally, nearly 60 percent of Cuban-Americans were born abroad compared to less than 40 percent for all other Hispanic groups. Cubans tend to be older, more likely to own homes and businesses, more geographically concentrated in Florida, more educated, wealthier, and have fewer children than other Hispanic immigrant groups. They are overwhelmingly positive for the American economy.

Third, Florida has been the main destination and beneficiary of Cuban immigration since the 19th century century. Ybor City, a section of Tampa, owes its birth and development to Cuban and Spanish-born entrepreneurs like Ignacio Haya and Vincente Martinez Ybor who made the city a cigar manufacturing powerhouse by the early 20th century. For generations, Ybor City was known as “Little Havana.”

In addition to the tobacco trade, Cuban-American entrepreneurs in Ybor City also specialized in legal services, accounting offices, real estate development companies, and advertising. Restaurants have probably had the biggest impact on the habits of Americans. The Columbia Restaurant, currently Florida’s oldest restaurant, was opened by Cuban- born Casimiro Hernandez in 1905. It started as a small corner cafe serving authentic Cuban sandwiches and café con leche and has since expanded to seven other locations.

The situation was similar in Miami where Cubans excelled at opening small businesses and revitalizing large sections of the city that had begun to decay. Ever since the earliest Cubans came to America, they haven’t wasted any time in their pursuit of the American dream.

Fourth, Cuban immigration to Florida has not lowered the wages for Americans working there. According to an authoritative peer-reviewed paper written by Berkeley labor economist David Card, the sudden immigration of 125,000 Cubans on the famed Mariel boatlift in 1980 increased the size of Miami’s total labor market by 7 percent and the size of its Cuban workforce by 20 percent.

For non-Cubans in Miami with similar skills, wages were remarkably stable from about 1979-1985. A massive and sudden increase in labor supply did not lower wages for Americans or increase their unemployment. Miami businesses rapidly expanded production to account for the influx of new consumers and workers and Cuban immigrants started businesses with a gusto, thus creating their own employment opportunities.

Cuba’s reform of the travel ban could reignite Cuban immigration. In 2011, roughly 40,000 Cubans gained legal permanent residency and refugee status in the United States. That number could increase dramatically if the Cuban government truly got out of the way and let its people move toward relative freedom and economic opportunity.

Beginning in mid-January, assuming U.S. policy does not change (an unlikely scenario given that neither political party wants to upset the politically influential Cuban community in South Florida), we could witness a large new wave of Cuban immigration to the United States.

Despite entertaining movies like Scarface, the long run consequences of the Marial boatlift have been good for Americans, Cuban immigrants, and Florida. Cuban-Americans reveal a pattern of success and achievement similar to other contemporary immigrant groups and those in our country’s past. Immigrants are more successful in the United States than their former countrymen left behind. American capitalist institutions are the main cause of this, but it’s also because immigrants are overwhelmingly committed to economic advancement and the hard work that takes.

If Cuba truly lifts the travel ban, it will be a blessing for all Cubans. Many of them will likely immigrate to the United States, which will also be good for us.