Ross Douthat offers a contrarian and somewhat pessimistic take on the politics of immigration reform:

So you have an economic context in which upward mobility looks more difficult and optimism more unwarranted, and a political context in which anxious white voters are already feeling alienated from the G.O.P.’s economic message (or lack thereof). Against this background, it’s almost painfully easy to see how a sweeping immigration reform blows up in the Republican Party’s face. First, it persuades downscale, culturally-conservative whites that the party really, really doesn’t have their interests and values at heart. Second, it does win the G.O.P. a second look from some Hispanic voters — but because racial wealth gaps make those voters even more economically anxious than whites with similar incomes, they don’t see any reason to actually start voting for a party that doesn’t have an economic agenda beyond austerity and entitlement reform. Third, it gradually adds more low-skilled immigrants to the voting rolls at a time when trends in the economy and the culture make it harder for them to rise into the middle class — and absent such upward mobility, these voters, too, prove less-than-eager to embrace the party of free markets, limited government and American exceptionalism.

One can make a more sanguine argument about how the politics of immigration reform will play out for Republicans over time. Sean Trende, for example, has suggested that creating a path to citizenship for unauthorized immigrants currently residing in the U.S. won’t necessarily expand the Democratic coalition. But of course Sean doesn’t address Ross’s central anxiety, which is the increase in less-skilled immigration that is embedded in the Senate immigration bill, an issue that I’ve written about at length (to the chagrin of some of you, I’m sure). And earlier today, Dylan Matthews of Wonkblog, an advocate of a significant increase in less-skilled immigration, reported that the bill creates a path for less-skilled “temporary” workers admitted under W visas to eventually become U.S. citizens:

The bill allows for roughly two tracks by which eligible visa holders can get green cards. The first establishes a point-based merit system for green card applicants. You get varying numbers of points based on how educated you are, what field you work in, what skills you have, what family ties you have in the U.S., and so forth. The second is intended to reduce the existing backlog of employment and family-based green card applications, as well as provide for people who’ve been in the U.S. for at least 10 years in some legal capacity. The latter “long-term alien workers” channel is not open to W visa holders. Nor is the track two employment-based channel, which only applies to people in the U.S. before the bill’s enactment, necessarily excluding W visa holders. But it appears that the other routes are, in fact, available to guest workers. W visa holders are not explicitly barred from accumulating points under track one, or applying under the family green card provisions of track two.

Keep in mind that because that W visa holders are allowed to bring their spouses and children to the U.S., it seems likely that many will give birth in the U.S., and so these households will immediately become “mixed-status” households. Failure to renew W visas will cause family disruption, thus making it less likely the the immigration enforcement authorities will fail to renew visas. And the point-based merit system Dylan references is rather idiosyncratic in terms of how it distributes points. Zhang & Attorneys, L.P., an immigration law firm, has provided a detailed summary of the point-based merit system, which is divided into a skilled tier and a less-skilled tier: starting in the fifth fiscal year after passage of the law, 50 percent of these merit-based visas will be allocated to immigrants in each tier. 

For Tier 1, a PhD will earn an applicant 15 points, a Master’s alone will earn 10 points, and a BA alone will earn 5 points. English language proficiency will earn 10 points. Employment in a high-demand occupation, as determined by requests for H-1 visas, will earn 10 points. Points will be granted on the basis of the number of years an immigrant has worked in an occupation that requires extensive preparation. Employing at least 2 employees in jobs that demand extensive preparation will yield 10 points. Civic involvement will yield at most 2 points. Having siblings or married sons or daughters over the age of 31 will yield 10 points. The maximum score is set at 100 points.

The rules for Tier 2, the less-skilled tier, are subtly different, e.g., 10 points are granted to those with “exceptional employment records,” the rules for English language proficiency are more forgiving, and less-skilled immigrants who have been employed as primary caregivers will receive 10 points. Otherwise, the rules are roughly the same. 

Whereas the point-based merit system employed by Canada and Australia are designed to guarantee that immigrants have high skill levels and are likely to earn above-average incomes, thus ensuring that the immigrants in question are less likely to draw on means-tested benefits over the life course, the proposed U.S. point-based system makes it in many respects easier for less-skilled immigrants with large U.S.-based families than skilled immigrants with small families or without U.S. family ties. If our goal is to craft an immigration policy that serves the interests of foreign-born Americans and second-generation Americans, this makes sense. But if our goal is to admit immigrants who are likely to earn high wages (which, bluntly, can be taxed to finance social services, etc.), this doesn’t necessarily make much sense. 

To sum up: this is not an awesome bill. If it were up to me, we’d scrap the W visas — we ought to revisit the question of a guest worker provision at some later date — and increase the number of visas for skilled workers by a commensurate amount. The point-based system would make a high degree of English language proficiency a sine qua non, and it would increase the share of Tier 1 from 50 percent to 75 or 90 percent of the merit-based stream. There are many other aspects of the law we might revise, including the path to citizenship, but these measures would be my first priority. 

On Saturday, Mike Konczal argued that the Evans Rule — under which the Federal Reserve has committed itself to purchasing $85 billion in assets per month as long as unemployment levels exceed 6.5 percent and the inflation rate is below 2.5 percent (AKA QE3) – offers a perfect test case of whether or not “market monetarists” are right to believe that monetary expansion can offset fiscal consolidation, in light of recent tax increases and spending reductions. Several market monetarists and fellow travelers, including Scott Sumner, David Beckworth, and the market monetarish Matt Yglesias, have replied to Konczal and Paul Krugman, who endorsed the Konczal thesis. I particularly enjoyed Beckworth’s post, and not just because he is an occasional co-author of National Review’s Ramesh Ponnuru:

QE3, then, is like taking a road trip and applying the same pressure to the gas pedal regardless of whether one is driving up a hill, down a hill, or on a flat terrain. The trip’s length would depend on the changing terrain of the road (the shocks) and would be hard to know ahead of time even though you know your trip’s destination (the target). This is better than taking a QE2 road trip, where you don’t know your destination, but there is still much uncertainty about how long the QE3 trip will take. Now imagine you turn on cruise control at 70 MPH so that your car automatically adjusts the amount of gas based on the terrain. There would be much more certainty about the trip and much better expectations management. This would be much closer to a NGDPLT and provide the real test of whether monetary policy can offset fiscal austerity. It could be operationalized by conditionalizing the size of the QE3 asset purchases each month so that constant progress to the Fed’s targets were being maintained. QE3, therefore, is farm from ideal and, as Matt O’Brien observes, it is not even clear the Fed is fully on board with it.

Beckworth, like Sumner and Yglesias, emphasizes that the Fed does appear to have counteracted the effects of fiscal consolidation — it just happens that the tool it is using is very crude relative to NGDPLT, and is thus unlikely to yield a sufficiently strong result. 

Sociologist Andrew Cherlin’s recent op-ed on marriage as a capstone is an excellent summary of his work:

Today, marriage is more discretionary than ever, and also more distinctive. It is something young adults do after they and their live-in partners have good jobs and a nice apartment. It has become the capstone experience of personal life — the last brick put in place after everything else is set. People marry to show their family and friends how well their lives are going, even if deep down they are unsure whether their partnership will last a lifetime.

Consider weddings, which typically were formal ceremonies planned and paid for by the parents. Not anymore: According to the American Wedding Study, commissioned by Brides magazine, 36 percent of couples paid the entire cost of their wedding receptions in 2012, up from 29 percent in 2009; and another 26 percent contributed to the cost. As more couples plan and pay for the occasion, its central meaning is shifting from uniting two families to celebrating the bride and groom themselves.

YOUNG adults with greater earning potential, who can afford the capstone celebration, are still marrying in large numbers, while those with poorer economic prospects are holding off. 

If marriage is a celebration of a successful young adulthood, it is easy to imagine it fading away rather quickly. Consider developments in France, as described in the most recent issue of The Economist:

Under French law, marriage confers firmer rights, particularly over inheritance, than the civil pacts that have long been open to same-sex partners. The irony is that, for heterosexual couples, such pacts are now nearly twice as popular as the increasingly unfashionable institution of marriage.

It could be that America’s embrace of same-sex civil marriage will arrest a larger shift towards “marriage-lite” civil unions. Or it could be that civil unions will be embraced in the U.S. as they have been in France and the Netherlands on the grounds that they are more easily dissolved and less fraught with cultural expectation. All in all, I’d say the prospects for a marriage revival are gloomy. Of course, this could reflect the fact that it is raining today. Perhaps I will revisit this subject when the weather is more agreeable. 

In How the West Really Lost God, the social critic Mary Eberstadt argues that the decline of religious observance and the decline of intact biological families are interrelated phenomena. We know that the religiously observant tend to have larger families than the unaffiliated, which has led many to conclude that religiosity drives decisions about family formation. Yet Eberstadt suggests that the decision to form families also inclines individuals towards embracing and sustaining religious belief. While it is often observed that industrialization and urbanization are associated with secularization, Eberstadt maintains that what she calls the “Family Factor” is the mechanism through with these phenomena shape religious belief. That is, while industrialization, urbanization, and rising affluence might encourage a shift from large families to small families, as the opportunity cost associated with child-rearing becomes more onerous, the shift from large families to small families, and to pervasive childlessness, might in turn reduce the salience of religious belief. For example, parents concerned with the moral education of their children might be particularly invested in the normative structures and communities built around the major monotheistic religions. Though Eberstadt is very modest in her claims, her thesis strikes me as plausible. 

As family decline has put fiscal pressure on cradle-to-grave welfare states, which aim to replicate many of the caregiving functions that had traditionally been performed by kin-based social networks, Eberstadt raises the possibility that traditional families might experience a revival in a new article in the Weekly Standard:

If the welfare states of the West finally do implode, it’s hard to think of any institution but the family that could step into that vacuum. When politics forces the truth that taking care of one’s own is less ruinous than having the state do it, it’s just possible that personal choices could come to reflect that fact.

Might divorce rates go down—as they did, suggestively enough, following the crash of 2008? Similarly, if there is a world after the welfare state, might there be earlier marriage and more of it, as the (unsubsidized) single life becomes less tenable? Or consider the less tangible ways in which a world without a viable cradle-to-grave safety net could reinvigorate family ties. Might the unreliability of the state lead people to look nearer for emotional and social sustenance—meaning less family breakup, maybe even a rise in the birth rate as insurance against the loneliness and uncertainty of old age?

Of course, Eberstadt’s speculation rests on an implosion of the welfare state. Even if sluggish growth continues, absolute gains in living standards over time will likely continue to be fairly high, per Scott Winship’s essay on “The Affluent Economy.” So while the welfare state might retrench in some domains, it seems more likely than not that it will expand in others. The segments of society that are the most educated and affluent continue to enjoy stable lifetime partnerships, and the segments of society that are more vulnerable might find it very difficult to reconstitute the robust kinship networks of earlier eras. Assuming the retrenchment of the welfare state occurs in progressive fashion, in which high-earners receive smaller transfers and pay somewhat higher taxes than they have to date while low-earners are largely spared the need to “fend for themselves,” retrenchment might reinforce the current pattern rather than lead to a reinvigoration of family life as such. Some, including the New York University sociologist Patrick Sharkey (about whom I’ll have more to say in the coming weeks), might argue that we’ve already seen a retrenchment of public social expenditures and public investment in the high-poverty urban communities most directly impacted by family decline, in the early 1980s, and that this retrenchment wasn’t accompanied by a revival of families. Others would argue that the retrenchment of that era was mild compared to what we might see in Europe and the U.S. over the coming decade. Regardless, for Eberstadt’s scenario to really be put to the test, the welfare state would have to be in even more parlous shape than it’s in, at least in the U.S. Japan is a good example of how a society can endure sluggish growth and family decline without sparking a cultural transformation. That said, the reinvigoration of family life Eberstadt has in mind strikes me as an obviously attractive propsect, so one hopes that it can occur even if the U.S. and other market democracies experience an economic revival. 

Part of me thinks that Eberstadt is right and that welfare state retrenchment really could lead to a family revival, but that this would be a long and arduous process. It’s hard to imagine modern electorates tolerating the short- and medium-term dislocation this process would entail, not least for the providers of social services, many of whom are themselves politically engaged middle-earners, like public school teachers and health professionals. 

John Goodman of the National Center for Policy Analysis has been calling for market-oriented health-system reform for decades, and he is one of the architects of health savings accounts and the broader embrace of consumer-directed health plans. He now finds himself immensely frustrated with recent Republican divisions over health reform, e.g., the recent failure of House Majority Leader Eric Cantor’s bid for shifting resources from the Prevention and Public Health Fund established under the Affordable Care Act, which the Obama administration has been using to finance the creation of state-based exchanges, to high-risk pools. Goodman has many thoughts on what has gone wrong with conservative health reform efforts, but his fundamental contention is that because there has been very little intellectual collaboration and exchange across right-of-center think tanks on the subject, conservative lawmakers haven’t come close to reaching a consensus about “what is to be done.” 

For Goodman, the most problematic aspect of the Affordable Care Act is that it creates serious horizontal equity problems, i.e., households at the same level of income are treated very differently, depending on whether they acquire health insurance via employers or via the state-based exchanges, etc. And so along with health economist Mark Pauly of Wharton, he has long championed fixed-sum tax credits. Liberal critics have objected to fixed-sum tax credits on the grounds that the tax credits envisioned by Goodman and others are not generally large enough to finance the purchase of comprehensive health insurance policies, and many fret that fixed-sum tax credits would lead to the rapid unraveling of employer-sponsored insurance, thus shifting tens of millions of Americans to a fragmented and flawed individual insurance market. 

But Goodman, like Yuval Levin and Ramesh Ponnuru, among others, maintains that the fixed-sum tax credit would create a powerful incentive for private insurers to create attractive insurance products that cost no more than the fixed-sum tax credit. This insurance products would look different from comprehensive health insurance prodicts, in that they would tend to employ narrow networks and they would have somewhat higher deductibles. Yet they would shield households from catastrophic expenditures, and their narrow networks would tend to encourage medical providers to become more cost-effective, so that they would be more likely to be included as providers of choice. 

One of the more intriguing aspects of Goodman’s proposal, to me, is that he suggests that households be allowed to buy into the Medicaid program. The core elements of the Goodman program includes: (1) fixed-sum tax credits worth $2500 for every adult and $1500 for every child (an amount that would have to be revised over time); (2) money that is not claimed by individuals will flow to state and local governments to be spent on medical care for the indigent; (3) the federal government would make certain benefits fully or partially conditional on proof of insurance, to encourage the expansion of continuous coverage; (4) and finally, households would be allowed to spend their fixed-sum tax credit and some additional income-contingent amount, starting at zero for low-income households, to buy into Medicaid. (Medicaid beneficiaries would also be permitted to exit the Medicaid system if they’d prefer to use their fixed-sum tax credit to purchase private insurance.) Under Goodman’s framework, state Medicaid programs can thus serve as a “public option,” offering a backstop for those who would prefer not to navigate the private insurance market and who are comfortable with Medicaid’s limitations. (See this recent post by Don Taylor Jr. to get a sense of Medicaid spending across beneficiary categories.)

This weekend, I had the pleasure of reading David Goldhill’s Catastrophic Care. Avik Roy published a lightly-edited excerpt from the book back in January, outlining the basics of Goldhill’s proposed health-system reform. My sense is that the chief objections to Goodman’s proposal from the center-left will be that it leaves room for adverse selection and that its fixed-sum tax credits will be insufficiently generous, though there will be additional wraparound subsidies for low-earners. My concern, which Goldhill addresses, is that I’m not sure that high-risk pools are sufficient to address the challenges facing individuals with high health costs. Over time, for example, there is a danger that politicians will expand high-risk pools to woo voters, as Avik has suggested. Then there is the possibility that the ranks of the truly uninsurable might increase over time as we learn more about the genetic propensity of individuals to contract various chronic diseases. And so one of the foundations of Goldhill’s proposal is a universal “true catastrophic insurance” system, run by a publicly-sponsored non-profit corporation. Others, like Harold Luft, have proposed public reinsurance mechanisms to achieve the same basic goal of creating a unified risk pool to cover the risks of hospitalization and chronic illness. Goodman, in contrast, is more inclined to support John Cochrane’s approach of using health-status insurance to protect continuously-insured individuals against the danger of developing medical conditions that would raise their insurance premiums. While I find many aspects of Goodman’s approach attractive, this risk pool question is immensely challenging. 

Having recently discussed Kevin Hassett’s call for more aggressive federal efforts to fight long-term unemployment, I thought I’d mention a 2009 paper he co-authored with Lawrence Lindsey and Aparna Mathur on creating a unified credit for low-income workers. Late last year, Harvard economist Edward Glaeser called for the consolidation of federal social policies, and in particular six large programs: TANF, Medicaid, SNAP, housing vouchers, unemployment insurance, and the EITC. His argument was that while the adverse incentives in any given program were manageable, the cumulative impact of all six programs was an extremely high effective tax rate on low-earners. Hassett, Lindsay, and Mathur argue along broadly similar lines, yet they focus on seven tax credits for low-earners:

Currently, the tax code allows low-income individuals and families (at varying income levels) more than seven different tax credits (including the refundable and non-refundable portions of each credit). The credits are either tied to certain expenditures such as child care expenses, education expenses or are provided as incentives to low-income families who work. Each has varying income and other eligibility requirements, different schedules, different maximum credit values and different phase-in and phase-out ranges, adding layers of complexity and high marginal tax rates even at the lower end of the income distribution. Replacing all of these credits together with a simple policy, therefore, holds significant promise, and we discuss several options to do so.

What follows is a detailed discussion of the various credits and the incentives they create for low-earners. One of the more intriguing points made by Hassett et al. is that the work disincentives of a “cliff” — an abrupt cutoff of benefits at a given level of benefits — are in some sense better than the work disincentives of a gradual taper, in which benefits are reduced at a rate below 100 percent as income rises. Low-earners will likely refuse to take jobs that pay more but not enough to make up for the loss of the credit, but high-earners beyond the threshold will be less tempted to reduce work hours to become eligible. But in the end the authors reject this option on the grounds that despite its simplicity, the effective tax rates for workers right at the cliff would be unacceptably high. They conclude by tentatively endorsing the following basic design:

If we had to choose among the several alternatives, however, we believe that the most practical policy is one that phases in at a rapid rate and phases out at a rate of about 22 percent for every additional dollar earned, the maximum phase out rate faced by individuals under the current tax code. By further restricting the availability of this credit to families with children and work related income and ensuring that the total cost of the credit does not exceed the costs of the current system, we could ensure to some extent that the proposed new credit achieves the goals of distributional and revenue neutrality.

A unified credit that applies to childless adults as well would be more expensive, but it would have the added benefit of benefiting large numbers of less-skilled men. 

Judith Miller suggests that had the Tsarnaev brothers planned a terror attack in New York City, there is a good chance that they’d have been stopped by the NYPD. The NYPD’s intelligence and counterterrorism divisions are the gold standard for local police forces worldwide, and their 1,000 counterterrorism police officers and analysts have cultivated strong ties with Muslim communities in and around the five boroughs. Replicating the NYPD’s extensive and expensive efforts is probably infeasible for most large U.S. cities, let alone small ones. But the NYPD’s success in this regard is further evidence that the quality of local government matters a great deal, and measures that tend to increase the quality of local government, like those championed by the legal academic David Schleicher, are worth pursuing. Policies that attract more people will tend to lead to more revenue, and more revenue can translate into better services (note the “can”), including better protective services.

Mike Konczal argues that, rather than devise policies narrowly-tailored to address the problem of long-term unemployment, we ought to focus on boosting the general economy. Mike is an advocate of large-scale fiscal stimulus, and so his particular vision of how to achieve full employment is unlikely to find many takers on the right. What I have found encouraging, however, is that a growing number of conservative policy thinkers, led by Ramesh Ponnuru and James Pethokoukis and David Beckworth, among others, have embraced nominal output targeting, and also that Megan McArdle and Kevin Hassett have recently endorsed direct employment programs for the long-term unemployed. Megan identifies the following possibilities:

We could, for example, replace extended unemployment benefits with a WPA-style jobs program. We could implement a federal hiring preference for the long-term unemployed, akin to the benefit that veterans get, paired with a very lengthy probationary period in case some of the long-term unemployed are unemployed because they’re lazy or useless. We could offer to suspend payroll taxes for those who rehire the long-term unemployed: one or two months for every month of unemployment. We could offer people in areas with very high unemployment a mobility grant to move elsewhere.

These things would be expensive. But they’re not more expensive than having fellow citizens permanently drop out of the labor force, which costs us in three ways: first, because they are not producing anything, which makes all of us a little bit poorer; second, because they may well end up finding their way onto government benefits, such as Social Security Disability; and third, because those folks are our friends and family, and seeing them suffer makes us suffer too.

And Hassett, in testimony before the Joint Economic Committee (that, shamefully, no Republican lawmakers and only four Democrats attended), offers the following menu of policy options, which overlaps with Megan’s:

1) Direct hiring into government jobs. The stigma of long term unemployment may be ameliorated by a short run jobs program that recruits the long term unemployed to assist with the normal functions of government. This may allow individuals to look for a new job while employed, a change that may have a large impact on placement.

2) Policies directed at geographic mismatches. These might include improved empowerment zones, and possibly programs to assist workers as they move from areas with weak labor markets to areas with strong labor markets.

3) Privatized training. Our government training programs are a national embarrassment, and the unemployed would be better off if the monies were available to individuals who themselves chose the skills they wish to acquire.

4) Work subsidies. Programs that provide employers with tax incentives to employ the long term unemployed may encourage them to hire them.

5) Work Share programs. The U.S. currently has some programs that allow employers to cut hours of workers in downturns and let them receive some unemployment insurance, but they are very little used. There was also a program in Georgia24 that allowed workers to train and try out employees for a period of eight weeks while they continued to receive unemployment insurance, with the goal of the workers being hired at the end. We need to expand programs like this and experiment with others that may nudge employers towards hiring the long-term unemployed.

Hassett makes no effort to assess how much such programs would cost. Rather, he calls for policy experiments that can be rigorously evaluated, which makes sense.

What I find somewhat surprising is that the numbers involved do not appear to be as astronomical as I might have assumed. Lawrence Mead’s Expanding Work Programs for Poor Men suggests that the cost of a serious effort to raise employment levels among less-skilled men would be relatively high, as even generous initiatives like the New Hope Project in Milwaukee faltered when they weren’t mandatory and when they didn’t involve intensive case management. And of course Mead was writing about a population of 1.2 million men that was in need of work enforcement programs, a population that is smaller than the long-term unemployed as a whole. Nevertheless, his estimates are instructive. Drawing on the work of Harvard sociologist Bruce Western, who assumes that a robust employment program that would create paid positions lasting for a year would cost $15,000 per client. America Works, a private workforce development firm that works primarily with “hard-to-serve” clients, charges up to $4,250 to place workers with private employers, depending on how long the jobs actually lost. America Works appears relatively inexpensive because employers pick up the tab for wages. Mead estimates that scaling up America Works to cover the national population has in mind would cost $3.4 billion a year, while Western’s approach would cost $8.4 billion when additional services, like drug treatment, housing, and Pell grants, are factored in. Given that the average state spent $27,536 per inmate in 2008, these numbers look fairly modest. If intensive work programs reduce the incarceration rate, the public sector could achieve substantial savings. 

The cost of serving the larger universe of unemployed and underemployed workers would be much larger. Mead cites the work of Gordon Berlin and Wendell Primus, who have called for increasing the EITC subsidy rate for workers without dependents from its current 7.65 percent (up to a maximum of $457) to 25 percent (up to a maximum up $2000), a measure that would cost $29 billion to $33 billion a year while reaching 35 million workers. By way of comparison, the state and local tax deduction was worth $70.2 billion in FY 2011. 

Right now, it is hard to imagine a Republican lawmaker proposing halving the state and local tax deduction to finance wage subsidies aimed at the boosting household incomes and employment levels at the bottom of the labor market. Congressional Republicans, most of whom represent monolithically Republican districts, have resisted far less ambitious proposals to improve the lives of middle-income wage-earners, blithely unaware that they’re setting themselves up for political pain ahead. But if there is going to be a Republican revival, it is going to be built around fighting unemployment. 

Recently, George Borjas offered an estimate of the impact of immigration on GDP under a standard “textbook” economic model.

Of the $1.6 trillion increase in GDP, 97.8 percent goes to the immigrants themselves in the form of wages and benefits; the remainder constitutes the “immigration surplus” — the benefit accruing to the native-born population, including both workers, owners of firms, and other users of the services provided by immigrants. The standard textbook model of a competitive labor market yields an estimate of the immigration surplus equal to $35 billion a year — or about 0.2 percent of the total GDP in the United States — from both legal and illegal immigration. The immigration surplus of $35 billion comes from reducing the wages of natives in competition with immigrants by an estimated $402 billion a year, while increasing profits or the incomes of users of immigrants by an estimated $437 billion. Three key results are implied by the standard economic model: (1) if there are no wage losses, then there is no immigration surplus; (2) the redistribution of income is much larger than the surplus; and, (3) the size of the net benefit accruing to natives is small relative to GDP.

One reason we might want to emphasize skilled immigration over less-skilled immigration is that skilled immigrants will tend to put pressure on the wages of skilled U.S. workers, who tend to command higher wages than less-skilled U.S. workers. As Josh Barro has observed, one reason why health care costs in the U.S. are substantially higher than in other market democracies is that U.S. physicians are very well-compensated by international standards. Increasing the supply of foreign-born and foreign-trained physicians might help mitigate this problem, and in turn increase the profit or the incomes of the users of medical services.

Matt Yglesias interprets Borjas’s findings as follows:

There’s also the strange contention that the surplus comes from reducing wages of natives “while increasing profits or the incomes of users of immigrants by an estimated $437 billion.” The problem here is that the class of users of immigrant labor is virtually everyone. Immigrants pick crops and build houses. They work in meatpacking plants and fast food restaurants. They clean hotel rooms. They also write computer software and treat sick people. It would be foolish to pretend that there’s zero distributional impact of all this, but the idea that “users of immigrants” is some discrete class of people whose interests need to be weighed against those of wage-earners is a delusion. The big winner across the board would be retired people, who consume services but don’t earn wages. Like the fact that the big economic loser from increased levels of immigration is previous immigrants (who face the most direct labor market competition) this should be a clear sign that immigration politics isn’t about economics. If it were, you’d have a bunch of cantankerous old white people demanding open borders while young Latinos argue for pulling up the ladder of migration opportunity. In reality, you get exactly the reverse as people’s policy preferences track their cultural affinities or phobias. [Emphasis added]

Matt is probably right that immigration opponents tend to be motivated by cultural rather than economic concerns. It is not obvious that this is objectionable in itself, as failures of cultural integration can give rise to serious tensions within a society. But some of us who oppose an increase in less-skilled immigration do so precisely on the grounds that it will have a negative impact on the economic well-being of previous immigrants, and in particular previous immigrants who have yet to fully integrate into U.S. cultural, economic, and political institutions. While most immigrants might not share this concern, liberals haven’t abandoned their advocacy of coverage expansion on the grounds that many non-college-educated white voters who might benefit from it are nevertheless opposed. There is another sense in which the interests of previous immigrants and the broader citizenry might be in tension. At least some previous immigrants might welcome the prospect of new arrivals who share in the cultural traditions of their native country, as it will make it easier for them to sustain these traditions in their new country. That is, an ongoing influx will tend to reinforce ethnic enclaves and endogamous marriage, both of which impede assimilation. If assimilation is one of the goals of the broader citizenry, as it should be in my view, the case for restricting immigration for less-skilled workers with limited English proficiency seems fairly strong. 

It should be acknowledged that skilled immigrants with a high degree of English proficiency might also form cultural enclaves and resist assimilation, but the costs associated with this kind of cultural “apartness” are far more manageable than when the same kind of self-segregation occurs among asset-poor households. 

The long-term-care needs of aging Americans aren’t a central political issue yet, but that will soon change. The public sector finances over 70 percent of long-term-care costs in the United States, and those costs are set to increase dramatically in the coming decades as the over-65, and for that matter the over-80 and over-100, population is set to explode. In the most optimistic scenario, biomedical innovation will help us manage these costs by allowing us to delay the onset of various age-related diseases, which is one reason why President Obama’s brain science initiative is if anything too modest. But if cost growth stays on its current course, it is difficult to imagine that voters will allow the public sector to retrench in this domain. If anything, there will be pressure for the public sector to pick up even more of the tab for meeting long-term-care costs, as smaller family sizes, and the broader fraying of family ties, imply that aging boomers will have a smaller number of adult children to help meet their needs. Meanwhile, many of these adult children have children of their own, and the human capital investments middle-income parents are expected to make in their children are substantial and growing more substantial over time. There is thus good reason to believe that the politics of the next decade will be the politics of the sandwich generation. 

Biomedical breakthroughs aren’t the only way we can limit the spending increases associated with rising demand for long-term care. Private sector innovation can also play an important role. In the new issue of Pacific Standard, Lisa Margonelli describes an unglamorous private sector initiative that appears to be making a positive difference in the lives of retirees:

One of the biggest questions facing the nation with regard to aging boomers is: Where are they going to live? The options amount to a tangle of euphemisms and politically correct titles: independent living, nursing homes, aging-in-place, naturally occurring retirement communities (NORCs), retirement village, memory-care units, age-restricted communities. All this complexity disguises a simple fact about money, happiness, and aging: Seniors who can live on their own cost the country relatively little—they even contribute to the economy. But those who move into nursing homes start to run up a significant tab—starting at $52,000 a year. People who are isolated and lonely end up in nursing homes sooner. Hence, finding ways to keep people living on their own, socially engaged, healthy, happy, and out of care isn’t just a personal or family goal—it’s a national priority. Among seniors’ living options, there is one we overlook: mobile homes. Time-tested, inhabited by no fewer than three million seniors already, but notoriously underloved, manufactured-homes can provide organic communities and a lifestyle that is healthy, affordable, and green, and not incidentally, fun. 

As Margonelli explains, manufactured housing is the largest source of unsubsidized affordable housing in the U.S. 18 million people live in 7 million manufactured housing units, including one out of every 12 Florida residents. Because manufactured housing is better able to exploit economies of scale, it is dramatically cheaper than site-built homes. And if well-maintained, manufactured homes can prove as durable as site-built alternatives. (This extraordinary cost advantage is further evidence that the traditional construction industry ought to draw more heavily on modular construction.) Given that aging baby boomers face severe income constraints, due to the deterioration of defined benefit pensions, the collapse of the housing bubble, and family breakdown, Margonelli argues that for-profit communities of manufactured homes represent a way that retirees can maintain some modicum of independence while economizing on living expenses. She profiles one such community — the Pismo Dunes Senior Park in central California, which residents call “Pismodise” – to describe how it reduces loneliness, which in turn reduces the risk of death and deterioration:

In a paper published in the Journal of Housing for the Elderly, Tremoulet speculates that mobile-home parks can, for some seniors, do a better job of meeting needs than more-traditional arrangements in apartment buildings or in the suburbs. The design of the community allows seniors to own and modify their homes, have dogs, and putter around with hobbies like gardening in a way they couldn’t in an apartment building. Meanwhile, because parks have boundaries and streets, they function a bit like a gated community, where residents feel safe and have an easier time making friends than in either an apartment or a suburb. Mobile-home parks give residents a lot of control over their desire to be alone or to be social, Tremoulet found.

There are, to be sure, some downsides associated with this model, and Margonelli doesn’t shy away from them. But overall, her story is very encouraging: Pismodise seems to have crafted a promising ad hoc solution to a big, complicated, and expensive problem. 

In a recent post, I cite data from Carnevale and Rose to suggest that U.S. human capital and immigration policy ought to be oriented towards increasing the share of the U.S. workforce with post-secondary education, as doing so will tend to reduce the size of the college wage premium by making less-skilled workers relatively scarce. But as Andrew Biggs and Abigail Haddad have recently observed, there is reason to believe that the income gains attributable to college completion are not as high as has been commonly assumed:

[Michael] Greenstone and [Adam] Looney also assumes that high school graduates who attend college are the same as those who don’t, meaning that college education is the only thing driving earnings differences later in life. This is far from true. High school students who go on to college took a more rigorous high school curriculum, scored better on tests of reading and math, came from higher-income families, were in better physical and mental health, and were less likely to have been arrested. These are all correlated with higher earnings regardless of whether a person attends college, either because they contribute directly to higher pay or because they proxy for other factors that do. How much a college education increases the incomes of those who attend is a different question than the simple difference in earnings between college grads and individuals with only a high school diploma.

Using the 1997 National Longitudinal Survey of Youth it is possible to control for these and other differences between college grads and the rest of us. Once you control for both the risk of not graduating from college and differing personal characteristics, the earnings boost attributable to college attendance is cut in half. Looking at data that includes people from a wider age range confirms these results. Treating the entire wage gap between high school and college graduates as if it’s due to going to college significantly overstates the financial benefits of attending college.

The point raised by Biggs and Haddad is well taken. A college education is best understood as a proxy for other qualities that tend to correlate with success in the labor market. And that is why I tend to emphasize the importance of post-secondary education in determining who should and should not be allowed to work and settle in the U.S. Recently, I reread Edward Glaeser’s and Albert Saiz’s 2003 article on “The Rise of the Skilled City,” which includes the following passage:

One possible explanation for the strikingly different correlation between skills and growth in growing and declining places is that skills allow reinvention. The view that human capital is most valuable because it enables flexibility and the ability to respond to new circumstances was emphasized by Welch (1968). If this view is correct, then we should not be surprised if a high skill New England city manages to reinvent itself while a low skill rustbelt town does not.

One implication of this hypothesis is that places with high human capital should be better at switching out of declining industries. To test this hypothesis, we gathered data on education and industrial composition in 1940 by metropolitan area (contemporaneously defined). We then tested whether the impact of skills on contributing to the shift away of manufacturing over the next 30 years has been more important in industrial, colder areas of the country (Table 10, Panel B). The regressions support the view that the skilled rustbelt towns were better at reorienting themselves: the importance of education to left-hand-side) in the second half of the 20th Century was stronger in colder areas (interaction between human capital and temperature) and in areas with an initial bigger share of manufacturing (interaction between education and share manufacturing) explain the shift away of manufacturing (the change in the manufacturing share in the left-hand-side) in the second half of the 20th Century was stronger in colder areas (interaction between human capital and temperature) and in areas with an initial bigger share of manufacturing (interaction between education and share manufacturing). [Emphasis added]

The central risk associated with less-skilled immigration, in my view, is that it will increase the number of Americans who are ill-suited to successfully navigating economic change. In an ideal world, we could identify the qualities that are associated with upward mobility, the capacity for economic self-reliance, and flexibility in potential immigrants in some more precise way. But in the absence of these metrics, post-secondary education is a decent indicator of likely labor market success. 

Ramesh Ponnuru makes the case against the guest worker provisions in the Senate immigration bill in his latest Bloomberg View column. In January, I observed that some countries have established successful guest worker programs, e.g., Canada:

A small handful of countries, such as Canada, have crafted relatively successful guest-worker programs. But Canada’s program has succeeded in part by strictly regulating the lives of guest workers. Participation is limited to married men, and guest workers are isolated from the broader society. It is difficult to imagine that American civil libertarians would find such an arrangement acceptable.

The U.S. guest-worker program envisioned by the Senate immigration bill will be quite different, as Michael Clemens of the Center for Global Development recently explained to Dylan Matthews of Wonkblog. After noting that the bill allows guest workers to bring their spouses and children to the U.S., Matthews asks Clemens a sensible question:

DM: It’s easy to imagine W visa holders having kids in the U.S. who would then be U.S. citizens. And given that the bill makes immediate family visas unlimited, that could be an avenue for a lot of W visa holders to get permanent residency and citizenship later on, no? MC: In order for that to affect the status of the parents, the kid would have to grow up, become established in the U.S., have a job, and then sponsor them for a parental green card, which would be at least 25 years later, by which time it would be decades since they would have to have gone back home, even if they had a child while they were on W.

It would have to be that the child grew up in the origin country, with U.S. citizenship, but they’re not going to do that without their parents. They’re going to have to grow up with their parents and then come sponsor them. That could happen, but a) it wouldn’t happen for a quarter century and b) it’s unclear at what rate that would realistically happen.

There’s always the possibility that people come on W and then overstay, but that’s the status quo. We have a massive flow of unauthorized people, and if they stay they’d be in the same irregular status. A big misconception people have around legal reforms of this kind is that when you’re talking about the law you’re talking about movement, and the law and movement are completely different things. The law is a set of mechanisms for handling movement that is already happening and will happen anyway. That is happening now, that might happen in the W visa, the only question is what the legal treatment will be.

Clemens’ reply to Matthews isn’t very reassuring to those who want guest workers to be temporary residents, as it is easy to imagine Americans finding it difficult to turn away mixed-status families. The W visa might become a new magnet for unauthorized immigrants, as large number of W visa holders and their children choose to overstay their visas. Indeed, Ramesh raises precisely this point:

One of the chief arguments for this bill is to stop enforcing immigration laws in ways that break up families. What happens when a guest worker has finished his three-year term and has no job — but has brought his family here? (Or had a child, who would be a U.S. citizen?) Will we then deport him? Or will we just let him overstay his visa and go into the shadows as an illegal immigrant?

The Canadian authorities did not devise their restrictions out of pure spite; rather, they recognized that separating guest workers from their families and discouraging their integration in Canadian society would make them more likely to return home at the end of their term. Note that Canada has a very generous immigration policy for skilled immigrants, but they have decided, wisely in my view, to treat skilled and less-skilled immigrants very differently. That is, they encourage skilled immigrants to settle permanently in Canada and to integrate into political, economic, and cultural institutions while encouraging less-skilled immigrants to earn relatively high incomes for a limited period of time and then “make room” for other less-skilled immigrants in seasonal industries, etc. 

One of my great regrets in writing about immigration is that the data we have tends to track national origin and ethnicity rather than skill level. So though I’d prefer to stick to making observations about less-skilled immigrants, I more often encounter data about, for example, Asian Americans or Latinos. In a forthcoming article, Graeme Wood identifies a startling statistic from a group called Feeding America, which describes itself as the nation’s leading hunger-relief charity. In a section on Hispanic/Latino poverty, Feeding America notes that 26.2 percent of Latino households are food insecure, and that 34.5 percent of Latino children live in food insecure households. Moreover, Latino households are disproportionately represented among households that receive emergency food assistance. An extraordinary 29 percent of Latino children are served by the Feeding America network. In addition, 10.5 percent of Latinos live in deep poverty, i.e., in households with incomes less than 50 percent of the U.S. poverty threshold. The numbers are similar for children of immigrants: just under 35 percent of the children of immigrant mothers experience food insecurity, as opposed to just under 15 percent for the children of native-born mothers.

It is also true that immigrants households are less likely to access SNAP benefits than native-born households, in part because SNAP eligibility is limited for recent immigrants. Some, including Shikha Dalmia, suggest that this means that a foreign-born less-skilled workforce is  less burdensome than the native-born less-skilled workforce. She recognizes, however, that regularizing the status of less-skilled immigrants will tend to increase their reliance on means-tested transfers. Sara Quandt reports that among low-income immigrant children, the children of foreign-born, non-citizen mothers experience a level of food insecurity twice as high as that of native-born mothers; the children of foreign-born citizen mothers, in contrast, experience a level of food insecurity that is the same as that of native-born mothers. (See also this 2009 article from the American Journal of Public Health.) This suggests that creating a path to citizenship for less-skilled unauthorized immigrants will tend to reduce food insecurity, which is a good thing. Yet this will occur in part via the channel of an increase in the number of SNAP-eligible households.

A 2009 Child Trends research brief provides further evidence:

New analyses presented in this research brief indicate that levels of food insecurity are higher among infants and toddlers with immigrant parents than among those with native-born parents. Among these young children, food insecurity is more likely when immigrant parents are less acculturated, for instance when they are noncitizens, arrived more recently, or have limited English skills. When multiple background characteristics are considered simultaneously, parental citizenship in particular is strongly associated with food security—i.e., infants whose immigrant parents are citizens are more likely to be food secure than infants whose parents are not citizens. This research provides new insights into the prevalence and factors associated with food insecurity among households with young children of immigrants. [Emphasis added]

The authors also make reference to parental education among immigrant parents:

Higher parental education is associated with food security among infants with foreign-born parents. Infants with parents who lack a high school education, or who have a high school education but not a college degree, are less likely to live in food secure households than infants whose parents have at least a college education. Previous research suggests that food insecurity is lower in households where adults are better educated and our results provide additional support for this association when focusing specifically on immigrant households with infants. Thus, investment in immigrant parents’ education might yield better labor market outcomes as well as better knowledge of more cost-efficient food sources and better dietary practices for their children. [Emphasis added]

One approach is, as the authors to suggest, to invest in immigrant parents’ education. Another approach is to select immigrants with at least a college education, on the grounds that they are far more likely to form food secure households than less-skilled immigrants. This perspective is not widely embraced among scholars studying food security, for perhaps obvious reasons. The solution to the food insecurity problem among less-skilled immigrants is generally that we ought to expand eligibility rather than that we ought to think harder about whether U.S. immigration policy should emphasize the capacity for self-support. 

Regardless, it appears that one of the main reasons the U.S. has a high incidence of food insecurity by the standards of rich democracies is that food insecurity in the U.S. immigrant population is extremely high. This is not the only reason, obviously, as a rate of food insecurity of 15 percent for the children of native-born mothers is by all means higher than we’d like it to be. But given that the U.S. is in a position to select immigrants, as there is a large number of foreigners eager to live and work in the U.S., does it make sense to select immigrants who are likely to experience a substantially higher incidence of food insecurity than the native-born population, or might we instead select immigrants likely to experience a substantially lower incidence of food insecurity?

Some will no doubt conclude that the implicit moral perspective I’m introducing is distasteful in the extreme, as low-income, less-skilled immigrants experiencing food insecurity are almost certainly better off than they would be in their native country, and that the only humane policy is to welcome them in large numbers. And then advocates of less-skilled immigration split between those who also believe that the only humane thing to do once they arrive is to provide them with means-tested transfers, including SNAP, while others will suggest that less-skilled immigrants should not be eligible for SNAP and other means-tested benefits but rather that we ought to be indifferent, as a policy matter, to the food insecurity that will result. 

To understand why this alternative view might not be quite right, considering a brilliant recent article by Catherine Rampell of the New York Times, in which she argues that the cost-of-living in cities like New York is to some extent misleading for high-income professionals, drawing on research by Wharton economist Jessie Handbury:

Highly educated, high-income New Yorkers are surrounded by equally well-educated and well-paid people with similar tastes. More vendors compete for their business, which effectively lowers prices and provides variety. There’s also a high fixed cost to distributing a niche product to an area; if there’s more demand for that product, then the fixed cost can be spread across more customers, which will justify bringing the product to the market in the first place. That’s why companies go through the expensive hassle of distributing, say, St. Dalfour French fruit spreads in rich cities but not in poor ones and why New York can support institutions like the Metropolitan Opera.

Of course, not everything that wealthy New Yorkers spend money on is cheaper here. Housing, after all, is absurdly expensive, even for the rich. Complex zoning regulations and limited land make it all but impossible for supply to grow alongside demand. Still, it’s somewhat unfair to compare housing costs here to those in a place like Buffalo, or even Atlanta, since perks like access to amenities and unusually lucrative jobs are baked into the cost of New York real estate.

There is a flipside, as Rampell goes on to explain:

When you look at the cost of living for low-income people based on their tastes and preferences, New York’s poor turn out to be even poorer than you think. According to her research, a household earning $15,000 a year faces approximately 20 percent higher grocery costs in cities with relatively high per-capita income. The same is very likely to be true for other essentials, like clothing. Real estate is most crushing for all but those lucky enough to get into subsidized housing. For the poor, it is impossible to unbundle apartments from all the perks that help drive up costs.

A concentration of rich consumers should lead to better salaries for low-skilled jobs like waiters or manicurists. But federal programs intended to help the poor, like food stamps or child-care subsidies, are generally not adjusted for the local cost of living. In New York, the poor are “getting disqualified from a lot of these programs because they’re being paid $10 an hour rather than $7.50 an hour,” says David Albouy, an economist at the University of Michigan, “which can sort of artificially put them above the poverty line or wherever the threshold is.” [Emphasis added]

This is absolutely not to suggest that less-skilled immigrants don’t benefit enormously from access to the U.S. labor market. Rather, it is that the cost of closing the economic gap between less-skilled immigrants and the native-born might be higher than we have traditionally assumed. We could take the view that we should simply allow less-skilled immigrants to decide whether or not they want to accept the risks involved in working and living in U.S. Millions of immigrants have decided that living in food insecure households in the bottom tenth or fifth of the U.S. income distribution is preferable to the available alternatives.

Yet as long as Americans are concerned about household income and wealth dispersion and the high incidence of food insecurity, it is fair to ask whether it makes sense for us to import large numbers of workers who will struggle to independently achieve some modicum of economic security, as defined by prevailing U.S. standards. 

My latest column for Reuters Opinion is on the future of the U.S. Muslim community, hence the title of this post. I should stress than I’m not an expert on the sociology of religion, and I went the perilous route of trying to draw on my idiosyncratic personal experiences to yield broader insights. That hardly ever works. But you might enjoy reading the column all the same.

Ruy Teixeira of the Center for American Progress argues that Americans are “not as educated as we should be, given the demands of today’s increasingly skill-driven economy.” And he makes a convincing case.

As a recent study by Georgetown University’s Center on Education and the Workforce suggests, today’s 74 percent premium for a college education over high school (that is, how much more an average college graduate earns than an average high school graduate) is too high, both because it signals that today’s economy is demanding more college graduates and because of it contributes to wage inequality. They recommend instead a Bachelor’s degree wage premium level of around 46 percent.

This reduction in the college wage premium can be obtained if we increase the supply of college educated workers by around 20 million over the next 15 years (right now, we’re on track to add only about 8 million). Such an increase in the college educated workforce would take a big bite out of inequality, rolling back about a quarter of the increase in inequality we’ve seen since 1979.

This can be done, but it will necessitate a much more aggressive approach than we currently have to bringing down college costs and making sure everyone who wants to has adequate resources to pursue a college degree. This is particularly the case for black and Latino youth who still lag substantially behind whites and Asians in their college completion rates.

The study Teixeira cites — “The Undereducated American,” by Anthony Carnevale and Stephen Rose — is eye-opening. One of their findings is that it is important that the share of workers with post-secondary education increase, as a higher college-educated share of the workforce will lead to higher wages for less-skilled workers. Under current trends, the U.S. will have 8 million more postsecondary-educated workers by 2025. But if we sharply increase the number of workers with post-secondary education to 20 million, the U.S. economy will look very different:

[I]f this alternative path is adopted, GDP will be $500 billion higher than current projections and there will be earnings increases across the board even though the earnings gaps between Bachelor’s degree holders and high school educated workers will decline. Figure 11 projects the average increase in earnings by education level. Earnings of workers with a Bachelor’s degree would rise by 6 percent (from $56,138 to $59,329 [2010 dollars]) and the earnings of workers with only a high school diploma would rise by 24 percent (from $32,179 to $40,003), which would bring the wage premium down to 46 percent. For those with an Associate’s degree, earnings would rise 15 percent (from $36,160 to $41,584).

Given the declining earnings of male high school graduates over the past 30 years, our predicted 24 percent rise in real high school earnings may seem improbable. But the supply and demand conditions for less-skilled workers will be very different under our 2025 scenario: Output per worker will be 25 percent higher than it is today, and the share of the labor force with only a high school diploma or less will decline from 40 percent to 25 percent, making high school workers more scarce. High school workers’ scarcity will result in higher wages. Further, as part of meeting the goal of producing more college graduates, we specified that the quality of the K-12 system would have to increase; therefore, the quality of the noncollege-educated group in 2025 is likely to be higher than their counterparts today. Therefore, our projected higher wages for high school graduates reflect both higher skills and a large decline in supply. [Emphasis added]

But what will happen if we increase the supply of workers with post-secondary education while also dramatically increasing the supply of less-skilled workers with high school diplomas are less? Under this scenario, less-skilled workers will be far less scarce, and so wage gains for these workers will presumably be much smaller. To those of us who believe that  robust wage gains for less-skilled workers would be a welcome development, the next question is this: how we can grow not just the number but also the share of the workforce with post-secondary education, as the share of the workforce with post-secondary education will ultimately determine the size of the college wage premium? 

One relevant factor is immigration policy. An immigration policy that is explicitly geared towards welcoming workers with post-secondary education while restricting the numbers of workers with less education would contribute, over time, to increasing the share of the workforce with post-secondary education. 

Recently, Shikha Dalmia replied to my argument that as long as the U.S. intends to welcome a finite number of immigrants, it makes sense to prioritize workers with post-secondary education over less-skilled workers. There are a few small issues with her characterization of my posts, e.g., while I do observe that limited English proficiency is one reason low-income immigrants are less likely to access social welfare services, it is not the only reason — linguistic isolation is not the only form of social isolation; complicated eligibility rules mean that recent arrivals are much less likely to collect benefits than earlier arrivals, and so less-skilled immigrants will tend to access benefits more over time, etc. So her argument, as I understand it, is unconvincing:

Salam’s first point that one reason low-skilled immigrants use less welfare is because their poor language skills render them less able to navigate the bureaucracy might be true — but so what? It doesn’t negate my central thesis that so long as America needs a labor class, a foreign-born one (that needs welfare but can’t access it) is cheaper than a homegrown one (that needs welfare and can get it). This might be unfair to foreign workers — although they are obviously better off with a job in America even with differential access to welfare than in their home country or they wouldn’t be here — but not to America. (I am merely describing the current state of affairs, not endorsing it.)

My point is that this is not a stable equilibrium — low-skilled immigrants are “cheaper” only as new arrivals; as they assimilate, they become more like native-born less-skilled workers. Moreover, the U.S. is affirmatively choosing to welcome less-skilled foreign workers. The presence of less-skilled native-born workers reflects a failure of U.S. K-12 policies and much else. U.S. policymakers are not choosing to rely on a homegrown less-skilled workforce rather than a foreign-born less-skilled workforce. Rather, the existence of a homegrown less-skilled workforce is a product of complex historical circumstances. If we could legislate away the legacy of enslavement, segregation, and entrenched poverty and in doing so dramatically increase the share of the workforce with a post-secondary education, I would recommend that we do so. But we can’t. We can, however, choose not to sharply increase the share of less-skilled workers by revising our immigration policies. And in doing so, we can preserve our limited resources to tackle intergenerational poverty to deal with intergenerational poverty that has domestic origins. Other countries face profound intergenerational poverty challenges, including middle-income countries like Mexico and low-income countries like Bangladesh. While it is undoubtedly true that allowing these countries to export less-skilled workers to the U.S. will help alleviate their poverty problems, it is not obvious that this is the best policy from the perspective of U.S. taxpayers or from the perspective of the native-born American poor. Some balancing of interests is appropriate, e.g., some humanitarian component could be a part of a sensible immigration policy. But the notion that we are substituting a cheap foreign-born less-skilled workforce for an expensive native-born less-skilled workforce doesn’t make much sense — the native-born less-skilled workforce isn’t going anywhere, where or not we sharply increase the overall number of less-skilled workers.

Dalmia acknowledges that regularizing the status of less-skilled workers might make them more expensive in terms of public social expenditures. Yet she states that it is impossible to predict whether this cost will exceed the economic benefit created by less-skilled migration. That may well be true, yet it is a much safer bet that immigrants with post-secondary education will deliver net fiscal benefits.

Dalmia insists that we face a knowledge problem: those of us who believe that U.S. immigration policy ought to favor skilled over less-skilled immigrants are engaging in a form of central planning. As evidence, she points to the fact that some Canadian immigrants with doctoral degrees in physics drive taxi cabs. My conjecture is that a Ph.D. physicist driving a cab in Year 0 will have a substantially higher household income, regardless of the profession she is in, in Year 2 or Year 10 than an individual with less than a high school diploma. (I’ll also note that some people choose to drive cabs because they prize autonomy over income — a minority, perhaps, but the point is that more educated workers have more options than less educated workers.) That is, Dalmia is taking a snapshot of skills mismatch to imply that having Ph.D. physicists driving cabs is necessarily a waste, and that we’d be better off if the immigrants driving cabs had the lowest possible skill level to serve in that particular occupational niche. This ignores the fact that economic life is dynamic, and that it makes sense to select immigrants who are likely to prove resilient over time. The lowest possible skill level in Year 0 might prove too low a skill level for Year 10. An immigration policy that undershoots in terms of skill level is likely to yield a larger immigrant underclass over time than an immigration policy that overshoots in terms of skill level. Dalmia’s critique of central planning in immigration policy reminds me of the notion that NGDP targeting represents central planning in monetary policy. Any immigration policy, like any monetary policy under a fiat money regime, implies a degree of central planning. It happens that some central plans are geared towards the near-term interests of agricultural firms and low-wage employers who fear the prospect of a scarce supply of less-skilled workers while others are geared towards other priorities. 

Finally, Dalmia writes the following:

As for Salam and Bigg’s objection that it makes little sense for America to import foreigners with an 8th grade education when it is trying to raise general educational attainment levels, it sounds perfectly reasonable, but here’s the thing: The goal of an education policy and an immigration policy are not identical. The primary purpose of an education is to produce well-honed, well-rounded, self-actualized individuals — not necessarily generate workers for an economy. The economy certainly shapes individual career choices — just as it is shaped by the availability of workers — but that doesn’t mean that at any given time individual aspirations are going to be perfectly in sync with the needs of an economy. A well-crafted immigration policy can help alleviate workforce imbalances and go a long way toward enhancing economic productivity. The fact that between 1995 and 2005, about 700,000 low-skilled foreigners every year managed to be gainfully employed (legally and illegally) in construction, agricultural, landscaping, restaurant, house-cleaning industries speaks for itself.

This is one interpretation of the primary purpose of an education. Another view is that one of the purposes of education policy is, for example, to reduce the share of the population that is likely to prove dependent on means-tested benefits. This is one of the justifications for a public sector role in education — to subsidize human capital investment for households with limited resources and credit constraints, as the spillover benefits of a more educated population are considerable. Dalmia treats workforce imbalances as static, yet a dynamic economy will change over time by substituting labor-intensive business models with capital-intensive business models if the supply of less-skilled workers shrinks over time. We have seen this happen in many economies and in many historical periods. We don’t lament the fact that our economy is severely imbalanced between illiterate horse-and-buggy drivers and cab drivers with post-secondary education, nor should we be.

Last week, the Bipartisan Policy Center’s Health Care Cost Containment Initiative (HCCI), led by Former Senate Majority Leaders Tom Daschle and Bill Frist, Former Senate Budget Committee Chairman Peter Domenici, and Former Congressional Budget Office Director Alice Rivlin, released its recommendations for the next phase of health system reform. I had been looking forward to the report, as Frist advocated a number of interesting health system reforms while serving in the Senate, including a federal reinsurance mechanism. First has also said, however, that he believes that the Affordable Care Act ought to be reformed rather than repealed, which remains a minority view on the right. 

The report is built around four pillars: structural Medicare reform; tax and regulatory reform; an effort to prioritize quality, prevention, and wellness; and encouraging states to pursue delivery, payment, workforce, and liability reform.

1. One of interesting tensions on structural Medicare reform is that while Domenici and Rivlin are the architects of the Bipartisan Policy Center’s Protect Medicare Act, which uses competitive bidding between fee-for service (FFS) Medicare and approved private plans to yield savings over time, a concept that has been embraced by congressional Republicans and that presumably appeals to Frist, Daschle has been skeptical of this approach. Moreover, while conservative lawmakers have by and large accepted a continuing role for FFS Medicare as a “public option” that will compete with private plans, there has been a great deal of hostility towards the Independent Payment Advisory Board (IPAB) that is meant to improve the efficiency of FFS Medicare by driving payment innovation. 

HCCI calls for the creation of “Medicare Networks” as an option within traditional Medicare. These Medicare Networks would essentially be integrated care delivery networks, and each would enter into a contract with CMS that would establish a unique spending target. Networks that spend less than the target would be entitled to share in the savings while those that exceed the target would be obligated to eat some of the overage. Beneficiaries choosing to enroll in a Medicare Network would receive a premium discount. And to make Medicare Networks more attractive still, providers that belong to or contract with them will receive payment increases as established under current law while those that only participate in fee-for-service Medicare will have their payment rates frozen for several years.

The authors describe Medicare Networks as an improved version of Accountable Care Organizations (ACOs), and they identify a number of flaws in the current ACO model. Providers have only weak incentives to join ACOs, ACOs are eligible to share in savings but not to endure some of the cost of overages, payment reform for ACOs has been very limited, and beneficiaries don’t benefit from savings generated by the most successful ACOs. The Medicare Network concept aims to address all of these deficiencies. Medicare Networks continue to susceptible to some of the criticisms against ACOs, like those recently offered by Clayton Christensen, Jeffrey Flier, and Vineeta Vijayarhagavan. Yet HCCI addresses some of these criticisms elsewhere in their report.

Medicare Networks are also very different from Medicare Advantage Plans, e.g., while Medicare Networks continue to rely in part on Medicare payment schedules, Medicare Advantage Plans receive fully-capitated payments. And while Medicare Advantage Plans are sponsored by health plans or providers with an insurance component, Medicare Networks are purely provider-led. 

HCCI draws heavily on Domenici-Rivlin in its approach to Medicare Advantage Plans. Yet the balance is tilted in favor of traditional Medicare, a concession, one assumes, to Tom Daschle. Initially, for example, Medicare Advantage Plans would bid to offer a standard benefit package with a higher actuarial value than traditional Medicare. Beneficiaries enrolling in Medicare Advantage Plans that are cheaper than the benchmark — which is based on the enrollment-weighted average of all plan bids unless Medicare Advantage Plans exceed 40 percent of local market share, in which case its set to the 35th percentile bid – will receive a dollar-for-dollar rebate equal to the difference while those enrolling in plans more expensive than the benchmark will have to pay the difference. But if traditional Medicare is more expensive than the benchmark for Medicare Advantage Plans in a given region, beneficiaries won’t have to pay the difference to enroll in it. That is, while the Protect Medicare Act applies competitive bidding to all plans, including traditional Medicare, in a given region, HCCI limits competitive bidding to Medicare Advantage Plans.

HCCI offers a number of other recommendations as well, e.g.: updating the Medicare benefit package to reduce demand for medigap coverage, as this supplemental coverage appears to raise utilization of medical services; strengthening protections for low-income Medicare beneficiaries; and reducing spending on high-income Medicare beneficiaries.

2. On tax and regulatory reform, HCCI proposes capping the income-tax exclusion for employer-sponsored insurance at the value of the 80th percentile of single and family ESI premiums in 2015, and indexing the amount to GDP per capita growth and then GDP per capita growth plus 0.5 percent after 2023. This approach is far more complicated than the universal credit proposed by Sen. John McCain in 2008, but it will presumably prove less disruptive to high-earning individuals who receive employer-sponsored insurance. And it certainly represents an improvement over the “Cadillac tax” in the ACA. 

The authors also address the danger that while provider consolidation can be a good thing if it leads to higher-quality integrated care, it can be a bad thing if it results in anti-competitive behavior. This section of the report is notably weak, as it hints at but largely neglects the pernicious role that large hospitals play in blocking new entrants, thus dampening competition.

3. On quality, prevention, and wellness, HCCI offers a panoply of pilot programs.

4. The section on how states can pursue delivery, payment, workforce, and liability reform is dense and forward-looking. 

(a) On dual-eligibles, for example, HCCI recommends the full integration of Medicare and Medicaid services under a single program. I’ve recommened that we considering federalizing responsibility for dual-eligibles, which is one way to achieve this goal.

(b) The authors offer thoughts on how to reform insurance regulation. Encouragingly, they recognize how hospitals abuse their market power to force insurers to include them in “preferred” or highest-value tiers of medical providers, and they recommend that states prohibit hospitals from refusing to contract with insurers that place them in a lower tier. They also call for restricting “all-or-nothing” contracting more broadly, so that insurers can be more discriminating about the providers to which they steer their customers. They also identify modest steps insurers and states might take to encourage price transparency, e.g., encouraging insurers to sure data on average anticipated costs for accessing various medical services.

(c) HCCI sticks to encouraging states to test alternative models for medical liability reform.

(d) And perhaps the best section of the report calls for scope of practice reforms to allow non-physician primary care professionals to offer safe, high-quality service at the lowest cost. Because states take the lead in this space, they only propose that the federal government give states government wide scope to relax current restrictions. They also call for initiatives designed to increase the supply of medical professionals, a piece of the health care cost puzzle that we tend to neglect. 

In The Lost Majority, Sean Trende argues that when one of America’s major party coalitions succeeds by becoming an inclusive “coalition of everyone,” the stage is set for its eventual failure. The broader the coalition, the more clashing interests it will contain and the harder it will be to reconcile these clashing interests to the satisfaction of all of its members. In a new article, he observes that while the Democratic coalition of African Americans, Latinos, suburban moderates, and urban liberals looks very formidable, conflicts over taxes and public service delivery appear to be intensifying:

We also saw this type of split play out in the fiscal cliff fight, where several Democrats from wealthier states argued for a higher cutoff for tax rates than the $250,000 the administration was proposing. As the tax rates needed to fund the “blue state model” — a term coined by Walter Russell Mead — rise higher and higher, more and more pressure will be placed on Democrats from upscale districts to oppose those rate increases; these voters are much more likely to vote on social issues when the debate is whether the top rate should be 35 percent or 39 percent, but when it becomes whether the top rate should go over 50 percent, it becomes a different story.

Trende doesn’t dwell on how conservative political entrepreneurs might profit from these tensions, but the potential paths forward are relatively straightforward: (a) the GOP could make a bid for college-educated suburban moderates by softening their stance on some social issues while championing public sector efficiency and low taxes; or (b) the party could try to broaden its appeal among low- to moderate-income voters, including African Americans and second- and third-generation Latinos, by embracing a more populist policy mix. These strategies aren’t mutually exclusive, though there are tensions between them at the edges. 

I’m an admirer of Duke University economist Jacob Vigdor, and I recently praised his proposal for “assimilation bonds” as a strategy for improving the U.S. immigration system. In a new Washington Examiner op-ed, Vigdor observes that the influx of less-skilled Mexican labor that has so transformed American life is most likely at an end as the Mexican population ages and grows more affluent. Over the past five years, the net increase of 2.3 million immigrants, but net migration from Mexico was zero. As Mexican immigration has faded, immigration from Asia, the rest of Latin America, and Africa has increased. This raises a number of interesting possibilities. One concern about the Mexican influx has been its sheer size, and the prospect that a distinctive Hispanophone Mexican-origin community might endure in American life. Though most second- and third-generation Latinos speak English as their first language, and in many cases their only language, the duration of the Mexican influx and the robustness of transborder cultural ties might in theory contribute to a sense of cultural apartness, at least for some minority of Mexican-origin Americans living in heavily-Latino enclaves. A more diverse, fragmented influx is perhaps more likely to assimilate, as it would be difficult for Tagalog- or Wolof-speakers to achieve critical mass. Vigdor writes:

These trends can help us to think about what our “new” immigration policy should look like. Border control will be of declining importance in a world where most migrants arrive in the United States from a different continent. Spanish will begin to recede as the nation’s de facto second language; Mandarin, Hindi and Tagalog will be among the most prominent replacements.

Guest worker programs might not work as well as they would have in the past; the vast networks of underemployed Latin Americans who might have once jumped at the chance at a temporary job in the United States are aging out of their prime years of physical labor, and there aren’t as many younger adults around to take their place.

Bracketing the question of whether guest worker programs were ever likely to work well, it seems clear that as long as there is a large place premium, i.e., a large gap in wages for identical workers working in the U.S. and other jurisdictions, one assumes that vast networks of underemployed natives of poor societies with high birthrates will replace the vast networks of underemployed Latin Americans Vigdor describes. This is why the question of whether we ought to allow for a formal channel for temporary less-skilled labor, and how this channel ought to be designed if we do indeed choose to create it, remains very relevant.

Back in 2009, Edward Telles and Vilma Ortiz published Generations of Exclusion, product of a detailed longitudinal study of Mexican-American integration that drew on thirty-five years of data:

The study contains some encouraging findings, but many more that are troubling. Linguistically, Mexican Americans assimilate into mainstream America quite well–by the second generation, nearly all Mexican Americans achieve English proficiency. In many domains, however, the Mexican American story doesn’t fit with traditional models of assimilation. The majority of fourth generation Mexican Americans continue to live in Hispanic neighborhoods, marry other Hispanics, and think of themselves as Mexican. And while Mexican Americans make financial strides from the first to the second generation, economic progress halts at the second generation, and poverty rates remain high for later generations. Similarly, educational attainment peaks among second generation children of immigrants, but declines for the third and fourth generations.

Telles and Ortiz identify institutional barriers as a major source of Mexican American disadvantage. Chronic under-funding in school systems predominately serving Mexican Americans severely restrains progress. Persistent discrimination, punitive immigration policies, and reliance on cheap Mexican labor in the southwestern states all make integration more difficult. The authors call for providing Mexican American children with the educational opportunities that European immigrants in previous generations enjoyed. The Mexican American trajectory is distinct–but so is the extent to which this group has been excluded from the American mainstream.

One implication of Telles and Ortiz’s findings is that the U.S. ought to devote more resources to schools serving Mexican Americans, and on less-skilled immigrants and their descendants more broadly, to facilitate economic integration. But of course another approach is to tilt U.S. immigration policy towards immigrants who are likely to earn higher incomes than members of the native-born population.

Second-generation Latinos have much higher levels of English language proficiency than Latino immigrants, as one might expect. This is often touted as evidence that concerns about assimilation are misplaced. The larger problem, however, is that while incomes for second-generation Latinos also tend to be much higher than for Latino immigrants, which makes sense given that second-generation Latinos have access to U.S educational opportunities, household incomes among second-generation Latinos lag behind household incomes for the population as a whole.

A recent Pew report on second-generation Americans offered a strikingly optimistic take regarding the economic progress of the children of immigrants, noting that the median household income, adjusted for a family of three, for second-generation Latinos was $48,400 in 2012. This is substantially higher than the median household income (again, adjusted for a family of three — assume this is the number I’m using henceforth), for Latino immigrants ($34,600) and all Latino adults ($39,200). This last number is of particular interest, as it captures third-generation and fourth-generation Latino adults, etc., as well as immigrants and second-generation Latinos. So what exactly is going on with third-generation-plus Latino households? The Pew report includes a chart which notes that median household income for these households is $43,600, i.e., that median household income for the third-generation-plus cohort is actually lower than it is for the second-generation cohort.

One needn’t overinterpret this finding. It could be that the children of today’s second-generation Latinos will greatly surpass their parents in educational attainment and household income. But consider the contrast between median household income for Latino adults and for all adults, including Latino adults, by immigrant generation, which Pew also provides. For immigrant adults, the median household income is $45,800, below the number for second-generation Latinos. Note that this cohort is 47 percent Hispanic, i.e., were we to exclude the Hispanic share of this population, the median household income number would be much higher. For second-generation adults, median household income is $58,100, considerably higher than the $48,400 number for Latino second-generation adults. And 35 percent of this second-generation cohort is Hispanic. Among third-generation-plus U.S. adults, a group that is much larger (177.7 million) than the previous cohorts (37.4 million immigrants, 19.7 million second-generation)  and also less Latino (6 percent as opposed to 47 percent and 35 percent), median household income is $60,600. Suffice it to say, the gap between $60,600 and $43,600 is substantial, though of course this comparison is hardly apples-to-apples — it is entirely possible that the Latino third-generation-plus cohort is far more skewed towards third- than, say, fifth-generation adults. 

In an ideal world, we wouldn’t be reduced to contrasting median household income across ethnic groups. Rather, we would track household incomes across immigrant generations by educational attainment. Many Latino immigrants are skilled, and these individuals have higher household incomes than their less-skilled counterparts, and there is good reason to believe that the same is true of their children and grandchildren.

What I find puzzling is this: immigration policy represents an effort to shape the future workforce. The U.S. invest considerable resources, both public and private, in increasing high school graduation and college completion rates. The goal of this investment in human capital is, among other things, to see to it that U.S. adults are more robust against economic shocks, e.g., an adult with a college degree is generally considered better able to navigate an economic transition than an adult with a high school diploma, and an adult with a high school diploma is generally considered better able to navigate an economic transition than an adult without a high school diploma. As the labor market position of less-skilled individuals has deteriorated, many have been forced to take jobs that lack security of tenure, that don’t offer health and pension benefits, and that don’t yield an income high enough to surpass the poverty level. In some cases, less-skilled individuals have found that exiting the formal labor force is preferable to remaining in it — this is particularly true of those facing various physical maladies, which are in some cases exacerbated by the stresses associated with low-wage work. 

So why exactly would be would want to deliberately engineer an increase in the size of the less-skilled workforce? Why would we do this if we also believe that while the children of less-skilled immigrants will likely surpass their parents in levels of educational attainment, they will continue to lag behind other native-born adults? There are a number of arguments that are raised, e.g.:

1. One of the central arguments for increasing less-skilled immigration is that less-skilled immigrants will themselves be better off if they have access to the U.S. labor market. There are weaker and stronger versions of how seriously we ought to take this claim, ranging from the notion that restrictions on transnational labor mobility represent an egregious human rights violation — the contemporary equivalent of enslavement — to the notion that humanitarian considerations ought to play at least some role in U.S. immigration policy. I’m not unsympathetic to the view that humanitarian considerations ought to play some role, yet this would tend to move us towards guest worker policies that are limited to individuals from highly-indebted poor countries and that would discourage guest workers from forming strong attachments in the U.S. (as in Canadian guest-worker policy), so as to facilitate the replacement of one cohort of guest workers who, having been given an opportunity to earn U.S. wages for a limited period of time, can more easily be replaced by another, thus spreading the benefits of temporary access to the U.S. labor market as widely as possible. The problem, of course, is that such an arrangement might prove impracticable in the U.S. context, as it is likely to be regarded as inhumane. 

2. There is considerable demand for less-skilled labor, in food preparation, eldercare, tourism, agriculture, and other labor-intensive services. One assumes, however, that demand is high at a given (low) wage. While it is easy to see why one would want to pay less for eldercare and not more, it is worth thinking through the implications of this line of thinking. To secure less-expensive eldercare, we will allow an increase in the influx of less-skilled immigrants willing to work at a low wage. Yet in order for the less-skilled immigrant in question to have a standard of living that we in the U.S. consider acceptable, the public sector would eventually have to provide a suite of means-tested benefits. To be sure, recent immigrants are not eligible for a wide range of benefits, yet eligibility increases over time and when the immigrant in question reaches various milestones, such as securing citizenship. That is, taxpayers at large are obligated to subsidize the consumers of low-cost eldercare services. We might instead choose to subsidize eldercare via some more direct route. Our decision regarding whether or not to take a direct or indirect route ought to rest in part on intergenerational considerations, e.g., how likely is it that children of less-skilled immigrants might also depend on means-tested benefits?

You’ll note that the argument above bears some resemblance to arguments for a statutory minimum wage. That is, because low-wage employees are in many cases forced to rely on means-tested benefits, low-wage employers can be understood as free riders. This view doesn’t strike me as quite right, as there is a real danger of pricing less-skilled individuals out of the labor force. It is important to strike a balance that reflects the needs of firms, the social benefits of labor force participation, and (to some limited extent) the dangers of free-riding, which leads me to favor a combination of a relatively low statutory minimum wage and relatively generous wage subsidies and work supports. But note how such a policy mix interacts with a large influx of less-skilled immigrants. Resources devoted to wage subsidies and work supports would have to be provided to individuals who arrived in the U.S. voluntarily, in part because doing so would benefit the native-born children of less-skilled immigrant parents. Is it necessarily wrong to believe that we ought to husband these resources carefully?

3. A number of advocates of increased less-skilled immigration have pointed me to the work of economist Jennifer Hunt, who observes, among other things, that:

(a) assuming the arrival of less-skilled immigrants increases wage inequality, it will increase the returns to graduating from high school, thus encouraging higher graduation rates;

(b) and that evidence drawn from U.S. Census data bears out this proposition. Specifically Hunt finds the following:

The increase in immigration in the 1990s caused the 2010 native high school completion rate, which stood at 87.8%, to be 1.3 percentage points higher than it would otherwise have been. I find native-born black people to be more responsive to immigration than natives as a whole. However, as the rate of immigration slowed in regions with more black people, the overall effect is very similar (1.4 percentage points). This is comparable with the completion gap between black people and white people, which was 7.3 percentage points in 2010. I also estimate a small negative net effect for native-born Hispanic people (-1.2 percentage points), but this is not statistically significantly different from zero.”

If we further distinguish immigrants by age and education, you also find support for immigration improving education through the labour market channel. Again, magnitudes are small. The 1990s increase in adult immigrant dropouts caused a 0.8 percentage point increase in 2010 native completion rates, with larger effects for native-born minorities. That said, the effects of more educated adult immigrants are not precisely estimated.

I find that immigrants have a small negative effect on natives as a whole; the 1990s increase in child immigrants reduced the native completion rate by 0.2 percentage points. The effect on native-born black people is 0.4 percentage points. The results for native-born Hispanic-descended people are more subtle because the effect of immigrant children on education depends strongly on the education of their parents. Native people of have a moderately sized positive response to the inclusion in the education system of child immigrants of more educated parents and only a moderately sized negative response to child immigrants of poorly educated parents. [Emphasis added]

What I find odd is that Hunt’s arguments have been characterized as a slam-dunk case of the unambiguous benefits of less-skilled immigration on educational attainment for the native-born. It seems no less plausible that in the absence of an increase in adult immigrant dropouts, the U.S. public sector might have been in a position to shift time and attention away from financing various social expenditures associated with this increase and towards increasing high school graduation rates for the native-born population. That is, is increasing the returns to high school graduation by exacerbating low-end wage inequality actually the lowest-cost strategy for increasing high school graduation rates?  

I recommend reading Dylan Matthews interview with Michael Clemens of the Center on Global Development, a staunch advocate of increasing less-skilled immigration. The discussion is revealing, particularly as it pertains to the “W visas” proposed in the new Gang of Eight immigration reform bill. One of the more interesting aspects of Clemens’ argument is that we ought to look to earlier eras of mass low-skill immigration, e.g., the 1900s, a period during which the gap in educational attainment between native-born U.S. adults and low-skill immigrants was much smaller than it is today and when means-tested benefits were not widely available. 

In the end, my differences with Clemens et al. are relatively modest. I favor a substantial amount of immigration. But I think the costs associated with an influx of less-skilled immigrants are higher than Clemens acknowledges, particularly if one believes that the labor market position of less-skilled workers might continue to deteriorate over time. Many labor-intensive tasks have become capital-intensive tasks over time, and it’s not obvious to me that this trend won’t continue. There are, to be sure, high-touch, nontradeable services that resist automation and offshoring, like eldercare. Yet it remains unclear to me why efforts to reduce the cost of eldercare ought to trump efforts to focus social resources on attacking intergenerational domestic poverty rather than the poverty of newcomers. 

Some of those who disagree with me will presumably argue that as a conservative, I am indifferent to intergenerational domestic poverty. This betrays a lack of familiarity with my work and my interests. Others, including many libertarians, will argue that it is inappropriate to devote public resources to attacking integenerational domestic poverty; rather, we ought to eliminate licensing requirements and statutory minimum wages to do the job. I disagree with this view as well.

P.S. In a recent Reuters Opinion column, I offer an alternative framework that might be of interest.