Immigration Reform as Stimulus to U.S. Economy

Written by on April 28, 2009 in Economics, Legislation, Reform with 0 Comments


Photo by ShellyS.

The Wall Street Journal (WSJ) ran an editorial yesterday, “We Need an Immigration Stimulus,” in which former WSJ publisher and Dow Jones VP, L. Gordon Crovitz, makes the case that protectionism doesn’t bolster U.S. economic growth and that, in our current economic downturn, immigration reform and economic growth are closely tied together:

An economic downturn is the right time to move on immigration, one of the few policy tools that could clearly boost growth. The pace of lower-skilled migration has slowed due to higher unemployment. This could make it less contentious to ease the path to legalization for the 12 million undocumented workers and their families in the U.S. It’s also a good time to ask why we turn away skilled workers, including the ones earning 60% of the advanced degrees in engineering at U.S. universities.

It is worth pointing out the demographic shortfall: Immigrants are a smaller proportion of the U.S. population than in periods such as the late 1890s and 1910s, when immigrants gave the economy a jolt of growth.

Restrictions love to chant, “They’re taking our jobs!” and unnecessarily stoke the flames of recessionary fear, but leading economists and numerous studies have indicated that providing a path to citizenship for undocumented workers would improve wages and working conditions for all workers, increase tax revenues for cash-strapped federal, state and local governments and enable newly legalized workers to spend more on American goods and services.

Crovitz goes so far as to lay out the beneficial roles immigrants have consistently played in the growth of our economy:

  • Immigrants have had a disproportionate role in innovation and technology. Companies founded by immigrants include Yahoo, eBay and Google.
  • Half of Silicon Valley start-ups were founded by immigrants, up from 25% a decade ago.
  • Some 40% of patents in the U.S. are awarded to immigrants.
  • A recent study by the Kauffman Foundation found that immigrants are 50% likelier to start businesses than natives.
  • Immigrant-founded technology firms employ 450,000 workers in the U.S. And according to the National Venture Capital Association, immigrants have started one quarter of all U.S. venture-backed firms.

On Thursday, the Senate Judiciary Committee’s Subcommittee on Immigration, Border Security and Citizenship will hold a hearing, “Comprehensive Immigration Reform in 2009: Can We Do It and How?,” to examine common sense solutions to our nation’s immigration problems.

With Chairman Sen. Charles Schumer presiding and an impressive panel of experts, including former Federal Reserve Chairman Alan Greenspan, SEIU’s Eliseo Medina and Dr. Joel Hunter of the President’s Advisory Council on Faith-Based and Neighborhood Partnerships, the panel will hopefully start the debate on repackaging immigration reform in the form of an economic stimulus, taking Crovitz’s cue, and consider immigration reform in context to a robust and growing U.S. economy rather than a protectionist reflection of our current recession.

Today’s information technologies thrive as innovators share new ideas and make businesses out of them. Much of this activity is being done by foreigners who want to become economically successful Americans. This makes more open immigration one of the few stimulus packages Washington can deliver with confidence that it would help.

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