Immigration Reform 2013: A Huge Opportunity to Grow the Economy
The Senate plans to begin mark up on the overhauling the maze that is the American immigration system on May 9. Our immigration system is in dire need of modernization and the 844 page bill [PDF] introduced by the so-called "Gang of Eight" is not lacking in motivation (read a summary here). The Washington Post calls the bill "the most ambitious overhaul of the nation's immigration system in three decades." The Senate appears to have majority support for the bill, with some claiming the legislation will sail through the chamber with 70 votes.
All roads for the legislation lead to the uncertain fate when it meets the GOP-controlled House. However, the bill does have key support from Rep. Paul Ryan (R-Wisc.). Rep. Ryan, like many others, makes the argument that reforming immigration is pro-growth economic policy and for the betterment of our long-term prosperity. And he's right. Modernizing the American system of immigration is as close to a "free lunch" as any public policy issue. The evidence and data supporting comprehensive immigration reform is overwhelmingly positive.
Economic Benefits of Reform:
Immigrant populations will increase the size of economic opportunity by creating new businesses and expanding the scope and quantity of economic production. These activities translate to positive affects on the broader economy. When reform was first introduced in 2007, the Congressional Budget Office analyzed President George W. Bush's proposed immigration overhaul. The CBO, as Ezra Klein notes, found that modernizing the system would increase federal revenue by $48 billion while costing only $23 billion in increased public services — before even considering the broader economic benefits. There is general consensus across the ideological spectrum that the economic benefits to immigration reform will be a boon for the U.S. economy.
Factoring in broader economic benefits, research from the left-leaning Center for American Progress finds reform would add $109 billion additional tax revenue, create 121,000 jobs due to increased consumer spending, and add $832 billion in U.S. GDP over 10-years. Further, an analysis from the right-leaning American Action Forum illustrates that benchmark immigration reform would raise the pace of economic growth by nearly a percentage point over the near term, raise GDP per capita by over $1,500 and reduce the cumulative federal deficit by over $2.5 trillion. Think tanks compete with numbers and ideas. Finding two on as far on the opposite side of the spectrum as Center for American Progress and American Action Forum in agreement on an issue is a rare occurrence. The data and facts supporting immigration reform simply do not lie.
Contributions of High-Skilled Immigrants & Entrepreneurs:
Numerous studies on entrepreneurship among high-skilled immigrants compliment these findings as well. High-skilled immigrants have provided one of America's greatest competitive advantages and a consistent source of innovative mojo for our economy. Immigrant entrepreneurs have brought us Chobani, Intel, Google, Yahoo, and others. An analysis of U.S. Fortune 500 companies shows that 40% were started by immigrants or the children of immigrants.
Immigrants have displayed entrepreneurship rates above that of the native born population. Vivek Wadhwa, et al. found that immigrants make up just 12% of the U.S. population yet have started 52% of Silicon Valley's technology companies, while contributing more than 25% of U.S. global patents. Additional research shows that for every 100 additional foreign-born workers in STEM (science, technology, engineering, mathematics) jobs created 262 additional jobs for native U.S. workers. Nationwide, companies with at least one foreign-born founder employed roughly 560,000 workers and generated $63 billion in sales in 2012 [PDF].
Cost Claims Overstated:
Opponents of reform are leading with claims that costs of the system would be too prohibitive on government programs. The Heritage Foundation, who played a key role in derailing the 2007 effort, is close to releasing a reprise of its costs analysis of the reform. These numbers will certainly serve as the basis for the rallying cry against reform for the opposition. But here's the problem: Heritage's 2007 cost-analysis relied on a severely flawed methodology producing grossly exaggerated costs to federal taxpayers and significantly undercounting economic contributions. The Cato Institute's Alex Nowrasteh offers 11 reasons why the Heritage's analysis is severely flawed. The release of the Heritage analysis is expected to be heavily scrutinized.
Embracing the Next American Economy:
The introduction of comprehensive immigration reform ensures that legacy will endure for our next American economy. The quantitative research and data supporting the case for overhaul is overwhelmingly positive. America has achieved greatness due to the diversity and talents of our population. The American legal system that encourages risk and a culture of innovation are what makes America great. We need the keep the door open to individuals to ensure that continues.