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Immigration And Its Effect On The Economy

Of The U.S Essay, Research Paper


Immigration and Its Effect on the Economy of the U.S


The 1990s have brought the largest influx of immigrants into labor force of the


United States of any decade in this nation’s history. A panel of social science


scholars concluded their assessment of U.S. society with the observation that


“America’s biggest import is people” and determined that “at a time when


attention is directed to the general decline in American exceptionalism,


American immigration continues to flow at a rate unknown elsewhere in the world”


[Oxford Analytica 1986, 20]. Unlike earlier mass immigration periods to the


United States the present day wave of immigration to the U.S. show “no sign of


imminent decline” [Bouvier 1991, 18]. “In today’s world setting, international


migration is a discretionary action that is regulated by the specific actions of


the governments of individual nation-states.” There is no international


obligation for any nation to allow others to enter or to work, in fact, most


nations do not admit immigrants for permanent settlement


Mass immigration has played a significant role in the economic history of the


United States, nevertheless the harsh fact is that what may be necessary and


beneficial at one time, may not be so at another. The demand for labor is being


affected by “restructuring forces stemming from the nature and pace of


technological change; from the stiff international competition the United States


that now confronts for the first time in its history; from major shifts in


consumer spending away from goods toward services; and from the substantial


reduction


In the national defense expenditures brought about by the end of the Cold War in


the early 1990’s”. (vernon m. briggs,jr. and stephen moore. pg 35.) In looking


toward the future the twenty occupations projected to grow the fastest in the


1990s, half are related to the growing computer and health fields. The shift to


a service based economy is leading to an upgrading of the skills and education


required by the labor force. On the other hand the occupations that require


minimal skills and education have declined and are presently forecasted to


continue to do so. Immigration can be useful in the short run as a means of


providing qualified workers where shortages of qualified domestic workers exist.


But, the long-term objective should be that these jobs should go to citizens and


resident aliens. “The 1990 Census revealed that the percentage of foreign-born


adults (25 years and over) who had less than a ninth grade education was 25


percent (compared to only 10 percent for native-born adults) and whereas 23


percent of native-born adults did not have a high school diploma, 42 percent of


foreign-born adults did not. Immigration, therefore, is a major contributor to


the nation’s adult illiteracy problem. On the other hand, both foreign-born


adults and native-born adults had the same percentage of persons who had a


bachelor’s degree or higher (20.3 percent and 20.4 percent, respectively), but


with regard to those who had graduate degrees, foreign-born adults had a


considerably higher percentage than did the native-born, 3.8 percent versus 2.4


percent.( )” It is at both ends of the U.S. labor force that immigration


has its greatest impact at the bottom and at the top of the economic ladder.


“The overall unemployment rate of foreign-born workers in 1994 was 9.2 percent,


while the comparable national unemployment rate at the time was 6.5 percent.


The unemployment rate for foreign-born workers with less than a ninth grade


education in 1994 was 13 percent; for those with some high school but no diploma,


it was 15.2 percent. The comparable rates for native-born workers were 13.5


percent and 29.9 percent.” Consequently, the greatest labor market impact of


immigration is in the sector of the labor market that is already having the


greatest difficulty finding employment. “The 1990 Census also disclosed that


79.1 percent of the foreign-born population (five years old and over) speak a


language other than English (compared to 7.8 percent of the native-born) and


that 47.0 percent of the foreign-born (five years and over) reported that they


do not speak English very well.( )” The ability to speak English in an


increasingly service-oriented economy has been definitively linked to the


ability to advance in the U.S. labor market of the post-1965 era [Chiswick 1992,


15]. Considering the factors aforementioned “the incidence of poverty among


families of the foreign-born population in 1990 was 50 percent higher than that


of native-born families or that 25 percent of the families with a foreign-born


householder who entered the country since 1980 were living in poverty in 1990 (


).” “Nor is it surprising to find that immigrant families make greater use of


welfare than do native-born families” [Borjas and Trejo 1991, 195- 211].


“Even when legitimate labor shortages exist, immigration should never be allowed


to dampen the two types of market pressures: those needed to encourage citizen


workers to invest in preparing for vocations that are expanding and those needed


to ensure that governmental bodies provide the human-resource-development


programs needed to prepare citizens for the new type of jobs that are emerging.”


( pg.44 ). We may need to reco

nsider ” an immigration policy that annually


encourages or tolerates the mass entry of immigrants with only minimal regard to


their human capital attributes or places additional remedial burdens on an


already underfunded and inadequate education and training system. It is not


only the actual effects of increased competition for jobs and social services


that are important, collectively we must consider the opportunity costs as well


when considering immigration and its effect on our economy.”(Pg,48)


The phrase “a melting nation of immigrants” is popularly used to describe the


people who settled the United States. Historian Oscar Handlin added to this


statement by stating that “once I thought to write a history of the immigrants


in America. Then I discovered that the immigrants were American history”


[Handlin 1951, 3]. ” The benefits of immigration, however are manifold.


Immigrants are highly entrepreneurial. Their rate of business start-ups and


self employment tend to be higher than that of United States born citizens.


Immigrants contribute to the global competitiveness of US corporations,


particularly in high technology industries. Perhaps the most important benefit


is that immigrants come to the United States with critically needed talents,


energies that serve as an engine for economic progress.”(pg 78). Economist


Ellen Seghal of the US Bureau of Labor Statistics did a study examining welfare


usage in 1984 of several major federal programs of immigrants who entered the


United States before 1982. She found that “the share of foreign born collecting


public assistance including unemployment compensation, Food Stamps, Supplemental


Security Income (SSI), and AFDC was 12.8 percent. The percentage for US born


was 13.9 percent.” (pg 93). “A study by the City of New York’s Office of City


Planning found that the public assistance rate was 7.7 percent for immigrants


and 13.3 percent for the population as a whole. Hispanic immigrants are alleged


to be especially heavy users of welfare services, but the research does not


verify this stereotype. A study done by the Urban Institute found the “annual


welfare benefits averaged $575 per California household, as opposed to $251, per


Mexican immigrant household.


Do immigrants compete with American workers for jobs? “There are almost always


economic losers under such competitions, even though the society as a whole is


almost always left wealthier.


The pressure of competition is one of the engines of economic growth under a


capitalist economy.”(pg98). ” When immigrants come to the United States, they


immediately raise the demand for US goods and services (Greenwood and McDowell


1986).” “They shop for food in US grocery stores; they move into apartments or


homes, as producers’ immigrants fill jobs, but as consumers they create


jobs”(pg106). Several studies have documented that the immigrants who come to


the United States tend to be more skilled, more highly educated and “generally


more economically successful than the average citizens in their home countries”.


(pg142) “Among Iranians who came to the United States in 1979, 57 percent were


professional, technical, or managerial workers. In Iran , only 6 percent of all


the workforce falls into those high skill categories. In that same year, 68


percent of the immigrants from India fell into these high skilled categories


compared to less than 5 percent among the entire Indian workforce. Finally, 15


percent of the 6,000 Haitians who entered the United States in 1979 through


normal immigration channels were professionals, administrators, or managers


compared to 1 percent for the Haitian workforce (Gibney 1990,372.)” The


children of immigrants also tend to reach exceptionally high levels of


achievement as adults, in earnings and professional skills.


“Economist Barry Chiswick has calculated that throughout this century, the


children of immigrants have had earnings that are on the average 10 percent


above those of comparably educated US born children (cited in McConnell 1988,


101 ).”


Americans are split on an issue that will likely remain on the forefront for


some time to come. The subtle nuances interwoven within the issue of


immigration are facets that require answers more akin to shades of gray than


black and white. As we look toward the future and our economic stability we can


be sure the battle will be for the scarcest natural resource, that of talent and


brainpower.


Bibliography


Baumol, William J. “Sir John Versus the Hicksians, or Theorist Malgre Lui.” The


Journal of Economic Literature 19, no. 4 (December 1990): 1708-1715.


Becker, Gary S. “An Open Door for Immigrants–the Auction.” The Wall Street


Journal, 14 October 1992, p. A-14.


Borjas, George J. “The Economics of Immigration.” The Journal of Economic


Literature 23, no. 4 (December 1994): 1667-1717.


Borjas, George J., and Stephen J. Trejo. “Immigrant Participation in the Welfare


System.” Industrial and Labor Relations Review 44, no. 2 (January 1991): 195-211.


Bouvier, Leon. Peaceful Invasions: Immigration and Changing America. Washington,


D.C.: Center for Immigration Studies, 1991.


Briggs, Vernon M., Jr. “Non-Immigrant Labor Policy in the United States. ”


Journal of Economic Issues 17, no. 3 (September 1983): 609-630.


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