Jul 2, 2018

Dan Griswold on the Benefits and Myths of Immigration

Immigration is crucial for maintaining demographic stability and boosting America’s economic growth.
David Beckworth Senior Research Fellow , Daniel Griswold Senior Affiliated Scholar

Hosted by David Beckworth of the Mercatus Center, Macro Musings is a new podcast which pulls back the curtain on the important macroeconomic issues of the past, present, and future.

Dan Griswold is a research fellow and co-director for the Program on the American Economy and Globalization at the Mercatus Center. He is a nationally recognized expert on trade and immigration. He joins the Macro Musings podcast to discuss his policy brief, “The Benefits of Immigration: Addressing the Key Myths.”

Read the full episode transcript:

Note: While transcripts are lightly edited, they are not rigorously proofed for accuracy. If you notice an error, please reach out to macromusings@mercatus.gmu.edu

David Beckworth: Dan, welcome back to the show.

Dan Griswold:   David, glad to be with you.

Beckworth: Oh, it's great. So our previous podcast was on trade. That's one of your areas of expertise. And now we're going to talk about your other area of expertise, immigration.

Griswold: Those two quiet issues of trade and immigration nobody ever talks about them.

Beckworth: I'll tell you what, as we said on the last show, President Trump has really put you to work, so you're a very busy person. So we're thankful that you've taken out time of your busy schedule to come and join us on the show. It's great to have a colleague like Dan. Dan always makes me feel smarter after I'm around him when I'm up here visiting at the Mercatus Center.

Beckworth: So glad to have you back on the show. Now you have this recent policy brief, just came out. We'll have it linked to on the website and at SoundCloud, the benefits of immigration and addressing key myths. Nice short read, and I encourage the listeners to take a look at it. But we'll work through this as a way to motivate our conversation on immigration. And you do go over some key myths, but you also outline some facts before you get to the myths. I want to talk about those facts with you and have you explain them to us. And the first fact that you bring up about immigrants is that they boost economic growth and actually raise the productivity level of American workers. So tell us about that point.

Griswold: Yes, and President Trump rightly has made GDP growth an issue. We've been locked in a 2% funk for most of the post-recession economy. President Trump wants to raise that to 3% or higher, which I think is doable. I think immigration needs to be part of that. When you just think of the basic definition of economic growth, it's the size of the workforce, the hours worked times the productivity. And immigration helps you in both cases. When you have more workers you could call that extensive growth, right? You're increasing L, the size of the labor supply. But immigrants also increase productivity.

Griswold: They do that by, in several different ways, if you're a high skilled immigrant and you come into the country and you start working for a high tech firm, you're of course bringing innovation. Immigrants, I cite this research, immigrants are actually about twice as likely as the general population to file patents. They are 16% of the labor force and they file one third of the patents. Immigrants make up one third of the PhD workers in the STEM subjects, science, technology, engineering, mathematics.

Griswold: So in that sense, they increase our productivity by helping to create new products and innovation. They're actually more likely to start businesses, whether it's a corner restaurant in a strip mall or a high tech startup company. So if you look at the Fortune 500 companies, 40% of them had an immigrant as a founder or co-founder. If you look at the so-called unicorns, these are the still privately held startup companies that are worth $1 billion or more, there's about 88 of them in the country, half of them had immigrant founders or co-founders.

Griswold: And then of course, immigrants make all of us more productive because, and here's a key thing I've learned about immigration. Immigrants tend to not compete head-to-head with the vast majority of Americans, they complement American workers. They're overrepresented on the high-end, those PhD scientists, and on the low-end, the lower skilled immigrants. Whereas, the large majority of the American workforce is in the middle.

Beckworth: Interesting.

Griswold: And in complementing Americans, they allow us to do other things. Think of an immigrant, a low skilled immigrant, who offers services in terms of childcare. That might allow a native-born American to work more hours in the office at what they've specialize in. One other way, an interesting way that immigrants affect our productivity, they tend to give Americans an incentive to upgrade our skills. So even if you're a lower skilled American, let's say you've got a high school diploma and there's low skilled immigrants coming into your community, and studies have documented this, that if you face that potential competition from lower skilled immigrants, you're more likely to stay in school. High school graduation rates go up.

Griswold: You're more likely to get a job where your language skills matter. So instead of being just another worker, you might be more likely to get a management position because of your language skills. That's an advantage Americans have over most immigrants is language skills. So you put all these together, studies show that immigrants boost the wages or at least have a minimum no effect on the wages of the vast majority of Americans. 90 plus percent of Americans, immigration either raises your wages or has no impact.

Beckworth: Okay. I couldn't help but think of Silicon Valley when you were mentioning the unicorns and the number of foreigners who head many of these organizations. A lot of people like Google who are born elsewhere who come in, Tesla, I mean there's a lot of foreigners who are driving innovation in the country. And I'd just make a general observation. If you are willing to take the risk to get into the US whether it's high-end or low-end, I mean think of the Mexicans crossing the desert willing to die to get here, that's the type of people we want in this country. We want risk-takers. And that's the history of the US, people who were willing to take risk, who weren't comfortable staying back in Europe. We want the risk loving entrepreneurial types to be here in the first place for dynamism, for job growth. So we should be welcoming them with open arms.

Griswold: Yeah. Just to rephrase that quickly. Immigrants aren't a random sample of the source country, they're self-selected. The very fact of picking up from the country of your birth and coming to another country and learning the language, learning the culture, that is a character trait in and of itself. It's what we used to call gumption, right? Get up and go. And immigrants tend to have that. That's why they're more likely to start businesses. It's almost a cliche, but it's true, the hardworking immigrants. The immigrants we know, think of the immigrants you know in your neighborhood and your community, almost invariably we admire them for those very traits.

Beckworth: Right. It's also good to get this inflow of dynamism, of creativity, because it is easy to become complacent if you've been here a long time. So, if my children are richer than I am and their children are richer than them, you might lose some of that flare, some of that drive. But if you've just got here, you're ready to go knock them out, right?

Griswold: Yeah. That's right. Immigrants, I think remind us what is special about America. Some ways they're even in a better position than native-born Americans to appreciate the opportunity, the dynamism, offered here in the United States. Some ways that can be uncomfortable, they're hustling, they're starting businesses-

Griswold: Yes, but it is good for America and the vast majority of Americans for us to be open to immigration. It's not open borders, we need to be careful who we let in. We need to check criminal and terrorist connections and all that, we need to make sure in law that immigrants when they come here work and don't go on welfare and we have laws that make it very difficult for immigrants to go on welfare generally, and I think that's the right approach.

Beckworth: Yeah. When I think of people who are immigrants in my community or in my life, I mean I mentioned people I admire from a distance, people in Silicon Valley, but I think if people like my Uber drivers who I see all the time here in D.C, the story after story of these incredible people who are working hard, long hours, I met one individual from India, he's been here five years and his family's back in India and he said he's going to work five more years, and he's paying for a life over there they couldn't otherwise afford. And that just blew my mind. I couldn't fathom being away that long from your family, from the place you love. And they did that.

Beckworth: And then you think of other places you go out to eat, some of these ethnic restaurants, these people are working long hours, and you look at yourself you're like, "Man, I don't know if I'd put that much time in my work days, these folks are." So it is a good reminder and it's also... it's again, we need that fresh inflow of hard work, dynamism, and living the American dream.

Griswold: Yes, that's exactly right. And also one of the key benefits of immigration isn't just the first-generation immigrants which are the ones that literally came over here, were born in another country, but the second-generation. Studies show that the children of immigrants do quite well in America. They do much better than their parents. They often do better than the average American. Why? Because their parents transmit to them those values of hard work initiative. Their parents want their kids to succeed here in American and don't take succeeding in America for granted. They know it takes hard work.

Griswold: And so the studies show that the second-generation immigrants do very well in terms of education, in terms of income. Of course we need them, we'll get to demographics later, but we need immigrants.

Beckworth: Yeah. This reminds me of the debate between the Asian tiger mom and Brian Kaplan who called himself the dolphin dad. Her name escapes me, but she's I think a law professor at Yale. And she described in her book how-

Griswold: Amy Chua.

Beckworth: Yes, thank you. Thank you. She described in her book how she really works her children hard at the piano for hours or whatever they're doing. It's incredible work ethic. Incredible drive. And Brian Kaplan's like, "Oh, I'm the dolphin dad. I'm kind of chill." And maybe that does work in some ways. Maybe that's good for creativity, thinking outside the box, but we also need some of that drive in our lives as well.

Griswold: I'm forgetting the exact award program. It used to be the Westinghouse Awards where they give to young people typically say college students, some people call them the Young Person's Nobel Prizes. A hugely disproportionate number of them are children of immigrants. You can look it up. But just in any way you measure it, the children of immigrants are overachievers in America. And of course, we all benefit from that.

Beckworth: That's right. Well, let's touch on demographics. You just mentioned that, but why are immigrants important to the US in terms of demographics?

Griswold: The American, native-born American workforce, is simply not replicating itself. There was a story in the press just in the last few days about how the birth rate in the United States has fallen to a record low. It's typically measured by the number of births per woman in her lifetime. You need 2.1 just to keep population at its current level over the long-term. We fall into 1.8 and there's no sign that that's going to pick up.

Griswold: In other countries like Japan, it's down to 1.2 or something like that. And over time there's a certain demographic momentum where you can keep growing even with that, but over time, and it's already happening. One figure I cite from the Pew Research Center is that if you look at native-born Americans with native-born parents, that group of Americans is actually going to shrink by 8 million, over the next 20 years. So we need immigrants and their children.

Griswold: The labor force growth, it was over 1% in the 1990s, it's now fallen to one half of 1%. The growth of our labor force. Without immigrants that would soon be shrinking. You look at Japan, other Western countries, their labor forces are already shrinking. That makes it harder to grow your economy when you have a shrinking labor force, it means your kind of weight and influence in the world is shrinking. It creates all sorts of financial headaches for the government in terms of funding, retirement programs, the so-called old age dependency ratio. That's the ratio of retired people to working age people. That's going to basically double in this country over the next 30 or 40 years. Immigrants help to at least slow that.

Griswold: Think of all your baby boomer listeners, who's going to pay for the baby boomer's social security, if you've got a shrinking labor force of native-born workers? The answer is, immigrants and their children.

Beckworth: Now, Dan and I had a conversation before the show and we were joking around that we're both economic patriots.

Griswold: Yes.

Beckworth: We both have three children-

Griswold: We've done our part.

Beckworth: Yes. I'm above the 2.1 and doing my best to keep the US labor force active and healthy, but it's not enough, it's what you're telling us that the folks who live here aren't producing enough babies.

Griswold: And it doesn't have to be massive immigration, but just current levels or I've proposed increasing legal immigration by 30%. That would just add a 10th of a percentage point onto the growth rate of the population. Our growth rate is down into like 0.7% heading down towards zero. Immigration is just slowing that demographic decline here in the United States.

Beckworth: Now, all those things that you've said about funding government programs to economic growth, one concrete way that I thought about it when I interviewed Noah Smith recently, he also talked about immigration. It kind of hit me when he framed it this way, is that you literally need things produced. You need food, you need clothing, you need homes. And so if you're a retiree, it's not just a question of, will the government be able to pay social security? But who actually is going to produce these things?

Beckworth: If everyone, do a thought experiment, if everyone is literally 80-years-old, who is going to go out and build the road, the new homes, produce food, clothing? You literally need a young labor force who can produce stuff. Now the alternative would be to develop robots or technology that can substitute for labor, but you still in the realistic world, need people who can produce. No matter how much you save for retirement, it's simply going to be worthless if there's not a working labor force that can produce things for you.

Griswold: That's absolutely correct. And not just goods, but services. Who's going to staff the nursing homes and be the nurses and the doctors? And of course, immigrants are already a significant share of our medical care employment, doctors, nurses, that sort of thing. And it's all to the benefit of the United States. And again, you don't need a dramatic increase, but we should see immigration as one of America's economic aces in the hole, that Japan doesn't have, Western Europe doesn't have.

Griswold: They're going to be facing very large demographic and financial issues that are somewhat unprecedented in human history, aren't they? In the sense that we've always taken for granted a growing population. China, China is facing that demographic issue too. And so it isn't just purely economics, and I think if you want to put America first, let in more immigrants and that will help maintain the greatness of this country both domestically and in our influence in the world.

Beckworth: There was a recent New York Times piece and the title was, As Population Growth Slows, Populism Surges. And it makes the case that one of the consequences of declining population growth, the US and around the world, is it creates problems. Things begin to fester. It mentions, for a lot of people they don't see this because they live in a city, high density, things are a buzz. But if you're in the rural areas of these parts of the world where growth is slowing down, you feel the pain, and US is a good example. But they make the case that this is a global phenomenon. And as you mentioned, growth rates around the world are falling and it's creating problem and leads to populist solutions.

Beckworth: And it's just striking that we're at a stage where this is happening globally, not just in the US. So there's really, to be blunt, there's a race, a competition, for who gets the immigrants. And we want to be a place where they feel welcome, where they can come and... because if we don't get them, someone else is, and we need them as much as anyone.

Griswold: Yes. And I'm not a political scientist, but that is an interesting connection. I suppose part of it is, as population growth slows, your population ages and older people tend to be more maybe conservative about change even though as we just talked about, they have a lot to gain from having an expanding workforce that can pay for the cost of their retirement programs.

Griswold: Another irony is, you go to some rural areas in America where concern about illegal immigration and immigration is high, and yet they have some of the fewest immigrant populations there. It's hard to find immigrants in some of these rural areas. We have literally hundreds of counties in America that are depopulating and immigration would be one way of maintaining the population, the economic viability, in those areas. You're seeing it to an extent in Iowa where immigrants are helping to keep meat packing factories going and in some ways revitalizing these communities.

Griswold: I come from Western Wisconsin. I go back there to visit family. It's a town there called Arcadia, Wisconsin, that has Ashley Furniture, does a lot of manufacturing there, they have an influx of Hispanics there, Mexican restaurants in Western Wisconsin that weren't there when I was growing up in the 1960s, but that creates, that can create, some social tensions, but I think immigration is helping to revitalize not only inner city neighborhoods but rural communities as well as impacting favorably our overall macro economy.

Beckworth: Yup. Going back to this New York Time piece, again it stresses that East Asia, all of Europe, parts of North America, even Iran, Brazil, and other emerging markets, are part of this declining fertility rate trend that's going on. And the only place that is poised for rapid growth, not rapid, but significant growth, is Africa.

Beckworth: And so they draw this conclusion, I want to read it here. They put, "In other words, with the significant exceptions of the African continent and the less than half a percent of the planets habitable service covered by the world's 500 largest cities, the earth is today experiencing a net population decline." So it's very sobering and one we should think carefully about before we get worked up about immigrants. Humanity is our greatest resource, the ideas come from them as you mentioned, productivity as well as the actual labor they put into it.

Beckworth: Well, let's talk a bit about some of the myths, and we've touched on them in the process of making these other points, but you outlined five myths and the realities of immigration. So the first myth is that America is currently being flooded with mass immigration. And if you listen to the presidents, maybe if you watch some Fox and news, that might be an impression that you just are certain is correct, but it's not. So talk about that.

Griswold: Yeah. Well, there's two ways of looking at the amount of immigration coming into the country and the number of immigrants here. One is just in nominal terms, in sheer numbers. And that's the closest that comes to being the truth. We issue Green Cards, which is legal permanent residents in the United States. Once you get the Green Card, you can live here the rest of your life, work, and you're eligible to become a citizen in five years. That's really the technical definition of immigration coming here permanently to live.

Griswold: We give Green Cards to about a little over 1 million people a year, which is at the high-end of our historical experience. Although if you go back to say 1910, 1900, 1910, that was the peak of the Great Atlantic Migration, all those immigrants coming over from Southern Europe and Eastern Europe. That was about a million a year, when our population was one third of what it is today. So I think the better way of looking at immigration is as a rate. We talk about everything else as a rate, right? The population growth rate, the unemployment rate, the crime rate-

Beckworth: Absolutely.

Griswold: If you look at net migration to the United States, so both legal and illegal immigration minus immigration, believe it or not, some people leave the United States each year, it's about 3.3 net in migration per 1000 population. If you go back a hundred or more years to that great migration, it was eight, nine, 10 net immigrants per year per 1000 population. So immigrants were coming in at a rate that was two or three times what it is today. Some of our major cities like Chicago and New York were 40, 50% immigrant back then. And that's the flow.

Griswold: If you look at the stock of immigrants in the United States, it's 13 and a half percent of America's population is foreign born. Were born in another country. About 43 million. If you look at the first and second-generation, the children of immigrants, it's about one out of four Americans were either foreign born or their parents. One of their parents was foreign born. It was higher a century ago. It peaked at about 15%. It's heading back up towards that, not because the inflow is higher as a rate, it's not, significantly lower, but because as we discussed a moment ago, native-born Americans are... that population isn't growing. In fact, it's starting to shrink.

Griswold: So I would say we're comfortably within the norm of America's historical experience in both the flow of immigration and the stock. We've been here before and we did quite well as a country. One final point I'll make, we're not unique among Western countries. Canada... so here it's 13 and a half percent of our population is foreign born, Canada, it's 20%. And from the same basic source countries, China, India, the Philippines.

Griswold: Australia is 28% foreign born. There are also China and India represented. Also England and New Zealand. Switzerland has a higher foreign born population than the United States, tends to be from other European countries. And by the way, those are all advanced, pluralistic, democratic countries that don't, to my knowledge, have any great social issues. You can thrive as a large modern economy and society with significant inflows of immigration larger than ours.

Beckworth: Well, a case in point would be the State of Texas. Large number of Hispanic immigrants there. And Texas is one of the most dynamic economies in the US. So I definitely agree with that point.

Beckworth: Now you mentioned the net flow rates around three per 1000, and I think many people who are leery of immigrants, probably think of Mexico. But as you mentioned, immigrants to the US come from a number of places, not just Mexico. But Mexico is probably on the radar screens of immigrant critics. One thing that I talked about with Noah, I'd like to get your take on this, he mentioned this observation which I think you've mentioned also elsewhere, is that the net flows from Mexico have slowed down, almost kind of even, kind of flat. After the Great Recession it declined and then it kind of flat line.

Beckworth: So even though we see stories about violent Mexican immigrants or we see president Trump talking about the need for a wall…  Illegal immigration from Mexico has flatlined and really isn't going anywhere. Is that right?

Griswold: My knowledge is, it's actually turned negative-

Beckworth: It's turned negative? Okay.

Griswold: More Mexicans going back to Mexico. Two primary reasons for that. Mexico's birth rate has dropped significantly, dramatically from the 60s and 70s, and their economy's doing reasonably well. It hasn't been a star in terms of five or 6% growth, but as you know, the macro stability in Mexico has been pretty good. Plus they have a thriving manufacturing sector, thanks to NAFTA.

Griswold: In one of the ironies of President Trump's pronouncements on NAFTA, if we were to pull out NAFTA and start slapping tariffs on Mexican imports to the United States, it wouldn't do anything to help our economy, it would hurt our economy, but it would also hurt Mexico's and give one more reason for Mexicans to come to the United States. So NAFTA for all its economic benefits, it's brought the US and Mexico closer together, at least up until the Trump presidency, but it also, it has given Mexicans one more reason to stay in Mexico. And that's one reason why we've had the net out migration.

Griswold: Yeah. I think Noah Smith gave you a pretty good tour of the history of immigration. You go back 150 years, it was the Irish coming in and there was a lot of concern about them. And then the Great Atlantic Migration and we had a lot of concerns about the Italians and the Poles and the Russian Jews, coming in. In recent decades, it's been from Latin America, from Mexico, and other Latin American countries.

Griswold: We just reached the point in the last few years where the single biggest source region is no longer Latin America, it's Asia. There are more immigrants coming to the United States from China, India, and other Asian countries, than from Latin America.

Beckworth: Interesting. So why do you think many observers think Latin America instead of Asia? Is it because the Asians tend to be higher income levels and you tend to think of a Latin as not falling into that socioeconomic group? Why do people point to Mexico? Just because they're on our border, it's easy to see, easy to take out of context?

Griswold: Yeah. Well, of course, and I'm probably guilty of this too. Sometimes we don't differentiate between Mexicans and Salvadorans and Hondurans, and it's very important to them, to mention Puerto Ricans who can come here freely. So it has shifted from Mexico more towards Central America. They tend to be lower skilled workers often without a high school diploma, although that doesn't mean they're dumb-

Beckworth: Right.

Griswold: And they've got those extra qualities of gumption and hard work. The labor force participation rate of Latin Americans is full 10 percentage points or more higher than for the average native-born American. It's like 67% for a native-born illegal. It's 77% or higher. So they work hard, they don't come here to go on welfare, but there are certain cultural stereotypes. People seem to be a little more concerned about low skilled immigration than the Indian born computer programmer or physics professor that's moved in next door even though they're both immigrants. So there's a lot of these cultural issues swirling around there.

Beckworth: Well, do you think it's also kind of, just a residual effect because as you mentioned, Mexico had its own baby boom, had a big population shock in 60s, 70s and 80s, and we just happened to be the recipient of a large part of that. I think Noah called it the Mexico shock, that there's just one... Mexico has had this one time surge, it's probably not going to ever happen again at the same level. And we're kind of maybe, I don't know, scarred, we think back to that experience, and it's very unrepresentative of what's going to happen going forward.

Beckworth: And it's just easy, it's a point we've look to because we're biased and it's hard for us to think outside the box. And so maybe we just need time to kind of get past this narrative that is outdated.

Griswold: Yes, he's exactly right. And by the way, that shock was a positive shock.

Beckworth: Yes.

Griswold: The Mexican labor that came here allowed our agricultural sector and our service sector to thrive. When immigration flows the greatest, both legal and more so illegal, it was in the 1990s. We all know that was a period we look back to somewhat nostalgically now, right?

Beckworth: Right. Good old 90s.

Griswold: Yes. Immigration was part of that story. So he's exactly right. I think Gordon Hanson and some others have drawn a comparison between the United States and Europe on exactly this issue. Our source of low skilled immigration is kind of drying up because of these demographic factors and we're going to miss that. I think we're going to increasingly talk about our need to be more open to low skilled immigrants coming here.

Griswold: You're already seeing the stories about, in Maryland, the crab industry is literally not able to find workers. And there are crab processing plants in Maryland that have had to shut down because they literally can't hire the workers. The dairy industry in my native state of Wisconsin, they can't find workers to help in the dairy industry. We have seasonal low skilled Visas. It's a bureaucratic program that doesn't work very well. But of course dairy farms are not seasonal, twice a day, 365 days a year. You need those workers.

Griswold: So we're increasingly in need of lower skilled workers. Europe has kind of the opposite problem. They're sitting right above Africa that you talked about a moment ago, which is demographically still growing. So we need to be more open to low skilled immigrants as well as high skilled immigrants. And by the way, research shows, our historical experience shows, that if we create more channels for low skilled workers to come to the United States, often temporarily, they just want to come here for three or five years, send money back home and then go back home. Illegal immigration drops significantly.

Griswold: That's why I think a wall is such a bad idea. One, it's not going to solve the problem. Most illegal immigrants coming to the United States today come legally. They come here as tourists with visas and then they overstay their visas. A wall of course, isn't going to keep them out. And secondly, if we increase channels for legal immigration, the flow of illegal immigration would drop significantly and you don't need a wall. It transforms the whole enforcement issue.

Beckworth: Yeah. And it's moreover the wall presupposes that this huge Mexican wave is still occurring when in fact it's been flat to declining. I mean, literally there are more people going to Mexico than coming to the US.

Griswold: Apprehensions at the border peaked 15 years ago, and they're at near record lows.

Beckworth: Yeah. And you know, I also, I don't want to belabor Trump too much, but you know, his narrative is in a sense, an outdated one. And again, I'm not trying to agree the premise of his narrative, which is all of these problematic immigrants from Mexico, we think that they actually were very productive. We need them. There's a shortage of them. But Trump is living in a view of the world that's just several decades old. Kind of like, if you look at his rhetoric on trade, it's been with him since the 80s. Maybe he was scarred by Japan in the 80s or something, I don't know. But I get the sense that this view about illegal immigrants is very similar. It's just kind of a dated view he's had and he keeps with him.

Griswold: Yeah. There's just some very bad economic thinking there, there's some nostalgia for the 50s-

Beckworth: It's just bad data. I mean, just the facts are wrong.

Griswold: Yes.

Beckworth: Okay. Well, let's go to another myth and we've touched on this, but let's flush this out a little bit more. The second myth and a very popular one is, the immigrants depress wages and take jobs from Americans. So we've touched on that, but go ahead and flush that out for us.

Griswold: Yeah. The important thing to keep in mind is that immigrants don't compete head-to-head with the vast majority of Americans. They complement American workers. They work alongside us, they work for us. And there've been a lot of empirical studies of this and the consensus of the studies is immigration has a surprisingly small effect on the wages of native-born Americans. Why is that? One, there's complimentary aspect. Secondly, immigrants create demand as well as supply, right? They're consumers, they buy cars, they rent houses, they go to the grocery store. And so that's why our workforce can double from what it was in the 1960s and we have an unemployment rate that's below 4%.

Beckworth: That's a great point.

Griswold: But the empirical studies show that for the large majority of Americans, 90% plus, immigration either has a small positive effect or no discernible effect. The one cohort of Americans that do suffer some wage losses because of low skilled immigration are Americans without a high school diploma, adult Americans in the workforce without a high school diploma. It's a sympathetic group. Although I will say if you're trying to make a go of it in America without a high school diploma, you're getting it from all sides, right?

Beckworth: Right.

Griswold: If it isn't imports, it's more likely technology. The biggest message we could send to low skilled Americans is, stay in school. If you just have a high school diploma, you'll earn 37% more than if you're out there without a high school diploma. So the studies show, and even on this group, the impact isn't that great, it's about one or 2%, wage depression of Americans without a high school diploma. Well, just staying in school and getting your high school diploma is going to do a lot more than all the contortions and the billions we need to spend in an ugly wall and raiding workplaces-

Beckworth: It's a simple solution.

Griswold: Yeah, let's just let in low skilled immigrants and that naturally gives Americans an incentive to stay in school and upgrade their skills, but redouble our efforts at job retraining. It's the same message on globalization, isn't it?

Beckworth: Right.

Griswold: We need to equip ourselves and more importantly, our children, to take advantage of the opportunities being created by our more automated high-tech, open competitive global economy.

Beckworth: Yeah. Robots aren't going away, automation is increasingly upon us. So we have to face that reality and adjust accordingly.

Beckworth: All right. Well, let's go to the next myth in your paper. Immigrants increase the danger of crime and terrorism.

Griswold: Yeah. And we have to mention our president.

Beckworth: Again.

Griswold: Let me be candid, it's shameful the way he exploits fears over crime. The simple story is, and studies have shown this, if your listeners were to look at two studies, comprehensive studies, they're both done by the National Academy of Sciences, one in 2017 looking at the economic consequences of immigration and one in 2015 looking at more the social impact, it was called the Integration of Immigrants to the United States. That one on the integration, they looked at all the studies on it. The studies of immigrants and crime all come to the same conclusion, immigrants are less likely to commit crimes than native-born Americans. Even controlling for education, socioeconomic level, they're less likely to be arrested and incarcerated for crimes. Immigrant neighborhoods are safer than non-immigrant neighborhoods in the United States.

Griswold: Terrorism's a slightly different issue. But the September 11th's terrorists were not immigrants, they all came here on student and tourist visas. They were temporary non-immigrant visitors. If you look at terrorist incidents committed by immigrants to the United States, they're very rare. And so immigrants are actually less likely to commit a crime. If you're thinking, if you're a low skilled or an illegal immigrant here, the last thing you want to do is rob a store or get in trouble and get deported. You try to keep your nose clean. And so immigrants are simply not...

Griswold: What the president's done, I mean, obviously immigrants commit crimes. They are people like the rest of us and you can find crimes committed by immigrants and frankly exploit them, and that's what the president's done. This week, he was up in Long Island talking about in graphic detail about crimes committed by the MS-13 Gang.

Beckworth: Right.

Griswold: And you know, David, you and I have no sympathy for MS-13 and the crimes they commit-

Beckworth: Right.

Griswold: The government has a central role of arresting and deporting or incarcerating anybody who commits a crime, any immigrant who commits a crime. But the crime rate in New York City and the surrounding suburbs is a fraction of what it was 25 years ago. And there's more immigrants there than back then. So the crime rate in America has fallen at a time when immigration has continued to climb and that's because immigrants are not a particular problem when it comes to crime. Immigrants are less likely to commit crimes. So it isn't an immigrant problem, it's a crime problem.

Beckworth: Okay. All right. The fourth myth, immigrants impose a fiscal burden on US taxpayers.

Griswold: Yeah, this is one that's largely false, but with a greater truth. Overall, immigrants are net payers to the federal government. An immigrant who comes here, and this is from the National Academy of Sciences-

Beckworth: And we'll make a point to have those articles linked to the SoundCloud page for the listeners.

Griswold: Yeah. An immigrant who comes here at age 25 with a bachelor's degree will over their lifetime taking the net present value, pay half a million dollars more to government at all levels than they consume in government services. If they come here with an advanced degree, it's almost a million dollars more they pay in taxes than they consume in government service. This is gravy for the government and that's one point I make.

Griswold: I had a paper from Mercatus in the fall, specifically looking at high skilled immigrants and why we should let in more high skilled immigrants. And there's plenty of arguments that we've covered about innovation and job creation. But appealing directly to lawmakers, if you want to give an injection of tax payments into the federal system, educated high skilled immigrants are a net plus for the government, pretty much from day one.

Beckworth: Why do we then kick out these people who get PhDs? I hear it's one of the big flaws in our system. We train a PhD. A foreigner comes in, get a PhD and then they have to quit, often if they don't get a job, they have to leave. It's like a simple fix to generate all this additional tax revenue for the government.

Griswold: Yeah. Well, some people have said when they get one of those graduate degrees, we should staple their Green Card to their diploma. And I'm sympathetic to that. Again, it's a mixture of prejudice, bad economic thinking. I mean this misguided notion that a PhD scientist who, immigrant scientists who stays here in the United States or an immigrant engineer means some native-born American PhD scientist or engineer won't get a job. That's just false. It creates more opportunities. You have agglomeration effects.

Griswold: The more high skilled people we attract to the United States, the more vibrant Silicon Valley and other high tech industries are-

Beckworth:         Right. Exactly.

Griswold: It actually creates... not to mention core products for you and me, but it creates more employment opportunities for native-born Americans. So it's just pure foolishness. It is to me as close to a no brainer as you can get in public policy to make America more welcoming to high skilled immigrants who come here, they go through American schools, they have American education, so we know they're basically assimilated for better or worse to American culture. They speak the language. Let's encourage them to stay.

Griswold: When we send them back, we're not only losing the immediate economic and fiscal benefits, but we're saying, "Go back to your home country and file your patents and start your high tech startup companies." And that's okay with me if they do that, but on the whole, if they want, I'd rather they stay here.

Beckworth: Yeah. And this is to stress this point of agglomeration economies of scale, that you get a bunch of smart people together. There's many dimensions to this, but one of them is there's increasing returns to scale people's ideas. They feed off each other. I mean, if you're around other smart people and you're thinking on a similar problem, it's almost limitless as to what you can do. You know, putting minds to use. Where if you're isolated, if you're a smart educated person, you're isolated, you're not going to be as productive as if you were around a bunch of other well educated smart people.

Griswold: Yeah. Just one footnote to the fiscal effects. I mentioned there was a greater truth to it. If you're a low skilled immigrant without a high school diploma and you come to the United States, you're a net burden to taxpayers. It's about 100,000. I think that tends to be overstated in the sense that it assumes they stay here and retire here. I think if you fashion, if you tend to emphasize permanent Green Card immigration for high skilled immigrants and temporary migration for low skill immigrants, you can partly mitigate that problem.

Griswold: In fact, during their working years, low skilled immigrants tend to be slight net payers into the system. Of course, their children tend to be net payers into the system. If they're encouraging native-born Americans to upgrade their skills and move into more management communication intensive jobs, their productivity goes up and their tax payments go up. It is true that there are certain fiscal costs to low skilled immigration. I would argue in the general impact on the economy, we're still better off. A person isn't just their balance of payments with the government, they have other positive effects on the economy.

Beckworth: An interesting fact that you mentioned in the paper, I hadn't seen before is that, if you take the same education level for a native, so you have an immigrant who has less than a high school education take a native-born with less than a high school education, the native-born actually will be more of a drain on fiscal resources. So it will be more loss to the native-born than to the immigrant.

Griswold: Yes. Significantly more. I guess, David, one way to package that is, yes, low skilled immigrants they form a working group that you'd call the lower working class or something, but they're more functional. They have a higher labor force participation rate. Family cohesion is better. They're less likely to commit crimes. So in a sense, we aren't importing poverty, we're importing low skilled workers who tend to be more functional than native-born Americans without a high school diploma who've sort of dropped out. And to the extent that immigrants encourage Americans to stay in school and move up, we're all better off.

Beckworth: And back to the point you made earlier, we are in dire need of these low skilled workers all throughout the country, farming, and in different activities.

Griswold: Yes.

Beckworth: Okay. Last myth. Immigrants are no longer assimilating into American culture.

Griswold: Yeah. And of course this is a little harder to measure. It's kind of in the eye of the beholder. But one way people measure assimilation is language skills. And it's true native-born Americans from non-English speaking countries... Oh, sorry, first-generation immigrants from non-English speaking countries can tend to struggle with the language, especially if you're getting up in your 20s or 30s, but their children are invariably fluent in English, often bilingual. And by the third generation, they tend not to know the language of their immigrant grandparents.

Griswold: And studies again show immigrants today are following the pattern of immigrants in the past, first-generation learns the language but sometimes less than fluently, second-generation fluent, third generation mano linguistically, English speaking.

Beckworth: Yeah.

Griswold: Other aspects of assimilation, polls show immigrants are more likely to believe in the American dream and appreciate the opportunities we have here.

Beckworth: Really?. That makes sense. Yeah.

Griswold: Yes.

Beckworth: Yeah. Yeah.

Griswold: So I think immigrants do assimilate. Again, there's self-selection. They don't come here because they hate America, they come here because they love the idea of the opportunity and the freedom we offer. Some economists, Deirdre McCloskey and other talked about the bourgeois virtues. Immigrants tend to have the bourgeois virtues in spades. Think of the things we admire as Americans, the work ethic, family, faith, immigrants tend to be as serious or more so than Americans about their faith and they're helping to revitalize churches and immigrants appreciate and love America because they've known what the alternative is. They don't take it for granted the way some of us are tempted to do.

Beckworth: I think we're all guilty of that to some extent. Okay. So those are the myths. We've debunked them. Now moving forward, what should be the changes to US immigration policy? You have a paper out, I believe last year... Was it last year, that-

Griswold: Yup, October of 2017.

Beckworth: Yeah. We'll put that on the website as well.

Griswold: US immigration system to promote growth.

Beckworth: Yeah. Tell me about that. What would you change to better line up what our potential for immigrants can be?

Griswold: We've touched on most of the basic research in the paper. And the policy recommendations were that we increase legal immigration significantly. I said 30%. The interesting thing about increasing legal immigration 30% is that, we talked about the net immigration rate of being 3.3. That would bump it up to 4.3, which is the historical average in the United States. We were actually above that in the 1990s. So it would increase the immigration rate, but not out of the historical norm even of recent experience, with an emphasis on high skilled immigration.

Griswold: We have an odd system here in the United States. We tend to favor family reunification, which we can all understand, certainly letting the spouses and minor children of the immigrants come to the United States and become legalized. There's also, this is what the president calls chain migration and I happen to think he exaggerates the problems of it, but it's letting adult siblings and the parents of immigrants come over here. That's about two thirds of the immigration to the United States. Only about 14% of immigration to the United States is employment-based.

Griswold: The immigrant gets a Green Card because of the job that they have. And overwhelmingly, it's higher skilled immigrants. We have a pittance amount of immigrants visas for lower skilled immigrants. I spend quite a bit of time in the paper contrasting our system with Canada and Australia. You've heard the president talk about a merit based system. Again, a little bit of truth to it. And in my paper I somewhat agree with the spirit of that. Let's give more emphasis to employment-based and higher skilled immigration.

Griswold: If you look at Canada and Australia, most of the immigrants they allow in, are employment-based, but that's not an argument for cutting family immigration. Again, if you look at the rates both in Canada and Australia and the United States, the rate of family-based immigration is about two to two and a half immigrants per year per thousand population. That's for family. The dramatic difference is in employment-based.

Beckworth: Okay.

Griswold: We let in about half of the immigrant per year on employment per thousand population. In Canada, it's four and a half. In Australia, it's five and a half. So family-based immigration as a share of the population is about the same in all three countries, but it's dramatically higher in Canada and Australia for skills-based, employment-based.

Griswold: So if you want to change the US immigration system, it shouldn't be dramatically cutting family immigration as the president's embraced, it should be to significantly increase employment-based immigration. You could do some trade-offs like the visa lottery system that you've heard about. It's basically we give 50,000 visas a year to immigrants from countries that are underrepresented in our immigrant population. I can see the idea behind that, but I'd gladly chuck that program and take those 50,000 visas and give them to those computer scientists and those PhD physics professors that are often educated in American schools and want to stay here and they have employers who want them to stay here.

Beckworth: So keep the family tied immigration rates where they are, but increase both the rate the absolute amount of work-based immigrants?

Griswold: Yes. We mentioned, legal immigration here is a little over 1 million, I propose increasing that by 325,000 to 1.4 million a year. You can either keep family immigration the same and increase employment-based or you could cut back on some of those extended family. We're a different world than we were. A lot of this was based on the Cold War and once you immigrated to the United States, you lost touch with your family back there. And the only way of staying in contact with them was bringing them over here.

Griswold: Well, now travel's more easy, communication's more easy. So I think there's a political argument that you could cut back on some of the extended family immigration categories, but have those visas go to employment-based immigration.

Beckworth: And we don't want to completely eliminate the family-based immigration-

Griswold: Correct.

Beckworth: Because you might be that PhD scientist coming to the US and you want to bring your family with you. We want that scientist to feel comfortable here. We want them to bring their family, right?

Griswold: Correct. And often the spouses are educated as well and they contribute to our productivity and our growth as well. Yes.

Beckworth: Right. Then you also have an article I want to bring up in closing, we've got a few minutes left, and in this article you argue that conservatives, those right of center, and immigrants actually have a lot in common and therefore conservatives should be embracing immigrants. Tell us about that piece.

Griswold: Yeah, it was a fun article to write because the economic issue for immigration I think is strong, but people have concerns that go beyond that about society and the social fabric. And I wanted to point out in this article that I think immigrants embrace not only the economic opportunities here, but American society and American values. They embody these bourgeois virtues of hard work, but also commitment to family and faith.

Griswold: The overwhelming majority of immigrants who come into the United States identify as Christians. They are repopulating many of our churches in neighborhoods where they've been losing the church population. Their commitment to family life, immigrant families are actually less likely to divorce, they're more likely to marry, less likely to divorce. Children of immigrants are more likely to grow up in a two parent household. They're learning the language as we pointed out. They respect authority, less likely to commit crimes.

Griswold: So I think we should look favorably on immigrants as embodying these American values that conservatives and most Americans tend to embrace. President Reagan spoke very elegantly about immigrants virtues, and I think my conservative friends, and I'm conservative in a lot of ways myself, I think they should look at immigrants as people who want to help us build a stronger America and understand the things that make America special and great.

Beckworth: So what you're saying then is president Trump, if he truly wants to make America great again, should embrace immigrants?

Griswold: Yes, he should. And he and I literally embrace immigrants. We're both married to immigrant born wives-

Beckworth: Nice.

Griswold: My wife is from England, so my three kids, we broke that 2.1 barrier. My three kids are all second-generation immigrants. They're all employed and doing well. And now, president Trump's wife has brought over her elderly parents. So he apparently embraces chain migration. My mother-in-law is still living in Northern England with no plans to bring her over here to the United States.

Beckworth: Well then you are a true economic patriot. You bring in the immigrants, you have a large family, doing your part to keep the American dream alive.

Griswold: Thank you, David. I try.

Beckworth: On that note, our time is up. Our guest today has been Dan Griswold. Dan, thanks for coming on the show.

Griswold: Thank you, David.

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