Costs to the US of immigration vastly exceed the benefits

By William W. Chip on March 12, 2017

Sir, Rana Foroohar, in “Trump’s trade policies won’t help my town” (March 6), argues that “cultural tensions” arising from the loss of US industrial jobs in the face of a “burgeoning immigration community” have caused an otherwise “legitimate debate” about trade and industrial policy to be “sidetracked by xenophobia”.

Her conclusion that xenophobia accounts for the seemingly irrational introduction of immigration policy into a trade debate is premised on “a large body of research” showing that “immigration is a net benefit to the US, at both the top and bottom levels”. In particular, immigrants are the “key reason” that growth in the US population and gross domestic product will “outpace most of the rest of the rich world”.

I agree with Ms Foroohar that immigration increases the US population and the GDP. If all of India were to migrate to the US over the next decade, our population would quintuple, and we would experience the largest increase in GDP of any country in world history. However, is not the more relevant question whether mass migration increases the per capita GDP of native-born Americans in amounts sufficient to offset less measurable costs such as increased pressure on our environment, our $4.5tn infrastructure deficit and our failing public schools, not to mention increased “cultural tensions”?

Ms Foroohar does not identify the “large body of research” showing that immigration benefits both “the top and bottom levels”, but a contrary conclusion was reached in the 1997 report of the National Academy of Sciences to the US Commission on Immigration Reform (appointed by Democratic President Bill Clinton), the most exhaustive effort in American history to arrive at a fact-based, non-partisan foundation for immigration policy. A 2016 version of the report has been summarised in a “User’s Guide” by Harvard professor George Borjas, one of its contributors.

According to the guide, current immigration flows are estimated to increase the income of native-born Americans by about $50bn (about three-tenths of 1 per cent of total GDP). However, because historically high levels of immigration have lowered wages by about 5 per cent, that $50bn net benefit is accompanied by an annual wealth transfer from employees to employers of approximately $500bn, which helps explain the “xenophobia” of President Donald Trump’s working-class supporters. What employee would be comforted to learn that his $500 pay cut made his boss $550 richer? In any event, before the upper crust spends the extra $50bn that the working class has sacrificed so much to drop into their laps, they are well advised to check their tax returns. According to the guide, native-born taxpayers (mostly the upper crust) will need to pay as much as $270bn of extra taxes to cover the government services and government benefits used by immigrant families.

There are a number of good reasons for admitting immigrants without regard to economic and fiscal costs, such as protecting refugees who have no hope of returning to their homelands, or enabling foreign brides and grooms to live with their US spouses. Those immigrants alone account for nearly 500,000 a year, and a cost/benefit analysis does not argue for admitting even more, save those whose skills, education or talent ensure that they will compete with those at the top rather than those at the bottom.