2011 News Releases

For immediate release: March 9, 2011

U.S. Must Reform Immigration Laws, Encourage High-Skilled Immigration, Says Dallas Fed’s Annual Report

DALLAS— In the global economic competition for talented workers, the United States risks falling behind if immigration laws are not reformed and employment-based immigration is not expanded, according to the Federal Reserve Bank of Dallas’ 2010 Annual Report essay.

“From Brawn to Brains:  How Immigration Works for America” is available at: http://www.dallasfed.org/fed/annual/2010/ar10b.pdf

For decades, the U.S. has been the world leader in attracting skilled immigrants, say Pia Orrenius and Madeline Zavodny, the report’s authors.

However, the U.S. immigration system—now facing more competition from other countries—has not kept up, and it’s not known how many high-skilled immigrants are turned away by the broken system.

“Piecemeal fixes have turned current law into a web of outmoded, contradictory and inefficient quotas, rules and regulations,” the authors state.

About 85 percent of U.S. green cards currently go to family members of U.S. citizens or permanent legal residents, people seeking humanitarian refuge and “diversity immigrants,” who come from countries with low rates of immigration to the U.S., the authors state. The remaining 15 percent are work-based, but half are for workers’ spouses and children, meaning only 7 percent of green cards go to principal workers, most of whom are high-skilled.

More than 1 million high-skilled workers are waiting for employment-based green cards, and untold numbers have given up on waiting or applying, according to Orrenius and Zavodny.

“No other major developed economy gives such a low priority to employment-based immigration,” the authors note.

U.S. immigration laws should be rewritten to focus on economic priorities, including leveraging high-skilled immigration to build the nation’s human capital base, retaining skilled jobs, fostering research and development, and bolstering U.S. competitiveness, Orrenius and Zavodny say.

“The nature of economic growth has shifted from brawn and machines to brains and microchips,” the authors write. “Immigration policy should reflect this change and be a tool that helps secure the nation’s prosperity, now and in the future.”
High-skilled immigrants come with more benefits and fewer costs than low-skilled immigrants, the authors say. High-skilled immigrants tend to complement high-skilled native-born workers by flowing into fast-growing fields where domestic labor supply has not kept up.

Immigration can also boost productivity growth, leading to a higher long-run rate of economic growth, Orrenius and Zavodny state. Highly educated immigrants receive patents at more than twice the rate of highly educated natives, and immigrants founded 25 percent of U.S. high-tech startups between 1995 and 2005.

In addition, high-skilled immigrants can help the fiscal picture in the U.S., the authors note. Immigrants with more than a high school education contribute far more in taxes than they use in public services.

Orrenius is a research officer and senior economist at the Dallas Fed and Zavodny is a professor of economics at Agnes Scott College.

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