PRESIDENT BUSH'S recent proposal to grant temporary legal status to illegal immigrants is not yet fleshed out enough to judge how effective it will be. Six million to eight million illegal workers would qualify, as would future immigrants hired by companies that could show that Americans were not willing to take the jobs.þþOne especially serious concern is that immigrant workers will be tied indefinitely to the company that sponsors them. Teresa Ghilarducci, an economist at Notre Dame, warns that this would give the company undue power over wages and other worker rights, and a result could be a permanent class of low-wage employees.þþBut if the Bush plan raises more questions than it answers, it is still an encouraging first step that focuses needed attention on an issue that will become more urgent in coming years.þþFor one thing, there will probably be no stopping the steady march of unskilled and skilled labor across borders. The United States has been unable to stanch flows of illegal immigrants from Mexico, for example. þþBut economists of varying political views also say that the limited migration of skilled and unskilled workers, if properly harnessed, can be a vital source of economic growth in developed and developing nations. þþÿThis is the last unexplored frontier of globalization,ÿ says Dani Rodrik, an economist at the Kennedy School of Government at Harvard. ÿWe have to start taking labor mobility seriously.ÿ þþIn fact, theoretically, the bigger the differences in wages for similar work across the world, the greater the potential rise in incomes to the receiving and sending nations. It is analogous to the benefits from international trade when goods are cheaper in one country than another. þþA team of British economists led by L. Alan Winters of the University of Sussex has developed a traditional model to estimate such gains. In general, the model assumes that developed nations generate higher profits and more investment as labor costs are saved. They also generate higher government revenues as the new immigrants pay payroll and income taxes, as well as sales taxes. As for developing nations, their migrant workers now make far more money and send a large part of it home. þþMr. Winters and his colleagues have found that if the Organization for Economic Cooperation and Development nations increase by 3 percent their quotas of migrant labor, both skilled and unskilled, world income would rise by a considerable $156 billion a year, or 0.6 percent of total world income today. þþBut if the theory is convincing, the practical issues are considerable. Absorbing lower-wage workers in host nations means that domestic wages are at least somewhat undermined. More immigrants will also put pressure on already overburdened social programs. As for the sending nations, they in turn may not receive a fair share of the economic benefits if workers leave and never return. þþA temporary limited migration program similar in principle but different in important details to what the Bush administration seems to have in mind can minimize such problems. By providing migrant workers legal status, including eligibility for domestic social programs, businesses could not easily pay wages below the going rate or ignore their payroll taxes and other benefits, as they now can for illegal immigrants. For these reasons, some labor unions are beginning to support such legalization.þþWith legal status, the immigrants will also be paying more taxes, including payroll taxes, to support social programs. In fact, the migration of young workers to Organization for Economic Cooperation and Development nations could be an ideal way to pay part of the rising costs of public pensions, including Social Security in the United States, as populations age. þþAs for benefits to developing nations, preliminary results of an incomplete survey by Mark Rosenzweig of the Kennedy School and his colleagues show that earnings increases for migrants over what they made in their home countries are steep. To give an idea, the average increase in annual wages for unskilled labor in 1996 was $7,400, and it was much higher for skilled labor.þþAlso, one fourth of the workers sent ample sums home. þþWhat is critical to the equitable distribution of benefits, however, is that workers return home after a few years. Cycling workers would allow more poor workers from a wider range of nations to migrate. Further, says Jagdish N. Bhagwati of Columbia University, these workers are often agents of change when they return, even if they are unskilled, because they bring back new attitudes, financial resources and knowledge. þþBut simply requiring workers to return home is not enough. Attractive incentives must be provided as well, and those in the Bush plan are inadequate. Devesh Kapur, a professor of government at Harvard, who with his colleagues has done comprehensive research in the field, suggests that one possibility is to have the United States retain part of the wages paid to new legal migrant workers in an investment account that is given back to the workers only when they return to their home countries. þþAs for the power of businesses over their recruits in the Bush plan, Mr. Kapur says that employees should be required to work for their sponsoring company for only a limited time, and then be allowed to look for other jobs. þþFor all its benefits, however, greater labor mobility is no panacea in itself. In the United States, for example, a Bush-style immigration program would work best, in my view, in tandem with a reasonable increase in the minimum wage. As for sending nations, Mr. Rosenzweig points out that returning money in the form of remittances is most productive when the economy can adequately channel them to useful investment and social programs. þþMoreover, some older policies work at cross purposes. Mr. Kapur notes that one reason so many Mexicans flee to the United States is that the North American Free Trade Agreement subjected them to low-price American agricultural competition that is subsidized by the government. þþMore labor mobility, then, is an exciting potential source of growth for all, but it will work only in conjunction with proper safeguards and fair and productive social policies. þþþJeff Madrick is the editor of Challenge Magazine, and he teaches at Cooper Union and New School University. His new book is ÿWhy Economies Grow,'' from Basic Books and the Century Foundation. E-mail: þþþþþþ
Source: NY Times
