I have condensed the transcript of a March 3 2006 panel discussion called: Guestworker Programs: Do They Make Sense for America? The meeting was sponsored by the Center for Immigration Studies, and the transcript came from its website. All the panelists are vocal critics of the guestworker program. I have divided the posting into major segments: (1) 1986 IRCA failed in processing, enforcement, and numbers of evaders, (2) economics of farm labor and what happens when labor costs rise (we adjust) (3) net cost to taxpayer even after guestworker program of $10B, and (4) How to deal with current 12 million illegal immigrants (attrition).
The panelists were moderator, Mark Krikorian, Executive Director, Center for Immigration Studies; and panelists Bill King, Retired Border Patrol Agent, Mike Cutler, Fellow, Center for Immigration Studies, Philip Martin, Professor of Agricultural Economics, University of California, Davis, and Steven Camarota, Director of Research, Center for Immigration Studies
MR. KRIKORIAN: Will Rogers had a joke that he wasn't worried so much about what people didn't know as what people did know that just wasn't true, and unfortunately, that seems to be the guiding philosophy of the immigration debate in Washington. The problem is that there are a lot of basic things that people in this debate, especially in Congress, seem to know that just aren't true, and I wanted to put a panel together to address some of these issues, the administrative feasibility of whatever it is that congressmen are dreaming up.
We'll start with Bill King. He's a long-time Border Patrol agent, retired now, but many years in the Border Patrol. Among other things, he was head of the Border Patrol Academy, and most relevant for this panel, he actually administered the 1986 amnesty program for the western part of the country -- California and Arizona, neighboring states -- which was the most, sort of the busiest part of the amnesty program.
Then, next to him is Michael Cutler. He's a fellow here at CIS, a 30-year veteran of the Immigration Service, and he was not in the Border Patrol side but in the immigration enforcement side of what used to be the INS -- a special agent -- and has a done a lot of the narcotics-related, national security-related, fraud-related activities and has an enormous body of experience in this issue. He's also a frequent guest on TV and radio and testifies before Congress.
To my right is Philip Martin, professor of agriculture and resource economics at University of California, Davis, and really is the top person in the country -- probably in the world -- on the mechanics and the impacts of guestworker programs here or abroad, and in that capacity was one of the members of the Commission on Agricultural Workers that looked at some of these very issues that Congress is going to be debating.
And finally, Steven Camarota, the Director of Research at the Center for Immigration Studies, who is one of the top people on the effects of immigration on the United States -- the fiscal effects, the economic effects of immigration policy in the United States.
PART ONE: IRCA FAILED
Failure of IRCA: processors overwhelmed and no enforcement
As a planner, I was asked to provide my recollections of what it took to put the 1986 program on line, and to put it bluntly, I feel that the '86 amnesty was just one more bale of goods sold to the American public. It called for the amnesty of all these eligible aliens, but it also called for a guestworker -- I mean, an employer sanctions program -- and strong border enhancement, which never occurred. We took in 3.1 million applications for amnesty; 2.7 million of which were approved, but the improved border security enhancements never happened, nor did the interior enforcement. And 20 years later, they're still going.
But to fully implement the '86 amnesty program it was necessary for us since we had no outside help to locate, lease, furnish, and equip 115 temporary legalization offices across the nation, including another four regional processing facilities.
….To get to the McCain and Kennedy bill or the president's guestworker program, the logistics involved in implementing a program of that sort just stagger the imagination. What we went through with the '86 program would be minuscule in size compared to what we would have to prepare for with today's alien population. And the idea of soliciting guestworker applications from abroad, it doesn't make any sense.
Federal agencies don’t care and/or are overwhelmed.
I spent 30 years with the INS, enforcing a whole broad spectrum of laws that fall under the purview of what was the INS; now it's a part of ICE. The problem is that immigration enforcement has never been seriously attempted by our country.
We have a multiple of that number in terms of illegal aliens scattered across a third of the North American continent, and we have about 2,500 special agents who are supposed to enforce the laws. As of late, they're not even offering Spanish language training to the agents going through the academy. When I went, it was a requirement.
They are providing many -- apparently, according to some bills -- to do document training, to be able to have our inspectors know when someone offers them a phony document. That training isn't being offered to the special agents. Right now, almost 80 or 85 percent of the field offices are headed up legacy Customs bosses who have no experience with immigration law enforcement and no inclination to enforce the immigration laws.
MR. MARTIN: Well thank you very much. I want to make three points in the next few minutes. We're going to talk now not what has happened, we're going to talk about agriculture, so one specific sector.
PART TWO: FARM LABOR ECONOMICS: WHAT HAPPENS WHEN LABOR COSTS RISE
Farm labor economics
The first is that most farm work in the United States is done by U.S. citizens and their families; it's done by white U.S. citizens and their families. Most farm work is done by farmers and their families, and they happen to be white. So the first thing we'll do is explore who does the farm work.
Bracero program – when it stopped in 1964
The second is that the United States once had a bracero program. It ended in 1964 in the middle of the civil rights movement. The takeaway lesson from the ending of the program is that the people who were closest to the program were in the worst position to predict what actually happened. The prediction of farmers, of processors, and everyone else was that the industry most dependent on bracero workers processing tomatoes would either shrink in the United States and disappear or move to Mexico, whatever. We now produce five times more tomatoes at about half the cost than we did. It's not that they were -- you know, it's hard to predict the future, and the people making the predictions were wrong.
Removal of illegal immigrant for hire paid domestic labor – little consumer impact
The third is, the third point is, regardless of what we do in terms of an agricultural guestworker program, the average consumer won't notice it. I mean, the reason we have low food costs is because we have high incomes and very productive land, not because wages are low.
So we'll walk through those three things in a little more detail. But the three takeaway messages are: most farm work is done by white U.S. citizens; secondly, there are adjustments that are very hard to predict; and thirdly, whatever happens, it's not going to affect the average American. You just don't eat enough fresh fruits and vegetables, according to our government data.
Where migrants work within agriculture
So the first thing to keep in mind is agriculture is a small part of a big economy. Farm sales are a little over $200 billion a year. The U.S. GDP is about $12 trillion. So it's a little under 2 percent. Most of agriculture does not rely on hired workers. Most of agriculture is grains, cattle, livestock, et cetera. The place where hired farmer workers is concentrated are in fruits, vegetables, and greenhouse and nursery crops. They're about 20 percent of U.S. agricultural sales. And we know that dependence on hired workers varies by very well known parameters -- big employers producing fruits and vegetables and these greenhouse specialties primarily in Western states and Florida. What has changed is that those are the states that have traditionally hired immigrants. There are now -- there's been -- the last 15 years have seen a spread of immigrants. So among the hired farm workers who do about a third of U.S. farm work, about 80 percent are immigrants -- there are still U.S. citizens who do farm work for wages -- and of those immigrants, roughly half are considered unauthorized.
So the first takeaway point is that hired workers are important to agriculture, but most farm work is not done by hired farm workers. And since U.S. farmers tend to be -- the average age of U.S. farmers is in the low 60s, they tend to be white, they tend to be male, and those are the people who do most of the hours of farm work.
Now, what happens in agriculture and the reason immigration is so important is because we think that there are about 2.5 million people employed for wages on U.S. farms sometime during a typical year. So on the peak day in September, there might be about 1.5 million people employed. But of course some day in January there's only half a million people employed. And it's not always the same people. So when you add them all up, that's about 2.5 million individuals employed sometime during the year. But farm work is a job, not a career. And as best we know, about 10 percent of the people who are hired workers -- that is, you did at least one day of work for wages during the year -- about 10 percent leave every year. So if you have a stable industry -- and it's been pretty stable -- about 2.5 million people, and 10 percent leave, that means every year you want a new 250,000.
So that's the farm worker dilemma. The new entrants are born abroad. The farm workers of tomorrow are growing up today somewhere outside the United States. New entrants are almost exclusively foreign born. And the issue is, how are people going to get access to those foreign workers? That's, in a sense, what the guestworker debate is all about.
Enforcement during the 1942 – 1964 Bracero program worked
So one option, if course, is to reduce access. And that's the second point. That's what was done in 1964. And what happened during the so-called bracero program, from 1942 to '64, is that Mexican workers arrived, worked seasonally, and were to return.
And the thing to keep in mind is that there were almost 5 million admissions of Mexican workers over those 22 years. Each time -- if the same person came back twice -- that counts twice.
There were about 5-1/2 million apprehensions during that same 22- year period, and same persons apprehended twice count twice.
But if we just count numbers, there are actually more apprehensions than there were admissions of legal guestworkers. So one of things that people often overlook is that there is unauthorized migration alongside legal guestworkers.
But at the end of the program, toward the end of the program, the Department of Labor started enforcing the standards. The program shrank.
And the commodity that really was in the spotlight in the early 1960s was so-called processing tomatoes, not the tomatoes you buy at the store but the tomatoes you buy in bottles of ketchup and salsa and stuff. About 85 percent of the workers were braceros, and they picked the tomatoes in lugs that weighed roughly 60 pounds. And you put the lugs together. You took them to a factory, where they were steamed and then turned into ketchup and all the tomato products.
And of course the theory was that . . . ending the program would end the industry. And it was a fairly important industry in parts of California. And there was lots of testimony in Congress about why the program has to be continued, because there's no other way to get the work done.
How the tomato industry responded to rising labor costs
For better or worse, the program ended. And I think the important thing to take away is how fast the industry changed: in the early 1960s, 85 percent [were] braceros picking the tomatoes. By 1970, the industry had completely mechanized and roughly doubled in size. It's now since increased in size.
What happened? Well, they made a tomato that was not round but instead oblong. They made a machine to harvest and sort them. And the two together wound up lowering costs.
One small point to make is that government played an enormously important role, because [it regulated tightly the accuracy of tomato harvests]. That was a key role that government played in getting that industry to make a transition. There's probably room for government to play a role like that again as industries adjust.
Third and last point is, what would happen to the average consumer? If there were to be a change, there would not be an overnight of 'today workers, tomorrow no workers.' It's really a question of, in the case of agriculture, attrition out of the labor force. It's a process that, as I have suggested, is roughly 10 percent a year.
How wages increased, future impact on consumer
And the way that I used the example was, what happened after the bracero program ended? Well, for those of you who remember, there was a small union named the United Farm Workers Union. And in 1966, they got a 40 percent, one-year wage increase -- 40 percent in one year, in part because of a boycott but also in part because there were not braceros available. Suppose we were to have a 40-percent wage increase again. What would happen? Well, if those wages were totally passed through -- that is, if there were no labor-saving changes -- then that roughly 6-cent- cost of a pound of apples would rise to about 7-1/2 cents. And for better or worse, you really don't buy that many apples. And for the average family, you would spend about $10 a year more on all fresh fruits and vegetables.
So the bottom line is, if history were to repeat itself, the increase in the cost of fresh fruits and vegetables for an average family would be about $10 a year, or about the price of a movie ticket.
Raisin industry very manual
But at the low end of the labor market, if I am, let's say, a raisin farmer in Fresno, the largest labor-intensive activity in North America -- 50,000 people for six weeks. If I say that there are not people willing to do -- picking raisins and laying them in the sun to dry, picking grapes and laying them into the sun to dry into raisins, that's right; there aren't. But this country had 90 percent of its people in agriculture 200 years ago at the first census. We've now got well under 2 percent. The way in which we make changes when there is a labor shortage or a labor need is the flexibility, on the demand side of the market, not the supply side. In other words, you know, when wages evolve, attitudes change, we figure out some way to get the work done in a different manner. Then employer groups will say, "Well, tell me exactly how that's going to happen." Well, some of the employers won't survive the adjustment. I mean, I can tell you that there are raisin growers who will not survive in an adjustment to higher wages. But it's -- we know the general direction of change. The flexibility is on the demand side of the market, not the supply side.
Case study of gas stations
And I guess, let me just say, the way I try to answer this question is when I was a teenager, one of the common jobs that teenage boys had was to work at a gas station, pumping the gas and cleaning the windshields. Now, suppose you were the head of the Gas Station Operators of America back in 1970, and you said there's a baby bust generation coming. Who's going to run out there and fill the cars with gas? You would have predicted an enormous labor shortage because there were fewer teenage kids coming along.
Well, we all know what's happened. There has been . . . we have closed about a third of all gas stations in the U.S. We have far fewer than we used to have, and people do their own [gas pumping]. It's not easy to point to the trajectory of change for every particular industry, but I think the take-away message is: You know there is going to be a change, and if wages rise, the general direction of change is demand shrinks, supply increases.
PART THREE: NET COST TO TAXPAYERS: $10B BEFORE AND AFTER A GUESTWORKER PROGRAM
MR. CAMAROTA: Thank you, Mark.
Net cost to taxpayers = $10B – mainly due to low income status of most illegal families
I would like to shift gears and now talk about another issue that obviously comes up a lot in this debate in various ways, the fiscal cost; that is, the cost to taxpayers. I've done a fair amount of research on that, and let me tell you what I and other people have found in that area.
Now based on U.S. Census Bureau data, we estimate, just looking at the federal government, that illegal immigrant households use about $10 billion more in services than they pay in taxes each year, though that's because they're paying about 16 billion (dollars) in taxes -- about half of illegals are paid on the books -- and we estimate 26 billion (dollars) in costs, roughly a $10 billion net deficit, for just the federal government. The costs at the state and local level, which we have not estimated, and it's much tougher to get estimates for, would likely be bigger.
Now among the largest costs, for those who are interested, are things like Medicaid, about 2.5 billion (dollars); treatment for the uninsured, 2.2 billion (dollars); food assistance programs -- food assistance welfare programs tend to be large, about 1.9 billion (dollars); the federal prison system is large . . . very tiny expenditures on cash assistance welfare programs. Illegals don't get what we now call TANF, what we used to call AFDC. There are a few who seem to show up in the data.
Food stamps -- not so much. California seems to have a problem with fraud in its food stamps program, but other than California, not too much in food stamps. A lot in a program called WIC -- Women, Infants and Children.
A lot in free school lunches, that sort of thing.
Now I think maybe perhaps most important for this discussion, we found that if illegal aliens were legalized and began to pay taxes and use services like legal immigrants with the same education levels, the estimated annual fiscal cost would roughly triple, to about $29 billion a year.
Now why is this the case? Why do the costs go up if you legalize illegal aliens?
Heavy use of government programs
Well, all researchers agree, including the Urban Institute and the Pew Hispanic Center and so forth, that illegal aliens are overwhelmingly unskilled. I estimate that about 60 percent-plus of illegals haven't completed high school. Another 20 percent have only a high school degree, or more like 25 percent. So you're looking at about 80, 85 percent have no education beyond high school.
So the primary reason they create a fiscal deficit is their low levels of education and resulting low tax payments in the modern American economy. And it's not their legal status or an unwillingness to work. Most illegal aliens work.
Giving illegal aliens legal status increases costs because illegals would still be largely unskilled, and thus their tax payments would continue to be very modest. But once legalized, they would be able to use government services. We've estimated that if we legalized illegal aliens, tax revenue per household would rise about 77 percent, partly because the other half of illegals would now be paid on the books and partly because we expect income to go up significantly for the illegals.
But unfortunately, we also estimate, given what legal unskilled immigrants -- or legal immigrants, I should say, with the same education levels -- we estimate that costs would rise 118 percent. So in other words, if we legalize them, tax revenue goes up 77 percent, but unfortunately, costs goe up 118 percent.
Now costs rise avoidably with amnesty, again because of the education level of the immigrants. And legal status would now allow them to use a lot of programs. And again, it's not cash welfare.
Earned Income Tax Credit will be available
To understand why the costs rise, it's helpful to consider a program like the Earned Income Tax Credit. Based on some internal numbers the government has done and our estimates from the Census data, this program, the Earned Income Tax Credit -- which pays cash assistance to low-income workers, [and] you have to work to get it -- illegals right now account for just 1.5 percent of the costs of that program.
But if we legalize them, and they began to use the program like legal immigrants with the same level of education, we estimate that the costs would roughly go up ten-old, because now they would be able to use it. You can' get it if you have a bogus Social Security number.
Now remember, this dramatic rise in cost is not due to laziness on the part of immigrants, legal immigrants or illegal aliens. In fact, only those who work get the credit. The dramatic rise in costs simply reflects the low educational attainment of illegals --60 percent-plus, no high school; another 25 percent, high school only.
To the extent that policymakers have considered the fiscal costs of illegal immigration, they have generally tried to reduce the costs while allowing illegal aliens to stay in some way or another. But this strategy has not been effective, because the average illegal alien already receives less than half as much in services from the federal government as do other tax . . . other households anyway.
Moreover, many of the costs associated with illegal immigration -- and this would be true under a guestworker program or any other legalization [program] -- are programs that they get on behalf of their U.S.- born children. And those children have welfare and other eligibility, like any other American citizen. So efforts to bar legal immigrants or illegal aliens from welfare and other means-tested programs are largely ineffective, because the child gets the benefit.
The cash assistance programs are small anyway. It's really things more like the food assistance program, WIC, food stamps, free school lunch, and the medical assistance programs, Medicaid -- those programs dwarf the cash assistance programs.
So we really have two options. Either we begin to enforce the law and significantly reduce the number of illegal aliens in the country, or we accept the costs they create. There's no middle ground here.
Now of course employers don't see those costs because they're diffuse. They're borne by everyone. But nonetheless, the costs are very real.
Net cost by level of education – not HS, HS and college
Now if you're wondering about our estimates, let me talk to you about the National Research Council. They did estimates in '97, looking at the fiscal impacts of immigrants overall. They found that an immigrant, in the course of his lifetime, who lacks a high school education, will use $89,000 more in services than he pays in taxes. That's an immigrant without a high school education. And remember, 60 percent of the illegals fall in that category.
An immigrant with only a high education uses $31,000 more in the course of his lifetime than he pays in services.
And these costs actually do not include the children. They were just trying to look at the original immigrant. Now I should point out that the immigrant who has a college education -- he pays more than $100,000 -- pays 100,000 (dollars) more in taxes than he used in services during the course of his lifetime. The problem here is educational attainment.
Interestingly, just to give you another example, the Inspector General has actually done a detailed analysis of tax returns filed by illegal aliens. They give out about $10 billion in returns a year to people they're 99 percent sure are illegal aliens. It turns out practically none of them have any tax liability. Again, that situation arises because given the education level of illegal immigrants, they're just not going to pay any taxes.
to anybody. But if anybody is interested, I'd love if you have a question, if you could identify yourself, please.
Q. [what about impact of labor shortages in other industries?]
MR. MARTIN: That's a good question. I mean, you know, if we have a market economy, the way we bring supply and demand into balance is by having prices adjust. So if the weather destroys the peaches, there are fewer peaches, the price of peaches go up, and some people switch to apples and low and behold the peach market clears.
The labor market also works, but the labor market's a little different. I mean, there can be lags. You have to train people. It's possible that people's social mores change, and they find some jobs less attractive than others. If we're thinking of -- so at the high end of the labor market, the argument always is if you have a sudden ramp up in demand, it can take time to train more nurses or IT or whatever, and that's a separate kind of issue about how you do that.
Unemployment among HS dropouts
Or maybe more specifically, unemployment among high school dropouts is like 14 percent in the United States. There are 800,000 people, in the Census data collected in 2005, who report that they're adults 18 to 64. They have previously worked in construction, and now they're unemployed. Over that same time period, about 600,000 immigrants came in. Now, there's about 400,000 people who say they're in the building, cleaning, and maintenance trades who are adult natives who are unemployed. They say they don't have a job, they're looking for a job, and the last thing that they used to do was building and cleaning, and we've taken in about 400,000 immigrants.
It would be a mistake to assume that there is a one-for-one trade between every job taken by an immigrant and every job lost by a native. countries are also doing the same thing. I know that the Indian government is complaining that there aren't enough H-1B visas being made available for people to come to our country in the high tech fields.
PART FOUR; HOW TO DEAL WITH THOSE HERE NOW: ATTRITION
Q: [How do you deal with the illegal immigrants here now?]
MR. KRIKORIAN: Let me at least start that.
We only deported last year 40,000 people from within the United States. That's it. Or, since that can't work, we have to legalize them all, that somehow it's presented as though those are the only choices. In fact, neither one of those can work.
And the only thing that can work is a middle way, which is attrition -- enforcement of the immigration law so that we have an annual decrease in the total illegal population instead of a continual, annual increase; the point of which is after 8 or 10 years, you revisit the situation and then decide: are there some long-term illegals remaining that you might want to amnesty, and you do it honestly and you force them to allocute publicly to their crimes and then forgive them, or do you just live with the remaining population of illegals as a nuisance?
But the point is you can't have that debate until you've reasserted control over the problem.
There are all kinds of specific pieces of it, and I think we'd be happy to talk about it afterwards, but that's kind of the . . . and I'd have to say, that's as far as I can tell, the implicit strategy behind the House legislation as well.
Demographics of foreign workers coming and going now: will assist attrition
MR. CAMAROTA: Oh, just so you know, here's what the demographers think, people like Bob Warren at the INS and so forth. About 150,000 illegal aliens, we think, go home on their own each year. So if you made it hard to get a job, if you made it hard to open a bank account, if you cut them off from more of the normal things of life and it made their life more difficult, you might get that number up to 2(00,000) or 300,000 a year.
We also give out green cards to about 150(,000) to 200,000 people a year who are here illegally. They marry an American, they win the lottery, their name comes up in the queue. So right now we have, if you will -- and about 40,000 get deported, if you want to know, 30(,000) to 40,000 get deported; and about 10(,000) to 20,000 die each year. It's a very large population. So you might have as many as a half a million people leaving the illegal population right now.
If you could get that up to a million or a million-and-a-half a year and, as you say, stop future illegal immigration, over the course of five or eight years you could get rid of most of the illegals. And then at that point you decide what to do with the rest, which is a very difficult decision, but at least we should be honest. We shouldn't say, well, we're going to turn them into guestworkers, even though we know none of them are going to go home. We should tell the American people, look, it's not temporary; we're giving them all green cards, and that's that -- if that's the debate we want to have.
But I do think we could probably get rid of two-thirds, three-fourths of illegals through enforcement, but the rest -- and that's not a trivial number -- is an issue that would be with us and we'd have to decide. And I think at that point we could consider giving them green cards. That's not an unreasonable -- it's not off the table, as far as I'm concerned. But it's certainly off the table to give them green cards or legal status out of the gate.