Immigration Amid a Recession

As the economy deteriorates, the debate over the economic impact of immigrants rises. What this means for policy

By Moira Herbst

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Editor's Note: This story is the first in an occasional series examining the role of immigration amid economic recession.

As unemployment rises and the economy sinks further into recession, an old debate has become new again: the question of immigrants' impact on the U.S. economy. On one hand, the chorus of calls to restrict immigration is getting louder. Many U.S. workers are fearful of losing their jobs and want to ensure that the domestic workforce gets priority for new positions, especially for those created by the taxpayer-funded economic stimulus plan. On the other hand, tech, health-care, and other companies warn that tightening restrictions on immigrants will hinder, not help, the economic recovery.

Enter President Barack Obama. Despite his long to-do list, he says he wants to act on comprehensive immigration reform this year, and is expected to address the issue publicly this month. Like the 2007 bill that ultimately failed in the Senate, a new proposal is expected to include a path to citizenship for the estimated 12 million undocumented workers in the U.S. But Obama Administration officials say the plan would not add new workers to the American workforce.

H-1B Quotas Are Unlikely to Increase

That would disappoint employers in sectors such as health care, farming, and technology, who say they're in need of workers despite rising unemployment. Hospitals and other health groups say there's a critical shortage of nurses in the U.S., while farmers say they can't find enough workers to help milk cows, pick fruit, and harvest vegetables. In technology, companies like Microsoft (MSFT), Google (GOOG), and Oracle (ORCL) say they need more workers from overseas for jobs in software design and engineering. They have lobbied to increase the number of temporary visas for skilled workers, called H-1Bs, from its current annual limit of 85,000.

Worker groups counter that if employers boost wages, they'll find plenty of U.S. workers to fill open positions. With unemployment on the rise and potentially headed for double digits, it's unlikely employers can win more temporary work visas. "It will be impossible to push a large-scale temporary worker program," says Alexander Aleinikoff, dean of the Georgetown University Law Center and a member of the Obama team's immigration task force.

Competitors or Colleagues?

At the heart of the debate about immigration is the question of whether immigrants are complementing or replacing American workers. If they complement U.S. workers—because they possess rare abilities or will do jobs natives won't—they make a net contribution to the U.S. economy and even help create jobs. But if they replace native workers with similar skills, U.S. workers can be displaced and wages dampened, reducing the spending power of at least some populations.

Of course, what impact immigrants have ultimately depends on what laws are in place and how they're enforced. Some economists say that given the state of the economy, lawmakers should focus on inviting in more highly skilled, high-wage workers in certain professions on a permanent basis, thereby filling labor needs while increasing the tax base and encouraging home and car purchases. They also argue that legitimizing the status of the 12 million undocumented workers will level the playing field both for U.S. workers competing with them and for employers who compete against rivals that use cheaper, undocumented labor.

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