Immigrants, our country needs you
May 10, 2000
by Irwin Stelzer
THE SUNDAY TIMES April 30, 2000
Alan Greenspan says America's (so far) inflation-free prosperity is attributable in part to immigrants, who have filled about one-third of the new jobs created by the nation's booming economy. And America is not alone in benefiting from the fact that the populations of the world are on the move, propelled by oppression and poverty in some countries, and attracted by job opportunities in the growing economies of the industrialized world or, say some, by generous welfare benefits.
The German economy's ability to avoid complete stagflation in recent years can be traced in part to the foreign workers who have flooded in from Turkey. In Spain, Moroccans are the backbone of Andalucia's workforce. In Canada, Asian immigrants have turned Vancouver into
a thriving version of Hong Kong. In Britain the sounds at many construction sites are more like those at the Tower of Babel: without workers from all over continental Europe, much of London's building boom would grind to a halt.
Like capital, labor has become a mobile resource. That relieves some of the pressure on the job-short economies of Africa, East Europe, Asia and Hispanic America, and provides growing economies in the developed nations with much needed hotel workers, bed-pan emptiers, construction workers and computer programmers. This is good news for the world's economies.
But the internationalization of the world's labor markets is not without problems for the governments of the receiving countries. The desire of businesses to import workers, especially those who fill jobs at the low end of the labor market, runs into the perception by indigenous manual workers that foreigners are depressing their wages. At the same time, the middle classes fear that foreign workers bring with them crime, demands on the social services and a threat to the national identity of the countries in which they settle.
Governments are reacting by trying to attract only certain immigrants - those with the skills in demand in the high-technology economy of the 21st century.
America will now admit hundreds of thousands more computer programmers, largely from India and the Philippines. Germany has decided to compete for those workers and is issuing 20,000 work permits to computer specialists from India and East Europe. Ireland, with an economy that is overheating, is powerless to raise interest rates because it has ceded that power to the European Central Bank. So it is planning to augment its labor supply by holding job fairs in America, Canada and Europe in the hope of attracting 200,000 skilled workers. And Italy is allowing between 200,000 and 300,000 foreign workers to apply for "no questions asked" residence permits, even if they entered the country illegally. Economic necessity trumps xenophobia every time.
But the policies of many governments are confused by conflicting goals. America has a tradition of welcoming "your tired, your poor, your huddled masses yearning to breathe free". Britain is proud of its history of providing a safe haven for asylum seekers. Germany and other countries accepted thousands of refugees during the Balkan upheaval. That humanitarian approach to immigration is now coming unstuck.
America finds it difficult to separate Mexicans flooding across its borders to pick fruit and tend gardens from those who find its welfare system attractive. Britain is now engaged in the near-hopeless task of distinguishing between real and bogus asylum seekers. And several nations are trying to decide whether Serbia is now a safe enough place to permit them to force Albanians to return to their former homes.
The difficulty of gearing policy to the needs of the prospective immigrants is forcing governments to consider, instead, basing policy on the needs of the receiving nation. Canada has long operated such a policy, using a points system, whereby applicants for entry are graded according to their likely contribution to Canada's economy - what they can do for us, not what we can do for them, to turn John F Kennedy's phrase on its head.
Unfortunately economists rate well below social workers on the Canadian desirability scale - but all
systems have their flaws.
In America, where labor markets are so tight that even temporary workers are in short supply - or in many regions of the country simply unavailable - the need for computer programmers is so obvious and the jobs they are promised so high-paying, that Congress is opening the door to them. But that new generosity is not restricted to the high end of the labor market.
Traditionally, American unions have fought to keep out unskilled workers. That is changing, for two
First, the public-sector unions, the only part of the organized labor movement still growing, see these poor immigrants as prospective clients, in need of the social services that government workers spend their time doling out.
Equally important, trade unions are starting to see unskilled immigrants as a new source of members. The recently concluded strike in Los Angeles by the Service Employees International Union is a case in point.
Some 98% of the members of this union of 8,500 office cleaners are immigrants from Mexico and Central America. They brought to Los Angeles, a city long hostile to organized labor, a new willingness to unionize, march and demonstrate. They also pay their union dues, a fact that is not lost on America's union leaders, who are now in the process of re-examining the movement's traditional opposition to raising the level of immigration.
This suits America's employers just fine. It also suits Greenspan. The Fed chairman is about to raise interest rates, perhaps by twice the usual quarter of a point, in response to last week's figures showing that labor costs are on the rise. He would have had to move rates up sooner and faster if America's borders had been closed to foreign workers.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.