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

Arizona-Style Immigration Laws Hurt the Economy

This piece originally appeared in Forbes here, and is reproduced with permission from the author. It is written specifically in the context of United States politics.

With  the “papers please” portion of Arizona’s recent immigration law SB 1070 going into effect, civil rights and watchdog groups are in  overdrive readying for the litany of purported abuses and complaints.  Lydia Guzman, president of Respect Respeto, a civil rights group in Arizona that records abuses at the hands of police, said, “Our hotline has been receiving hundreds of calls a day since the law was implemented.”

Forcibly removing peaceful unauthorized immigrants from the U.S., separating them from their families, property, and jobs, to satisfy arcane labor market regulations created by Progressive politicians, is an appalling indecency.  It also inflicts significant economic harm. Arizona’s immigration laws have drastically damaged its economy since mid-2007. The humanitarian arguments may leave those who complain the loudest about unauthorized immigration unmoved, but the supporters of Arizona style immigration laws might be persuaded by the economic costs.

In a new Policy Analysis by the Cato Institute called “The Economic Case against Arizona’s Immigration Laws,” I analyze the economic carnage inflicted by Arizona’s immigration laws.

The Legal Arizona Workers Act (LAWA or employer sanctions) was the first such law, and it tried to regulate unauthorized workers out of the market.  Its chief tool is E-Verify, an electronic employment eligibility verification system used to weed out unauthorized immigrants when they apply for a job.

E-Verify has three major problems.  It is very expensive, discourages investment and increases unemployment.

Just to run an employee through costs around $147. Compliance, however, also requires additional human resources and legal services, increasing the financial burden on firms.

The second problem is that E-Verify scares away businesses, investment, and workers.  E-Verify is tied to what then-Governor Janet Napolitano called the “business death penalty.”  Businesses that knowingly hire unauthorized immigrants have their licenses revoked on a second offense, killing the business.

Despite the fact that application of the business death penalty has been relatively rare the prospect has scared investors and businesses out of the state.  It was largely responsible for a shocking business formation rate decline of 14.3 percent in the third quarter of 2007 in Arizona, rates of business formation in California and New Mexico increased over the same time.

Entrepreneur Richard Melman halted plans of opening a restaurant in Arizona after LAWA passed said:  “You put in $3 million or $4 million, and you can be shut down for a mis­take. Why take a chance? I want to see how it plays out.”  He wasn’t the only one.

The third problem with E-Verify is that it increases unemployment.  Supporters of E-Verify like Kris Kobach, the Secretary of State of Kansas and author of many different state level anti-immigrant bills, claim that E-Verify will force unauthorized immigrants out of jobs so Americans can fill them.

In reality, some unauthorized immigrants are forced out of jobs, which then mostly remain unfilled.  In the immigrant heavy farming industry, crop production employment dropped by 15.6 percent in the first 4 years after LAWA was passed.  American workers did not fill the gaps.  In neighboring New Mexico and California, crop production employment increased over the same time period.  E-Verify explains much of that difference.

Two and a half years after LAWA was passed, Arizona created a more controversial law called SB 1070 to enforce immigration laws outside of the workplace.  The combined effects of LAWA and SB 1070 forced about 200,000 people out of Arizona, most of them from the Phoenix area.

In the six years after April, 2006, the home price index for the 20 largest metropolitan areas in the nation declined by 32.9 percent.  In the Phoenix area, the price index declined by a whopping 51.29 percent.

The housing bust, combined with forcing 200,000 consumers of real-estate out of Arizona lowered prices further.  Homeowner and rental vacancy rates in Arizona were consistently above those in California and New Mexico.  For four years after LAWA passed, Albuquerque and Los Angeles even recorded vacancy rates that were 50 to 75 percent lower than those prevailing in Phoenix.

As a result of the triple whammy of E-Verify, the business death penalty, and the housing price decline partly caused by forcing hundreds of thousands of renters and buyers out of the market, employment in construction collapsed faster and further than in neighboring states.

The economic harm caused by LAWA and SB 1070 is only the tip of the iceberg.  Following the next election, when numerous states will begin to consider Arizona style immigration laws, they should pause to survey the tremendous economic toll it has taken on Arizona.

Open Borders note: More related information is available at the Arizona immigration crackdown page.

Immigration Politics are Holding Up the Technology Sector

This piece originally appeared in the National Journal here, and is reproduced with permission from the author. It is written specifically in the context of United States politics.

Politicians are simply playing at immigration reform. As these representatives and senators take their turn at political games, introducing pieces of legislation designed to go nowhere, the federal immigration bureaucracy once again highlights how much the current opaque immigration system damages the U.S. economy, now in its third year of anemic growth.

Rep. Lamar Smith, R-Texas, recently introduced a bill to eliminate the diversity visa program, which awards 55,000 green cards by lottery, and instead redirects all of those green cards to skilled advanced foreign graduates from U.S. universities. His bill came up for a vote last week, failing in the House.

As a counter, Sen. Chuck Schumer, D-N.Y., and Rep. Zoe Lofgren, D-Calif., who represents part of Silicon Valley, introduced their own legislation to increase the number of green cards for highly skilled graduates without destroying the diversity visa program. It’s a version of Smith’s bill meant to appeal to Democrats who support the diversity visa, but it will turn off Republicans who are newly opposed to it.

Both bills, introduced with provisions unacceptable to the other party, make for political theater but leave the fundamental problem of immigration reform unresolved.

On Oct. 1, new highly skilled migrant workers on H-1B visas can start working in the United States. H-1B visas are a small subset of visas that let U.S. firms temporarily hire skilled foreigners. Along with skilled foreigners on green cards, H-1Bs make a big difference in innovative growth industries, even though only 85,000 a year are hired annually. About half of all H-1Bs work in the computer industry, with most of the rest in engineering, science, mathematics, and technology. 

Over the last decade, the number of jobs in these sectors has grown three times faster than in the rest of the economy. Foreigners seem particularly driven to these high-growth industries. About 35 percent of engineers, 27 percent of computer scientists and mathematicians, and 25 percent of physical scientists were born in foreign countries. 

To be clear, Americans are driven to these industries, too. U.S. firms try to hire H-1Bs and skilled immigrants when they are expanding. Smaller technology firms that employ H-1Bs hire five to seven other employees for each H-1B worker brought in. H-1B workers expand production, meaning that firms have to hire other Americans as well to work alongside H-1Bs. That is one reason why more technology workers do not drive down American wages. 

Every year, firms in Silicon Valley and elsewhere clamber for more H-1B visas than are issued. This year, after just two months of accepting H-1B visas, the government had to stop because the quota had been reached. Last decade, when the economy was growing at a rapid clip, the yearly quota would fill up in a single day. 

Presidents George W. Bush and Obama have done a lot to hobble the H-1B. Under Bush’s TARP, financial firms getting bailed out were not allowed to hire H-1B workers. 

And it’s not like hiring H-1B workers is easy or cheap. Firms already spend about $6,000 in legal and government fees per H-1B and as much as twice that for employment-sponsored green cards. Obama didn’t think those fees were high enough, so he doubled them for firms heavily dependent on H-1B workers, mostly Indian firms, to fund increased border-security efforts. 

Dynamic Silicon Valley firms and the technology industry are highly dependent on skilled workers. As they grow, so does their demand for skilled workers. To continue to expand in this overall moribund economy and remain a bright light of economic success, they need to be freed of obtuse immigration restrictive, quotas, and rules that hobble their expansion.

The bills introduced by Schumer, Lofgren, and Smith would release a bit of the pressure. But when desperately needed reform is stalled over the diversity visa, which has nothing to do with skilled immigration and is blamed for many sins it has never committed, it is clear just how unserious Washington is about solving the immigration mess it created.

[Open Border editorial note: Readers might like to check our pages on high versus low skill as well as our page on the startup visa, which contain related material]

TRUST Act Breaks Through in California

This post was originally published as an op-ed for the Huffington Post here. It is reproduced with permission from the author.

Last Friday the California State Assembly passed the TRUST Act. Also called the "anti-Arizona immigration law" by some, it would limit California law enforcement’s cooperation with the federal Secure Communities program (SCOMM). The bill is now on its way to Governor Jerry Brown’s desk where he is expected to sign it into law. The TRUST Act is good news for California budgets, residents, and police departments, for three main reasons:

First, it would limit immigration detainers to unauthorized immigrants convicted or currently charged with a serious or violent felony. If SCOMM must exist, it should exist for violent or property offenders and not otherwise peaceful unauthorized immigrants.

This limitation is essential to continuing California cities’ successful use of community policing strategies that rely on informant and witness cooperation with police, even if they are unauthorized immigrants. If the possibility of deportation is increased with SCOMM, fewer unauthorized immigrants and their legal families will go out on a limb to help police solve real crime. The TRUST Act limits the growing distrust between immigrants and police.

Second, the TRUST Act would lower the cost for local governments who object to shouldering the high cost of detaining suspected unauthorized immigrants. A recent report found that detention costs for SCOMM currently run over $26 million a year for Los Angeles county and $65 million a year for the entire state. Food, guards, prisons, beds, and other amenities that need to be provided to suspected unauthorized immigrants are too expensive for many jurisdictions.

Third, the TRUST Act frees those who haven’t been convicted of violent or serious felonies and would prevent imprisonment of American citizens like James Makowski. He was wrongly accused of being an unauthorized immigrant and held in detention for two months before the government admitted its mistake and released him. After his release, Makowski said, "Everybody makes mistakes. I’ve made mine . . . But if the government can detain a U.S. citizen without justification, that’s pretty outrageous. There have to be safeguards in place." (Markowski is suing the Federal Bureau of Investigation and the Department of Homeland Security for his two-month detention.)

SCOMM was started by a pilot project in 14 police jurisdictions by the Bush administration in October 2008. SCOMM is now active in over 3,000 jurisdictions in the United States, roughly a 21,429 percent increase in jurisdictional reach since Obama took office, and will be going nationwide shortly.

Beyond the TRUST Act, SCOMM should be discontinued. SCOMM is a federal immigration enforcement program that links fingerprint records with government immigration and criminal databases. If Immigration and Customs Enforcement (ICE) suspects an arrestee is an unauthorized immigrant, it issues a detainer to hold the arrestee so that ICE is notified when the arrestee is to be released, often delaying the arrestee’s release until ICE is ready–on merely a suspicion that the arrestee is an unauthorized immigrant. ICE then detains the arrestee, verifies he is unauthorized (occasionally they deport American citizens by accident), and deports him. Meanwhile, local police departments hold these suspected unauthorized immigrants past their release dates.

States and localities originally volunteered to cooperate with ICE in this program, but some states like New York and Illinois want to drop out. The government’s response to their requests was to declare SCOMM mandatory despite earlier agreements and statements to the contrary.

ICE officials have previously stated in their SCOMM agreement with California that the program would only target those "convicted of serious offenses." Recently obtained government documents show that SCOMM issues detainers for people who are not suspected of any criminal conduct. Some are detained by SCOMM because they were unable to identify themselves satisfactorily at drivers’ license checkpoints or because they were arrested for identification purposes. Merely being arrested for non-serious offenses should not subject an arrestee to SCOMM.

SCOMM has lost credibility with the public, imposes heavy incarceration costs on states, and diverts the resources that should be used to deport unauthorized immigrants convicted of violent or serious felonies. The TRUST Act will build a wall around the worst parts of SCOMM in California and help restore confidence between police and immigrants.

Parts of this op-ed are based on an earlier blog post written here.

Obama’s Tepid and Temporary Immigration “Reform”

The post was originally published at the Huffington Post blog here and is reproduced with permission from the author.

The Department of Homeland Security (DHS) just released a memo outlining a temporary relaxation in prosecutorial discretion to allow unauthorized immigrants who came here when they were under the age of 16, to get a temporary two year (possibly renewable) work visa. This proposal is a truncated version of Senator Marco Rubio’s (R-FL) recent proposal and another older law called the DREAM Act. This temporary version of the DREAM Act offers a glimpse of the benefits of the real one.

Under the proposal, unauthorized immigrants who came to the United States when they were younger than 16, have lived here for 5 years, are in school or have graduated from high-school or are honorably discharged from U.S. Armed Forces, who are not criminals, and who are currently under younger than 30 can stay and receive a two year temporary work permit that can be renewed. That’s it.

The government already has legal authority to grant something called “deferred action” to unauthorized immigrants. That basically means the government will choose not deport them and instead focus on criminals or other deportation priorities. Those immigrants are then allowed, under current law, to get a temporary work permit if they show “an economic necessity for employment.”

Most unauthorized immigrants who could be legalized by Obama’s memo would meet the “economic necessity” qualifications for a temporary work permit.

Representative Steve King (R-Iowa) has already said he will sue the Obama administration to stop this memo from going into effect but his success is uncertain. Rubio rightly called the measure “a short-term answer to a long-term problem” but continues by saying that it “will make it harder to find a balanced and responsible long-term [solution].”

Since taking office, Obama’s DHS has deported over 1.2 million people in a frenzy of government immigration enforcement not seen since the 1950s. Last year his administration promised to use prosecutorial discretion to stop prosecuting those who had strong American family ties and no criminal records. Since that policy went into effect in November 2011, DHS officials have reviewed more than 411,000 cases but closed less than 2 percent of them.

Immigration enforcement officers referred to that administrative order as “a joke” which barely impacted government policy toward deportations. This year’s change could be very different.

If applied as broadly as the DREAM Act, somewhere between 800,000 and 2.1 million unauthorized immigrants could gain a temporary work permit through the administration’s actions.

Only a fraction of the economic benefits of the proposed DREAM Act will be reaped by the memo’s policy change. Political scientist Raul Hinojosa-Ojeda estimated that an amnesty similar to 1986 would yield at least an added $1.5 trillion to GDP over a single decade. If the maximum of 2.1 million eligible unauthorized immigrants are legalized under the Dream Act, we would gain at least $250 billion in additional production over the next decade by a rough estimate.

A temporary two years deferment with uncertain renewals will yield benefits that are miniscule compared to what they would be under legalization.

This temporary reprieve should also have a very minimal impact on the welfare state and other government services because they are limited to those with work permits. But even if they were granted permanent resident status tomorrow, it would still be five years before they were eligible for any kind of major government assistance. In any case, immigrants use less welfare and government assistance than Americans with similar incomes.

Our government’s restrictive immigration policies fly in the face of economic reality. Most immigrants who want to come to the U.S. are denied by our immigration regulations. But just because our law doesn’t adapt to supply and demand doesn’t mean people remain idle when confronted with poverty in their home countries. A predictable outcome of immigration restrictions is that immigrants will come without authorization and Americans will want to work with them, employ them, and sell to them.

The sad situation that so many unauthorized children face, being born in another country but raised American, can only be permanently resolved with immigration reform that vastly diminishes the government’s role in regulating, limiting, and controlling immigration.

Unauthorized immigrants brought here as young children are attached to this country and our society. Many of them don’t even remember the land they were born in. It’s about time the government gets out of the way, even if it’s temporarily, and allows industrious, peaceful, and otherwise law-abiding unauthorized immigrants to not fear deportation. The next step should be real immigration reform.

Obama Administration Adopts De Facto Dream Act

The post was originally published at the Cato@Liberty blog here and is reproduced with permission from the author.

Two senior Obama administration officials told the Associated Press that the administration will enforce many of the major portions of the Dream Act using the president’s administrative discretion to defer deportation actions. According to a memo released by the Department of Homeland Security this morning, the plan would apply to unauthorized immigrants who:

  • Came to the United States under the age of 16.
  • Have continuously resided in the United States for a least five years preceding the date of the memorandum and are present in the United States on the date of the memorandum.
  • Are currently in school, have graduated from high school, have obtained a general education development certificate, or are an honorably discharged veteran of the Coast Guard or Armed Forces of the United States.
  • Have not been convicted of a felony offense, a significant misdemeanor offense, multiple misdemeanor offenses, or otherwise poses a threat to national security or public safety.
  • Are not above the age of 30.

If the above plan is implemented fully, between 800,000 and 2.1 million unauthorized immigrants could be legalized for up to two years. By being legalized they will become more productive, earn higher wages, and more fully assimilate into American society. But this is only a temporary fix.

Temporary work permits can be issued to unauthorized immigrants who have their deportations deferred but in this situation they would only last 2 years. It’s a routine administrative procedure that already occurs for unauthorized immigrants who have their deportations deferred. This is one situation where the complexity of our immigration rules and regulations works to the advantage of immigrants and Americans.

A permanent version of this action in the form of the admittedly imperfect Dream Act would need to be passed to reap the full rewards.

The benefits from passing the Dream Act are enormous. Evidence from the 1986 amnesty showed that the legalized immigrants experienced a 15.1 percent increase in their earnings by 1992, with roughly 6 to 13 percentage points due to the legalization.

In the Winter 2012 issue of The Cato Journal, Raul Hinojosa-Ojeda estimated that an amnesty similar to 1986 would yield at least an added $1.5 trillion to GDP over a single decade. If 2.1 million eligible unauthorized immigrants were permanently legalized, that would be at least $250 billion in additional production over the next decade (back of the envelope calculation).

However, before we get too thrilled about the prospects of this sorely needed temporary liberalization, we should remember that hardly anything changed the last time the Obama administration used its prosecutorial discretion to review deportation cases. His administration promised to wade through backlogged cases and close those where the unauthorized immigrants had strong American family ties and no criminal records. Since that policy went into effect in November 2011, DHS officials have reviewed more than 411,000 cases and less than 2 percent of them were closed.

If the administration’s proposal temporarily goes as far as the Dream Act would, it will shrink the informal economy, increase economic efficiency, and remove the fear and uncertainty of deportation from potentially millions of otherwise law-abiding people. It would be a good first step toward reforming immigration and a glimpse at what the Dream Act would do.