THE ECONOMIST: Time for Immigration Reform


Immigrants, both documented and undocumented, are a crucial source of labor, and it is well past time for immigration reform. Moreover, it needs to be framed in a way that addresses the reality of the situation rather than popular myths. In addition to the important human aspect of the issue, there is also a clear economic incentive. Change is coming for the U.S. workforce, with the retiring of baby boomers and slower population growth, and long-term prosperity hinges on the ability to tap into the global workforce.

Part of the current situation relates to visas, where there have been calls to reduce numbers and make them harder to obtain. In some cases, visas allow in workers who fill jobs where qualified employees are hard to come by. For example, the H-1B program allows U.S. companies to temporarily employ foreign workers in occupations requiring highly specialized knowledge and a bachelor’s degree or higher. Fields include sciences, engineering, and information technology. However, the total numbers allowed under the program are relatively small.

There are also specialized visas for students, temporary visitors, and many other categories of people visiting the US for an extended time, but not planning to remain here permanently. Reducing the availability of these visas curtails the potential for cultural exchange and improving relationships over time through greater understanding. While the argument has been made that people utilizing visas (such as J-1) are taking jobs away from Americans, the reality is that most of the individuals holding these types of visas are here to study, not to work.

According to the State Department, there were nearly 14,000 J-1 Visa participants in Texas last year. About 48 percent of those were either high school students, college students, interns, or trainees; another 20 percent are involved in summer work and travel programs; and hundreds more are just visiting. Those who are here to work (a few hundred physicians, au pairs, and camp counselors) are needed, and the numbers are again relatively small.

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A larger issue involves persons who would prefer permanent residence or even citizenship. The process can be difficult to navigate, requiring time, financial resources, and often legal assistance. For many persons who are undocumented, there is not a viable path to legal status. Immigration reform which provides a mechanism for undocumented immigrants to achieve legal status could provide substantial economic benefits ranging from a larger pool of potential workers to additional tax receipts.

The importance of the undocumented workforce illustrates the need for reform. In a recent study, we found that the number of undocumented workers in Texas is much larger than the total number of unemployed persons in the workforce. In other words, even if all currently unemployed persons filled jobs now held by undocumented workers (which is clearly impossible for numerous reasons), the state would be left with a glaring gap of hundreds of thousands of jobs if the undocumented workforce were no longer available.

We looked at the costs and benefits of the undocumented workforce (you can download the study at and the results were clear. The net direct economic benefits of undocumented workers in Texas were found to include $144.7 billion in output (gross product) each year as well as 1.2 million jobs. There are multiplier (ripple) effects on top of the direct benefits, and when those are considered, total net economic benefits rise to an estimated $290.3 billion in output (gross product) each year and 3.3 million jobs.

Certain industries are particularly in need of workers and rely on undocumented individuals, including the agriculture, hospitality, and construction sectors. The current situation, with the Gulf Coast recovering from the devastation of Hurricane Harvey, illustrates the importance of the immigrant workforce.

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Our analysis indicates that there are more than 250,000 undocumented construction workers in Texas, with roughly one-third of them in the Houston area. Many of these workers are highly skilled; they represent about 30% of the state’s construction labor force, with no replacements readily available. Given that construction crews travel to needed areas, Houston and the Gulf Coast could easily face a shortage of 100,000-150,000 or more workers for the efforts to rebuild homes, businesses, and infrastructure without this pool. As fears of deportation rise, it becomes increasingly difficult to access this critical resource. At a more macro level, the US economy is essentially at full employment and we have a record level of job openings that employers are trying to fill. American workers are not being displaced.

The Trump Administration’s recent decision to end Deferred Action for Childhood Arrivals (DACA), an immigration program allowing individuals who entered the United States as children to remain here for school or work, has added another layer of anxiety and uncertainty. Nearly 800,000 persons are enrolled in the program, and approximately 124,300 of these “Dreamers” live in Texas (with a high concentration in Houston and the Gulf Coast region).

The Administration allowed six months for Congressional action to provide a replacement for DACA, which was the result of a 2012 Presidential memorandum and was never intended to be a long-term solution. If no action is taken, this group will be subject to deportation when work visas in place on March 5, 2018 expire. It looks like there could be a deal in the works, and it would be a very good thing (although it only addresses part of the issue).

In recent years, the pace of immigration has slowed. While the Great Recession may have played a role, there are also factors such as post-9/11 regulations, efforts to secure borders, and improved conditions in other nations (such as Mexico) in relation to the United States. Add to that the anxiety associated with political rhetoric, and it’s not hard to see why immigration is slowing after a long period of increase.

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Without a steady supply of immigrant workers, however, the United States may face significant labor force challenges. Congressional action is needed to fix the system, particularly given the decision to end DACA. In addition to the important social considerations, immigration reform that both protects borders and the integrity of the system and confronts economic reality is essential to long-term economic prosperity.


M. Ray Perryman is President and Chief Executive Officer of The Perryman Group ( He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.