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Economics of Immigration

posted on April 19, 2007

The migration of noncitizens into the American work force has reached remarkable levels. Most estimates indicate there are at least seven million employed. In all some 12 million noncitizens well in the U.S., including 55- to 85,000 in Iowa.

The federal raids on six Swift packing plants in six states last December shoved the issue of illegal immigration into the public eye. Set into motion by the forces of economic globalization, the moment had been building for years.

Narrator: The meat industry is just one sector of the economy that has become increasingly dependent upon an undocumented work force. That trend and the subsequent immigration raids underscore the inability of the U.S. to govern its own economy.

Harl: In my view it really represented failed policy, that it was sad that we came to the point where we had to deal with it in such a manner as that.

Narrator: Noted Iowa State University economist Neil Harl says the nation's immigration policy fails to square with realities of geography or, for that matter, trade agreements that have been implemented.

Harl: What we have is an outsourcing of manufacturing, outsourcing of services. Anything that's mobile has a tendency to move to the place in the world where the cost of doing that step in the process is the cheapest.

Narrator: Meat processing is tied to the soil and the climate of the Corn Belt. Outsourcing is not feasible. So thousands of workers have migrated to an industry that has seen its average wage adjusted for inflation decline by more than 20 percent over the last 25 years. Roughly 58 percent of the estimated 7 million undocumented workers in the U.S. are from Mexico. Another 25 percent are from other Central American countries. Given Mexico's proximity, current immigration quotas seem extraordinarily unrealistic. Under U.S. law, fewer than 26,000 Mexicans may enter the U.S. annually. Clearly the figure is a drop in the bucket compared to the numbers crossing the border, more than a half million a year. The availability of the cheap labor benefits the Iowa economy, ensuring consumers of cheap food and farmers of a slaughter industry to process and add value to the livestock they produce. The economic activity feeds the state's tax coffers and its economy; those are the benefits. The cost of the undocumented population, though, is typically borne by local communities.

Harl: I recall a few years ago when there was a proposal to build a new packing plant in Iowa, Iowa Falls said no; Cambridge, Iowa, said no; even Ottumwa, a longstanding meat packing town, said no. And because of what we call the cost of externalities, the cost for education, the burden on the health care system, on the various social services, particularly where you don't have a screening kind of a system to screen out those who tend to come and cause problems.

Narrator: While some in affected communities are simply uncomfortable with the influx of new faces that don't look or sound like them, there are real fiscal demands. Harl says the state needs to recognize those costs and help communities adjust to the new populations.

Harl: If this is advantageous for society, advantageous for Iowa, then we need to spread those costs beyond those communities. They shouldn't be expected to bear all those costs.

Narrator: Moreover, Harl says the nation needs to recognize geopolitical and economic realities and get ahead of the challenge of managing an immigrant work force. He suggests a guest worker program that recognizes the nation's need for foreign workers and offers those workers the prospect of long-term work visas and even citizenship, a screening process that would weed out the undesirables and ensure the skills and language abilities of the applicants. And Harl says the process should punish employers who hire someone not precertified to be here.

Harl: We've got to make it, in my view, illegal to hire someone who's not been through the process, who just gets across the border and gets to Marshalltown, Iowa, and gets hired.

Tags: crime culture economy immigration Iowa politics


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