Wednesday, April 27, 2011

Immigration in the United States and its effects on the economy

Immigration is one of the most debated topics in the political scenes internationally, and within developed countries in particular. It is mainly due to the increasing number of citizens from developing countries seeking jobs, better social status, freedom, better education…etc. The United States is not an exception to the massive immigration phenomena in our world today. One of the main reasons, in my opinion is in fact summarized in the wide social, political, and economic gap between developing and developed countries. However, while there are numerous obvious and explicit reasons driving the increasing rate of immigration to the United States, there are also implicit effects of immigration on the economy of the United States and on its foreign policy. The post will discuss those effects and analyze the policies of immigration concerning working authorizations policies and drain of brain or human capital flight phenomena within the United States of America.
 The immigration has played a primordial role in the formation of what we know today as the American Population. Since 1891, immigration in the US has become a federal responsibility. The federal government passed successive laws and policies targeting the containment of the immigration issue facing the United States, especially from neighboring countries in Latin and Central America. The clandestine aspect of the issue has become a serious threat to the stability of the country’s foreign policy and Immigration law enforcement. We have witnessed different controversial debates and legislations such as the Arizona Law, which requires immigrants to carry their documentations at all times and which requires police to inspect and question people if they suspect that they in the United States Illegally. It is considered the toughest immigration legislation passed on a federal level because it creates a hostile environment for immigrants to the US. Immigration issues and policies can be ambiguous for most people, and create a lot of debate and division in opinions. When looking at the effects that it has, opinions can differ dramatically and divide people between pro and anti immigration laws enforcement and more regulations. However, it seems that the economics effects that the immigration has on the US hasn’t been discussed enough. We witnessed the delocalization of numerous American firms seeking cheaper labor and skilled worked. We also witnessed the weakening the industrial sector, turning gradually the America to a service oriented economy. Not only that, but there is an obvious shortage in professional fields such as the medical, engineering, and mechanical. One of the main goals of the immigration policies is to fill those positions with skilled immigrants, but also to admit workers with specific skills. Increased regulations can enlarge the shortage and encourage more firms to delocalize, or not invest in the US territories in the first place. The repatriation of unauthorized worked could cost the US economy billions of dollars in expenditures, but can also affect dramatically its GDP and create an employment crisis within industries and small businesses who still rely on illegal workers to stay competitive using relatively cheaper labor. Some politicians argue that illegal immigration opportunities attract criminals and drug dealers to the United States, it can be counter argued with the fact that legalizing the immigrants and giving them rights, would consequently entails the newly legalized to respect the national and federal laws of the United States and would facilitate the enforcement of those laws while keeping impacting positively the economy. The foreign Affairs Secretary Hilary Clinton says in a conference on immigration policies in 2010: “We have to have a comprehensive, compassionate, pragmatic, rational, and humane immigration policy”. She is referring mainly to the immigration flow coming from Latin and Central America. It is right to believe that immigration policies exercised on certain neighboring nations affect to a certain degree the foreign relations with that particular country. We have seen ups and down within the foreign and diplomatic relations between the US and Mexico due to the immigration policies and enforcement measures taken by the US homeland security in regards to Mexican illegal or authorized workers.
The United States labour is remarkably expensive, which puts American firms at a relative disadvantage compared internationally. It is often a tough task for firms to keep a close control of their costs when they have to pay a high cost of labor. Having stronger immigration regulations to protect American workers is not the answer; it creates a vicious circle in the American economy. The circle can be describes as follows: Less competitive labor market, higher labor costs, higher prices, increasing life standard and a higher inflation. The cited description and theory might not be perfect or non debatable, but it does reflect part of the economic reality in the United States.  As long as American firms delocalize, one can still argue that there is a human resources issue on the national and federal level, in other words, there is an immigration or selective immigration issue. Mentioning selective immigration is crucial to complete this analysis. Many positive effects of immigration were listed, but it is important to be precise and discuss the right process for constructive immigration that would fortify the economy of the United States while keeping foreign relations with neighboring countries relatively at low risk. The US governing institutions have a clear understanding of the needs in the labor, professional, and research market. Immigration policies should be selective to fill in the exact needs concluded. The US is clearly seeking more skilled people in the fields of Science, Technology, Engineering, or Mathematics (STEM), however not enough is done to ensure the retention of newly graduates in American universities, nor is the immigration process to attract skills potential immigrants to the US. Every year, many green cards are issued by the US government to citizens from different countries by lottery, ignoring the education or specific skills factors. Also the foreign workers’ sponsorship cost is very high, which doesn’t encourage firms to hire skilled and legalized immigrants. Companies are often very reluctant in sponsoring foreign workers because of the massive immigration regulations and costs. Newly foreign graduates currently have 12-17 months to find an employer who is willing to take the risk of investing in their sponsorship, which often leads to having skilled professionals leave the US to their country seeking less complication and hostility.
While immigration laws are more comprehensive and compassionate with skilled foreigners from the STEM fields, it is less flexible when it comes to labour filling mechanical or factory jobs needs. There is no legal process for firms to legally hire workers and sponsor them. Illegal Workers in the US are left with the only option to remain working illegally as long as the ethics of the firm permits it to break US immigration laws. On the other hand, industrial firms and factories are also left with the option to delocalize in order to appreciate a more competitive and cheaper labour market.
One can see clearly, that the US immigration laws have a more complex effect and more implicit consequences on the country. It is absurd to ignore the economic sphere of influence and aspect that it takes, while looking at the political and social side. I always see economics as a complimentary element of politics, as a consequence debating the economic side of immigration is, with no doubt, crucial for a better understanding of the US immigration policies and laws’ debate.

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