The Economic Benefits of Obama's Immigration Action

Whether or not one thinks the immigration action that President Barack Obama is about to implement is the morally right thing to do, according to groups like the Immigration Policy Center, it is economically expedient. It’s true that the comprehensive immigration reform passed by the Senate last year would have been a great deal better for the economy, and Republicans have said that this executive action is (somehow) causing them to not work on the immigration reform bill. However, that bill was killed in the House last year, and the new Congress coming in next month appears to be even less friendly to the kind of reforms that the President supports. Thus, it seems like the choice is between executive action and no action at all.

The benefits of the reform will stem from two major areas, one being the modernization of the PERM process. (The PERM process is a step that those who would hire employment-based immigrants must take in the greater process of hiring a foreign worker). It is a means of making sure immigrants aren’t displacing the U.S. citizen workforce.) As part of the President’s plan, the Department of Labor is working to make it smoother and more responsive to today’s labor needs. On the DOL’s website, it acknowledges that “advances in technology and information dissemination have dramatically altered common industry recruitment practices, and the Department has received ongoing feedback that the existing regulatory requirements governing the PERM recruitment process frequently do not align with worker or industry needs and practices.”

The DOL is planning a few things to combat this. It will address labor shortages, most likely by easing regulations on employers trying to hire in those fields with the biggest shortages (while tightening them in more crowded fields). The Department will do everything it can without additional tax revenue to make these regulations fall more in line with today’s job and labor practices. While these practices may not increase the net amount of visas available, the eventual changes should work toward the goal of admitting those immigrants that will make us (as a whole) as competitive as possible. The department will also look into the possibility of introducing premium processing and overlooking harmless errors on petitions. In addition, the USCIS is considering extending work authorization to H-4 spouses and those who are waiting “in line” for an employment-based green card. These kinds of steps are what will keep the U.S. in the lead on innovation, because it will make immigrating here more attractive for innovators and high-potential families overseas.

However, most of the economic improvement will come from the expansion of the deferred action program, which promises to increase GDP, decrease the deficit, and even raise wages. For almost five million undocumented immigrants (that have proven to be non-dangerous and that have strong ties to this country), the deferred action expansion will temporarily erase the threat of deportation and replace it with the right to apply for work authorization. Considering that most of these people are already working, it should be easy to see that giving them work authorization will increase the amount of taxable revenue in this country. Removing the threat of deportation will allow them to “come out of the shadows” and fully participate in the economy.

Increased labor participation will lead to greater spending. These millions of undocumented immigrants will feel better able to buy houses and send their kids to college. Work authorizations will allow the immigrants to market themselves for better jobs. This will allow for more specialization and labor flexibility, because there will be a bigger labor market with a more diverse set of skills. This leads to greater productivity. Along with greater labor certainty, these things should increase the GDP and average wages.

The economic impact of President Obama’s immigration executive action is a major reason to support it. It may seem at first glance like expelling undocumented immigrants is sound economic policy because they are “taking our jobs.” However, the costs associated with expelling around 3.5% of the population notwithstanding, anyone making that kind of argument is ignoring the fact that new workers, especially when added on a large scale, create enough economic activity to create more jobs than they take up. An exclusionary viewpoint is a perhaps understandable product of a jobs crisis borne out of economic collapse. However, cooler heads will prevail, and policies like the ones discussed in this post will help us grow our way out of the economic downturn, rather than exacerbate it.