The Wages of Immigration
Feb 17, 2014, Vol. 19, No. 22 • By JAY COST
Last month, the House Republican leadership released its guiding principles on immigration reform. While mostly boilerplate, the document suggests that the House GOP envisions a bill similar to last year’s Senate compromise spearheaded by Marco Rubio: enhanced border security in exchange for legalization of the illegal immigrant population; more visas for the highly skilled and permits for temporary guest workers; and a rationalization of the immigration process. The main difference is that the Senate bill offers a special path to citizenship for the entire illegal population, while the House principles offer it only to immigrants brought here illegally as children.
This difference is intended to mollify conservatives who warn that the Senate bill would pad the voting rolls with millions of new Latino Democrats. But that fear is overblown. Of the 11 million or so people in the country illegally, Pew reports that only 9 million are Latino, and not all of them would become citizens. The Latino turnout rate, moreover, was only 48 percent in 2012, and the bloc broke for Democrats 71-27. So the best case for Democrats is that they would net about 2 million more new voters than Republicans starting in 2028.
Instead, conservative critics should focus on two other problems. First, the border and visa enforcement provisions are only as effective as the follow-through by local and federal authorities, and the political calculations of Democratic pols will incline them toward lax enforcement, making these provisions of dubious value. Second, the Senate bill and House principles offer no protection for the wages and employment status of existing workers. This fact, often overlooked by critics of comprehensive reform, is its greatest weakness.
According to the Congressional Budget Office, the Senate bill would decrease average wages by 0.1 percent by 2023 (although over the following decade wages would rise with increases in productivity). What’s more, this effect would not be evenly distributed:
Furthermore, the CBO projects that the bill would increase the unemployment rate, in part because of “imbalance[s] between the types of workers needed to produce the goods and services demanded in the economy and the skills and occupations of available workers.” Again, the burden would fall particularly on the low end of the socioeconomic scale.
Conservative proponents of the House principles and the Rubio plan offer political and philosophical arguments in favor of passing a program along these lines. Absent an explicit commitment to protect wage and employment levels, however, they are not persuasive.
The economic case is that reform will increase economic growth, and indeed it will. CBO estimates that the Rubio bill would boost gross domestic product by 3.3 percent between 2013 and 2023. The GOP, however, should not support growth for its own sake, but rather as the best way to generate broad-based prosperity. That is an important distinction, for there are policies that can increase growth without broadening the middle class—and if the CBO’s analysis is correct, the Rubio bill is one of them. Wages would fall, unemployment would rise, and according to the CBO, per capita gross national product would fall by 0.7 percent in 2023. Thus, even as the aggregate economy would be larger, the average American’s share of that prosperity would be less than without the Rubio reform.
This points to the tensions in the strategic alliance between the right and business. Conservatives are pro-business because they believe that, in general, business is good for everybody. If business presents a plan that hurts a significant swath of the country for its own advantage—such as the Senate bill—conservatives should oppose it. Indeed, they should do so loudly and forthrightly, for their biggest electoral liability is the widespread conviction that the GOP stands with big business instead of with the average person.
The political case is that Republicans have lost the popular vote in five of the last six presidential elections, and their only hope is to win the fast-growing Latino bloc. The problem here is lack of context. There are only three states where comprehensive immigration reform might directly affect Republicans’ prospects in the near term: Colorado, Nevada, and New Mexico. Arizona and Texas are solidly Republican; California is solidly Democratic; and the bulk of the Latino vote in Florida is Puerto Rican or Cuban, two groups who are mostly already citizens.
But what happens if the Republican party slackens in its commitment to protecting wages and employment? Several decades ago, the GOP began winning the white working class in the South, and more recently it has done so in the border states (Kentucky, Tennessee, and West Virginia). Yet its advance in the Midwest has stalled. Ohio remains less than a sure thing, even though its demographics have changed little. Pennsylvania and Minnesota are creeping closer to the Republican party, but have not yet flipped. Iowa, Michigan, and Wisconsin remain frustratingly elusive.
These are all states where Republicans regularly win statewide, yet lose presidential contests, in part because Democrats successfully tag GOP nominees as heartless plutocrats. The only way for the GOP to shatter this image is through an explicit and relentless commitment to pocket-book issues of concern to average Americans. A comprehensive immigration bill that lowers wages is a giant step in the wrong direction.
The cost-benefit calculus is simple. If Mitt Romney had won the Southwest, he still would have lost the election handily in 2012. If, on the other hand, he had swept the Rust Belt, he would have won by the same margin in the Electoral College that George W. Bush did in 2004. The Latino vote might be the fastest growing in the country, but Republican victory for the foreseeable future depends on carrying the Rust Belt.
Republicans, moreover, if they ignore the harm to workers from immigration reform, will be missing an opportunity to turn the tables on the Democrats.
For over a generation, Democrats have supported wage-suppressing policies demanded by rent-seeking unions, the environmentalist left, and the consumer rights movement, while still parading as the party of the people. And on immigration reform, the Democrats are kowtowing to ethnic pressure groups while harming the average worker.
This might explain why Democrats insist on bipartisanship now in particular. They were happy to pass financial reform legislation, health care, and a massive stimulus basically on party line votes. Immigration reform is one of just two salient issues where they’ve insisted on reaching across the aisle. The other was the Bush tax cuts. Not wanting to be cast as the party of tax hikes, the Democrats sought political cover on that issue. Similarly now, Democrats want to legalize new potential voters, but not at the expense of lowering wages and increasing unemployment, especially in the midst of the longest economic stagnation in generations. Enter the Republican party: Bring in the GOP to neutralize the wage issue, then reap the benefits down the line from the new voters.
In 1960, Barry Goldwater blasted the policies of Dwight Eisenhower as a “dime store New Deal.” This was an exaggeration, but Goldwater was on to something. The Republican party did not enjoy enduring successes until Ronald Reagan’s victory in 1980, when the party articulated a compelling alternative to New Deal/Great Society liberalism. So it goes with immigration reform. Offering a “lite” version of the Democratic proposal is poor political strategy, for the party will always be outbid. By contrast, offering a robust critique and a sensible alternative is the proven way to turn the party’s fortunes around.
On immigration reform, far from echoing Democratic claims, Republicans should mount a vigorous attack that spotlights the negative effects the Senate bill would have on the economic stability of the working class.
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