What 100-year-old immigration policy can teach us about the economy
Amid new executive actions on immigration, and 100 years since the National Origins Act, we look at how policy has shaped the economy.
President Joe Biden has taken two executive actions on immigration recently. First, it was restricting the number of migrants who can request asylum in a given day. And then, just this week, the president announced a new measure to shield unauthorized immigrants who are married to U.S. citizens from deportation.
These actions comes as legislative changes to immigration policy remain stalled in Congress.
It’s a fitting time to step back and look at how immigration policy has shaped U.S. society — and the economy over time. It’s the 100th anniversary of the National Origins Act of 1924. This law essentially stopped immigration from Asia, and it put quotas on how many people could come from parts of Southern and Eastern Europe. The country-specific quotas from this legislation were dumped in 1965, but there is an economic legacy to the National Origins Act that we can learn from.
Zeke Hernandez is a professor at the University of Pennsylvania’s Wharton School. He’s also author of the new book “The Truth About Immigration: Why Successful Societies Welcome Newcomers.” He spoke with “Marketplace Morning Report” host Sabri Ben-Achour. The following is an edited transcript of their conversation.
Sabri Ben-Achour: Immigration and economics are so closely linked in reality and in perception. What were the economic consequences of this law that sort of dictated who could come and who could not?
Zeke Hernandez: That’s a really good question. And, interestingly, it’s not the question that most people ask about the consequences of this restriction, right? History has judged the National Origins Act harshly because of the racism and xenophobia behind it. But history hasn’t judged it harshly enough because of its economic consequences. One study shows that there was a huge hit to innovation. And the proponents of the restrictions believed that they were protecting American workers from unfair wage competition from foreigners, but the effect was actually the exact opposite: U.S. workers lost jobs and were able to find worse jobs than before because of the deportations and lost immigrants. So, however you look at it, the economic effects were not good.
Ben-Achour: The U.S.’s current immigration system — though far from perfect — is different. What lessons are applicable to now?
Hernandez: If you look throughout history, we’ve really only updated the quotas three times since 1924. The last time we updated the system was 34 years ago. Back then, the economy was $9 trillion. Now, it’s $25 trillion. There are skeptics who could be listening to this and say, “Oh, are you calling for open borders?” No, that’s not what I’m calling for. I think there should be some kind of regulation. But the way we manage quotas in this country is really damaging, just because we don’t update them enough. And so at a minimum, we have to let the system be more flexible.
Ben-Achour: In what ways is the current system still quota driven?
Hernandez: About two-thirds of our visas go to family-based immigrants, and only 14% go to economic immigrants — I’m talking about green cards. And then we have a system of temporary work visas that allow additional workers. But there’s a whole set of other immigration circumstances for which we just don’t have an entry point. For example, we only give 5,000 green cards per year to people without a college degree through our work visa program. That’s 5,000, right? But we need like way more than that number of unskilled workers to do farm jobs, manufacturing, home services. And so, when you don’t allow unskilled workers into the economy, you get this kind of underground system of irregular immigration to fill those gaps. So, at a minimum, we need to be realistic about that.