The Economic Standard: Immigration Law Creates a Lose-Lose Scenario for America

Last week, the Wall Street Journal reported that “as many as 80,000 employment-based green cards expire” before being offered to foreign workers, both in the United States and abroad. The loss of 80,000 employment-based greens cards due to a failure to process petitions will be unwelcome news to the 1.2 million foreign workers who await permanent resident status. While immigration hawks may welcome this news on the assumption that 80,000 jobs for Americans have been saved, the loss of these foreign workers means unnecessary harm will be inflicted on the U.S. economy.

Congress needs to act to ensure these foreign workers can make invaluable contributions to the U.S. economy. Failing to act will not only dampen the economic prospects of immigrants and Americans alike, but it will overlook the reality that the U.S. economy needs access to foreign talent to grow and innovate. When the economy fails to grow and innovate, it’s American workers and consumers who lose out.

The source of the current green card backlog is a combination of COVID-19 and immigration laws that place numerical limits on the number of green cards that can be issued each year.

In July 2021, the State Department estimated that 100,000 green card petitions were yet to be processed. Unfortunately, the Immigration and Nationality Act stipulates that any green cards that haven’t been awarded below the 140,000 annual cap will expire rather be carried over to the next fiscal year.

In a normal year, these petitions would have been processed, but the United States Citizenship and Immigration Services, the agency responsible for adjudicating applications, faced reduced capacity owing to COVID-19, which closed processing centers and consulates abroad. 

Studies routinely show that “the United States needs immigrants to stay competitive and drive economic growth.” In 2017, Francine D. Blau and Christopher Mackie estimated that foreign workers make “the U.S. economy an estimated 11 percent larger each year,” adding about $2 trillion to America’s Gross Domestic Product. Without the contributions of foreign talent, the United States would not only have a smaller economy, but Americans generally would be much poorer.

Foreign workers also possess considerable spending power that ultimately allows them to support American jobs and businesses. For example, the New American Economy estimates that in 2019, foreign workers had a spending power of $1.2 trillion. This spending power was not only used to purchase consumer goods from American businesses, but it also allowed them to support millions of jobs across the economy. Thus, in the long run, denying foreign talent access to the United States only denies American businesses a stable consumer base that will enable long-term growth.

For American consumers and the broader economy, foreign talent brings innovation and entrepreneurship, something the non-partisan Congressional Budget Office (CBO) has warned has been in decline over the past decade. Back in 2018, the CBO warned “the rate at which firms were created decreased from 10 percent of all businesses in 1982 to 8 percent in 2018, and the share of employment belonging to new firms (those less than five years old) fell from 14 percent to 9 percent over that same period.”

While domestic innovation falters, foreign talent has “founded many companies in the United States that have increased innovation, job creation, and economic growth.” In fact, the Center for American Entrepreneurship estimated in 2017 that half of Fortune 500 companies were founded by immigrants or their children.

Stanford University also highlighted the importance of foreign talent to innovation and entrepreneurship. Stanford’s studies have shown that while immigrants only make up 16 percent of inventors, they have been responsible for “30 percent of aggregate U.S. innovation since 1976,” helping develop everything from autonomous cars, social media sites, and biotech products to cell phones, all goods that have enhanced consumer welfare for Americans. Preventing foreign talent from entering the U.S. means the next big company could be set up abroad or never come into existence.

The recent news that 80,000 foreign workers could lose the opportunity to contribute to the American economy is another example of why Congress needs to pass comprehensive immigration reform and why arguments against welcoming foreign talent ignores economic reality. Failing to pass comprehensive immigration reform not only places thousands of foreign workers in immigration limbo but also prevents them from supporting American workers, businesses, and consumers. Failing to pass the much-needed immigration reform only places the country in an avoidable and unnecessary lose-lose situation. It does not have to be like this.

This was published in the Economic Standard.

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