Immigration policy: Surprise answers from the Dallas Branch, Federal Reserve


Did you miss this interview last spring?

Pia Orrenius knows more about the economic effects of immigration on the modern U.S. than almost any other person alive — her job is to study immigration economics for the Dallas Branch of the Federal Reserve Bank.  As a dull economics researcher, she can be quite lively — in a bank of economics presentations, Orrenius will deliver the goods and keep you wide awake.  To deserved astonishment, Orrenius’s work is occasionally published by the right-wing generally isolationist American Enterprise Institute.

Pia Orrenius, Dallas Federal Reserve economist, Photo by David Woo, Dallas Morning News

Caption from the Dallas Morning News: Dallas Federal Reserve economist Pia Orrenius co-wrote a book on immigration reform with economist Madeline Zavodny. (Photo by David Woo/DMN)

Last spring the Dallas Morning News interviewed Dr. Orrenius, with a short version published in the Sunday “Viewpoints” section.  You could learn a lot from her.  In its entirety, for study purposes, the interview  from June 21, 2013 (links added):

Prepare to have your preconceived notions about immigration challenged. Pia Orrenius, 45, was born in Sweden and raised and educated in the U.S. She is a labor economist with the Dallas Federal Reserve Bank who has been studying the impact of immigration for two decades. Orrenius sees immigration through the prism of research, resulting in views that buck much of today’s accepted political dogma. She supports relaxing immigration restrictions for high-skilled workers and extending portable work visas to low-skilled workers, and warns of the unintended consequences of increased border enforcement.

It seems when we talk about immigration from a political perspective, much of the focus is on border enforcement. How important is border enforcement?

In terms of the immigration debate, border enforcement — while it’s very necessary and an important component of immigration policy and national security policy and defense policy — has unintended consequences. I know some people like to argue that border enforcement is not effective. It is, actually, effective. It’s just that you need a lot of it for it to be effective. And it’s very expensive. So you put all this costly border enforcement in place, and what happens? Fewer people get in. When fewer people get in, the wages of illegal immigrants go up. So if you’re lucky enough to get in, the reward is higher. That’s one unintended consequence.

I’ve heard you speak before about cyclical migration patterns and how, by making it so difficult to get in, people who once came alone now bring families. And families are what create the negative economic impact, because they use up education and health care dollars.

It reduces the circularity [of migration patterns] so people stay here longer. And they are also more likely to try to reunify with their families by bringing them here. So you actually have this unintended consequence of initially increasing the permanent population of illegal immigrants when you implement tough border enforcement. Whereas people before were more likely to leave their families in, say, Mexico and just migrate for work and then migrate home.

Last week, the Senate killed John Cornyn’s amendment to the immigration reform bill, which would have required raising the current 45 percent apprehension rate to 90 percent. What do you think a 90 percent rate would do?

If you put a border patrol agent every other meter on the border with Mexico, yes, you will not have any illegal immigration because they will be standing there in the way. But the question that’s not being asked is: At what price? At what cost to the taxpayers? And what else could you do with that money?

Then what do we do about illegal immigration?

Interior enforcement. Interior enforcement policies are, in so many ways, superior. They’re not nearly as expensive and are more efficient. If you have sensible interior enforcement policy, like universal E-Verify, then you’re really going to reduce the pressure on the border and save resources.

What’s the impact of illegal immigration on U.S. workers?

For native workers who compete closely with low-skilled immigrants, there is an adverse wage effect. But it’s quite small, smaller than you would think. And you don’t really find any adverse effects with high-skilled immigrants. Other forces drive wages to a much greater extent. Labor economists generally agree the most detrimental force on low-skilled wages, especially blue-collar men, is technology. And globalization — the offshoring of jobs that were traditionally high-paying. There are other things like the decline of unionization and in the real value of the minimum wage.

There have also been changes in the U.S.-born workforce — the aging that people talk a lot about and the increased education levels. The supply of U.S.-born workers who have less than a high school degree has been falling over time and is continuing to fall. These workers coming from Mexico and other countries are filling a niche.

Demographer Steve Murdoch has often said that, because of the graying of the U.S. workforce, we need a significant in-flow of immigration.

Does the economy need immigration? Do we need faster economic growth, do we need a more efficient, productive economy? Do we need it, or do we want it? That’s the distinction. If we want the economy to grow at potential, if we want to continue to rely on the services we’re accustomed to at a cost we’re accustomed to, if we want to continue living the way we have been living, yes, we need these workers. It’s just that the word need is tricky in this context.

A lot of the back story to what’s happening in Washington today has to do with what happened with the Immigration Reform and Control Act of 1986. There’s a feeling that we gave illegal immigrants a path to citizenship and now we have three or four times as many.

What happened with IRCA is that we legalized 2.7 million undocumented immigrants and then, 25 years later, we have 11 million more. But there are several reasons why what happened under IRCA is not going to happen again. First, look at the supply. Look at where people were coming from. They were overwhelmingly coming from Mexico. Well, that supply push has gone away. Mexican fertility has fallen from six to eight children per woman down to two to 21/2 per woman. (Don’t ask me how you can have half a child.)

Yeah, the poor mother. Actually, the figure you cited in your report is 2.2.

OK, 2.2. So you don’t have that demographic pressure coming from Mexico.

Another reason is technology. In the ’80s and ’90s, it was so hard to enforce the border because we didn’t have the technology to process these people. We couldn’t take their fingerprints and keep them in a database. It was a revolving door. Nowadays, we know exactly who they are, who’s getting caught two, three, four times. And we can implement interior enforcement as well. And pretty cheaply, like an E-Verify program. That was not possible 20 years ago. With technology, we will never go back to where we were before, where a half a million or a million undocumented immigrants were coming in, on net, in a given year. We’ll never go back to that.

This Q&A was conducted and condensed by editorial writer Ralph De La Cruz. His email address is rdelacruz@dallasnews.com. Pia Orrenius’ email address is pia.orrenius@dal.frb.org.

More: 

Federal Reserve Bank of Dallas, Pearl Street (...

Federal Reserve Bank of Dallas, Pearl Street (Uptown), Dallas, Texas; Wikipedia image. The Dallas FRB has a wonderful collection of regional art — all unfortunately out of public view.

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20 Responses to Immigration policy: Surprise answers from the Dallas Branch, Federal Reserve

  1. […] Immigration policy: Surprise answers from the Dallas Fed, at MFB […]

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  2. […] Immigration policy:  Surprise answers from the Dallas Federal Reserve, Millard Fillmore’s Bathtub […]

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  3. Black Flag® says:

    “I think a nation has a sovereign right to control immigration.”

    Why do you think a nation has the right to stop the free movement of men?

    Why do you not think such a nation shouldn’t do the same thing regarding other arbitrary lines, like county, State, city, etc?

    Like

  4. Ed Darrell says:

    I think a nation has a sovereign right to control immigration. I think the U.S. should relax a lot.

    Do you have a beef with immigration law? What? Why?

    I’m also a pragmatist. We’re in the process of working to reform our immigration laws. They are not going away. A philosophical debate on whether such laws are needed or desirable isn’t in the scope of meaningful discussion at the moment.

    Like

  5. Ed Darrell says:

    I think a nation has a sovereign right to control immigration. I think the U.S. should relax a lot.

    Do you have a beef with immigration law? What? Why?

    Like

  6. Black Flag® says:

    Do you support immigration law?

    Like

  7. Ed Darrell says:

    What makes you think I’m dictating anything? What position is it you’re arguing against, and why do you think that’s my position?

    What is your point?

    Like

  8. Black Flag® says:

    “Not having a work visa can be a stopper”

    Why do you believe you can dictate when and where a man may or may not work?

    You do not own the job, nor do you own the labor, so why do you interfere (or support the interference) of a transaction which you are not a party to?

    Like

  9. Ed Darrell says:

    Work visas allow people to go after jobs they want. Not having a work visa can be a stopper — but the visas enable people to get work.

    Again, I wonder if you’d care to explain what your point is. You keep asking questions to which there are good answers that don’t require your heightened invective, I think. Are you fishing for something to carp about, or do you have an issue?

    Confess: You didn’t bother to read the article, did you?

    Like

  10. Black Flag® says:

    Ed,
    Of course there is such a law~!
    What do you think “work visas” are, Ed!?

    Whereas your “poverty, geography..etc” are circumstance beyond control of men, immigration law is law BY men.

    There’s a difference, Ed – and that is the evil.

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  11. Ed Darrell says:

    Probably, in some cases. So does poverty. So does geography. So does education. So does birth status. So does country of origin. So does skin color. So does talent.

    Is there a law that says “men may not apply for work?” No.

    I have long argued for letting a market-based solution arise in issues of immigration at our southern border with Mexico: If U.S. companies need workers, and if immigrants can fill that need when domestic workers can’t, I don’t think we should use an authoritarian scheme to deprive workers of the chance to work and capitalists of the chance to increase wealth (with necessary protections for private rights of contract and other human rights).

    So I’m confused that you accuse me of saying the opposite of what I’ve said; would you explain your view, or do you even know what it is?

    Like

  12. Black Flag® says:

    Does immigration prevent men from seeking the jobs they want?
    (Yes)

    Like

  13. Ed Darrell says:

    How does immigration law prevent men from searching for jobs. Please explain, and just so we don’t misunderstand, point to what section of immigration law you’re talking about, and offer an example.

    Most immigration in the world today is in search of jobs.

    Like

  14. Black Flag® says:

    Immigration law – by its premise – prevents men from searching for jobs.

    Like

  15. Ed Darrell says:

    Yet, you wish to prohibit other men from such a search.

    I don’t know what has blown your claims so far off the rails. I have said nothing like that. I can’t figure out what the hell you think you’re talking about, but it’s unrelated to anything I’ve said here.

    Like

  16. Black Flag® says:

    But, Ed, who are you to judge what a job a man’s seeks?

    Have you not wandered the job market in search of “whatever suits me?” type of a job?

    Yet, you wish to prohibit other men from such a search.

    Hypocrite.

    Like

  17. Ed Darrell says:

    Read Orrenius’s interview, and take a look at the U.S. immigration program. A key part of it is the H1B visa program, which is designed to allow businesses to hire people from overseas. Green cards allow immigrants to work without citizenship.

    A key purpose of immigration is to match people with jobs. U.S. law doesn’t stop that. Dr. Orrenius says we could do it better, but we do it now.

    Like

  18. Black Flag® says:

    Immigration law prevents men from seeking a job

    Like

  19. Ed Darrell says:

    Where did you ever get the crazy idea that anyone thinks anyone should be stopped from seeking a job?

    Like

  20. Black Flag® says:

    Why do believe men should be stopped from seeking a job?

    Like

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