The U.S. immigration system needs reform, and President-elect Donald Trump might be just the man to do it.
Although research shows that low-skilled immigration – agricultural laborers, janitors, construction workers and the like – isn’t that bad for working-class Americans, it’s now clear that very few Americans are going to listen to what the research says.
Working-class people want less competition, and Trump seems to support that demand. Libertarians who hope for open borders have decisively lost the fight.
But the U.S. economy needs immigrants – to offset the aging of the population, to preserve Social Security, to start businesses, to do research and to ensure the U.S. market remains attractive to foreign investors.
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How can Trump reconcile these two goals?
The answer is by changing the type of immigrants that flow into the U.S. Under Trump, the U.S. has a golden opportunity to switch to a Canada-style immigration system that emphasizes skills and education.
Trump has already proposed doing this. In an August speech on immigration, he promised to:
▪ Keep immigration levels, measured by population share, within historical norms.
▪ Select immigrants based on their likelihood of success in U.S. society, and their ability to be financially self-sufficient. We need a system that serves our needs – remember, it’s America First.
▪ Choose immigrants based on merit, skill and proficiency.
▪ Establish new immigration controls to boost wages and to ensure that open jobs are offered to American workers first.
This sounds very much like what Canada does. In Canada, prospective immigrants are assigned a number of “points” based on education, work experience and language proficiency.
Many economists and pundits, me included, have long called for the U.S. to switch to this type of system. First of all, it’s common sense – for a given number of immigrants, the economy gets a bigger boost from a higher-skilled cohort. Skilled immigration also helps diminish inequality, since educated immigrants compete more with educated, higher-paid Americans than with the working class.
But economic research also strongly supports the value of skilled immigration. A 2014 paper by Anirban Ghosh, Anna Maria Mayda and Francesc Ortega found that when the U.S. reduced its cap on H-1B visas in 2004, companies suffered productivity losses. They found that large companies that do a lot of research and development are heavy users of H-1B workers, and that these companies’ research efforts lagged when high-skilled visa holders are in short supply.
Meanwhile, Serge Shikher of the U.S. International Trade Commission has found that much of the productivity difference between countries can be explained by flows of highly educated labor. Get more people with advanced degrees to move to your country, and your economy becomes more productive.
In the past, the debate over skilled immigration was mostly about increasing the H-1B visa cap. But this would be the wrong way to go about it. The main problem with the H-1B program is that it ties immigrants to a single employer and forces them to accept lower wages, which also ends up pushing down the pay of native workers.
Research also shows that putting high-skilled immigrants on temporary visas can make them less productive, by forcing them to take the wrong jobs just to stay in the country. And the number of H-1Bs is too small to provide the population inflow that the U.S. will need to avoid becoming a nation of retirees.
So instead of more H-1Bs, the U.S. should shift the entire immigration system toward the Canadian model. The U.S. doesn’t just need a few more hired specialists – it needs a wholesale shift toward mass high-skilled immigration. This means green cards – hundreds of thousands of them – so that educated and skilled foreigners can make the U.S. their permanent home.
To some, this will seem unfair. Why should high-skilled individuals get to move to the U.S., while those with fewer skills are denied?
The answer is that with the election of Trump, the U.S. has shown that it doesn’t want open borders. And without open borders, the country has to choose between immigrants who compete with the working class and those who compete with the educated class. And the U.S. needs to choose immigrants based on their ability to add to the U.S. economy and support the country’s large and growing elderly population.
High-skilled immigrants are the obvious choice, for both reasons.
President-elect Trump, do what Canada does.
Noah Smith is an assistant professor of finance at Stony Brook University and a freelance writer for finance and business publications. He wrote this for Bloomberg View.