Immigration Reform 2013: Why It Could Complicate Economic Growth

The highly anticipated immigration reform bill is expected to come out sometime this week. While it promises to increase border security and provide a path for 11 million undocumented immigrants, it also has a guest workers program in store. With the possibility of having up to 200,000 guest workers in the United States a year, there is no doubt that American jobs will be taken. But what is the reason for this program? The answer can be found in the high creation of low-skilled jobs that may not be sought after by American workers, especially recent college graduates and millennials.

Politicians have negotiated with the business lobby by giving them the responsibility of guest workers. The business lobby’s main interests include representing the trade union and advocating for little regulation and a large number of guest workers. As a result, a new visa was born: the “W Visa” will allow 20,000 temporary workers to come to the U.S. for the first four years after the bill, then gradually increase the cap to 75,000 and possibly even 200,000 per year.

According to economists Michael Clemens and Lant Pritchett, more low-skilled jobs will be created between 2010 and 2020, far more than there are workers who can fill those positions. After taking into account jobs that can be substituted or mechanized— such as customer service, retail sales, and cashiers — the problem still remains that while around 1.7 million new American workers will be looking for jobs in that time frame, 1.6 million new jobs will be high-skilled, such as nursing or teaching along with 3.6 million low-skilled jobs, such as food service, construction, and janitorial services.

While it could be though that those who are already unemployed might also dig into this massive availability of jobs, it has not really happened so far during the recession. Reason being, some skilled workers who have been laid off as a result of outsourcing don’t necessarily want lower skilled jobs. Additionally, older unemployed workers are starting earlier to take advantage of Social Security disability pensions.

Ironically, there will be many jobs here in the U.S. that many people won’t want to take. This is where the guest workers program proposed in the new bill comes in. It is among three of the options to fill up the jobs that will be created. The other two include filling the gap with undocumented workers or — perhaps even worse — leaving these jobs unfilled. The criticism against the guest workers program is that it might drive wages down, but Alex Krueger and other experts believe that job displacement will be outweighed by the benefits of the program.

There is potential, through the growth of low-skilled jobs, for midlevel management positions to be created. As the number of low-skilled workers increase, the number of managers to supervise them must also increase. Another possible benefit is the protection of tough to harvest crop industries, which thrive on cheap labor.

Despite these benefits, there are major concerns with the high number of guest workers being allowed in the country each year. One of them is the U.S.’ labor needs in the future. As the number of guest workers rises and is capped off eventually at 200,000, it might create a culture of irregular workers. This might engender some instability in the job market, especially if the jobs being given are considered “desirable.”

Congress had tried measures in 1986 to reform immigration, having passed the 1986 Immigration Reform and Control Act (IRCA). It contained three components that the current bill also contains: a legalization program, increasing border security, and discouraging employers from hiring undocumented workers (in the 2013 case, the guest workers program). The difference is that when it was signed, there were 5 million undocumented workers; now, there are close to 11 million. Will Congress learn from its past lessons? It does not look like it might.