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Immigration for Shared Prosperity: A Framework for Comprehensive Reform

Immigration for Shared Prosperity: A Framework for Comprehensive Reform

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Table of Contents

Executive Summary

Chapter 1: Getting Immigration Reform Right

Chapter 2: Proposals to Fix the System

Chapter 3: The Components of a Comprehensive Framework for the Reform of Employment-Based Immigration

Chapter 4: Where Do We Go From Here?

Appendix A: Data Tables

Appendix B: Labor Movement’s Principles for Immigration Reform

Executive Summary

The American economy has become very dependent on foreign labor. Indeed, most of our workforce growth since 1990 has come from immigration, a trend that is expected to continue for at least the next 20 years. How these workers are employed, therefore, will have important implications for American economic health, as well as for national unity and social stability.This report addresses employment-based immigration, a small (15% of the total) but important and contentious part of immigration policy.

The problem

America’s employment-based immigration system is broken. The programs for admitting foreign workers for temporary and permanent jobs are rigid, cumbersome, and inefficient; do too little to protect the wages and working conditions of workers (foreign or domestic); do not respond very well to employers’ needs; and give almost no attention to adapting the number and characteristics of foreign workers to domestic labor shortages.

The last major immigration reform effort, the Immigration Reform and Control Act of 1986 (IRCA), was a failure. Since its passage, the number of unauthorized immigrants residing in the United States increased dramatically and now totals about 12 million, including about 7 million workers.

Illegal immigration has the advantage of being more responsive to employers’ requirements, but has the disadvantages of being beyond the reach of either labor or immigration laws; subjecting foreign workers to grave risks, exploitation, and uncertain futures in the United States; and depressing wages and working conditions for all workers. Moreover, unauthorized immigration is unfair to immigrants waiting (sometimes for years) to gain legal entry, undermines the rule of law, and strengthens the conviction that the federal government is powerless to solve important national problems.

Effective employment-based immigration policy requires reforms to correct IRCA’s defects, the most important of which are: (1) failing to develop a secure identifier which, in turn, is essential for effective border and internal controls, a work authorization system, and adjustment of status for millions of unauthorized immigrants; (2) making employers responsible for checking a variety of easily counterfeited identifiers, which companies lack the means (and often the will) to accomplish; and (3) accelerating unauthorized immigration because of ineffective controls and the failure to allow amnesty recipients to bring in their families.

Although our immigration reform framework focuses on the employment aspects of immigration, we fully support family reunification, which accounts for two-thirds of all immigrants and is the dominant purpose of U.S. immigration policy. Family reunification is in the national interest because families are our most basic learning and support systems and therefore greatly facilitate the assimilation of immigrants into American life.

The framework

Our comprehensive immigration reform framework has five interrelated components: (1) the creation of an independent, highly professional commission—the Foreign Worker Adjustment Commission (FWAC)—to measure labor shortages and recommend the numbers and characteristics of employment-based temporary and permanent immigrants to fill those shortages; (2) a rational, operational control of our borders and effective internal tracking systems; (3) a fair and efficient worker authorization system complemented by more effective labor law enforcement; (4) a humane and practical system to adjust the status of unauthorized immigrants; and (5) the improvement, but not expansion, of our temporary indentured worker programs.

1. The FWAC is needed because our employment-based immigration system is far too rigid, political, and detached from the real needs of the American economy. An independent agency is needed to develop much better measures of labor market shortages, assessment methodologies, and processes to efficiently adjust foreign labor flows to employers’ needs while protecting domestic and foreign labor standards. In order to give it time to prepare for its very important functions, we recommend that this commission be established in two stages: (1) create the structure and develop and refine methodologies, measures, and procedures to be recommended to Congress and (2) fully implement the system.

2. Border controls and internal tracking processes are necessary parts of an overall immigration control system. Border control alone is not likely to be sufficient—at best, no more than about 40% of unauthorized border crossers are apprehended. Increasing border resources has not done much to raise the number of apprehensions, but has pushed these migrants into ever more hazardous terrain and apparently has caused a larger proportion to settle in the United States with their families. But even completely successful border controls would not stop illegal immigration because an estimated 40 to 45% of these immigrants have overstayed visas—and this proportion undoubtedly would rise with more stringent border controls. Therefore, it is important to complement border controls with a much more effective internal tracking system. We have made progress with an entry identification system, but not with an effective way to determine whether or how many of the over 30 million authorized foreign visitors each year leave the country. The Department of Homeland Security (DHS) has proposed that the cost of an exit identification system be shifted to ocean and air carriers.

3. Since most unauthorized immigrants enter the United States to work or join family members who are working, an effective work authorization process is an essential component of a comprehensive immigration system. Efforts to overcome IRCA’s authorization defects have been largely ineffective. For example, the E-Verify system to determine if workers’ Social Security numbers are valid has many known and unknown identity and document error problems, as well as privacy and due process concerns. The basic problems are: the absence of a secure identifier (which the social security card definitely is not and was not intended to be); the lack of a secure database; the absence of due process and privacy protections; employer control of the verification system; and discrimination against naturalized citizens and authorized workers.

One promising approach to overcome these problems would be to have a federal agency give workers a secure identifier with biometric data and a unique work authorization number for each new job based on individual PIN numbers issued by the federal authorizing agency. Employees would present the work authorization numbers and identifiers to their employers, whose sole obligation would be to verify the number with the authorizing agency. This system would give workers control of their persona
l information and give trained federal professionals, not employers, the responsibility for verification. The administrative burden of introducing this system could be reduced by phasing it in for new hires, job changers, and foreign workers authorized to work in the United States.

It would be better to design a new, fairer, and more effective system instead of expanding E-Verify, but that system has gained a fair amount of momentum and political support. If we cannot substitute a better system we must at least overcome E-Verify’s serious deficits, especially to provide better due process, anti-discrimination, and privacy protections.

An important complement to a work authorization system would be much more effective labor law enforcement to protect labor standards. The present massive noncompliance with labor laws and the weakness of workers’ collective bargaining rights make it very hard for employees to protect themselves, a necessary precondition for effective labor law enforcement. And immigration authorities should be prohibited from entering work places where labor disputes are in progress.

4. Adjusting the status of unauthorized immigrants is the most controversial and complex of our framework components. It is controversial because a vocal minority of Americans believe allowing unauthorized immigrants to remain in the United States would be rewarding lawbreakers. These critics would be on firmer ground if we had a good immigration law that was fair, transparent, and enforceable, none of which applies to IRCA. For many years before 9/11 unauthorized immigrants were justified in believing that if they got into the United States with a visa or crossed the border illegally—which was not hard to do—got a job, worked hard and stayed out of serious legal trouble, they would be able to settle in the United States. Indeed, the unauthorized immigrants’ networks had a lot of official and unofficial support. It was not until after 9/11 that the United States became serious about immigration enforcement and then it proceeded in an unfair, disruptive, and often unconstitutional manner.

Adjustment of status nevertheless is a very complex process, requiring a carefully orchestrated combination of carrots and sticks. The carrot is to encourage people to register to adjust their status with the promise of a path to permanent legal residence and citizenship. The stick for failure to register would be the high probability of deportation or being relegated to underground jobs. It is not in our national interest to drive more unauthorized immigrants deeper into the underground economy.

Adjustment of status is also tricky because in order to deter future illegal entry, the process must send a clear signal that there will be no future large-scale status adjustments.

Adjustment of status clearly is not likely to work very well without more effective border, internal tracking, and work authorization systems, all of which require a secure identifier. On the other hand, an effective adjustment-of-status process would strengthen the effectiveness of these other components by reducing the magnitude of the unauthorized population.

There are thus four reasons to adjust the status of unauthorized immigrants: (1) we do not have good immigration laws; (2) it would raise labor standards; (3) a roundup and deportation not only would violate American values of fairness and due process, but also would be impractical; and (4) it will be very hard to gain political support for or implement comprehensive immigration reform without it.

5. We should improve, but not expand, temporary indentured foreign worker programs. Although “guest worker” programs have a superficial appeal as a way to reduce temporary labor shortages, study commissions and labor market research tend to reject these programs the more they examine them—their long-run social, economic, and political costs far outweigh their short-run economic advantages. Experience also shows that these programs are very hard to discontinue, as we found with the bracero agreements to bring in Mexican farm (and some railroad) workers during World War II. This “temporary” program could not be discontinued until 1964—19 years after World War II ended. In fact, the bracero program helped establish the networks that subsequently accelerated the flow of unauthorized immigrants into the United States. Indeed, the bracero program complemented immigration enforcement: in the 1950s unauthorized immigrants were rounded up as part of “Operation Wetback” and “deported” into the bracero program.

It is not hard to understand why these programs are so popular with employers, even though they complain about the excessive bureaucracy, much of which is designed to prevent the programs from suppressing labor standards. These programs rarely prevent the suppression of wages and other labor standards because indentured workers are attached to particular employers, weakening their ability to defend their rights. If individual workers are fired they can be deported. Sometimes, the indenture is reinforced by heavy indebtedness and the seizure of travel documents.

The abuses of indentured workers are well documented. Real labor market tests to certify labor shortages and the unavailability of domestic workers are rare. The workers’ powerlessness is exacerbated by federal authorities’ inability to audit employers to determine their compliance with either the law or the indenture agreements. Investigations by the GAO and other federal agencies have discovered heavy incidences of fraud.

Public support for indentured foreign worker programs often comes from employers’ unsubstantiated claims of labor shortages. The proof commonly proffered by employers of indentured H-1B computer and other technical workers is the exhaustion of the available visas for the year on the first day they become available. This clearly is not evidence of a labor shortage, but of a strong demand for indentured workers who can be paid well below prevailing wages. While employers often argue that these indentured worker programs strengthen the competitiveness of American industry, it is well documented that both the H-1B and L-1 programs frequently are used by outsourcing firms learning U.S. industry techniques in order to send the work to other countries.

Our recommendations are designed to prevent these abuses, limit the period of indenture, and restrict the use of these workers to occupations the FWAC certifies have real, temporary labor shortages and there have been good-faith efforts to recruit domestic workers. Our recommendations also are designed to prevent the use of indentured workers for non-temporary jobs or to suppress wages and other working conditions and decimate labor market institutions. We also recommend ways to enable the indentured workers to protect themselves, as well as how to improve the administration of these programs through such means as adequate administrative resources and enabling unions and joint union-management committees to sponsor foreign workers.

About the Author

Ray Marshall was Secretary of Labor in the Carter administration. He is Professor Emeritus and holder of the Audre and Bernard Rapoport Centennial Chair in Economics and Public Affairs of the LBJ School of Public Affairs at the University of Texas. He is author of more than 30 books and monographs, including Thinking for a Living: Education and the Wealth of Nations (Basic Books 1993) and The Case for Collaborative School Reform (EPI 2008). Marshall is one of the founders of the Economic Policy Institute, where he currently serves on its board.

About EPI

The Economic Policy Institute was founded in 1986 to widen the debate about policies to achieve healthy economic growth, prosperity, and opportunity. Today, despite rapid growth in the U.S. economy in the latter part of the 1990s, inequality in wealth, wages, and income remains historically
high. Expanding global competition, changes in the nature of work, and rapid technological advances are altering economic reality. Yet many of our policies, attitudes, and institutions are based on assumptions that no longer reflect real world conditions.

With the support of leaders from labor, business, and the foundation world, the Institute has sponsored research and public discussion of a wide variety of topics: globalization; fiscal policy; trends in wages, incomes, and prices; education; the causes of the productivity slowdown; labor market problems; rural and urban policies; inflation; state-level economic development strategies; comparative international economic performance; and studies of the overall health of the U.S. manufacturing sector and of specific key industries.

The Institute works with a growing network of innovative economists and other social-science researchers in universities and research centers all over the country who are willing to go beyond the conventional wisdom in considering strategies for public policy. Founding scholars of the Institute include Jeff Faux, former EPI president; Lester Thurow, Sloan School of Management, MIT; Ray Marshall, former U.S. secretary of labor, professor at the LBJ School of Public Affairs, University of Texas; Barry Bluestone, Northeastern University; Robert Reich, former U.S. secretary of labor; and Robert Kuttner, author, editor of The American Prospect, and columnist for Business Week and the Washington Post Writers Group.

For additional information about the Institute, contact EPI at 1333 H St. NW, Suite 300, Washington, D.C. 20005, (202) 775-8810, or visit

The Agenda for Shared Prosperity

The American people want and need an economic agenda that will spur growth, reduce insecurity, and provide broadly shared prosperity. The Economic Policy Institute’s Agenda for Shared Prosperity initiative was born out of a belief that poor economic outcomesfor average Americans are not inevitable, and that a change in policy direction is needed to ensure that everyone can benefit from a growing economy. Collaborating with some of the nation’s top progressive thinkers, EPI researchers have been exploring and refining solutions for the better part of two years. EPI has compiled the best of these proposals into a small, easy-to-read Policy Handbook called A Plan to Revive the American Economy.

A copy of the Plan can be downloaded at

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Price: $9.95 (+$4.00 for shipping); ISBN 1-932066-39-5; 64 pages.

We are currently upgrading our online purchasing system, and are unable to process orders over the Web at this time. We can, however, continue to take orders by telephone, email, and postal mail. To order this book, call 1-800-EPI-4844 (in D.C. area, 202-331-5510), or send email to

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