Cite as "AILA InfoNet Doc. No. 38me0130 (posted Jan. 31, 2001)"
January 31, 2001
Mr. James F. Hoge, Jr.
58 East 68th Street
New York, NY 10021
Dear Mr. Hoge:
Please find enclosed a response to the recent article by James Goldborough. I leave it to your discretion whether to publish this as an article, an essay or a letter to the editor.
Please feel free to contact me should you have any questions about the enclosure, or need confirmation before publication. My direct number is (716) 231-1122.
Margaret A. Catillaz
Ms. Catillaz, a partner in the Rochester, New York, law firm of Harter, Secrest & Emery, is President of the American Immigration Lawyers Association.
Recent Article Is "Out of Control"
James Goldsboroughs recent article on these pages ("Out-of-Control Immigration," September/October 2000) is factually inaccurate, wrong on the economy and just plain misguided. Goldsborough manipulates discontent and fears about the economy, rather than dealing with the reality of our booming economy. He overlooks the fact that leading economists report that our economy is undergoing a sea change, which affects not just the types of goods and services produced but also the way we measure economic progress. These same economists also repeatedly have lauded the contributions that immigrants and immigration have made to this new economy. As a result, Goldsboroughs thesis is no longer accurate.
His article is so replete with factual inaccuracies that it would take an entire column just to correct the misconceptions and misinformation. For example, he wrongly asserts that "skilled immigrants are driving down wages for Americas skilled labor force and diverting resources from the education of Americans."i Nothing could be further from the truth. In fact, the latest survey of the digital economy conducted by the U.S. Department of Commerce finds that the average wage for skilled high-tech workers was 85% higher than the average wage for all private sector workers.ii Since 1992, wages of high-tech workers grew by 5.8%; average private-sector wage growth over the same period was 3.6%.iii The Commerce Department reports that skilled workers in the high-tech industry (i.e., those with a bachelors degree or above who would be eligible to receive temporary visas under the H-1B program) earn an average of $59,900iv, and that the average weekly earnings for such skilled professionals went from $810 to $952 between 1992 and 1998v The law governing H-1B visas also requires employers to pay temporary foreign professionals the same prevailing wage and benefits as they do U.S. workers in similar positions.
Goldsboroughs allegation is simply refuted by the law governing temporary foreign professional employees. Two recently signed laws increased the cap on H-1B visas, and requires sponsoring employers to pay a $1,000 fee.vi Monies generated by those additional fees are used for job training,vii scholarships for low-income students pursuing degrees in mathematics, engineering or computer science,viii and demonstration programs to provide technical skills training for workers.ix
A Blast from the Past
Goldsboroughs entire thesis is based on an old economic model in which
the U.S. economy goes through periods of boom and bust, during which productivity
and employment are linked, and it is virtually impossible to maintain ultra-low
levels of unemployment and low inflation.
The current growth has been fueled largely by dramatic increases in productivity and efficiency.x These increases, in turn, have been fueled by high-technology and the way that U.S. businesses employ this technology.xi As Federal Reserve Chairman Alan Greenspan recently remarked:
It has become increasingly difficult to deny that something profoundly different from the typical postwar business cycle has emerged in recent years. Not only has the expansion reached record length, but it has done so with far stronger-than-expected economic growth. Most remarkably, inflation has remained subdued
While there are various competing explanations for an economy that is in many respects without precedent in our annals, the most compelling appears to be the extraordinary surge in technological innovation that developed through the latter decades of the last century.xii
These technological changes are interesting in and of themselves, but what is important is that "the efficiency gains that have already been achieved are permanent."xiii Chairman Greenspan has stated that he sees "no reason that productivity growth cannot remain elevated."xiv In other words, according to Greenspan and other economists, these changes are here to stay; companies and our economy can no sooner forget how to use a computer and improve productivity than we can forget that we invented the wheel and how it works.
Perhaps the most profound impact of these structural changes, in the words of Federal Reserve Board Governor Laurence H. Meyer, is that, even if the U.S. economic growth rate slows, "the resulting growth rate could remain well above the average growth rate over the previous 25 years."xv Even if our economy slows down, we still will not see the massive layoffs, job displacements and corporate closures that we have seen during previous downturns.
To be fair, it is not surprising that Goldsborough missed the boat. After all, the Federal Reserve Board is just beginning to understand this new economic paradigm. For example, Chairman Greenspan has acknowledged that the Federal Reserve recently "has been required to react to a constantly evolving set of economic forces, often at variance with historical relationships."xvi Vice Chairman Roger W. Ferguson, Jr. recently remarked that the Federal Reserve Boards "understanding of the macroeconomic environment has deteriorated,"xvii and, therefore, it is relying less upon information from "increasingly unreliable old models and more upon inferences from the more recent past."xviii
Fears Not Facts
It is perfectly understandable that, during such times of dramatic economic
change, people get worried. Polls and news reports show that just such anxiety
is occurring. Economists report that lingering uncertainties explain why wage
pressures remain more modest that they were in the milder and shorter economic
booms of the recent past.xix While American acknowledge an abundance
of jobs, a surprising number still tell pollsters they fear being laid off in
the near future.xx
Even Federal Reserve officials are acknowledging this financial insecurity lurking just beneath the future. For example, Chairman Alan Greenspan recently said one unwelcome byproduct of the rapid economic and technological changes "is the evident insecurity felt by many workers"xxi caused by "a fear of job skill obsolescence."
Who Needs Workers?
In so doing, Goldsborough ignores what leading economists have called the gravest
threat to our continued economic expansion: the severe worker shortages hitting
all sectors of our economy.xxii For the past three years, the Federal
Reserve Boards so-called "Beige Book" has reported that businesses
across all economic sectors have been experience severe shortages.xxiii
A leading demographic economist testified before the House of Representatives that, "The United States has entered a protracted period of worker dearth,"xxiv that "consists of a slowly growing and eventually shrinking workforce pool."xxv The existing and coming worker shortages will "seriously threaten Americas economic growth."xxvi In fact, from now until the year 2008, the workforce will grow by only about 1% annually.xxvii The latest government report shows that in 2008, the U.S. will have a shortage of 6,219,000 workers.xxviii Things will get worse after the year 2011, when the total size of the nations workforce will actually shrink.xxix
These worker shortages are caused by simple demographics. Between now and 2030, the number of people age 65 or older will double, while the number of people of prime working age (i.e., 20-64) will increase by only about 15 percent.xxx From 1999-2008, demographers predict that the number of people between ages 25 and 40 will drop by 1.7 million.xxxi
Simultaneously, people born during the post-World War II baby boom will either retire or near retirement age, and we are feeling the effects of a lower birth rate. The Congressional Budget Office estimates that, due to the retirement of so-called baby boomers and the lack of new bodies entering the workforce,
. . .the growth of the labor force will slow to a crawl between 2010 and 2020 and almost to a standstill between 2020 and 2030. That projection stands in stark contrast to the 2 percent annual growth that the labor force recorded from 1960 to 1989, and even to the 1 percent average annual growth rate [that had been projected between 1998 and 2008].xxxii
The Coming Economic Crisis
What do the converging demographic factors of severe worker shortages, a potential
worker dearth and the coming retirement of post-World War II workers -all of which
Goldsborough ignores- mean? Budgetary analysts and politicians of both political
parties predict it could spell a budgetary and economic crisis.
The National Bipartisan Commission on the Future of Medicare predicts that, by 2011, nearly 77 million baby boomers will begin entering the medical benefits system.xxxiii Due to the demographic trends described above, "As the number of new Medicare beneficiaries rises sharply, there will be significantly fewer workers per retiree to fund Medicare."xxxiv The Social Security Administration predicts that Social Security recipients will increase from about 20 percent 1990 to 35 percent in 2030.xxxv
As a result, both the outlay and revenue sides of the budget will be increasingly strained after 2008. Revenues will growth more slowly as the number of people working and the economy grows more slowly. At the same time, outlays for government programs that aid the elderly (Social Security, Medicare and Medicaid) will rise as the number of people eligible to receive benefits from those programs expands.xxxvi
Immigration Is a Solution
There is one other solution to our coming crisis. As demographic economist Richard Judy put it in his testimony before the House: "Most of the demographic realities . . . are immutable except, perhaps in the very long run. Even then, however, neither birth rates nor death rates are responsive to policy change. Among the fundamental drivers of demographic change, only immigration policy is amenable to manipulation by government policy makers."xxxvii
Judys comments have been echoed by none other than Alan Greenspan, who on more than one occasion, has stated that one way to solve the worker shortage (and presumably forthcoming disparity between workers are retirees) would be to "open up our immigration rolls significantly."xxxviii He also has stated that this demographic crisis would continue "unless immigration is uncapped."xxxix
Yet, Goldsborough insists that immigration is off limits. Rather than expanding immigration to help save the United States from its coming budget crisis and ensure our continued economic expansion, Goldsborough would reduce it. He would condemn us to a potential demographic, economic and social disaster, rather that admit that he and others who played off peoples fears were and are wrong. That would be more than foolish and stubborn, it would be the public policy equivalent of a crime.
i James Goldsborough, "Out-of-Control Immigration," Foreign Affairs, September/October 2000, at 90-91.
ii U.S. Department of Commerce, "Digital Economy 2000," June 2000, at 45.
iv Id. at 48.
vi Public Law number 106-313; Public Law number 106-311
x See for example Roger W. Ferguson, Jr., "Conversations with Leaders of the New Economy," speech at the New Economy Forum, Haas School of Business, University of California at Berkeley, May 9, 2000; Alan Greenspan, "Business Data Analysis," remarks before the New York Association for Business Economics, June 13, 2000.
xii Alan Greenspan, "Technological innovation and the economy," remarks before the White House Conference on the New Economy, Apr. 5, 2000.
xii Ferguson at 3.
xiv Greenspan at 2.
xv Laurence H. Meyer, "The New Economy Meets Supply and Demand," remarks before the Boston Economics Club, June 6, 2000, at 8.
xvi Chairman Alan Greenspan, "The Federal Reserves report on monetary policy," testimony before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, July 20, 2000, at 5.
xvii Ferguson, May 9, 2000, at 5.
xix "Lingering Job Worries Amid a Sea of Plenty," The New York Times, Aug. 28, 2000.
xxi Alan Greenspan, "Structural changes in the new economy," remarks before the National Governors Association, 92nd Annual Meeting, State College, PA., July 11, 2000.
xxii See generally: Alan Greenspan, "The Revolution in Information Technology," speech before the Boston College Conference on the New Economy, Mar. 6, 2000; Alan Greenspan, testimony before the Committee on Banking and Financial Services, U.S. House of Representatives, Feb. 17, 2000; Alan Greenspan, speech before the Business Council, Oct. 28, 1999; and Alan Greenspan, testimony before the Committee on Banking and Financial Services, U.S. House of Representatives, July 22, 1999.
xxiii See generally
xxiv Richard W. Judy, testimony before the Subcommittee on Oversight and Investigation, Committee on Education and the Workforce, U.S. House of Representatives, Feb. 17, 2000, at 2.
xxvii Id. at 3.
xxviii See generally, Bureau of Labor Statistics, "Employment Projections: Employment and total job openings, 1998-2008," and "Employment Projections: Civilian Labor Force 16 years and older by sex, age, race, and Hispanic origin, 1988, 11998 and projected 2008."
xxx Congressional Budget Office, "Long-Term Budgetary Pressures and Policy Options," May 1998, at 1.
xxxi Judy testimony at 3.
xxxii "Long-Term Budgetary Pressures and Policy Options," at 3.
xxxiii National Bipartisan Commission on the Future of Medicare, "The Facts About Medicare," Mar. 16, 1999.
xxxv "Long-Term Budgetary Pressures and Policy Options," at 3.
xxxvii Richard Judy testimony, at 6.
xxxviii Testimony before the Committee on Banking and Financial Services, U.S. House of Representatives, July 22, 1999.
xxxix Alan Greenspan, "The revolution in information technology," speech at Boston College Conference on the New Economy, Mar. 6, 2000.