Monday, Sept. 22 at 12 p.m., the Common Ground event centered on the issue of immigration continued for the second week at the Filius Events Barn, building on the conversations by Emily Mendrala and John Baselice. Paul Hagstrom, Associate Chair of Economics and Leonard C. Ferguson Professor of Economics, picked up the discussion while Stephen Wu, Irma M. and Robert D. Morris Professor of Economics, moderated.
They responded to the Sept. 15 event and discussed the relationship between poverty and migration as well as the broader theme of the impact of refugees on economies considered through both positive and normative economics.
The event started with a brief examination of the research regarding the impact of welfare programs on individual behaviors and poverty efficacy of these programs. Hagstrom explained that there is “concrete evidence from the local area” in terms of how refugees integrate into the local economy and what impacts they have.
Then Hagstrom clarified the difference between normative and positive positions in economics, explaining that policymakers should ideally establish positive facts before making normative statements. He explained how difficult it is to come to an agreement on certain issues as the value of data has been undermined recently.
Hagstrom gave crime as an example and argued that immigrants commit fewer crimes but one well advertised crime can skew public opinion. Additionally, Hagstrom pointed out another misconception regarding the types of visas visitors typically apply for. He explained that “about 95 percent use temporary, non-immigrant visas (i.e. F1 visas for students, tourism or cultural exchange) compared to five percent for long term visas (family reunification, employment, and ten percent diversity lottery).”
Hagstrom then responded to the statement made at last week’s event that the “current immigration system is broken” by clarifying that the current U.S. immigration system is “constrained by limits set in 1990” that no longer reflect today’s realities. The H-1B visa cap is “still 85 thousand even though application is 400 thousand,” and categories for seasonal workers have been cut back, even though low-wage work like elder care now has “a high immigrant employment rate.”
Family reunification makes up about 65 percent of immigrant visas, but applicants are “miles behind in backlog,” waiting as long as 20 years in some countries because of strict per-country caps. These restrictions, Hagstrom argued, were “based on a much smaller economy in 1990,” and continue to hold the system back. At the same time, “the humanitarian [dimension] of current policy has not kept up with current need.”
Unlike in the postwar era, when the U.S. accepted refugees fleeing political, racial or national persecution, today’s framework struggles to respond to climate refugees and people “fleeing economies in which they have no economic opportunity,” according to Hagstrom.
The conversation then moved on to the issue of “immigrants taking job opportunities from natives.” He framed the issue as a question of whether immigrants act as substitutes or complements in the labor market.
Hagstrom explained that when immigrants have “similar skills as natives,” they can substitute for native labor, increasing the supply of workers in certain industries and “driving wages down” in the lowest-skill jobs. But immigrants can also act as complements, “adding resources for firms” or, in the case of highly educated workers, increasing productivity, profitability, and the potential for new goods and services.
Hagstrom noted the sharp divide between low- and high-skill immigration: the distribution of undocumented workers is “not equal in the U.S. across skill levels or geography,” with many concentrated in seasonal or low-wage jobs—about “50 percent in agriculture, 30 percent in construction, 35–40 percent in hospitality, and 40 percent in healthcare.”
Still, Hagstrom stressed that the overall impact on native wages is “statistically significant but very small” and that immigrants often compete most directly with earlier immigrants rather than U.S.-born workers.
High-skill immigration, by contrast, tends to be “more complex” but often “creates new jobs” and has strongly positive effects. The substitution effects are most noticeable in industries with fixed positions—“like universities”—where foreign-born workers may crowd others out, but Hagstrom emphasized that displaced workers often move on to “do something else with high wages or that’s productive.”
The last part of the discussion covered the topic of technology, and more specifically, artificial intelligence with Wu raising the question “can A.I. change what is supplementary by reducing the number of employers needed.” Hagstrom responded by proposing that it “might affect college students or higher educated workers more,” but not necessarily lower skilled jobs as, for example, “there will still be a need for undocumented workers in farming jobs” to fulfill the “need for food.”
During the Q&A, audience members asked what the public could do to address immigration challenges. Hagstrom acknowledged that policymakers have “never been able to reach a political solution,” but emphasized that “voting and being active in the political system” remain the most important tools for change. He suggested that another populist movement could potentially push immigration reform forward, though low voter turnout continues to be an obstacle.
When asked about economic predictions concerning future migration, Hagstrom noted that it is “easy to predict” rising costs for housing, food, and home healthcare, since immigrants make up roughly 25 percent of the workforce in those sectors. He added that food production in particular will continue to shape policy, as administrations are often “responsive towards farmers’ needs for workers” and, more broadly, to employer demands.
The next Common Ground discussion will be on Oct. 9 and cover the issue of artifical intelligence.