'NEW ECONOMY' 1, IMMIGRANTS 0

Policy On Unskilled Entrants Flawed, Studies Say

Investors Business Daily, April 7, 1998

David A. Price

As the U.S. shifts gears to a new economy based on information, technology and white-collar jobs, it's becoming more dependent on educated workers. Yet U.S. immigration laws virtually guarantee that the hundreds of thousands of legal aliens who come to this country each year are for the most part unskilled and uneducated. ''The U.S., among industrial nations, is unique in having very few skill requirements in its immigration policy,'' said economist George Borjas of Harvard University's Kennedy School of Government.

Recent reports from Rand, the National Research Council and the bipartisan U.S. Commission on Immigration Reform have suggested that there's something wrong with this picture. Immigration policies, they conclude, don't match employers' needs going into the next century. And immigrants, who now account for more than a third of the country's population growth, are shaping the new work force. In fiscal '96, the U.S. admitted 916,000 legal immigrants. The great majority, 594,600, were admitted as relatives of citizens - 65% of the total. Only 13% were admitted on the basis of their skills.

The result: Immigrants are far less likely to be educated than the native- born. Nearly 40% of immigrants have less than a high school education - double the share for natives, according to '90 census figures. The gap widens when you look at grade school education. Some 23% of immigrants have less than nine years of education, compared with just 4% of native Americans.

Of course, there's still room for low-skilled workers in the new economy. But it's shrinking. Immigrants are having a harder time finding jobs. In '70, the employment rate for men who had been in the country less than five years was five percentage points less than native-born men. By '90, the gap had doubled to 10 points. ''We're admitting large numbers of low-skilled immigrants, and we're creating few, if any, new jobs for them,'' said Steven Camarota of the Washington- based Center for Immigration Studies, which favors greater immigration curbs. ''So in that sense, our immigration policy is incompatible with our needs.''

To be sure, even unskilled immigrants offer economic benefits by providing low-cost labor. And studies have found that employers see value in immigrants' attitudes and work habits. And not all immigrants lack education. At the other end of the spectrum, immigrants are a little more likely to have graduate degrees. Ten percent of recent immigrants have them, compared with 7% of natives. But the influx of the unskilled has disturbing results, say researchers.

Over their lifetimes in the U.S., unskilled immigrants are likely to use more in public services like education and welfare than they pay in taxes, says a '97 report of the National Research Council. Educated immigrants, on the other hand, are likely to put more in than they take out of public coffers, the study found. Also, because they're concentrated in a shrinking end of the labor market, unskilled immigrants put wage pressure on the lowest-wage workers already here, Borjas points out.

In a Brookings Institution study published last year, Borjas and economists Richard Freeman and Lawrence Katz found that ''immigration has had a marked impact on the economic status of the least skilled U.S. workers'' -that is, high school dropouts and those at the bottom 20% of the wage scale. ''To the extent that we care about income distribution, we are exacerbating the problem by letting in all these unskilled immigrants,'' Borjas said.

For these and other reasons, the Commission on Immigration Reform urged in its final report last year that U.S. immigration policy favor ''highly skilled immigrants, particularly those with advanced degrees,'' while cutting back on family-based admissions. The roots of the current system date to '65, when Congress enacted major changes in the immigration laws. The new rules allowed foreigners with close relatives in the U.S. to be admitted without any numerical limit. Lawmakers assumed that the family-based rules would be used mostly by European kin of white Americans. In fact, the vast majority of slots for legal immigration have gone to immigrants from Third World countries who had relatives in the U.S. - and, increasingly, to less-skilled immigrants.

How significant is the post-'65 immigration wave? It depends on which measures you view. As a share of total U.S. population, immigration per year is now far lower than it was during the immigration boom early in this century - 1.2% a year in 1900 through 1910, compared with 0.4% a year in the '90s. But in absolute numbers, immigration is at a record high, averaging more than 1 million a year so far this decade. That compares with about 900,000 at the early-century peak. What's more, immigration accounts for a greater share of population growth than it did during the earlier boom -37% of population growth in the '90s vs. 28% then. That's due in part to the native-born having fewer children.

Over the longer term - the next 50 years - immigration is expected to bring about nearly two- thirds of population growth, if current immigration levels continue, according to the National Research Council. That would bring the U.S. population in the year 2050 to 387 million. And there's a difference between the U.S. economy of '10 and that of '98: In the earlier period, ''We had a large and expanding industrial sector that could absorb unskilled labor,'' Camarota said.

A recent study of the California economy - long an immigration magnet, with 22% of its residents foreign-born - found that the prospects of upward mobility for today's unskilled immigrants are bleak. The Rand study looked at the 9 million net new jobs created in California from '60 to '90. It found that three-fourths of the new jobs were filled by workers with at least some college education, and almost all of the rest were filled by high school graduates. What's more, the share filled by workers with some college education has risen over the years, Rand found. By the '80s, some 96% of net new jobs were filled by such workers.

Meantime, the California economy is creating virtually zero net new jobs for high school dropouts, Rand also found. Like the other studies, the Rand report suggested U.S. immigration policy focus more on education and skills as a basis for admission and less on family ties. It also urged looking at English proficiency as a requirement for entry. ''In a society in which the demand for more educated workers is growing, admitting immigrants who are significantly less educated than the native born has the effect of putting them at a disadvantage that can take generations to make up,'' the report said. ------------------------------------------------------------------------

Mark Krikorian, executive director Center for Immigration Studies 1522 K St. N.W., Suite 820, Washington, DC 20005-1202 (202) 466-8185 (phone); (202) 466-8076 (fax) msk@cis.org http://www.cis.org/cis ------------------------------------------------------------------------