Testimony of

James R. Edwards, Jr., Ph.D.

Coauthor, The Congressional Politics of Immigration Reform

on

The Benefits to the U.S. Economy of a More Highly Skilled Immigrant Flow

before the

House Subcommittee on Immigration and Claims,

Committee on the Judiciary

March 25, 1999

Pursuant to House Rule XI, clause 2(g)(4), I hereby disclose that I have received no federal grant, contract, or subcontract in the current or preceding two fiscal years. I appear before the subcommittee on my own behalf, not representing my employer, coauthor, publisher, or any other entity.

Summary of the Prepared Statement of James R. Edwards, Jr., Ph.D., before the House Subcommittee on Immigration and Claims, March 25, 1999

If we project current immigration trends over the next three decades, we see a mismatch between the preponderance of the current immigrant flow and the direction of the American economy. This mismatch exists today and only worsens if our immigration admissions criteria remain unchanged.

The fastest growing sections of the American economy require a skilled and educated workforce - usually a bachelor's degree or higher. Meanwhile, the present immigration preference system gives scant attention to the levels of education, skills, literacy, or English language proficiency of prospective immigrants.

By changing the immigration system so that it emphasizes skills and education, America's economy would benefit in a number of ways. First, a more highly skilled immigrant flow would help equalize the skills and education levels of the immigrant population and the native population. This change would help minimize the effect of immigration on the wage structure of native workers.

Second, emphasizing skills in the immigrant selection process would increase the prospects of immigrant success. Skilled and educated immigrants are unlikely to become public charges. And as the Jordan Commission recognized, skilled immigrants' contributions go farther to the benefit of the U.S. economy. These skilled immigrants are equipped to create wealth and create jobs - that is, skilled immigrants help spur economic growth.

The evidence shows this to be true. The New Immigrant Survey found that immigrants in the more skilled immigration categories are best equipped for economic success here.

Third, greater emphasis on skills and education in immigrant selection would help diminish some of our most troubling social problems, such as illiteracy, poverty, lack of English proficiency, welfare usage, unemployment, and lack of health coverage. At present, immigrants are disproportionately likely to fall into these categories.

Specifically, we should change our immigration system so that it places greater emphasis on skills and education. A new system should give individuals points for educational attainment, with a high school diploma a virtual requirement. Points should be gained for English proficiency, literacy, and significant work experience in a skills-based occupation. Family ties should gain one points, depending on the closeness of the relation, but to a much lesser extent than would be the case today.

In closing, we must end the mismatch between the current immigrant flow and the direction of America's economic growth. We must end the mismatch in order that neither immigrants nor the native-born are left behind in America's skills-based economy of the 21^st Century.

Prepared Statement of James R. Edwards, Jr., Ph.D., before the House Subcommittee on Immigration and Claims, March 25, 1999

Mr. Chairman, members of the subcommittee, thank you for the opportunity to testify today regarding the benefits that would accrue from changing our immigration policy so that it emphasizes the admission of high-skilled immigrants.

I am James R. Edwards, Jr., co-author of The Congressional Politics of Immigration Reform (Allyn & Bacon, 1999). Additionally, during the 104^th Congress I handled the Judiciary Committee, and the Immigration Subcommittee, staff work for Rep. Ed Bryant of Tennessee, then a member of the committee and subcommittee.

The idea of giving preference to prospective immigrants with job skills and educational attainment is not new. The 1952 Immigration and Nationality Act, which remains the fundamental framework of U.S. immigration law, established a preference system. That preference system placed the highest priority on immigrants with education, training, and skills. It made skills, education, and ability the highest priority because those qualities were regarded as best advancing the national interest of the United States.⁽¹⁾

The preference system no longer gives priority admission to skilled immigrants. Instead, we give much higher priority to those with family members here, some quite distant. Two-thirds of legal immigrant admissions today go to family preferences and immediate relatives of U.S. citizens - without any consideration of the prospective immigrant's skills or education.

This bias in our present immigration system leads to serious consequences for the nation. According to the Census Bureau's Current Population Survey, the foreign-born over age 25 are more than twice as likely as the native-born to lack a high school education. The noncitizen foreign-born are more likely to be unemployed.⁽²⁾ Foreign-born noncitizens are more than twice as likely to live in poverty than the native-born.⁽³⁾ The foreign-born are more likely to receive public assistance than the native-born (4.9 percent vs. 3.3 percent, respectively). And more than one third of the foreign-born lack health insurance, while just 14.2 percent of the native-born lack coverage.

This is not an indictment of the foreign-born. It is an indictment of our current immigration policy.

If we project current immigration trends 20 to 30 years, we can expect to see a profound impact on our nation economically. First, we can expect today's minimal benefit from immigration that the National Academy of Sciences identified to turn into a net cost in 20 to 30 years. As you know, the National Academy of Sciences concluded that today immigration raises native-born income by $1 billion to $10 billion a year in an $8 trillion economy.⁽⁴⁾

However, if immigrant admission continues to favor those lacking skills and education, the potential for immigrant wealth creation in an increasingly skills-based economy will be low. Furthermore, the U.S. Department of Labor has projected that overall employment will grow 14 percent from 1996-2006. The most rapidly growing occupations require an associate's degree or higher.⁽⁵⁾ In addition, manufacturers already report having trouble finding skilled workers.⁽⁶⁾ Thus, newcomers filling the available low-skills jobs will continue to fall behind economically because they lack the necessary skills and education to compete for the best new jobs.

Second, the entry of nearly a million predominately unskilled migrants each year can be expected to provide leverage for rebuilding the welfare state. As the proportion of the population that's foreign-born and in poverty rises, we can expect more pressure to rebuild the welfare state, as has already been the case to an extent. Presuming this occurs, then in 20 to 30 years immigrant participation in welfare programs may well shift the balance in the net economic impact of immigration from modest benefit to significant cost.

Third, the most economically vulnerable Americans, including previous immigrants, will suffer both lower wages and head-to-head competition for low-skill jobs. The low-skill job market is projected to grow at a much slower rate than skills-based jobs. And immigration accounted for 44 percent of the drop in wages from 1980 to 1995 for high school dropouts' earnings.⁽⁷⁾ Will there be enough low-skill jobs to accommodate both native-born and immigrant low-skilled workers? Perhaps, but they are not likely to pay satisfactory wages or provide much in fringe benefits.

Finally, the localities where immigrants settle, such as in Southern California and Florida, can expect to bear even heavier burdens for public services. We know that immigration's economic benefits accrue mostly at the federal level, while the costs are primarily incurred locally. As predominately unskilled immigrants continue to enter en mass, as the welfare state is rebuilt, and as state and local resources are further strained, those areas will press Congress ever harder to redistribute federal tax dollars to cover the disparate impact of immigration.

Thus, the economic impact of current immigration trends over the next few decades portends a mixed bag at best and a significant drag on the economy at worst.

As America's economy becomes more high-tech and skills-based, it bears asking whether we should keep on admitting immigrants predominately lacking skills and education. Beyond reuniting an immigrant with spouse and minor children, family reunification becomes secondary. I submit that the present immigration flow is a mismatch with the nation's present and future needs. Witness the popularity of skilled nonimmigrant visa programs, such as H-1B and the prospective new H-1C foreign nurses category. Perhaps we should consider these skilled workers for permanent immigration instead of just temporary admission as nonimmigrants.

A number of benefits would come from changing our immigration policy so that it gives the highest priority to immigrants with skills and education. First, admitting more highly skilled immigrants would help equalize the skills and education levels of the immigrant population and the native population. Presently, the immigrant skills level is disproportionately below that of natives. By admitting a more highly skilled immigrant flow, thus making the immigrant skills level approximate the native skills level, the effect of immigration on the native labor wage structure would be minimized.⁽⁸⁾ In effect, this change would help reduce the adverse impact on the wages of both skilled and unskilled wage earners already in the U.S. labor force.

Second, a greater emphasis on skilled immigrant admissions would increase the prospects of immigrant success here. The new immigrant flow could be expected to demonstrate better economic and cultural assimilation. Immigrants with education and skills are more likely to create jobs and create wealth. They are more likely to be a net gain economically. The Jordan Commission recognized these facts, noting that "[t]he contributions [of skilled] workers go beyond the particular businesses they assist: their work may help create jobs for U.S. workers and may enable the export sector of our economy to grow. Immigration policy must focus on the admission of individuals with the high skills that will benefit U.S. society."⁽⁹⁾

Furthermore, we know that visa admission categories correlate with skills characteristics of immigrants.⁽¹⁰⁾ Employment-based immigrants, their spouses also admitted under the employment category, "diversity" immigrants, and finally spouses of U.S. citizens have been found to have achieved more education, be more English language proficient, and have more prior experience in the United States than immigrants admitted under other categories.

Third, emphasizing the admission of highly skilled immigrants would help diminish troubling and troublesome social problems. These include such problems as dropping out of school before attaining a high school diploma and lacking health coverage. Highly skilled immigrants are the least likely to participate in welfare programs and are unlikely to become a public charge. These facts could be expected to help alleviate public resentment toward immigrants. Further, they may lead to a more favorable public view toward immigrants.

Allow me to outline a new system for immigrant admission that is designed to increase the emphasis on admitting individuals possessing skills and education. It bases immigration upon a new set of criteria, which could be allocated under a point system.

Having a spouse or minor children here or being an immigrant's minor child should be a key criterion considered in qualifying an individual for immigration -- presuming those here were legally admitted. Higher priority should be reflected in the allocation of points for the immediate nuclear family - husband, wife, minor children - of U.S. citizens.

Having distant family here who were legally admitted should be considered, but count for much less. And having illegal alien family here should be a disqualifying factor. Similarly, the admission of extended family members of now-legalized individuals - the beneficiaries of a mass amnesty such as the 1986 Immigration Reform and Control Act - might be disallowed on the theory that the amnesty was intended to be a one-time benefit to the one who broke the law to come here, not to all his relatives still residing in the country of origin.

Other, more preeminent admission criteria should include holding an advanced degree. A high school diploma should virtually be required. English proficiency, literacy, and demonstrated, successful work experience in a field that requires special skills or education each should gain points for a prospective immigrant.

Under this system, individuals, regardless of country of origin, would be assessed head-to-head. This system is fair and equitable to individuals. It would admit the individuals who are likely to become productive, contributing new Americans in the economy of the 21^st Century.

In closing, while the United States has historically benefitted from immigration, we owe it to ourselves as a nation to take an honest look at where the needs of the nation and current immigration trends diverge. No one blames would-be immigrants for aspiring to come to America. But by the same token, we have to reassess our immigration policy and adjust it in a way that best serves the shared interest of all American citizens, an interest that includes the nation's economy.

Immigration is not an unmitigated benefit or an unmitigated cost to the nation. Immigration involves tradeoffs - both costs and benefits come from the immigrant flow. The cost-benefit ratio is determined by the policies that determine the immigrant flow. It seems to me the most prudent immigrant admissions policy is that which favors those individuals with skills and education. These are the qualities best suited to ensure not only successful assimilation, but also the most benefit to the nation.

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1. Vernon M. Briggs, Jr., Mass Immigration and the National Interest (M.E. Sharpe, 1992), cited in David Heer, Immigration in America's Future (Westview Press, 1996).

2. The Census Bureau found 8.4 percent of the noncitizen foreign-born unemployed, compared with 5.4 percent of the native-born; however, just 4.3 percent of naturalized citizens were unemployed. (Current Population Survey, March 1997)

3. However, the CPS found just 10.4 percent of naturalized citizens below the poverty rate, compared with 12.9 percent of the native-born and 26.8 percent of foreign-born noncitizens.

4. The New Americans: Economic, Demographic, and Fiscal Effects of Immigration (National Academy Press, 1997).

5. Bureau of Labor Statistics 1996-2006 Employment Projections; 1998-99 Occupational Outlook Handbook.

6. A 1997 National Association of Manufacturers survey of 4,500 manufacturers of all sizes found nine of 10 firms experiencing a problem finding qualified workers in at least one job category. The survey showed the skilled worker shortage unimproved since a similar 1991 survey. Reportedly lacking in the workforce are those with basic math skills, basic writing skills, and reading comprehension skills.

7. The New Americans, op. cit.

8. "The Impact of Immigration on the Native Labor Market," Professor George J. Borjas, House Immigration and Claims Subcommittee hearing, April 21, 1997.

9. Legal Immigration: Setting Priorities (U.S. Commission on Immigration Reform, 1995).

10. "The New Immigrant Survey (NIS) Pilot Study: Preliminary Results," Guillermina Jasso, Douglas S. Massey, Mark R. Rosenzweig, James P. Smith (August 1997).