Though Beneficial, Obama’s Immigration Initiative Will Have Limited Economic Impact

By | Citizenship and Naturalization, Immigration Policy, News & Press | No Comments

When signing his executive order on immigration November 21, President Barack Obama bypassed Congress, initiating a long sought reform. But evidence suggests that the reforms will benefit some sectors more than others, and may even be the source of increased competition in the labor market, marginalizing the overall effect on the U.S. economy.

The last time there was a significant overhaul of the immigration rules in the United States was under the Reagan administration in 1986. The 1986 Immigration Reform and Control Act granted approximately 1.7 million undocumented persons lawful permanent residency. In addition, it permitted roughly 1 million farm workers to apply for higher legal status, an impact that the current administration’s reform could emulate.

Studies have found that the 1986 law raised the incomes of the erstwhile undocumented workers, but much of the increase was due to newly naturalized farmworkers finding work in better-paying jobs such as in construction or manufacturing. By the 1990s, just 4 percent of the farm workers were still employed in the agricultural sector. Shifts into other sectors resulted in wage gains of between 5 percent and 16 percent among former farm workers who had gained legal status.

Some groups, such as the Center for Immigration Studies, see the sector shifts resulting from the 1986 law as deleterious to the labor market if repeated by the 4 million to 5 million undocumented immigrants President Obama’s executive order will benefit. According to this critique, the Obama initiative will result in increased competition in the U.S. job market, affecting many citizens still unemployed or underemployed in the wake of the Great Recession.

Because the president’s executive order will be limited in scope, the White House estimates that it will boost the gross domestic product by less than 0.1 percent over the coming decades. Had Congress enacted the measure that the Democratic-controlled Senate passed last year, but died in the Republican-controlled House, it would have added another 0.33 percent per year in GDP growth, according to the Congressional Budget Office.

While the business community is generally supportive of immigration reform, the technology sector believes the president’s executive order falls short of helping essential skilled immigrant workers. That is because the Obama plan, though streamlining some of the rules governing the H-1B visa for skilled workers, does not lift the annual cap of 65,000 such visas.

Congressional action, not executive action, would be required to lift the ceiling on H-1B visas or other visas tailored for the immigration of foreign entrepreneurs, and to put in place comprehensive changes that a future president would be unable to reverse, as one could with Obama’s executive order. In order for immigration reform to have a more substantial positive impact on the U.S. economy, Congress would have to do what the president has implored it to do for years: pass a bill.

[footer block_id=’902′]