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A Makeover for Immigration Policy?


Two years after immigration reform collapsed amid rancorous rhetoric and an unpopular, hobbled President, a new Congress is restarting deliberations on the subject, with votes coming potentially later this year. The new debate is expected to be just as fierce as in 2007, when disagreement over how to address the estimated 12 million undocumented workers in the U.S. roiled Congress and scuttled legislation. This year, however, the recession and the effect foreign workers have on a deeply troubled U.S. economy is likely to play a central role in the debate.

"Washington insiders and political pundits…say it is bad politics to even discuss immigration reform at a time when America is facing such serious economic challenges," Senator Charles Schumer (D-N.Y.), said Apr. 30 as the Senate Judiciary Committee heard testimony on the issue. "The politics may be hard, but the reality is obvious: It is (in) everyone's best interests to change and fix our current immigration system."

The hearing offered a glimpse at what are likely to be heated economic debates when a new bill is introduced, possibly as early as the fall. Those issues include: how to cope with the status of the estimated 12 million undocumented workers in the country, whether employers should use an electronic system of verification for potential hires' legal status, and whether guest worker programs like the H-1B visa program will be expanded or reformed.

Crafting a Path to Citizenship

In June 2007, a comprehensive immigration reform bill sponsored by Senators Ted Kennedy (D-Mass.) and John McCain (R-Ariz.) failed in the Senate despite strong support from President George W. Bush. That bill would have increased enforcement on the border with Mexico but also would have created a route to citizenship for those in the country illegally.

A newly crafted plan will also likely include a path to citizenship for these workers, and the debate will again be bitter. But this time around, supporters of immigration reform have the backing of a popular President, who is hoping to persuade voters that integrating undocumented workers would be a net gain for the economy. President Barack Obama signaled in March that he is committed to moving forward with comprehensive immigration reform in 2009.

In his Apr. 29 press conference, Obama said that the current system is untenable. "It's not good for American workers," he said. "It's dangerous for Mexican would-be workers who are trying to cross a dangerous border. It is putting a strain on border communities, who oftentimes have to deal with a host of undocumented workers. And it keeps those undocumented workers in the shadows, which means they can be exploited at the same time as they're depressing U.S. wages." Obama wants to convene a working group of legislators and experts to shape legislation this summer, and prepare a bill as early as the fall. "I see the process moving this first year," he said.

Via Immigration, Strains and Growth

The controversy over immigration reform has to do in part with the uneven distribution of the economic costs and benefits, particularly regarding undocumented workers. Some border states and other areas with large undocumented populations are facing strains on hospitals and public schools. And unskilled illegal immigrants can pressure wages of native-born Americans without high school diplomas. At the same time, immigration helps the overall economy: "There is little doubt that unauthorized—that is, illegal—immigration has made a significant contribution to the growth of our economy," said former Federal Reserve Chairman Alan Greenspan. "Between 2000 and 2007 it accounted for more than a sixth of the increase in our total civilian labor force.…Unauthorized immigrants serve as a flexible component of our workforce."

A new bill will likely include a path to citizenship for these workers, meaning the debates of 2007 will resurface. Some lawmakers predicted a tough fight. "There is indeed a dark side in this country," said Senator Dianne Feinstein (D-Calif.) "It prefers to distort the issue and caters to a fear in people that if we repair the system…it is harmful to this nation. But harm is being caused to this nation by not moving" on reform.

Another sticking point in the debate over a new bill will be whether to expand guest worker programs for both highly skilled and less-skilled immigrants under the H-1B and H-2B visa programs. The labor union groups AFL-CIO and Change to Win announced a unified stance earlier this month on a plan that would reform but not augment guest worker programs. President Obama has also indicated he does not want additional guest workers in a new bill.

Strong Demand for Guest Workers

"The current broken system has given rise to a three-tier caste worker system in America: citizens, guest workers, and undocumented workers," said Eliseo Medina, executive vice-president of the Service Employees International Union. "This onerous system depresses wages for all workers because too many employers seek out the cheapest, most vulnerable workers in order to gain a competitive advantage." The union groups say that instead of increasing the number of work visas, a government commission should regulate immigration flows according to the economy's needs. That isn't likely to please employers in industries from nursing to food processing to farming, who want to expand guest worker programs. They say they desperately need additional employees.

The hearing also touched on the issue of skilled workers in the controversial H-1B visa program for skilled workers. While demand for H-1B visas is down this year due to the weak economy, high-tech companies still favor raising the 85,000 annual cap on these visas. Companies like Microsoft (MSFT) and Oracle (ORCL), which have long advocated increasing the number of skilled H-1B visas available in the U.S., say they still confront employee shortages.

Greenspan favors expanding the number of H-1B visas. "The quantity of temporary H-1B visas issued each year is far too small to meet the need, especially in the near future as the economy copes with the forthcoming retirement wave of skilled baby boomers," he says.

Herbst is a reporter for BusinessWeek in New York.

0115_moira_herbst_bio
Herbst is a reporter for BusinessWeek.

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