A Government At Cross Purposes

By Steven A. Camarota on October 25, 1996

The Washington Post, October 25, 1996

Two of the most important issues of this election season are welfare reform and immigration. Unfortunately, few recognize that our policies in these two areas are incompatible.

Liberal critics of the new welfare bill view it as mean-spirited and misguided, especially its time limits intended to force recipients to find work. They argue that there simply are not enough jobs, and those available pay so little that recipients are better off staying on welfare.

The critics make a valid point, especially with regard to the long-term welfare population. For those who will use welfare for 10 or more years - about 48 percent of current recipients - finding and holding a job will be no easy task. This is an exceptionally low-skilled group, which faces bleak employment prospects. Roughly two-thirds are high school dropouts, and many are functionally illiterate. Official Bureau of Labor Statistics data indicate that the real earnings (adjusting for inflation) of high school dropouts have declined by 30 percent during the past 17 years, and dropouts are among the most likely to be unemployed or to have stopped looking for work altogether.

If getting the long-term welfare population off public assistance is an important goal, as the proponents of the welfare reform bill claim, it would seem obvious that reducing the number of jobs available to them and decreasing the wages of the jobs that remain would be counterproductive. Yet this is precisely what our current immigration policy does.

Each year the United States admits between 700,000 and 900,000 legal immigrants and tolerates the addition of 300,000 new illegal immigrants. In any given year, about 40 percent of the adult immigrants who arrive are high school dropouts. The March 1995 Current Population Survey, a sort of mini census, found that well over a million adult immigrant dropouts came to the United States in just the preceding five years. In fact, one-fifth of all the high school dropouts in the labor market are immigrants. Because most long-term welfare recipients also are dropouts, fierce job competition between immigrants and long-term welfare recipients seeking employment seems unavoidable.

An emerging body of evidence shows that our immigration policy prevents the creation of precisely the kind of tighter labor market that would be so helpful in making welfare reform work. David Jaeger, an economist at the Bureau of Labor Statistics, has found that native-born and immigrant high school dropouts are almost perfect substitutes for one another in the labor market. In other words, they compete directly for the same jobs. Moreover, he finds that half the decline in the wages for high school dropouts in the 50 largest cities is attributable to immigration.

Jaeger is not alone. Research by George Borjas of Harvard has found that, nationwide, immigration was responsible for a third of the decline in wages for dropouts in the 1980s. Augustine Kposowa of the University of California at Riverside has found that in high-immigrant cities, minority wage rates decreased and unemployment increased. And my own research indicates that the wages of natives in low-skilled occupations are reduced by 10 percent as a direct result of immigration.

Other impediments also hinder the long-term welfare population from moving into jobs: limited work experience, drug abuse, racism and a lack of affordable health and child care. But by driving down wages, our immigration policy exacerbates these problems - for instance, pushing health care out of the reach of unskilled workers.

Almost all observers agree that improving the labor market is an important part of the solution to welfare dependency. But shortly before Congress passed the recent welfare reform bill, it killed - with the administration's support - a proposal to reduce legal immigration modestly. And while the bill on illegal immigration has certain useful provisions, it will barely nibble at the edges of the problem.

Whatever one thinks of welfare reform, the contradiction between our welfare policy and our immigration policy seems stark.