To Grow, The U.S. Economy Needs More Low-Skilled Immigrant Workers

To Grow, The U.S. Economy Needs More Low-Skilled Immigrant Workers

May 06, 2013
Originally published in Forbes

Recently introduced legislation to tackle immigration reform has elements that should satisfy both liberals and conservatives–namely, strong border security metrics for conservatives and a pathway to citizenship for those here illegally for liberals. But the bill also contains provisions that could end up being problematic for both sides, unless they agree to dramatically expand the proposed guest worker program.

The bill’s border security standards include mandatory implementation of E-Verify, the electronic employment verification system that checks employees’ information against government databases to see if they are authorized to work.

Unfortunately, because E-Verify results in some errors for legal employees, nearly 180,000 authorized workers would be forced to sort out erroneous rejections under a national mandate. Under this bill, employers must employ unconfirmed workers for up to six weeks while they have the opportunity to appeal – which, in effect, guarantees unauthorized workers employment.

Immigrants already engage in mostly short-term employment, which means many will come knowing that E-Verify will give them a job. But the real problem for employers is if they are forced to hire and fire 1 percent (at current E-Verify rejection rates) of all new employees, this measure will increase worker turnover expenses dramatically.

Replacing workers, even the low-skilled, can cost between $2,640 and $6,042, according to two recent studies by economist Heather Boushey and another by the Sasha Corp., a management consulting firm. At the current rejection rate, E-Verify will reject 650,000 unauthorized workers per year, costing businesses $3.9 billion in turnover costs.

Actual costs may be higher because these workers would leave unexpectedly without the traditional two-week notice. But there is a solution: If immigrants looking for short-term employment are able to apply for guest worker visas, there will be fewer undocumented immigrants going through the E-Verify process – and fewer worker turnover costs for employers.

The only time in the last 70 years when illegal immigration was almost eliminated was in the 1960s when Congress let in millions of guest workers. But the Senate proposal includes a small program that would permit only 20,000 guest workers next year and at most 200,000. This number is far too low. The Government Accountability Office found more than 500,000 people attempted to cross into the United States in 2011 alone.

The Senate plan would cover less than half of new illegal entrants in a given year, and that’s just entrants from a single country and with America in a down economy. Without a significantly expanded guest worker program, undocumented immigrants are going to cycle through the E-Verify system, and American businesses are going to bear the costs – something no conservative intended.

Liberal goals also are threatened by the low guest worker numbers. As written, the current bill opens a pathway to citizenship for newly legalized immigrants but only if border patrol is able to catch 90 percent of border crossers. The only realistic way such a high percentage can be maintained is if most of the current flows enter legally rather than illegally.

Moreover, an expanded guest worker program would benefit American workers too. In 2012, the Department of Agriculture looked at the economic impact of cutting low-skilled immigrants by 6 million and found it would reduce Americans’ wages by up to 0.6 percent of GDP – or about $90 billion.

Increasing the number of guest workers allowed into the country will boost the economy, protect American businesses and allow for a smooth pathway to citizenship for the new Americans that this bill welcomes. With these incentives, Congress has more than enough reasons to fix this bill before it is too late.