Chairmen Metcalfe and members of the State Government Committee, thank you for inviting me to testify today on this series of bills aimed at a very real problem — illegal immigration. The Cato Institute is a non-profit, non-partisan educational institution dedicated to promoting public policies based on the principles of individual liberty, free markets, and limited, constitutional government. As the director of the institute's Herbert A. Stiefel Center for Trade Policy Studies, I've been researching, writing, and speaking about trade and immigration policy since joining Cato in 1997.
We can all agree today that U.S. immigration policy should promote private-sector growth and secure our borders against criminals and terrorists, while remaining true to our values and our history as a nation. I understand the frustration in Pennsylvania and other states at the failure of the federal government to fix our dysfunctional immigration system. While I share the goal of reducing illegal immigration, I firmly believe that the bills being examined today would take Pennsylvania in the wrong direction.
In my testimony, I want to share evidence that our economy benefits from the infusion of immigrants who bring a strong work ethic and flexibility to our labor force, enhancing opportunity and incomes for native-born Americans. The most freedom-friendly way to reduce illegal immigration is to expand opportunities for legal immigration. The kind of laws proliferating in Arizona, Georgia and Alabama are not the right solution to concerns about jobs, crime, or government spending. They offer a false hope that will only hurt your state's economy and reputation.
The state of Pennsylvania faces many challenges, but the inflow of too many hardworking immigrants is not among them. Pennsylvania currently ranks 30th among states in the share of your population that is foreign born. In 2009, only 5.5 percent of Pennsylvania residents were immigrants, compared to 12.5 percent nationwide. Illegal immigrants are an even smaller share, 1.3 percent of your state's population compared to 4 percent nationwide, according to the Pew Hispanic Center. That ranks Pennsylvania 40th among the states.
To solve the national problem of illegal immigration, we first need to understand why these workers come to Pennsylvania and the rest of our country without authorization.
It is not because of a lack of effort at enforcing our current immigration law. Since 1992, the U.S. Border Patrol's annual budget has shot up by more than 700 percent, from $326 million to $2.7 billion. The number of Border Patrol agents stationed along the Southwest border has grown by five times, from 3,555 to 17,415. We have built hundreds of miles of fencing along the border. We have ramped up deportations and expanded the use of E-Verify in the workplace. Yet the number of illegal immigrants in the United States in the past two decades has roughly tripled. Our enforcement efforts have only driven the illegal population further underground, and those crossing the border deeper into the desert. If this were a federal education program, critics would rightly charge that the federal government was simply throwing money at the problem when fundamental reform is required.
Our enforcement-only approach has failed because it ignores the underlying economic and demographic realities of our dynamic American economy. Low-skilled immigration to the United States, both legal and illegal, is driven by basic forces of demand and supply.
Our economy continues to create hundreds of thousands of net new jobs each year that require only short-term, on-the-job training. The downturn of 2007-09 put a big dent in net job creation, but the long-term demand for low-skilled workers will continue to rise. According to recent projections by the U.S. Department of Labor, hundreds of thousands of net new jobs will be created each year during the next decade for home health aides, food preparation and serving workers, retail salespersons, landscaping and grounds-keeping workers, and waiters and waitresses.1
At the same time, the number of Americans who have traditionally filled such jobs continues to shrink. American workers, on average, are becoming older and better educated and thus less willing to fill those jobs. The number of adult Americans in the work force without a high school diploma has dropped by 3 million in the past decade, and that trend will likely continue.2 The number of workers age 16-24, another group that has traditionally filled less-skilled jobs, will shrink by 900,000 by 2018.3 These demographic trends are as real in Pennsylvania as they are in the rest of the nation.
Immigrants fill the growing gap between the expanding number of low-skilled jobs and the shrinking pool of native-born Americans who have traditionally filled them. Immigrant workers enable important sectors of the U.S. economy to continue to grow and meet the needs of their customers. By facilitating the growth of such sectors as retail, agriculture, landscaping, restaurants, and hotels, low-skilled immigrants have enabled those sectors to expand, attract investment, and create middle-class jobs in management, design and engineering, bookkeeping, marketing and other areas that employ middle class, native-born Americans.
More broadly, our nation is undergoing a demographic downshift with enormous implications. The 2010 Census figures revealed the slowest population growth in the past decade since the 1930s, with Pennsylvania among the slowest growing states. Without immigration, our workforce would soon begin to shrink, reducing our potential economic growth and our weight and influence in the global economy. Immigration has played an important role in allowing our workforce to continue a healthy if slowing rate of growth.
The answer to illegal immigration is not to criminalize honest work but to change our immigration system to meet the labor needs of today and tomorrow. We need to expand channels for legal immigration through a robust temporary worker program. Such a program would allow low-skilled workers from Latin American and elsewhere to enter the United States legally, for a certain limited period, to work in Pennsylvania and other states in occupations where there are simply not enough American workers available and willing to fill the jobs being created.
Immigration reform would replace the current population of illegal immigrant workers with a legalized population, to the benefit of the immigrants and native-born alike. We know from experience in the 1980s that newly legalized workers invest more in their job and language skills, raising their productivity and their wages. Those workers would be more likely to pay taxes and obtain health and automobile insurance. They would be better protected from exploitation by unscrupulous employers, and would be more willing to cooperate with law enforcement as witnesses.
It is wrong and unfair to blame low-skilled, undocumented immigrants for the current economic problems in Pennsylvania and the nation. The national unemployment rate was sharply lower four years ago when there were 1 million MORE illegal immigrants in the United States than there are now. A crackdown on illegal immigration will do nothing to promote growth and job creation in Pennsylvania.
It may produce a good sound bite but it is misleading to claim that every low-skilled immigrant we can round up and deport or persuade to leave Pennsylvania for another state will mean a job for an unemployed American. The real-world economy doesn't work that way. Low-skilled immigrants, whether legal or illegal, do not compete directly with the large majority of American workers. American companies hire immigrant workers to fill millions of low-skilled jobs because there are simply not enough American workers available and willing to fill those same jobs. The pay and working conditions of those jobs do not match the qualifications and aspirations of the large majority of Americans currently looking for employment even in our underperforming economy.
More aggressive enforcement against low-skilled immigration will arguably have a negative impact on our economy and the incomes of American households. Removing millions of low-skilled workers from our labor force through enforcement would reduce incentives for investment in the affected industries. It would reduce the relative job openings in more skilled positions in those industries, reducing employment for native-born Americans. Less investment and employment in the affected sectors would in turn reduce government revenue.
A 2009 Cato study by Peter Dixon and Maureen Rimmer estimated the economy-wide effects of enhanced border and interior enforcement, as well as different versions of legalization through immigration reform. The authors used a general-equilibrium model that they have developed for the U.S. Homeland Security Department, the U.S. Agriculture Department, and the U.S. International Trade Commission. In a study titled, "Restriction or Legalization," they estimated that more aggressive interior enforcement that resulted in a 30 percent reduction in low-skilled immigration to the United States would cause a drop in the incomes of American households of 0.45 percent — or $64 billion a year. In contrast, the same study estimated that immigration reform that allowed more low-skilled immigrants to enter the United States legally could boost the incomes of American families by $180 billion a year.4 A 2010 study by the liberal-leaning Center for American Progress confirmed the magnitude of the potential gains, concluding that legalization would boost incomes by $189 billion a year once fully implemented.5
Despite the claims of its supporters, the E-Verify system will not create jobs for unemployed citizens of Pennsylvania. In fact, it may only add to their frustration. A government-commissioned study by the consulting firm Westat found that the system failed to flag more than half of the illegal immigrants who applied to work at companies using the system. The system also exposes too many legal workers to the risk of being falsely denied permission to work. As my Cato colleague Jim Harper concluded in a study of the program, "It would deny a sizable percentage of law-abiding American citizens the ability to work legally. Deemed ineligible by a database, millions each year would go pleading to the Department of Homeland Security and the Social Security Administration for the right to work."6
Imposing more red tape on the employment process and threatening to revoke the business licenses of employers in your state is not the way to promote job creation. This is the kind of government intrusion in the private economy that should arouse the skepticism of all of us who value free enterprise and individual liberty.
It is wrong and unfair to blame low-skilled, undocumented immigrants for unleashing a crime wave in America. There is no evidence that illegal immigrants have committed a disproportionate share of crimes. In fact, the evidence is just the opposite. The rate of violent crime in the past two decades has also dropped dramatically during a time when the undocumented population was rising rapidly. In Arizona, the violent crime is now the lowest it has been in four decades. Census data show that immigrants are actually less likely to commit crimes than native-born Americans of similar education and socio-economic background.7 While certain crimes in Pennsylvania can be tied to illegal immigrants, there is no evidence that illegal immigrants are committing a disproportionate number of crimes or causing a general increase in crime. In fact, illegal immigrants typically seek to avoid any encounter with law enforcement that could lead to deportation, giving them an extra incentive to refrain from committing crimes once inside the country.
A number of the laws you are considering today would actually make life more difficult for Pennsylvania law enforcement officers. By deputizing them as agents for federal immigration enforcement, you will be diverting resources away from combating real criminals who threaten the health and safety of your constituents. More police hours and jail space will be consumed with prosecuting dishwashers, janitors, and landscapers rather than rapists, robbers, and gang members. These laws will only push undocumented immigrants further underground. They will be less likely to cooperate with law enforcement and come forward as witnesses. Arizona-style state laws unwittingly break down the trust that authorities have tried to cultivate through community policing. This is why the Arizona Association of Chiefs of Police opposed that state's S.B. 1070. Los Angeles Police Chief Charlie Beck spoke for many law-enforcement professionals when he commented last year, "Laws like this are put forward as a public safety issue, but they are not a public safety solution. These laws will actually increase crime, not decrease crime. Witnesses won't come forward. And they break down the trust we've been building for decades."8
Finally, it is wrong and unfair to blame illegal immigrants for strains on the Pennsylvania state budget. Illegal immigrants are banned from applying for almost all state and federal welfare programs. They do make use of emergency rooms for medical care, imposing costs on taxpayers, but not out of proportion to their numbers. Undocumented workers tend to be younger and healthier than the general population and thus less demanding of the health-care system. A 2006 study by the Rand Corporation estimated that illegal immigrants account for less than 2 percent of uncompensated care provided by the government nationwide. The authors concluded, "Foreign-born residents use less funding from public insurers (such as Medicare and Medicaid) and pay more out-of-pocket costs for health care than do native-born residents — a pattern that is even more pronounced for undocumented immigrants."9 That share might be even lower in Pennsylvania, given its relatively small undocumented population.
Immigration, legal or illegal, has not caused a surge in public-school enrollment in Pennsylvania. The share of the state's population enrolled in K-12 public schools is almost exactly the same today, 14.1 percent, as it was 20 years ago.10 That is significantly lower than the 20 percent student share in 1970 when Baby Boomers were crowding classrooms. And by the way, Pennsylvania's share of the population in K-12 education today — your future workers and taxpayers — is the fourth lowest in the nation. You are one of the least youthful states in the union. Pennsylvania lawmakers should be far more worried about why so few future workers and taxpayers are moving through the educational pipeline than about the relatively few additional students whose parents are here illegally.
Organizations opposed to immigration have a record of exaggerating the costs that legal and illegal immigration impose on state and local governments. A number of more objective state-level studies have found that illegal immigrants do impose costs at the state and local level, but those costs are relatively modest and they are offset by the broader economic gains to the individual states from a larger and more flexible workforce.
One of the most comprehensive state-based studies was issued by the Texas Office of the Comptroller in 2006. Titled "Undocumented Immigrants in Texas: A Financial Analysis of the Impact to the State Budget and Economy,"11 the report attempted to measure the taxes paid by illegal immigrants, the costs they imposed on state and local units of government through spending for education, health care, and incarceration, and the overall impact of illegal workers to the state's economy.
Consistent with other state-based studies,12 the Texas comptroller's report found that illegal immigrants do impose up-front costs on local units of government, but that they are net contributors at the state level and that their overall impact on the Texas economy is positive. Specifically, illegal immigrants in fiscal year 2005 paid a total of $2.09 billion in taxes at the state and local level, while consuming $2.60 billion in services. Education was the main expenditure on the state level, and health care on the local level. Thus the net fiscal cost for state and local taxpayers in Texas from illegal immigration that year was $504 million.
The fiscal cost, however, was more than offset by the boost to the size of the Texas economy, another finding consistent with other state studies. The Texas comptroller's study used a general equilibrium model known as the Regional Economic Model Inc. (REMI), which then calculated the impact on the state's economy if the 1.4 to 1.6 million undocumented immigrants estimated to be in Texas in March 2005 were removed from the state. The model found that the resulting drop in the state's labor force would cause wages of remaining workers to rise slightly — by less than 1 percent. But the higher wages caused by a tightening labor market would cause producers in the state to become less competitive, resulting in a modest decline in the value of the state's exports. The state's economy would shrink by 2.1 percent, or $17.7 billion. The study concluded that, "relative to the rest of the world the cost of production in Texas is higher [without the illegal immigrants], making our goods less competitive in the international marketplace and decreasing the size of the Texas economy."
I would urge members of the committee to consider this basic fact: Texas has led the nation in employment and economic growth in the past decade. It is also a state with 10 times as many illegal immigrants in its workforce as Pennsylvania. The share of illegal workers in the Texas population is FIVE TIMES greater than the share in Pennsylvania. Those low-skilled immigrant workers have not been a barrier to economic growth and job creation in Texas. In fact, they have helped state residents to be more productive at home and more competitive in global markets. The same is true for Pennsylvania.
Let me be as clear as I can. I share the goal of every member of this committee to see a reduction in the number of illegal immigrants in the United States and your state. But I do not believe that goal can be achieved, except at a terrible economic and human cost, by the kind of legislation that the committee is considering today. The problem of illegal immigration can only be solved by changing our immigration laws at the federal level to create more opportunities for legal immigration. My advice to members of the committee would be to urge your congressional delegation to support robust, comprehensive immigration reform at the national level, and to return in your state capital to the important business of expanding economic freedom and opportunity for all in your wonderful state.
1 T. Alan Lacey and Benjamin Wright, "Occupational employment projections to 2018," U.S. Department of Labor, Monthly Labor Review, November 2009, Table 5, pp.93-94.
2 U.S. Census Bureau, "Table A-1. Years of School Completed by People 25 Years and Over, by Age and Sex: Selected Years 1940 to 2009," www.census.gov/cps/.
3 Mitra Toossi, "Labor force projections to 2018: older workers staying more active," U.S. Department of Labor, Monthly Labor Review, November 2009, Table 1, p. 32.
4 Peter B. Dixon and Maureen T. Rimmer, "Restriction or Legalization? Measuring the Economic Benefits of Immigration Reform," Cato Trade Policy Analysis no. 40, August 13, 2009.
5 Raul Hinojosa-Ojeda, "Raising the Floor for American Workers: The Economic Benefits of Comprehensive Immigration Reform," Center for American Progress and the Immigration Policy Center, January 7, 2010.
6 Jim Harper, "Electronic Employment Eligibility Verification: Franz Kafka's Solution to Illegal Immigration," Cato Policy Analysis no. 612, March 6, 2008.
7 Anne Morrison Piehl, "The Connection between Immigration and Crime," Testimony before the House Judiciary Subcommittee on Immigration, Citizenship, Refugees, Border Security and International Law, Hearing on "Comprehensive Immigration Reform: Impact of Immigration on States and Localities," May 17, 2007; Rubén Rumbaut, "Undocumented Immigration and Rates of Crime and Imprisonment: Popular Myths and Empirical Realities," Appendix D, pp. 119-139, in The Role of Local Police: Striking a Balance Between Immigration Enforcement and Civil Liberties, Anita Khashu, The Police Foundation, April 2009, p. 127.
8 Stephanie Condon, "Police Chiefs Tell Holder: Arizona Law a Bad Move," CBSNews.com, May 26, 2010.
9 Rand Corporation, "Rand Study Shows Relatively Little Public Money Spent Providing Health Care to Undocumented Immigrants," News Release, November 14, 2006, available at www.rand.org/news/press.06/11.14.html.
10 U.S. Department of Education, "Digest of Education Statistics: 2010, National Center for Education Statistics, April 2011, Table 36. Enrollment in public elementary and secondary schools, by state or jurisdiction: Selected years, fall 1990 through fall 2010, accessed at nces.ed.gov/programs/digest/d10/tables/dt10_036.asp?referrer=list
11 Carole Keeton Strayhorn, "Undocumented Immigrants in Texas: A Financial Analysis of the Impact to the State Budget and Economy," Special Report, Office of the Comptroller, Texas, December 2006.
12 See, for example, John D. Kasarda and James H. Johnson Jr., "The Economic Impact of the Hispanic Population on the State of North Carolina," Kenan Institute of Private Enterprise, University of North Carolina at Chapel Hill, January 2006, p. ix, available atwww.kenan-flagler.unc.edu/assets/documents/2006_KenanInstitute_Hispanic….