Relevant and even prescient commentary on news, politics and the economy.

Immigration, Democrats, Republicans and the NY Times

Tom Cotton, the junior United States Senator from Arkansas had a piece in the NY Times:

President-elect Trump now has a clear mandate not only to stop illegal immigration, but also to finally cut the generation-long influx of low-skilled immigrants that undermines American workers.

Yet many powerful industries benefit from such immigration. They’re arguing that immigration controls are creating a low-skilled labor shortage.

“We’re pretty much begging for workers,” Tom Nassif, the chief executive of Western Growers, a trade organization that represents farmers, said on CNN. A fast-food chain founder warned, “Our industry can’t survive without Mexican workers.”

These same industries contend that stricter immigration enforcement will further shrink the pool of workers and raise their wages. They argue that closing our borders to inexpensive foreign labor will force employers to add benefits and improve workplace conditions to attract and keep workers already here.

I have an answer to these charges: Exactly.

Higher wages, better benefits and more security for American workers are features, not bugs, of sound immigration reform. For too long, our immigration policy has skewed toward the interests of the wealthy and powerful: Employers get cheaper labor, and professionals get cheaper personal services like housekeeping. We now need an immigration policy that focuses less on the most powerful and more on everyone else.

Wasn’t this the Democrat’s position not long ago? When and why did that change?



1.  If it isn’t clear, Cotton is a Republican

2. The bolded section was part of Cotton’s piece, but I chose to bold it as I felt it was worth a special highlight.

The Bottom 10 Performing Immigrant Groups in the US – Lessons Learned

In my last post, I looked at the top ten immigrant groups by country of origin to the US, ranked by their per capita income in the US. In this post, I want to look at the bottom ten countries. Here’s some information on those countries (data sources mentioned at the bottom of the post):

Post 3, Figure 1 - Bottom 10 Countries by Immigrant Income - Corrected
(click to embiggen)
(note – this is a corrected table. Thanks to reader Mike B for pointing out the error in the last column of the table.)

The first thing to note is that Saudi Arabia is an outlier. Based on median age, education, and income, the composite Saudi immigrant described by this table is either a graduate student, a layabout, or something in between. Many Saudis may be receiving income from sources that are not accounted for in this table; from my limited experience, Saudi expats I have come across seem to receive a stipend, which is born out from other sources, though it seems those stipends are getting cut due to falling oil prices.

Mike Kimel vs. Yves Smith

I and many others, including Yves Smith, waded into the thicket of Mike Kimel’s provocative generic and specific-reasons-for-the-generic claims in his post here earlier this week titled “Negative Effects of Immigration on the Economy.”  I and others, including academic economist Barkley Rosser, commented in replies in the Comments thread to Mike’s post.  Yves did so on her Naked Capitalism blog, in prefatory comment to her republication of Mike Kimel’s post.

Yves is an expert on such matters as the effects of immigration on the economy.  I, suffice it to say, am not.   But Angry Bear Bruce Webb and I both invoked Yves’ prefatory comment as refutation of Mike’s specific reasons for his generic claims.  But Mike begs to differ, claiming that Yves’ preface is in agreement with his post.

To which I replied:

You and Yves Smith make the same point? Really? Actually, Yves was trying gently to refute your main point, which was your claim that immigration has a negative impact on job creation and your attributing this to the fact that so many immigrants aren’t white and from Europe and therefore, culturally (and intellectually) don’t sufficiently appreciate the importance of such things as time schedules and promptness.

Yves’ point was the opposite: that lower rates of job creation comes from lower rates of increase in GDP, which has nothing to do with the entrepreneurial, timekeeping and English-language skills of the current wave of immigrants and everything to do with the highly successful corporate efforts in the last nearly four decades to suppress wages–one (but only one) tactic of which has been the use of immigrants to keep wages down, thus reducing DEMAND FOR GOODS AND SERVICES. The effect on job creation is, contrary to your claim, not direct and is not the result of what you say it is, and is the indirect result of deliberate corporate goals.

Funny, y’know, but Germany, Holland, Scandinavia and Canada all have had very large non-white immigration in recent decades. All have strong laws supporting worker power, as well as corporate cultures that favor long-term investment and rational executive-suite compensation, and … voila! They have economies that work well.

Obviously, Yves can speak for herself on this if she cares to.  But it’s clear from the comments in the lengthy Comments thread to Mike’s post that I’m far from the only one who takes strong issue with what is at the heart of Mike’s premise.

This is by no stretch the type of thing I normally post about, but it gets to the heart of what others do, here and elsewhere, and certainly concerns issues at the forefront of this election cycle.  And therefore it’s worth my walking out onto this limb here.


Irish austerity exodus lingers on

August brings us the annual Irish immigration data, so it’s time to look at what has happened in their statistical reporting “year” that ended in April 2014. While better than last year, it’s still not pretty.

According to the Central Statistics Office, net emigration continued in 2013-14, with net emigration of 21,400. a decline of just over 1/3 compared to net emigration of 33,100 in 2012-13. Of the new total, once again, the Irish themselves accounted for over 100% of the net departures, with 29,200 more Irish nationals leaving the country than returning.

This continued out-migration continues to diminish any published improvements in Irish employment numbers and unemployment rate. In the year to the second quarter of 2014 (the closest quarter to April 2014 immigration figures), employment  increased to 1,901,600, a rise of 31,600 over a year previous. Unemployment fell by even more, 46,200, in the year to Q2 2014. So, while there is definite improvement even accounting for emigration, Ireland is nowhere near back to its peak 2007 employment figure of about 2.15 million. So employment is still 11.6% below its peak.

In Iceland (create a custom table here), by contrast, despite (but also in part because of of) the almost 50% decline in the value of the kronor, the sharp dip in unemployment has been almost completely erased, with July 2014’s value of 179,000 employed being a mere 1.7% below May 2008’s maximum of 182,100. Indeed, Iceland’s unemployment rate has fallen to a mere 4.4% in July 2014, compared with 6.2% in the United States — and 11.5% in Ireland.

So the lesson, if I have haven’t pounded it into your head enough already, is that Ireland’s austerity measures are not paying off, as it has failed to regain its pre-crisis employment level  and has seen its unemployment rate fall only by reverting to its historical solution of exporting people, as in the 1980s.

Cross-posted from Middle Class Political Economist.

Fixing the Border Crisis and Social Security in One Go

Stay with me here. Because I am almost serious about this proposal. Or at least it highlights the contradictions (while not Heightening the Contradictions).

The Border Crisis: tens of thousands of unaccompanied minors crossing the U.S. border.

Social Security ‘Crisis’: per ‘Reformers’ one that is driven by pure demography – too few future workers to support longer living large cohorts of retireees.

Solution? Keep the kids while excluding the parents. That is launch a campaign in Central America with the following messages:
One. It is very dangerous to send your kids to El Norte. Many of them might die on the way, almost all will be abused and exploited in one way or another, and all at the cost of your life savings and borrowings.
Two. If they manage to make it alive the U.S. will allow them to stay. But will not grant them any rights to sponsor their parents until they are adult citizens who are both financially secure enough to be sponsors and having undergone the naturalization process. Congratulations! Your kids are Americans now. But you may never see them again. Maybe they will write and post pictures on their Facebook walls.

I don’t know whether this will work in stemming the flow. But it might counteract the known sales pitches of the human traffickers that simply getting a kid into America makes them an automatic sponsor.

Turning to Social Security. One of the major contradictions in Social Security projections is that in the face of a declining worker/retiree ratio the Office of the Chief Actuary has consistently projected a drop in immigration in both absolute and relative terms from its peak. But unless you are an outright Nativist this makes little long term sense at all. After all if we need future workers to take care of increasingly aged Boomers where better to find them than overseas? Or better among the pool of new workers graduating from American high schools who arrrived here as unaccompanied children?

Now of course there are lots of missing pieces here, so many that even the outlines of this may seem farcial. And maybe I do have a tongue tucked into a cheek and am engaged on a little ‘epater la bourgeousie wingnutte’. Still there is room for WAY out of the box thinking on a lot of issues, and these two among them.

The most money goes to which law enforcement agency?

Think Progress offers a note of caution when we think we have reality nailed for government spending and results. And how ‘public displays’ by our politicians offer up little information:

During the 2012 fiscal year, the federal government spent more on immigration enforcement — $18 billion — than on every other federal law enforcement agencies combined, according to a new report from the Migration Policy Institute. The spending on Immigration and Customs Enforcement and Customs and Border Protection dwarfs the combined $14.4 billion spent on the FBI; Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration and U.S. Secret Service.

The U.S. has spent more than $187 billion on immigration enforcement since President Reagan signed the Immigration Reform and Control Act in 1986 — which first made it illegal for employers to hire undocumented workers along with strengthening U.S. border security. Adjusted for inflation, the U.S. now spends 15 times as much on immigration enforcement as it did in the mid-1980s. And the number of deportations and immigration-related prosecutions has also jumped along with the increased spending:

Posts I Won’t Write

Buce sends us to Der Spiegel’s description of Barack Obama’s potential 2012 opponents (“You Think This is Bad?”)

John Kay in today’s FT (no link) tells us why letting economists pontificate about finance is a Mug’s Game. The mugging being of people who are stupid enough to believe economists. (If Brad DeLong or Mark Thoma links to this one, I’ll add a link to them.)

This (from Kaplan Daily of all places, but Valerie Strauss is one of the only Bright Lights there) is probably the most important general article about standardized testing and education.

This one tells the truth and shames the devil, as it were. Those fooling themselves that vouchers and charter schools will lead to improvement in anything other than excess rents going into the pockets of the people who are hired to run them (such as Christopher Cerf, President and COO and Christopher Christie, lobbyist) either have forgotten or are ignoring history:

Decades of research have shown that not only do the for-profit, corporate models being forced on school districts from coast to coast not work, they present a separate and unequal solution, and offer huge profits for investors.

Anyone stupid enough to believe the “anti-piracy” crowd has the best interest of Creators in mind needs to mark that belief to market. For another data point (via Dr. Black), see here.

On a more positive note—not to mention having grown up watching Bob Braun as a local, afternoon talk-show host—I want to note Mr. Braun being one of the only reasons to read The Star-Ledger, and especially highlight his series dealing with ICE abusing its power (nu?) and almost preventing a girl from saving her sister’s life.

This one has a happy ending.

Mandatory submission to e-verify program…a few points more

Op ed by Nancy Ortiz

Scott Hochberg’s article Making E-Verify Mandatory: The Perfect Storm for Crippling the Social Security Administration and Jeopardizing the Social Safety Net discusses issues regarding the e-Verify system and a move in Congress to make it mandatory for everyone hired for a job in the US. He points out that eVerify is every bit as much a threat to SS and Medicare as any of the other benefit, COLA, or Medicare provider cuts now being discussed. I read Hochberg’s article with great interest and have a few additional points to add to his excellent analysis of this subject.

When the Immigration Reform Act took effect in 1987, I was the manager of the SS office in Northern Santa Barbara County in strawberry, broccoli, lettuce and wine grape country. Thousands of migrant workers pass through the area at the height of the picking season between January and May. Many stay with or without authorization so that about 60% of the population is Hispanic and/or non-English speaking/non-US national. You will find similar demographics up and down the California Central Coast in agricultural areas, so there’s nothing unusual about this.

I’ll spare you the war stories of actually implementing IRCA’s social security number provisions. This was the Bush I administration notable for its parsimony in budgeting for SSA operations. (How bad was it? How about no hiring, no overtime and no photocopy paper bad?) Farm workers in the area lined up with their new Immigration work visas in hand outside our office door at 6:00A and we interviewed Social Security Number applicants until 5:00P every day from 1987 til mid-1989. It was hard to get anything else done, but the normal operation got busier because of the recession that put maybe 15% of the workforce in our area out of work.

Alright, now it won’t take much imagination to imagine the same situation but worse, because now every worker would be subject to e-verify. Not just the “obvious illegals,” every single one who applied for a job. Hochberg’s article summarizes the projected workload from this but SSA’s workforce is now 20 or more years older
and really, really ready to retire. And, of course, Congress is talking about cutting the whole federal civil service workforce 10% across the board while maintaining an indefinite hiring freeze and whacking every agencies’ budget in its 2 Trillion to 4 Trillion dollar spending cuts. The President is ready to agree to at least 2 Trillion in cuts, but discussions are continuing.

Perhaps you can see now why making it illegal to work in the US without lawful admission was a bad, terrible, awful, rotten, really bad idea from the git-go. “All we would have to do to” avoid this debacle is revoke this provision and we could go back to doing business the way we did before 1987. The punitive notion of making
work without documents a “crime” has resulted in a flood of counterfeit and stolen documents. Field workers often buy many sets of documents (at high prices) before getting a set that will pass employers’ inspection. Every town in California and other border states has document mills. Sanctions against employers for hiring undocumented workers are virtually never imposed. Identity theft, impossible to prevent and prosecute effectively, is epidemic. And, on and on. All because of the notion that working in the US should be a crime.

If you remain unconvinced, let me remind you that the budget for SSA’s New New Computer Center was reduced about in this last round of spending cuts. This will make it impossible to meet an early construction deadline made necessary by the fragility of the existing computer system. This is estimated to result in causing SSA’s now aged and outdated computer processing and data storage systems to collapse
sometime between now and 2013. 2013 is supposedly the outside range of functionality assuming nothing catastrophic (such as a major power grid black out) happens between now and then. Otherwise, it can go at any time. Finally, I don’t need to remind you of the pending DIB appeals workload of approx. 700K cases still on hand.

But, in closing let me ask you–can you prove you are a US citizen or lawfully admitted alien with permission to work if I ask you right this minute? No, your drivers’ license isn’t enough. Your SS card isn’t ID. You may have a US Passport but it won’t resolve the matter unless it is current. Your current or former employer’s assurance isn’t enough either.

Prove to me who you are or you can’t work here any more. And, it says here on this little No Match notice that you aren’t who you say you are. So, what about it? Exactly who are you anyway, Mr. Working American?

Making E-Verify Mandatory: The Perfect Storm

In addition to the controversy over the ARRP position on Social Security, there are other issues affecting retirement that surface via immigration legislation. Scott Hochberg has given Angry Bear permission to post his article from this weekend from Huffington Post. (hat tip coberly)

Making E-Verify Mandatory: The Perfect Storm for Crippling the Social Security Administration and Jeopardizing the Social Safety Net by Scott Hochberg

There has been much recent buzzing about AARP’s ambiguous, half-denied statements about their (new?) willingness to cut Social Security benefits, and rightly so. As the largest membership organization of seniors in the country, AARP’s tactical gamble could be an unfortunate game-changer in any deficit deal negotiated behind closed doors in Washington.

But believe it or not, one of the biggest threats to Social Security this summer could come from an entirely different direction, from an initiative whose main target is not even related to social program spending. I’m talking about E-Verify, a proposed system for curbing the legal employment of every single undocumented worker in America. While seemingly immigration-related, a mandatory E-Verify program could cripple the Social Security Administration (SSA) by concurrently draining already-limited funding while imposing heavy burdens on one of the most efficient government programs in existence. Oh yes, and it would threaten the timely distribution of all new Social Security benefits.

For those not familiar with it, E-Verify is a tool designed to prevent the employment of undocumented workers in the United States. Employers run the personal information of new hires though the E-Verify electronic system, which is connected to the SSA master database of Americans with Social Security numbers. In its developmental stages, the program has been optional for employers, but new legislation proposed by Rep. Lamar Smith (R-TX) would make it mandatory. This would be dubious policy for a number of reasons, and many diverse groups, from the pro-immigrant community to businesses and agricultural companies, have come out against it.

One key message of these groups that is often overlooked is that E-Verify would add significant responsibilities and workload to an agency that is already overworked and underfunded. The Social Security Administration is one of the most efficient government agencies, operating at less than 1 percent overhead costs. Forcing SSA to handle the administrative nightmare of E-Verify is worse than the usual conservative position of “starving the beast” — it is more like starving the beast and making it run a marathon while carrying a 50 lb. backpack. That’s because in addition to drastically increasing the responsibilities SSA would be faced with, the agency is already dealing with massive budget cuts that limit its administrative capacity. There are three compelling lines of argument against mandatory E-Verify:

1. Mandatory E-Verify would cost American workers their jobs and create confusion at SSA.

When E-Verify finds an inconsistency between a name and that person’s work authorization, it issues a “tentative nonconfirmation” (TNC), after which an employee has several days to contact SSA or DHS to correct the error or risk losing their job. Unfortunately, a significant number of these TNCs are issued in error. (Errors are usually due to clerical mistakes from inputting data, especially with hard-to-spell names or ones that have been hyphenated or changed, as well as errors by the workers themselves when filling out government forms.) In 2010, of the 16 million E-verify queries by employers, 128,000 (0.8 percent of the total) required the employee to go to SSA or call DHS to fix the problem. Of those 0.8 percent errors, 0.3 percent were discovered to be in error and were later corrected. But 0.5 percent — over half of all errors — were falsely issued “final nonconfirmations,” essentially forcing their employer to wrongly fire them. 0.3 percent may not sound like very many, but with a total American workforce of 154 million, that translates to over 770,000 jobs lost. (Tyler Moran, Policy Director of the National Immigration Law Center, has a thorough explanation of how many workers would be affected, and why it is so hard for workers to challenge the system.)

So what does this mean for SSA? It translates to an already overburdened staff that now has to deal with hundreds of thousands of extra calls and office visits, sometimes entailing a lengthy review process for individual cases. In 2008, when there were only 7 million E-Verify queries, 88,000 people called the 1-800 number or visited SSA due to E-Verify errors. If the program were mandatory, SSA would have to review 154 million records in the initial implementation period: if the rate of people calling SSA was the same as 2008, that would be nearly 2 million more calls into the agency during that period alone.

2. SSA is already underfunded and overburdened, and cannot afford to take on the consuming and perpetual E-Verify project.

SSA has long been underfunded. Agency administrative expenses alone have been shorted 8 of the last 10 years (compared with the amount it requested of Congress to operate at full capacity). There was a particularly huge cut in 2011, almost a billion dollars below the required level, that was part of the last-minute compromise between Speaker Boehner and the Democrats a few months ago.

Because of those negotiations, SSA has already had to take several measures to limit its regular operations because it simply can’t afford them — many of which (ironically, although perhaps not unintentionally) will increase costs further. For one, last month the agency stopped sending out annual earnings statements to all workers under 65. (Leave aside the fact that they only cost SSA $30 million in 2011, and help millions of Americans with their retirement planning while double-checking that SSA has the correct data for them.) The agency still expects that it will experience increased call volume from confused people wondering why they didn’t get their statements and hoping to confirm their information either in person or on the phone.

E-Verify proponents often claim, in response, that SSA would be funded to keep up with its new responsibilities. While that’s theoretically possible, it’s unlikely, given the Republicans’ current impulse to cut every government program in sight. It’s easy to imagine a scenario whereby SSA is forced to cut even more of its regular operations in order to accommodate the new E-Verify agenda. Critical goals of the agency, such as reducing the unacceptably long backlog for pending claims, would have to be ignored further into the future. Or maybe it was the point all along to cripple the administration of Social Security benefits themselves and attack this extremely popular program through the back door.

3. E-verify would remove millions of taxpayers from the pool that pays into Social Security, thus weakening the solvency of the Trust Fund.

As we’ve seen, the point of E-Verify is to remove illegal workers from legal employment, likely ending their tax contributions to Social Security and other federal revenue streams. This is a wasted opportunity, as any undocumented worker that pays taxes provides a net gain to the system (since they don’t collect benefits). As we all should know by now, undocumented workers are not going to leave the country when E-Verify comes knocking. They fill an important niche in our economy and are here to stay — the only difference is that more of them will be funneled into the underground economy, or miscategorized as (partially tax-exempt) independent contractors. One 2008 bill that would have made E-Verify mandatory without a pathway to legalization would have decreased federal revenue by $22 billion over 10 years.

Of the approximately 8 million undocumented workers, it is estimated that about two-thirds of them pay payroll taxes into the Social Security Trust Fund, accounting for $12 billion in 2007. (The Trust Fund is the total pot of surplus money paid into Social Security that is not immediately sent out as benefits, now totaling $2.7 trillion.) In sum, undocumented workers have contributed somewhere between $120 and $240 billion to the Trust Fund, accounting for 5.4 to 10.7 percent of its total assets. In addition, these workers tend to be younger than the average American, so the impact of their tax contributions will grow as the Baby Boomers retire and the percentage of seniors in America rises from 12 percent to 18 percent. According to the chief actuary of SSA, without the contributions of undocumented workers, the Trust Fund would run out of assets six years earlier than estimated in the 2010 Trustees Report. That’s staggering.

According to most experts, mandatory E-Verify wouldn’t affect those who already receive Social Security benefits, because current beneficiaries receive their checks through a mostly automatic process. But this much is sure: nearly everyone else would be affected. It is anyone’s guess how SSA would respond to being buried with new caseloads at a time when, even pre-E-Verify, “unprecedented workloads combined with declining budgets [have] damaged [the agency’s] service delivery,” according to the SSA Commissioner himself. I’ll leave it to the immigration experts to suggest how E-Verify needs to be improved before making it mandatory — but for now at least, mandatory E-Verify is the surest way to threaten the social safety net with paralysis. Let’s hope that if E-Verify makes it through the Senate without comprehensive reform attached, Obama will roll out the veto on this one.

Scott Hochberg