Muddled Masses

Heaven's Door: Immigration Policy and the American Economy, by George Borjas, Princeton: Princeton University Press, 263 pages, $27.95

Throughout the history of American immigration, critics have viewed each new generation of arrivals as a threat to the nation's prosperity and culture. George Borjas, an economist and professor of public policy at the John F. Kennedy School of Government at Harvard University, sounds that warning yet again in his new study, Heaven's Door: Immigration Policy and the American Economy. Borjas is no nativist know-nothing: He is the author or co-author of many peer-reviewed articles on immigration and a major voice in the ongoing debate on the subject, so his book demands careful attention. So, too, does his life: Borjas is a Cuban-born refugee, yet the immigration policies he proposes would have precluded his own family's arrival in this country. That irony undercuts his anti-immigrant prescriptions as fully as the inconvenient facts he ignores.

The central argument of Heaven's Door is that America is being harmed economically because it allows citizens and permanent residents (green card holders) to sponsor close family members for immigration. Borjas writes that such immigration patterns are a direct result of the 1965 amendments to the Immigration and Nationality Act, and that we should change the law.

His argument is flawed. First, the book is ahistorical, suffering from a lack of understanding of--or an unwillingness to acknowledge--the discriminatory treatment that the 1965 legislation sought to address. Second, Borjas uses inappropriate data to support his conclusions, failing to distinguish between legal and illegal immigrants, and using information on illegal immigrants to advocate reducing legal immigration. Third, he assumes immigrants remain economically static, ignoring much evidence that they adapt to America by acquiring skills or training unavailable in their home countries. Finally, Borjas writes as if his conclusions are generally accepted --which they are not--and neither engages nor refutes criticisms of his earlier work.

Some history is necessary to understand the changes in immigration policy that occurred in 1965. In the 1920s, Congress replaced what had been a policy of nearly open immigration with "national origins" quotas that, in effect, barred Asians, Italians, Greeks, and Jews. These quota laws, passed after lobbying by the Ku Klux Klan and others, codified the eugenics theories of Madison Grant, whose work focused on the supposedly inferior skull sizes of Jews and other immigrants.

The 1965 amendments eliminated these quotas and carried forward almost intact the family immigration categories put in place by the 1959 amendments to the Immigration and Nationality Act. Although on paper half of the available immigration slots under the quotas were reserved for skill-based immigration, 86 percent of the visas issued between 1952 and 1965 went to family immigration, according to the Immigration and Naturalization Service.

Borjas is simply wrong when he states that the 1965 act "enshrined a new objective for awarding visas...the reunification of families." The historical records at Ellis Island make clear that most immigration prior to the 1920s was also family-based, and such unification never entirely lost its role. In fact, a report of the House Judiciary Committee on the 1959 legislation states, "The recognized principle of avoiding separation of families could be furthered if certain categories of such relatives were reclassified in the various preference portions of the immigration quotas." Joyce Vialet of the Congressional Research Service analyzed the 1965 Immigration Act and concluded, "In response to the demand for admission of family members, Congress enacted a series of amendments to the Immigration and Nationality Act (INA), beginning in 1957, which gave increasing priority to family relationship. The family preference categories included in the 1965 Act evolved directly from this series of amendments. Arguably, the 1965 Act represented an acceptance of the status quo rather than a shift to a new policy of favoring family members."

Under current law, a U.S. citizen can sponsor a spouse, child, parent, brother, or sister, while a green card holder can sponsor a spouse or child. We also accept refugees and employer-sponsored immigrants. Approximately 75 percent of family immigrants are spouses or children. Borjas argues that such immigration practices have caused numerous problems:

Education. Using U.S. Census data, Borjas concludes that immigrants today are less skilled than natives. But the Census includes data about many illegal immigrants. If one measures only legal immigrants, as the New Immigrant Survey (1998) does in a sophisticated research project led by RAND economist Jim Smith, one arrives at quite different conclusions. The New Immigrant Survey's findings directly contradict Borjas. "The median years of schooling for the legal immigrants, 13 years, is a full one year higher than that of the U.S. native-born," the survey concludes. It would seem that, on balance, legal immigrants are not less skilled than natives. Legal immigrants do congregate at the top and bottom of the education scale, but less so than Census data imply. Besides, economists agree that immigrants increase America's labor productivity most when they fill niches at the top and bottom.

Earnings Growth. Based on his study of the Census data, Borjas finds that the earnings of immigrants never catch up with those of natives. But other researchers using the same Census data, including refugees and illegal immigrants, have questioned that finding. Writing in the May 1999 American Economic Review, economists Harriet Duleep, a senior research associate at the Urban Institute, and Mark Regets, a senior analyst at the National Science Foundation, found that the gap in earnings between new immigrants and natives largely disappears after 10 years in the United States, with immigrant wage growth faster than native (6.7 percent vs. 4.4 percent).

Borjas misses this point because he excludes the self-employed, a major statistical blind spot when looking at immigrants. If, out of 100,000 immigrants, 60,000 started restaurants and software firms, and 40,000 worked as waiters, Borjas would count only the earnings of the 40,000 waiters. Moreover, if 10,000 of the waiters later started their own successful restaurants, Borjas would remove them from calculations of immigrant earnings growth, thus further biasing the results downward.

A July 1998 study by Stephen Moore of the Cato Institute supports the Duleep-Regets findings. It shows a direct correlation between time spent in America and economic well-being, finding that after two decades immigrants' home ownership rates exceed 60 percent, while their poverty rates fall below those of natives.

Fiscal Impact. Borjas portrays immigrants as fiscal liabilities by citing information on the annual costs of immigrant households from a 1997 National Academy of Sciences (NAS) study. Yet economist Ronald Lee of the University of California, Berkeley, who performed the key fiscal analysis in the NAS report, testified before the Senate Immigration Subcommittee in 1997 that such data are highly misleading. "These numbers do not best represent the panel's findings and should not be used for assessing the consequences of immigration policies," Lee testified. The problem, Lee found, was that calculating annual numbers requires using a model that counts the native-born children of immigrants as "costs" created by immigrant households when those children are in school but fails to include the taxes those children pay once they grow up and enter the work force.

According to Lee, the entry of a typical immigrant to the U.S. has a positive cumulative impact within the immigrant's lifetime: Taxpayers save $80,000 as a result of that entry, most of it during the lifetime of the immigrant and his offspring. "Most immigrants arrive at young working ages, with their education already paid for," testified Lee, and they "help pay for government activities such as defense for which they impose no additional costs." Borjas asserts incorrectly that any benefits come only after the passage of hundreds of years. As for the fiscal impact of legal immigration on the states, Berkeley's Lee said that, with the appropriate assumptions, a dynamic analysis would likely show 49 of the states coming out ahead, with the 50th, California, a close call.

Overall Immigrant Contributions. Borjas argues that the economic contribution of immigrants to the economy is only $8 billion a year. Cato's Moore and others have called that assertion absurd, noting that Borjas' methodology depends on immigrants being identical to natives and with no benefits accruing to Americans from immigrant entrepreneurs, immigrants with abilities different from natives, a larger economic pie, or a greater selection of goods and services. Borjas asserts immigrants save Americans money--and thereby benefit the economy--only if they lower native wages. That would mean
that Hungarian-born Intel founder Andy Grove has provided no economic benefit to America, even though Intel today employs over 65,000 people and has net revenues of $26 billion a year.

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