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  • Article: How Immigration Restrictions Are like Occupational Licensing. By David Bier

    How Immigration Restrictions Are like Occupational Licensing


    Conservatives across the country, from—Michigan to Arizona—are challenging burdensome occupational licenses. “Insiders use the false cover of consumer protection to get laws enacted that keep out new competitors,” Minnesota Republican state Senator Chris Gerlach recently said, explaining his reform bill.

    Visa restrictions are an obvious place to start deregulating labor markets.While a welcome development, conservatives should extend this logic to an even more pervasive form of anti-consumer protectionism: work visa restrictions.

    Work visas are licenses for foreign workers and entrepreneurs to practice their professions in the United States. And just as other occupational licenses artificially inflate prices for consumers, arbitrary visa quotas prevent consumers from accessing services that immigrants would provide. It’s protectionism, and it harms Americans every bit as much as unnecessary occupational licensing.

    Barriers to entry for foreign workers hurt American consumers and businesses.Yet even while the new Republican Party platform calls “excessive licensing requirements” a “structural impediment which progressives throw in the path of poor people,” it claims that it is “indefensible” that the U.S. government allows a million immigrants to live and work in the United States each year.

    The two positions are at odds. Occupational licenses limit the choices of American consumers in a few industries, while visa restrictions do so in every industry.

    Indeed, the research on this point is clear: immigration generally lowers prices, especially for labor-intensive goods. National Research Council’s canonical report found that “the benefits of immigration from lower prices are spread quite uniformly across most types of domestic consumers.”

    Allow lowLikewise, economist Patricia Cortes’s acclaimed 2008 study found that for every 10 percent increase in low-skilled immigrants, the price of immigrant-intensive services fell by 2.1 percent.

    High labor costs reduce consumer choice.Economists Robert Lipsey and Birgitta Swedenborg quantified how labor restrictions harm consumers in the end. “Countries in which prices of labor-intensive services are very high, such as the Nordic countries, consume much less of them,” they wrote in a 2007 paper, meaning that people in those places simply cannot access the same range of products and services that Americans can, thanks in large part to immigration.

    Visa restrictions make people in those countries poorer.

    Naturally, opponents of immigration still claim that immigration restrictions are good for Americans because it protects their jobs from competition. And it’s true that new work visas will result in more competition for current U.S. residents—just as fewer occupational licensing laws will result in more competition for those people who currently have the licenses.

    Monopolies are only good for the monopolists.But that doesn’t mean Americans will be worse off. Here’s why: it’s certainly nice to have a monopoly, but it’s only nice so long as you are the only one with one. If your industry can inflate its prices, that’s great for you. But if every industry can, then everything you buy becomes more expensive, and you become poorer no matter what privileges your industry happens to receive.

    That’s the situation in immigration. Every industry is “protected” more or less equally, which results in a general increase in prices for everyone. We all get poorer—even the cronies who asked for these regulations.

    That’s why economists, even noted immigration skeptic and Harvard economist George Borjas, agree that immigration makes natives better off. When immigrants—or other new workers, ideas, or technologies—enter a market and lower prices, consumers (i.e. all of us) can buy more or different products and services, creating new and better opportunities for employment in other industries. This is how economic growth happens.

    For many immigrants, there is no test to take and no line to stand in at all.Conservatives point to absurd examples of licensing laws—interior decorating, hair braiding, and cosmetology licenses that require years of training—as a reason to oppose licensing requirements. Yet in these cases, there is at least some process. For many immigrants, there is none at all.

    For lower-skilled foreign workers, for example, the U.S. government issues not a single visa for non-seasonal jobs. Even foreign workers already here on work visas, such as H-1B workers, can face absurd restrictions on work. They cannot, for example, start or own a business while they wait in line for a permanent visa.  

    America’s immigration laws are a web of protectionist regulations worse than any licensing regime. Even a moderate reform of these laws to allow more foreign workers and entrepreneurs to enter and contribute to the U.S. economy would greatly benefit Americans and immigrants alike.

    This post appeared on The Foundation for Economic Education. Reprinted with permission.

    About The Author

    David Bier David Bier is an immigration policy analyst at the Niskanen Center. He is an expert on visa reform, border security, and interior enforcement. From 2013 to 2015, he drafted immigration legislation as senior policy advisor for Congressman Raúl Labrador, a member of the House Judiciary Committee’s Subcommittee on Immigration and Border Security. Previously, Mr. Bier was an immigration policy analyst at the Competitive Enterprise Institute.

    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

    Comments 2 Comments
    1. Nolan Rappaport's Avatar
      Nolan Rappaport -
      David, what about the American workers who lose their jobs to foreign workers? My personal position is that American employers should have all of the foreign workers they need to take jobs that can't be filled by American workers, but that we should be doing more to train and educate American workers to fill the jobs foreign workers are needed to fill.

      Also, how many foreign workers do you think we should have. According to a May 28,2015, report from the Labor Department's Bureau of Statistics --

      Foreign-born workers represented 16.1 percent of the U.S. labor force in 2012
      In 2012, there were 25 million foreign-born persons age 16 years and older in the U.S. labor force, representing 16.1 percent of the total. About 130 million workers were native born, making up the remaining 83.9 percent of the total U.S. labor force. About 38 percent (9.5 million workers) of the foreign born were from Mexico and Central America, and 28 percent (7 million workers) were from Asia (including the Middle East). The share of foreign–born workers from Europe and the Caribbean was about 10 percent for each.

      My guess is that this number has increased since 2012.
    1. Nolan Rappaport's Avatar
      Nolan Rappaport -
      David, do you have statistics on foreign workers who are here on temporary visas? That would be more meaningful than the Labor Department statistic I used in my previous comment. I don't know how many of the "foreign" workers in that survey are citizens.
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