Immigration reform bill may hang on economic effect of legalizing millions

Friday's testimony at first Senate hearing on the bipartisan immigration reform bill presented economic pros and cons of legalizing some 11 million people. A chief concern is wage suppression for low-skill Americans.

The US Senate's first hearing on a bipartisan proposal to overhaul America's immigration system centered mainly on this question: Would legalizing some 11 million undocumented people offer enough benefits to the overall economy to outweigh the negative effect such a step would have on the wages of low-skill citizens?

Most senators on the Judiciary Committee argued Friday that the benefits would outweigh the costs, and one of two conservative witnesses agreed with that assessment. Whether the broader Senate will eventually reach the same conclusion, however, is far from certain.

Low-skill workers and black Americans in particular would see their wages reduced and job prospects dimmed if the US were to legalize millions of new workers, says Peter Kirsanow, a member of the US Commission on Civil Rights. He called the prospect of such a step “madness.” 

“Low-skilled Americans are a significant part of that economy,” said Mr. Kirsanow, a former labor lawyer appointed to the National Labor Relations Board by President George W. Bush. “And I think they're being completely excluded from this discussion."

Former Congressional Budget Office Director Douglas Holz-Eakin, on the other hand, testified that not only would a growing labor force add more than $2 trillion in federal revenues in decades ahead, but also that officially adding new and younger workers to the workforce would reduce pressure on America's entitlement programs.

More important, he said, is that low-skill workers don’t face competition just from their American contemporaries – they are competing with low-skill workers worldwide.

“If we're worried about the ability of low-skill Americans to earn a wage, we should – we should fix the low-skill problem. That's the problem. It's not immigration; it's low skills," said Mr. Holtz-Eakin, who leads the conservative American Action Forum. "And if you think the competition begins when someone arrives in the United States, you're mistaken. We are competing with those workers now wherever they may be.” 

The hearing made clear that opponents of the immigration reform bill, which was rolled out by the bipartisan “gang of 8” senators earlier this week, intend to make the nation’s unemployment situation a key critique of the bill.

After Kirsanow argued that the bottom line on immigration reform is “we have too few jobs for way too many people,” Sen. Jeff Sessions (R) of Alabama concluded, “Colleagues, this is indisputable.”

“We have more low-skilled labor than we can find jobs for today,” said Senator Sessions, a leading opponent of the immigration reform plan. “This is not considered properly in this bill, which was written too often by big business-big agriculture interests, rather than the public interest.”

But in the Judiciary Committee on Friday, the atmosphere seemed more hospitable to Holtz-Eakin’s view than to Kirsanow’s. Four architects of the bipartisan bill were at the dais, beside a clutch of lawmakers who have expressed support for the reform effort.

Sen. Sheldon Whitehouse (D) of Rhode Island lingered over past testimony from former Federal Reserve Chairman Alan Greenspan, repeating Mr. Greenspan’s belief that “the benefits of [newly legalized immigrant workers] significantly outweigh the costs.” 

Sen. Lindsey Graham (R) of South Carolina, a long-standing champion of immigration reform, summarized the deteriorating fiscal state of Medicare, Medicaid, and Social Security, citing a growing imbalance between the share of workers versus retirees. “Unless we have a massive baby boom," he concluded, "the numbers are going the wrong direction.”

Newly legalized workers would be accorded all the worker protections allowed to US citizens, said Sen. Charles Schumer (D) of New York, and would no longer need to take cash under the table or to be paid through other surreptitious means.

As such, “isn't is harder for [employers] to take advantage [of workers] if they're legalized than if they're illegal?” Senator Schumer asked Kirsanow.

“Yes, senator, on the margins,” Kirsanow replied, before offering a possible middle ground. 

“Taking steps to ensure that it's difficult for rogue employers to employ illegal immigrants or employ anybody outside the framework of existing law would be very salutary,” he said, citing an employment verification system as one such measure to help deter illegal workers. “We can do that.”