Download Value of Mexican Immigration? Let the Economy Tell the Story

Reason for Mexican
Immigration?
Let the Economy Tell the Story
Versus
OUTLINE
• Disclaimer/Methodology
• Mexico’s Position
• United States’ Position
• Economic Evidence
• Cost/Benefit to Each Nation
• Way Ahead
• Bottom Line
METHODOLOGY
• Politically Charged Issue
• Let the Economic Facts Tell the Story
• Variety of Sources to Balance the Slant
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Center for Immigration Studies (Neutral)
Bureau of Labor Statistics (Neutral)
National Economics Encyclopedia (Neutral)
Dr. Looney’s Website--Migration Section (Neutral)
Brookings Institute (Left of Center)
RAND Corporation (Conservative)
MEXICO’S POSITION
• Best Case…Open Borders, Free
Flow of Workers
- Relieves Mexico of social
obligations for large poor
population (60% defined as poor)
- Remittances benefit Mexico
($23B in 2006)
- Acts as relief/buffer to stabilize
political/economic situation in
Mexico
MEXICO’S POSITION
• Fall Back Position…Increased opportunity
for legal Immigration
– Guest Worker Program: Facilitate legal
seasonal workers…workers return to Mexico
with increased wealth to open businesses and
build houses
– Oppose new Y visa proposal as too
restrictive
US POSITION
• Controlled borders (28 general visa categories)
• Preference to migrants with degrees/specialized skills
• Guest Worker Program (Proposed, 2007)
– Two-Year Temporary Y Work Visas
• Renewable up to three times
• Must return to Mexico for a year in-between
– H2 Visas (Current)
• H2A: Temporary/seasonal agriculture workers, 1 Yr/3yr on extension
– Must return to Mexico at end of seasonal period
• H2B: Temporary/seasonal Non-agricultural workers, 1 Yr/3yr (66K)
– One time jobs, bridge project, road crew
– H1 series visas for temporary skilled employment
Problems With Current System
• US employers see H2 system as burdensome
– Paperwork and responsibility
– Must pay employee’s travel to and from Mexico
– Must pay legal wage rates/taxes
• Porous border allows for entry/bypass of system
– More workers want in than the US has demand for
– Those who can’t get a visa don’t wait for the door to
open, they let themselves in
• 12 million Illegal aliens/6 million are visa
overstays
WHY DO THEY COME?
• Only border between third-world and first-world on the
planet, largely uncontrolled, 2,000 miles
– GDP Purchase Power Parity
• US, # 9, $46,000
• Mexico, #75, $12,500
– Unemployment
• US, 4.6%
• Mexico, 3.7%, 25% under-employed
– Inflation
• US, 2.7%
• Mexico, 4.0%
– Freedom House Freedom Scores
• US, 1.0
• Mexico, 2.5 with Serbia and Ukraine
WHY DO THEY COME?
– Manufacturing
• Grew 183% in Chile, 196% in S. Korea, 307% in China, 2.7% in
Mexico
– Registering a Business
• 5 days in US, 22 in S. Korea, 27 in Chile, 48 in China, 58 days in
Mexico
– Transparency
• Mexico is 65th most honest place to do business, tied with
Ghana, Cuba is less corrupt
• 34% of Mexican businesses paid “extra fees” to Govt officials
– Education
• 62% of educated Mexicans polled would leave and live in the US
– Wages
• Mexican worker earns $10/day in Mexico, $8 to $10 an hour in US
• 60% of Mexican society classified as poor
Cost/Benefit to Mexico
• Costs
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No pressure to reform government
Opportunity losses, workers engaged in foreign productivity
US employment provides no incentive to advance skills
Disruptive to Mexican families
Benefits
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Removes pressure to add more jobs
Remittances stabilize the economy ($23B)
Reduces a large population of unemployed/disgruntled people
Immigration used as bargaining position to obtain more US aid
Cost/Benefit to the US
• Costs
– Reduced wages for low-skill US workers
– Negative impact on US welfare programs
• Low Tax payer, High Social Program Consumer
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Increased costs to border security
Increased need for infrastructure like schools, but no tax base to support
Skewed tax costs
Increased crime
Nation divided
• Benefits
– Keeps farm wages down
• Consumers pay less for agricultural goods
– Some service industry wages held down
• Cheaper Services for US Customers
– Gives some states like California a competitive edge in production
WAY AHEAD FOR US?
WAY AHEAD FOR MEXICO?
MEXICO, WHAT IS MORE
REALISTIC?
• The Canadian’s aren’t sneaking across the
border
– Mexico has to reform politically/economically
– Must invest in human capital programs
– Incentivize return of migrant workers for
Mexico’s advantage
UNITED STATES, WHAT IS MORE
REALISTIC?
• Comprehensive immigration policy that guards our
interests first
– Temporary workers pay bond to enter, refundable upon
departure
– Reduce Mexico’s annual visa quota by each overstay
– Go after source of illegal labor magnet, US employers
– Reduce social program eligibility, another magnet
• US is too hard to live in without a job and social welfare
– Change laws to prohibit citizenship for births to non-US
citizens while on temporary visas
– Execute program to reform Mexico’s economy vs. handing
out blind aid
BOTTOM LINE
• Root Problem is Economic in Nature
– As long as there is a wide gap in economic parity
between US and Mexico…they will come
• Requires Balanced Economic/Political Solutions
– Stupid policies net stupid results
• Fences, Machine Guns and Security Patrols
Didn’t Work for the Soviets, Ask the Germans
QUESTIONS??