Saturday, January 15, 2000, National Post, Canada.Time to debunk immigration myths
How many immigrants are enough? Recently Elinor Caplan, the federal Immigration Minister, announced that Canada intends to accept between 200,000 and 225,000 newcomers in 2000, a significant increase from the 174,000 who arrived last year. Advocates of increased immigration cite a variety of imperatives for such greater numbers: from a looming crisis in funding for the Canada Pension Plan to the preservation of Canada's tradition of ethnic diversity to the future of economic growth of the country. None of these alleged crises, however, is particularly convincing.
In his recent book, Heaven's Door: Immigration Policy and the American Economy, George J. Borjas, a professor of economics at Harvard, takes direct aim at the weak and often spurious arguments put forth by immigration advocates. Borjas poses two fundamental questions: How many immigrants does a country need and what kinds of skills and other qualifications should they bring with them? In doing so, he focuses on the actual economic impact of immigration. His conclusions, which are as valid for Canada as the U.S., are that immigration levels should be significantly reduced.
Borjas notes that immigration has had relatively little impact on the U.S. economy as a whole -- providing a total benefit to native-born Americans of less than one- tenth of one percent of GDP (about $30 US per person). However, the skill level of immigrants has undergone a precipitous decline in recent decades. This has depressed wages and has resulted in a net transfer of $160-billion (US) per year from the pockets of workers to employers. Related to this is the displacement of American-born unskilled workers who have to compete with large numbers of equally unskilled immigrants. (Comparable research in Canada indicates that workers in 47 major industries in Canada lost jobs or suffered wage compression due to immigration.)
Along with the decline in skill levels of immigrants and their ability to compete in the job market, dependency on welfare by immigrants has increased significantly. The deep poverty affecting some immigrant groups in the U.S. is expected to extend into the second and third generations. One study revealed that the cost of welfare and other social services used by immigrants had raised the annual taxes of typical non-immigrant households in California by $1,200 a year.
Based on these economic considerations, Borjas advocates a significant reduction in immigration levels. The U.S. has admitted an average of 830,000 legal immigrants and refugees per year in the 1980s and 1990s. He proposes reducing this to 550,000; a recommendation similar to that of the bipartisan congressional Commission on Immigration reform. If these levels were applied to Canada in relation to the size of our population, it would mean lowering our immigration levels to approximately 60,000 per year instead of raising them to 200,000. In addition, it is worth noting that the U.S. has a much better chance of absorbing new immigrants into the economy since its unemployment level is little more than half ours.
At the same time as overall immigration numbers are reduced, Borjas also recommends putting greater emphasis on highly skilled immigrants. In fact, he recommends that the U.S. adopt a method similar to the Canadian point system for selecting newcomers. His conclusion that our system "works" where the American does not, however, is based on 1980 statistics. These outdated figures show that the newest immigrant arrivals in the United States earned about 28% less than natives, whereas in Canada they earned only 16% less respectively.
Had Borjas used more recent Canadian data he would have found that we too have followed the trend in accepting a greater proportion of unskilled migrants. By 1995, recent immigrants were earning 40% less than other Canadians and we were experiencing many of the problems he has identified in the U.S. While we continue to receive many immigrants with impressive qualifications, the larger numbers and declining skill levels of the lesser qualified have caused an overall decline in immigrants' ability to contribute to the economy.
In making his case for lower immigration figures, Borjas explodes the myth that developed countries such as Canada or the U.S. must keep expanding their population in order to achieve economic growth. The need to keep growing in numbers is constantly repeated by advocates of higher immigration levels. But if this principle were valid, then China and India would be among the wealthiest nations on earth and Switzerland and Singapore among the poorest. Consider that a recent OECD report warned that Canada's economic growth could fall below the OECD average because our population is growing faster than any other leading nation. This problem is directly linked to the fact that our immigration levels are the highest in the world in relation to the size of our population.
Exhaustive studies in the three major receiving countries, the U.S., Canada and Australia, have found that immigration does contribute to the aggregate growth of the economy but that, apart from the transfer of billions of dollars from workers to employers noted above, it has very little impact on the incomes of current residents.
Disappointingly, Borjas' analysis neglects to address the argument that ageing nations require high levels of immigration to support Baby Boomers in retirement. This specious line is frequently trotted out by those interested in promoting high levels of immigration. And it has been repeated so often that Canadians now accept it as gospel truth, with no economic and demographic grounds to support it.
In their best-selling book, Boom, Bust and Echo 2000, authors David Foot and Daniel Stoffman made the point that there is little reason to fear a shortage of working-age Canadians when the Boomers retire. This is in fact precisely the wrong time to maintain high levels of immigration. The Echo generation, which like the Boomers constitutes a large population bulge, is now entering the job market and unemployment will worsen if they have to compete with large numbers of newcomers.
The question of supporting an ageing population, moreover, simply disappears with ordinary increases in productivity levels of an economy. Finally, if the Canada Pension Plan must depend on ever-increasing numbers of immigrants to maintain its solvency, then it is simply an untenable government-sponsored Ponzi scheme. The solution is not more immigrants, but a rationalization of the plan itself.
Given all of this, it is obvious that Canada desperately needs a sustained and informed national debate on what kind of immigration policies can best serve our nation. But while the recent boatloads of Chinese migrants have attracted great public attention and forced the government to address the need for major changes to our refugee system, the same cannot be said for immigration -- even though the latter has a much greater impact on what sort of country Canada is to be in the future. This attitude must change. Canada was able to set an example to the world with its effective immigration and refugee programs in the 1960s and 1970s, which focused clearly on economic objectives. But we are placing the very foundations of our tolerant and multi-racial society at risk if we cannot return to a more credible and logical system of evaluating and absorbing immigration.
Borjas notes that, with the advent of large numbers of unskilled immigrants, there is a strong tendency for them to cluster in ethnic enclaves, where there are fewer opportunities to prepare to compete in the general employment market and less incentive to integrate into the mainstream of society. This he fears has set the stage for ethnic divisions that will almost certainly be dominant features of the social and political landscape in the United States in the 21st century. We can expect much the same in Canada.
Those who seek to keep the doors as wide open as possible --such as refugee and immigration lawyers and consultants as well as government-funded advocacy groups -- have been largely successful to date in fending off criticism of the system by a variety of techniques. These include accusing critics of racism and, if that fails, portraying their clients as victims. (The latter method was used during the hearings for the Chinese boat arrivals when their lawyers, having failed to arouse much public sympathy for their clients, first accused the RCMP of intimidation and then attacked the Vancouver Immigration and Refugee Board for its supposedly low rates of acceptance of claims.)
And yet resorting to charges of racism in order to block reforms is ironic since those who have a vested interest in the present system are by their own actions helping to create a situation that will lead eventually to xenophobic if not outright racist reactions.
Canada has a proud heritage of immigration and a great capacity to welcome immigrants of many different backgrounds to form a rich and vibrant society. I personally am part of that heritage: My parents as well as my wife came to this country as immigrants and I have had the good fortune to be able to sponsor my in-laws from Asia -- some of whom came directly from refugee camps. Simple common sense dictates, however, that greater thought be given to determining how many and what sort of people Canada can successfully absorb at any one time.