Thursday, November 17, 2005

House Committee discusses immigration

From: The Potomac News

The House Committee on Education and the Workforce held a hearing Wednesday to discuss the impact of recent trends in immigration on the American economy, as it prepares to advise Congress on pending immigration reform.

With one of every seven people working in the United States born abroad, the percentage of America's foreign-born population -- 12 percent of the total population, according to 2004 Census figures -- is higher than it has been in 70 years.

This increase has revealed stark insufficiencies in the government's current immigration policy, both in terms of limiting and keeping track of immigrant workers. Apart from such concerns, panelists Wednesday viewed recent immigration trends as a net positive force for growth and development.

Even with an estimated 1.3 million foreign workers pouring across the border each year, the economic impact on wages is murky. Douglas Holtz-Eakin, director of the budget office, reported the agency's survey on wages did not reveal a clear impact by the tide of foreign workers, who are often willing to work for low pay. He emphasized the flexibility of the labor market in absorbing foreign workers.

"What may happen is that native-born workers, facing competition from uneducated foreign workers, may choose to get more education. It is hard to find a direct impact on wage," Holtz-Eakin said.

In contrast, Harry Holzer, a professor of public policy at Georgetown, presented "a consensus view" among labor economists, suggesting that immigration has at least modestly reduced the earnings of less-educated, U.S.-born workers. However, he centered his testimony on how consumers as well as producers benefit from immigrant labor. Immigrants who work for less have the effect of reducing the costs and prices of domestic products like food, clothing and housing -- all items on which low-income consumers spend much of their disposable income.

Steven A. Camarota, director of research at the Center for Immigration Studies, cited a 1997 study by the National Research Council that estimated that immigration reduced the wages of workers without a high school diploma by about five percent.

This reduction, however, caused marginal gains for 90 percent of the total labor force.

The reasoning, according to Camarota, is that when immigration reduces wages for less educated workers, the wages do not "vanish into thin air." Instead, employers may pay higher wages to attract more highly educated workers.

The fourth panelist, Dan Siciliano of Stanford Law School, also rejected the hypothesis that immigrants have caused a significant decline in wages of U.S.-born workers. In his written testimony, he emphasized that immigrant and U.S.-born workers are not "perfectly interchangeable," observing that the different levels of education between foreign and native-born workers "indicate that they often fill different niches in the labor market."

On the subject of illegal immigration, Holtz-Eakin identified a basic economic incentive, driving those in poorer countries to seek work in the U.S. which better absorbs the labor supply. Holzer suggested that by providing means for undocumented immigrants to become legal, the U.S. could "level the playing field" -- in terms of wages between immigrants and native-born workers.

Rep. Howard McKeon, R-California, raised a concern about the relative ease of obtaining a false Social Security card, and asked what happened to the money that should be funneled into Social Security. Holtz-

Eakin said that the Social Security Administration has a fund of payroll taxes that cannot properly be matched, and it is considered to reflect earnings of illegal workers. The fund has $400 billion.

Holzer, however, saw another side to the Social Security dilemma: a potential labor shortage as "baby boomers" begin retiring in large numbers.

"The supply of immigrant labor to the health care and elder care fields will become even more critical for averting shortages of services in these areas," he said.

All the panelists agreed that a mass deportation of illegal immigrants would significantly disrupt the U.S. economy.

"The most recent demographic analysis ... reveals that most immigrants, including undocumented immigrants, do not compete directly with native-born workers for jobs," Siciliano concluded. "Instead, these immigrants provide a critical element of our nation's economic success and continued resiliency."

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