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Is it time to roll up the welcome mat to newcomers? Europe, one of the world's largest recipients of refugees over the past two decades, seems to be saying yes. The stunning electoral showing of aging French right-winger Jean-Marie Le Pen is only the latest symbol of resurgence in anti-immigrant sentiment on the Continent.
Politicians such as Italy's xenophobe Umberto Bossi, Austria's Nazi-apologist Jorg Haider, and Holland's former Marxist Pim Fortuyn are all gaining a voice and an audience for their anti-immigrant message. Immigrants are blamed for rising crime rates and high unemployment. Perhaps more important, foreigners living in Europe are seen as a threat to social culture. "Massive immigration has only just begun," Le Pen remarked in a recent television interview. "We risk being submerged."
A debate over immigrants is also emerging in the U.S., although it's far less virulent and focused than in Europe. U.S. legislators and regulators seem to be reconsidering America's open-door policy following the terrorist attacks of September 11. Among the border-tightening initiatives in recent months: the federal government's restricting foreigners' access to student visas, the move to bar international students from certain areas of study, proposals to create a tougher Immigration & Naturalization Service, expanded government powers for detaining noncitizens, and the momentum behind a national identity card.
JUST TINKERING? Plus, border-accord talks between the U.S. and Mexico are stalled over U.S. demands for a tighter dividing line. In each example, the U.S. appears to be doing no more than mere tinkering. But taken all together, it's clear that a major move is under way that could dramatically change U.S. immigration policy.
Hold on, please. Policymakers should move cautiously when it comes to immigration. Its net economic benefits have been substantial in the U.S., especially in the increasingly integrated global economy. America's historic ability to absorb newcomers in its vast melting pot is a vital source of competitive advantage. Immigrants and their contributions, more than stock market investment or information technology, may well be the defining feature of the New Economy.
Certainly, the numbers are stunning. From 1981 to 2000, more than 16.4 million people legally poured into the U.S. (at least 7 million to 8 million more illegal aliens managed to get in), a figure exceeding the great immigration wave of 1900 to 1914 (see table).
The foreign-born now make up 11% of the U.S. population, twice the share of the 1970s. In the nation's fastest-growing cities, the overall populations of Hispanics and Asians grew by 72% and 69%, respectively. Almost all of the gain was driven by immigration.
HIGH-TECH LYNCHPINS. Since 1995, the foreign-born have contributed fully one-third of household growth in the U.S., and these immigrants are avid homebuyers. Among Asians age 25 to 44, the homeownership rate rose from 32.9% in 1995 to 37% in 2000, according to the Joint Center for Housing Studies at Harvard University. The comparable figures for Hispanics are 28.9% and 31.2%.
Many economists believe that immigrants play a dynamic role in the New Economy. More and more, America's high-tech industries, from semiconductors to biotechnology, depend on immigrant scientists, engineers, and entrepreneurs to remain competitive.
About half of foreign-born students who get their doctorate in science at an American university stay in the U.S. (see table). As of 1997, 21% of chemical engineers in the U.S. were foreign-born, as were 20% of computer scientists. Multinational corporations and export-oriented companies are highly dependent on immigrant managers and workers. Immigrants' links to their old countries are a boon to U.S. exports to such fast-growing regions as Asia, Latin America, and Eastern Europe.
ON THE MARGINS. The demand for less-skilled immigrants is also strong in an economy facing a long-term labor shortage. Those with less education are filling in the kinds of low-wage jobs that make a modern service economy run, such as in the hotel and restaurant industries. Over 15% of construction workers nationwide are immigrants.
Of course, this economic vitality does come with a price tag. Many immigrants barely survive on society's margins. Immigrants and their U.S.-born children account for some 22% of all people living in poverty. About a third of workers without a high school diploma are immigrants. Getting fired and not getting paid are constant threats, and racial discrimination does make immigrants' lot harder.
The federal government is a net winner in the balance of immigrant costs and taxes, while many state and local governments bear a disproportionate share of the costs, largely in the areas of education and health care.
The great migrant stream at the beginning of the 20th century profoundly shaped the U.S. economy. Between the Civil War and World War I, the U.S. emerged as the world's leading industrial nation. While immigrants did populate such rural states as Minnesota and Wisconsin, they mostly settled in cities and worked in the manufacturing establishments critical to the economy of that era. The century ended with another period of high immigration, and contrary to the latest rhetoric of the anti-immigration politicians here and abroad, newcomers are once-again vital to the economy.
The Influx of Immigrants
Decade
Number (Millions)
1821-30
0.1
1831-40
0.6
1841-50
1.7
1851-60
2.6
1861-70
2.3
1871-80
2.8
1881-90
5.2
1891-00
3.7
1901-10
8.7
1911-20
5.7
1921-30
4.1
1931-40
5.3
1941-50
1.0
1951-60
2.6
1961-70
3.3
1971-80
4.5
1981-90
7.3
1991-2000
9.1
Data: 2000 Statistical Yearbook of the Immigration & Naturalization Service
Foreign Student Enrollment in the U.S.
Period
Number (Thousands)
1954-55
34
1964-65
82
1974-75
154
1984-85
342
1997-98
453
1995-96
454
1997-98
458
1997-99
481
1998-99
491
1999-00
514
2000-01
548
Data: Institute of International Education
Farrell is contributing economics editor for BusinessWeek. His Sound Money radio commentaries are broadcast over National Public Radio on Saturdays in nearly 200 markets nationwide. Follow his weekly Sound Money column, only on BusinessWeek Online Edited by Beth Belton
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