Immigration Reform Should Avoid a Credential Fetish: A Response to NRO's Reihan Salam

Over at NRO, Reihan Salam offered a two-part response to my recent Bloomberg View piece on why opposition to low-skilled immigrants because they'll strain the welfare system is based more on myth than fact. Salam, who is in favor of looser immigration policies though not open borders, acknowledges that welfare use among low-skilled immigrants, even among their American children, is lower than among similarly placed native born. But he offers

four main reasons, as I understand him, for why this doesn't mean we should remove the barricades on the Southern border:

One: The lower welfare use among low-skilled immigrants is a result of their linguistic isolation (not, eg., lack of need).  

Two: Lower welfare use is a result of the unauthorized status of low-skilled immigrants that makes them ineligible for most (though not all, he insists) means-tested benefits. But amnesty for those here illegally and more legal immigration options for future low-skilled workers will make more of them welfare eligible.

Three: Even if one concedes that low-skilled immigrants are a net economic plus (as I note here), high-skilled immigrants are an even bigger plus. Hence, unless one believes in open borders, why shouldn't the selection criteria of the host country favor high-skilled over low-skilled immigrants, especially since "the labor market position of less-skilled individuals in the U.S. has been deteriorating for at least 30 years"?

Four: Quoting Andrew Biggs at American Enterprise Institute, Salam points out, the country is spending gobs of money to prevent U.S. schools from producing students with low-levels of educational attainment. So how does it make sense to import foreigners with low educational attainment?

Salam's first point that one reason low-skilled immigrants use less welfare is because their poor language skills render them less able to navigate the bureaucracy might be true — but so what? It doesn't negate my central thesis that so long as America needs a labor class, a foreign-born one (that needs welfare but can't access it) is cheaper than a homegrown one (that needs welfare and can get it). This might be unfair to foreign workers — although they are obviously better off with a job in America even with differential access to welfare than in their home country or they wouldn't be here — but not to America. (I am merely describing the current state of affairs, not endorsing it.)

Salam's second point that legalizing low-skilled immigrants might make them more expensive for the welfare state is more on point, but it is impossible to predict in a vacuum whether their cost will exceed their economic benefits (which, as I noted in my piece, are substantial according to several state-level studies).

As per current welfare law, temporary visa holders don't qualify for most means-tested benefits and green card holders qualify only after five years. Under the Gang of Eight's proposal released Thursday, unauthorized workers who came to the U.S. prior to 2011 will be able to obtain temporary legal status right away on the payment of fines. But they won't become eligible for a green card for at least 10 years after that (and presumably citizenship another 5 years). Given that the last big round of amnesty was in 1986, this means that these illegals would have worked and paid taxes in this country for anywhere from 12 to 48 years, depending upon when they came here, before they would be eligible for full-blown welfare. Many of them no doubt will be dead before they qualify. It is hard to imagine that amnesty will completely wipe out their contributions.

But what about future low-skilled workers who come here legally? The Gang of Eight has proposed a new W-visa program for them. W-visa holders, unlike holders of existing H2-A and H2-B visas for agricultural and non-agricultural workers, will be allowed to apply for green cards after these visas expire in three years. Depending on how long it takes for their green cards to arrive (currently, wait times are in decades, although the one good thing about the reform proposal is that it would cut that), it is theoretically possible that they'll go on the dole sooner than those who receive "amnesty."

However, whether they do so at rates worth worrying about is an open question: One reason low-skilled workers lag behind high-skilled workers and native born in terms of economic advancement — a point that Salam hammers — is that most of them are illegal and therefore don't have either the opportunities or the inclination (given the uncertainty of their situation) to invest in their human capital: acquiring new skills or completing their education. Changing their status will change their incentives, allowing many more of them to pull themselves out of poverty, diminishing their need to go on welfare. But if they do go on the dole that would be an argument for scaling back their eligibility (or the welfare state itself) not barring them from entering.

Salam's third argument that if we can't admit every foreigner, then its best to admit highly-skilled ones who are more economically beneficial than low-tech ones who are relatively less is certainly clever, but ultimately can't avoid the knowledge problem that bedevils all central planning efforts. Indeed, Canada tried to do just that with its federal bureaucrats applying a complicated point system that privileged foreigners with advanced degrees in STEM and other fields. The upshot was a complete mismatch between the skills of the foreigners admitted and local economic needs. (I once hired a cab in Toronto whose driver, a Russian immigrant, had a Ph.D. in physics but couldn't find a job in a university.) Canada is rapidly moving away with from its centralized approach and empowering its provinces to effectively write their own immigration policies based on their own economic needs through the Provincial Nominee Program that I wrote about here. (Also read Nancy Scola's absolutely first-rate account of the program for Next City, "Welcome to Winnipeg.") Most provincial programs have completely scrapped the high-skilled, low-skilled distinction and others treat jobs that in America are considered low skilled — welding and certain kinds of masonry — as skilled work, demonstrating just how arbitrary such distinctions are.

As for Salam and Bigg's objection that it makes little sense for America to import foreigners with an 8th grade education when it is trying to raise general educational attainment levels, it sounds perfectly reasonable, but here's the thing: The goal of an education policy and an immigration policy are not identical. The primary purpose of an education is to produce well-honed, well-rounded, self-actualized individuals — not necessarily generate workers for an economy. The economy certainly shapes individual career choices — just as it is shaped by the availability of workers -- but that doesn't mean that at any given time individual aspirations are going to be perfectly in sync with the needs of an economy. A well-crafted immigration policy can help alleviate workforce imbalances and go a long way toward enhancing economic productivity. The fact that between 1995 and 2005, about 700,000 low-skilled foreigners every year managed to be gainfully employed (legally and illegally) in construction, agricultural, landscaping, restaurant, house-cleaning industries speaks for itself.

It is really vital that the upcoming immigration reform avoid a credential fetish and take its cues from companies and industries — actual economic actors, that is, not abstract worries.