The US-Mexico border situation is an opportunity, not a ‘crisis’

Heated references to a “crisis” at the U.S. southern border and calls for massive deportations of undocumented Mexican immigrants aren’t new. Driven by demographic and economic factors, immigrants have gone between both countries for more than 100 years. Since these movements largely have occurred in reaction to basic supply-and-demand forces, they’ve generally served to benefit both countries. 

Fears of job losses among native citizens of the U.S. have led to harsh rhetoric and triggered significant extradition of Mexican nationals. Aside from how immigrants currently are being treated, the present situation at the border isn’t a “crisis” and doesn’t warrant mass expulsion of foreign workers; rather, it is an opportunity for both countries to enact positive immigration reforms.

Mexican immigrants entered the U.S. in large numbers during the 1920s. The depression era saw the extradition of thousands of migrants, but labor shortages during World War II led the U.S. to welcome Mexican agricultural workers under the “Bracero” program, initiated in 1942, when the U.S. signed the Mexican Farm Labor Agreement. In the years following the 2008 recession, the number of undocumented workers dropped from 6.9 million to 5.9 million. 

Job security and discontent with existing immigration policy played a role in President Trump’s 2016 victory, and he continues to push for accelerated deportations, heightened border security and a $22 billion border wall — without conducting a benefit/cost analysis to measure its economic viability.

The major economic argument made against immigration is that the influx of unskilled and semi-skilled workers drives down wages and forces local workers out of work. A recent study (by Clemens, Lewis and Postel) finds that, in the early 1960s, farm owners responded to the phase-out of the “Bracero” program by adopting new farming technologies, rather than replacing migrants with native workers. 

Although they receive less attention, there are compelling economic arguments in favor of immigration. The entry of foreign workers into the domestic labor force places strong downward pressure on the prices of consumer goods. The efforts of these new workers increase the profits of the firms that hire them, leading to more investment and further economic expansion. Our research suggests, due to the high prevalence of immigrant labor in the manufacturing and construction sectors, Mexican workers have substantially increased the nation’s capital stock and led to economic growth and welfare gains. 

As businesses hire further unskilled and semi-skilled labor, the size of the workforce grows, as does the need for native workers with complementary skills. Immigrants use the wages they earn to buy goods and services, increasing the demand for all U.S.-made commodities.

Another argument against the admission of new immigrants is that they represent a drain on the public treasury. This argument has some validity, owing to the social services that immigrant families incur; however, the situation is more nuanced. The unemployment level of immigrants is lower than that of the native population, so they require fewer social services. The crime rate of immigrants is about one-half that of the U.S. population as a whole, and immigrants are more compliant in paying taxes. Most importantly, second generation immigrants are socially mobile and, over generations, the negative impact of the initial immigrant cohort disappears as their children become more educated and productive. 

In response, Mexico should vigorously address its problems of economic stagnation and income inequality. During the past 30 years, over 20 percent of its population has struggled below minimum poverty levels, and today the majority of all Mexicans work in small “informal” firms, which lack legal status and are precluded from obtaining loans and credit. Authors have pointed out that strong and sustained fiscal measures, including basic tax reform, are necessary if Mexico is to incentivize efficient production.

The U.S. should concentrate on a cost-effective means of border security enforcement. Expensive and antiquated physical barriers should be eschewed in favor of better-trained and more efficiently equipped border agents and the use of “smart” technology to detect illegal border crossings.

The U.S. also should streamline the way it issues work visas to accommodate cyclical variation in the labor market. Mexico remains the single largest foreign source of mobile unskilled and semi-skilled labor available to U.S. firms, and flexibility in the issuance of visas can take advantage of that. Under NAFTA’s TN program, professionals from Mexico and Canada are permitted to enter and work in the U.S. on temporary visas that have a three-year limit, yet there is no limit to how many the U.S. can issue.

If managed correctly, the current situation represents an opportunity to enhance the economic welfare of both countries, but requires cooperation and sound policy. Agreeing to work together in solving their many shared immigration problems would be only a first step, but a step in the right direction. 

Roy Boyd is a professor of economics at Ohio University and expert in resource economics, international trade and computable general equilibrium (CGE) modeling.

María E. Ibarrarán is director of the Xabier Gorostiaga Institute for Environmental Research at Universidad Iberoamericana Puebla, Mexico.