Friday, August 10, 2007

I'll keep my $125, Thank You Very Much!

The following headline appeared on page A.10 of today's New York Times: Bush Plans Immigration Crackdown. The summary explains that the crackdown will pertain mainly to illegal immigrants who are members of street gangs, but amendments to the bill chide the Administration to "demonstrate operational control" of the border, enforce existing immigration controls, and require employers to fire workers who are employed under false SSN's.

Perhaps sponsors of such amendments to elevate the level of border control (like Dr. Tom Coburn, R-OK) could answer a few key questions:

1. How many illegal entries is acceptable? Some estimate the net entry of illegal immigrants to be as high as 300-500,000 per year. For 2005, the Department of Homeland Security reported the number of voluntary departures to be 965,538 and the number of deportations to be 208,521 (Yearbook of Immigration Statistics), so that means between 1.4 and 1.7 million enter each year. There were about 14 million arrests nationally for all crimes in 2005. There were about 25 million total offenses reported. We know that we cannot reduce either of these number to zero without putting an undue strain on the private economy, so what will the benchmark for success be in the case of immigration?

2. What additional cost must society bear to hunt down and deport existing illegals? Most journalists cite about 12 million as the number of immigrants currently living in the U.S. We are already deporting over 200,000 immigrants each year, several thousand more are brought in, and leave by means other than deportation, and a handful are incarcerated for crimes they commit while they are here. About 300,000 illegals per year are removed from the workforce as a result of enforcement activities.

3. To what end will firms be expected to bear the cost burden of investigating the legitimacy of each and every applicant's citizenship and work eligibility documentation? According to Dr. Coburn's own website his "priorities in the Senate include reducing wasteful spending" and "balancing the budget."

4. What are the other economic costs to "enforcing" immigration laws in the way Dr. Coburn proposes? Suppose we remove all 12 million illegals. This number would represent about 8 percent of the total civilian labor force. The total unemployment rate has been pretty steadily between 5 and 6 percent of the labor force over the last 20 years. That means that the total unemployed work force could not feasibly replace all of the illegals working in the US, even if their skills were a good fit for the jobs vacated. That means that the impact of their departure would almost certainly affect the price level.

5. I saved this for last-- What is the net benefit/cost of immigration (legal, illegal, or otherwise)? Most studies have shown (a good reference is Heaven's Door by George Borjas) that the net impact of immigration on per capita incomes is positive and amounts to about 0.25%. So, the impact of immigration is positive, but small. These benefits tend to be latently observed in their impacts on prices, productivity, competition, etc., and economists try to use sophisticated empirical techniques to best sort them out. So, if you're a native earning $50,000 per year (about the median household income in the US) would you be willing to pay an additional $125 per year in addition to the administrative cost of enforcing the border and deporting illegals just to not have them here? That sounds silly to me, but Rock On, Middle America. Keep opposing immigration reform.

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