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

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

Post  MBAstudent on Tue Feb 23, 2010 1:15 am

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

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 reconsider " 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


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