Recent US Immigration: How Big? Who? What Impact?

Madeline Zavodny: Would be a surprise to many of us in the United States how recent most Latin American migration is. You think this is who's geographically proximate, right? Mexico's right there on our southern border, the Caribbean's not very far, and so on. But for most of US history, the vast majority of our immigration was coming from Europe.

Steven J. Davis: Welcome to Economics, Applied, a podcast sponsored by the Hoover Institution. In today's episode, we return to the topic of immigration and its impact on the US economy. To help us think about these matters, we are fortunate to have two outstanding economists. Wendy Edelberg is a senior fellow at the Brookings Institution, where she directs the Hamilton Project.

Previously, she served as chief economist at the US Congressional Budget Office and executive director for the Financial Crisis Inquiry Commission, among other roles. She earned her PhD in economics at the University of Chicago, and I used to talk to her quite a bit about our work in those days.

Madeline Zavodny is the Donna L Gibbs and first co-systems professor of economics at University of North Florida. She is the managing editor at the Journal of Population Economics, an IZA research fellow, an adjunct scholar at the American Enterprise Institute. She has published extensively on the economics of immigration, and earned her PhD in economics at MIT.

I confirmed with her earlier today that she took two courses in labor economics from me during her grad school days at MIT. So both of our guests today have somehow managed to overcome educational experience with me and proceed to have outstanding careers. So welcome, it's really great to have both of you.

Wendy Edelberg: It's great to be here.

Madeline Zavodny: Thank you.

Wendy Edelberg: You couldn't have done that much damage, we're back, we're back with you.

Steven J. Davis: No, it wasn't as bad as I remember, yes.

Madeline Zavodny: It was longer ago than I care to think about, though.

Steven J. Davis: Yes, it was. But that's okay, we're still having fun.

Okay, so immigration is a complex topic. It's got many elements to it, this is the third or fourth episode we've done that deals with this topic in some way. So just note to the audience, we're not gonna pretend to cover it in all its complexity today. We're gonna cover certain aspects.

I wanna start with Wendy and try to get a scale on just what is the scale of immigration since, say, 2021, after the worst of the pandemic had wound down? And how does that compare to what was happening before the pandemic? So, what are the numbers like and how should we think about them in that respect?

Wendy Edelberg: Yeah, that's a good way to pose the question. So, in a generally typical year, though, there's never really any one typical year. But in a roughly typical year, smoothing through gyrations, you might have expected immigration before the pandemic to be about a million each year on net migration.

So people come, people go. And then things went wildly haywire in the depths of the pandemic, and then there was some bounce back. But then we did indeed see a surge in net migration in 2022 and in 2023. So in 2022, using CBO's numbers that a co-author, Tara Watson, and I have kicked the tires on and think are right, CBO estimates that net migration in 2022 was 2.4 million.

So that's a lot more than one.

Steven J. Davis: Right.

Wendy Edelberg: And net migration in 2023 was 3.3 million. And their projection was that net migration in 2024 would once again be 3.3 million. I'm sure we'll come around to what we're seeing in the most recent data, but that gives you a sense of how very big these numbers are relative to what you might have expected.

Steven J. Davis: So something like 4 million more people over this three-year period, if I got the numbers right?

Wendy Edelberg: That sounds about right.

Steven J. Davis: Let's go, okay, so, okay. And there's a CBO study that just came out very recently that tries to make a combination of estimate projection of kind of above the norm immigration from 2021 to 2026, and their number is about 8.7 million.

Now that's partly a looking forward projection. And just to put that in context, that's about two and a half percent of the US population, if I do my arithmetic right. So we should think about over, say, a five year window. Roughly speaking, we're getting an extra two and a half percent bulge in our population that we weren't really expecting, say, as of 2019.

Wendy Edelberg: It's quite dicey if you're gonna add what you think is these projected numbers, because things are unusual right now, and it's hard to get a grip on what's happening right now. And then, of course, what happens in 2025, 2026, that's very much going to depend on policy.

That said, to give you a sense of how big these numbers are for what you think about the economy. When we thought we kind of knew what demographics were doing to the labor force and what we thought was happening, generally speaking, with labor force participation, we might have thought that under full employment, a good number in a given month for payroll employment growth was about 100,000. 

And, in fact, CBO probably thought it was more like 75,000. Social Security, being optimistic, probably thought it was like 120. But those were the numbers that people had in mind for what a good payroll growth number was with these sorts of immigration numbers that we're talking about, that full employment, good number for payroll growth, double it.

That's how big this effect is if you wanna think about what it does to the labor force. So now if you look back at it like, how do we understand whether or not the labor market was healthy in 2023 or the first half of 2024, in a given month under full employment, if the labor market's healthy, you should look for a number that's like 200,000 a month.

So it's just a game changer in understanding the economy.

Steven J. Davis: Okay, so I wanna come back to that point, but we jumped over two other things I think we ought to put on the table first. One's implicit in our discussion already in talking about estimates of what's happened and so on.

A surprise, which is the statistical authorities in the government don't really have an exact precise handle on how much immigration has happened in recent years. I think it's important to say that. And you refer to the CBO numbers, which I think is also, in my judgment, the best source to look to for this question, at least for the moment.

Those numbers don't really square up exactly with what you might get from the current population survey, at least they haven't been factored in. So I just wanna let the audience know is there's some ambiguity or uncertainty about exactly what the extent of immigration has been. And there's certainly been some slow to catch up recognition of what's happened in the last three or four years, in terms of some of the statistical releases that we rely on for our understanding of the economy.

You agree with that?

Wendy Edelberg: You're being rather understated in saying that we don't have a precise handle, the numbers don't completely capture it. So the current population survey, another way of thinking about this is, what the official statistics tell us, how big the population is right now. Those statistics rely on excellent data sources, but they're quite lagged.

And so those data sources don't do a good job at all of measuring this unusual surge that we've gotten in immigration in the past couple of years. Those data sources work best when demographics kinda trudge along at a normal pace year after year after year, which, generally speaking, is a perfectly valid methodology for thinking about population growth.

But when you have a surge that's completely unexpected of millions of people coming into the country, this established methodology has just put us wildly astray of where I think the actual numbers are. So I think that the population numbers right now are very much understated, and I think that that is infecting a lot of the numbers that we're seeing in the household survey.

Not the shares, but the levels in the household survey that we see every month, month by month in the BLS employment report. Those numbers just are not capturing reality.

Madeline Zavodny: But I would say even the shares can be off as the composition of who is entering the country and who's staying in the country has changed.

Because I think the flows that we've been getting in the last couple of years are groups that are very difficult to measure, particularly compared to what we've been getting since about 2007 until the onset of COVID where it was a largely legal stream coming in, and now it's all streams.

Steven J. Davis: Right, so I wanna pick up on that point in particular. And here I'm gonna use a little jargon, and I'm gonna rely again on the CBO, their numbers here. So there's a category that is often referred to as other foreign nationals, okay? And as I understand it, that category mainly consists of two groups, people who entered the country unlawfully or who unlawfully overstayed their lawful entry visa.

That's roughly according to CBO numbers about 65% of the surge. And most of the surge we're talking about is in this other foreign national category, so that's why I'm focusing on it. Huge surge in that relative to what we had pre-pandemic. That accounts for most of what Wendy was talking about it.

As I understand it, about 65% of that is the unlawful entry or overstay category. The other 35% are people who entered lawfully, but they have refugee or asylum status. Ukrainian refugees would be an example. And those also, for various reasons, surged in recent years and were kind of unexpected and off the usual path.

So the biggest, and this also speaks to Madeline's point about why it's hard to precisely track these people, especially the unlawful part.

Madeline Zavodny: But they're not even going in traditional housing units. So when you have people in shelters and who are homeless and so on, they're particularly hard to count.

So new arrivals are hard to capture in these surveys regardless. But when they're in non-traditional housing, I think it's a big challenge for the Census Bureau.

Steven J. Davis: Right, so we've had this extraordinary surge in immigration relative to what was happening before the pandemic. It was also of an unusual character in that this other foreign national category is really the main source of the big surge in immigration.

It's hard to measure. Okay, so that's what's happening on the ground in the last few years. And so people's perception that something unusual has happened, which is sometimes overplayed for dramatic effect in some of the news media. But there really has been something unusual that has played out since 2021 in a rather big way.

And now I wanna pick up on the thing Wendy was talking about, about how that's really had an impact on the potential growth of employment and labor force in the United States and the population, but also in our perception of what was happening in the economy in real time.

So that's what I wanna drill in on. Wendy, there's a story here which I wanna put on the table. From 2021 through 2023, there were many, many months in which the household, the business survey, the payroll survey, it's sometimes called the establishment survey. Was showing unusually large employment gains relative to what we were, what analysts had expected and also relative to what seemed to be coming out of the household survey.

So explain how that ties to this initially unrecognized surge in immigration. What's the story there? How do we understand that?

Wendy Edelberg: Generally speaking, we think that the establishment survey does a good job because it's administrative data and establishments have all the incentive in the world for various reasons to accurately report what their employment is.

So if people think, but that's not gonna capture the employment of immigrants who are not legally allowed to work in the United States, we have good reason to think that it does a pretty good job of capturing those numbers. The bottom line is that before today, before we got today's data, and even with today's data, we had a report of way more job growth in the establishment survey than in the household survey.

And my co author and I largely attributed that to a shortfall in the household survey because we had a shortfall in population numbers that were underlying those levels.

Steven J. Davis: You mean we've understated the population growth that feeds into the household survey? That's what by shortfall?

Wendy Edelberg: Yeah, that's what I mean by shortfall, yes.

Month after month we were getting very strong growth in payroll employment. That was very hard to understand, particularly hard to understand for me, given that I saw that the unemployment rate was basically moving sideways. Wage growth was kinda strong, but it wasn't crazy strong. And I didn't see anything close to the increases in the labor force that would help to support these gains in job growth that firms were reporting.

Now that we understand that the labor force was actually growing much more than I think we thought and much more than the official statistics suggest, it's now much easier to understand the payroll growth. That's true-

Madeline Zavodny: Wendy, can I just ask, I'm really curious why businesses would be reporting employment of workers who don't yet have papers, as is the case with lots of asylum seekers, where it's gonna take at least six months to be legally eligible to work and then kind of permanently, if you will, unauthorized immigrants.

It sounds like you think that they're actually captured in the payroll data.

Wendy Edelberg: I'm guessing that you actually know a lot more about this than I do, but my sense is that the consequences for firms not reporting accurately are actually quite high. And it's an issue of getting in trouble with the government statistical agencies, and like they've said, we are accurately reporting.

It's who they're getting in trouble with there relative to getting in trouble with immigration officials. It's just two sets of people who they're worried about getting in trouble with and the consequences for misreporting their numbers are actually quite high. And there's pretty good oversight on that relative to the oversight of, we're actually coming into your business and checking whether or not everybody in your business is legally allowed to be working there.

Madeline Zavodny: That's fascinating. I knew.

Steven J. Davis: Madeline, I wanted to ask you about this. My understanding, correct me if I'm wrong, it's still that many people who enter the country unlawfully nonetheless manage to work in legal jobs with Social Security numbers they've somehow acquired or borrowing from somebody or buying from a list or employers just not verifying their eligibility very carefully.

So, just because somebody's unlawful in the country doesn't mean they aren't working in a lawful job. I believe many of them do. And that's part of the discrepancy that we're talking about between what comes out of the payroll numbers and what shows up in the household survey, which has the problem that it's not correctly adjusting for the surprise surge in the overall population.

That's what caused the household survey over the last three years to diverge from the establishment survey under the view that even unlawful immigrants are often working. Hence they're showing up in the establishment survey if they're working in an employee capacity, not a self employed capacity. And yet we're still missing those in the numbers that come out of the households.

It's a little complicated cuz the household survey is getting a sample and that sample has to be blown up somehow, okay? And that's where the population numbers, the population estimates come into play. And if those population estimates are too low, then the implied size of employment and the labor force from the household survey will also be too low.

We've been focused now so far on the discussion on the period from '21 to 2024 because it's been such an extraordinary episode in the history of US immigration, at least in recent decades, and it helps us understand our real time diagnosis and how we got it somewhat wrong in the last few years.

But I wanna broaden the historical lens now and turn to Madeline in particular and ask her to, over the last few decades, maybe we went all the way back to the 1960s, give us some historical perspective on the big wave of immigrants that have come into the United States over that whole period from Latin America.

It's hardly the first big extended immigration wave into the United States. We have many indoor in our history. I'll let you describe them, but describe the scale of the immigration wave from Latin America in recent decades and how it compares to earlier immigration waves in the United States from southern Europe, from central Europe, and so on.

Madeline Zavodny: So I think it would be a surprise to many of us in the United States how recent most Latin American migration is. You think this is who's geographically proximate, right? Mexico's right there on our southern border, the Caribbean's not very far, and so on. But for most of US history, the vast majority of our immigration was coming from Europe.

And so it was first, of course, the English, right. Then the Germans, and then we had the Irish, and then we had the eastern Europeans, that's my family and relatives and so on, and Italians coming in, and it really wasn't. You had some flows coming in from Latin America, particularly Mexico, largely to work, so in kind of farming jobs, largely along the border.

And then whenever the US economy went south, we would have a mass deportation campaign. So this happened in the 1920s, it happened in the 1950s, but those flows were still relatively small and the stock remained very low. Then in 1965, related to the civil rights movement, there was a big change in US immigration law that just led to huge changes in the composition of who was entering the United States in terms of the flows that ultimately really change the stock of who was here.

As foreign born, as older immigrants, the Europeans were just aging out of the population, dying, right? So that now we think of immigrants as largely being from Latin America, because about half of those who have come in this post 1965 era have indeed been from Latin America and the Caribbean, whereas if you went back pre 1965, it would be like 90% almost coming from Europe.

So just huge change that I don't think many of us realize.

Steven J. Davis: And is that because life in Europe was miserable first half of the 20th century relative to what it was in much of Latin American Caribbeans, whereas in recent decades, maybe things reversed. And that, I mean, just it is a broad sweep question but-

Madeline Zavodny: Yeah, I think part of it, life is hard everywhere, right?

Steven J. Davis: Hard everywhere, and then I guess it became less hard in much of Europe.

Madeline Zavodny: Life became, yeah, that Europe industrialized. We passed a lot of immigration restrictions in the 1920s that made it hard for non Europeans to come.

So to the extent that people might have wanted to continue, we already made it hard for Asians to come. But to the extent that people from Latin America or Asia would have wanted to come, it would have been difficult to enter legally. A lot of these farm workers were either on temporary programs.

We had a program called the Bracero program, or they were here illegally. And then in 1965, we kind of lifted these country caps. We still have them, but we've made it a lot more accessible for people to come from other places, while at the same time, I think transportation costs really change.

When you think about Mexico again, it's really close, but it didn't feel close in terms of the ability of people who were living not near the US border to come north into the US was very limited until you had planes, trains, and automobiles, in essence. And then from even further south, it was just hard to come to the US compared to the steamships coming from Europe.

Steven J. Davis: Okay, and so say, as of 2020, what fraction of the US population roughly was born in Latin America?

Madeline Zavodny: So in 2020, 2022, we're at around 6%, a little over 6% from Latin America and the Caribbean. So predominantly Mexico, but increasingly diverse over the last four decades.

Lots of Cubans, more coming from the northern triangle, El Salvador, Guatemala, Honduras. Recently, we've gotten inflows of Venezuelans coming. So in part, you're right that when things get tough at home, when things go really south, people do tend to come to the United States, or at least to leave their country, and the United States is a desirable place for some of them to go.

Steven J. Davis: And I wanna just put that 6% figure in historic perspective in various ways. So one way to do that is how does that compare to the fraction of US immigrants, say in, I don't know, 1950 or 1960 that came from central or southern Europe? Just, I wanna scale this immigration wave compared to earlier ones.

Madeline Zavodny: Okay, so if you look right kind of about the time that we slammed the border shut in the 1920s, we would have been over 8% from eastern European, so again, this is my relative. So those numbers were bigger as a share of the population, but back to the pie analogy.

The pie was indeed smaller during that period. The shares who were born in Germany, Ireland, Southern Europe, Italy were already declining at that point cuz those were much earlier waves that had come. And so this is now their children and grandchildren in the United States for the most part.

Steven J. Davis: And before the Chinese Exclusion Act and other restrictive immigration legislation in the 1920s, what fraction of the US population, roughly speaking, was from East Asia?

Madeline Zavodny: Incredibly low.

Steven J. Davis: Even so, it was never-

Madeline Zavodny: It would never high. If you were in California, you would probably would have, I don't know when California became a state, but what became California, you would have been much more aware of Asian immigrants, the gold rush and so on.

But that's really far to come at a time. And those barriers to Asian immigration really started in the 1800s, they predated the 1920s, closing of the borders.

Steven J. Davis: Okay, all right, so just in terms of raw numbers, the Latin American immigration wave, it's quite sizable in recent decades, after 1965, as you described, but it's within the range of previous immigration waves.

Madeline Zavodny: Absolutely.

Steven J. Davis: It's worth pointing out that the society, the country has changed in some way since then. We have more people, although I don't really think space is a huge physical constraint in the United States. But a bigger change is we have a well developed social safety net now that is funded by the public sector, much more so than we did in these earlier waves of immigration from central Europe, southern Europe, and to a much lesser extent from East Asia.

So, that's at least a reason to ask oneself whether the economic forces that are motivating immigration might differ over time, and that the consequences of after people arrive and their incentive to assimilate and integrate have changed over time. I'm not making a hard statement about the effects of that, but it's just worth noting that, it's not just about the scale of the immigration.

It's about the way we either directly or as a byproduct of other policies, set the stage for people to assimilate and integrate after they get here.

Madeline Zavodny: Absolutely, so I realize that a lot of people worry that immigrants are coming here to take advantage of welfare programs to the extent that we have them in the US.

And one thing that's important to realize is that, foreign born are largely barred from receiving most benefits until they are US citizens. Now, any US born children that they have are going to be eligible on the same basis as everybody else. But as Wendy's colleague Tara Watson has shown, I think a lot of those families are reluctant to even take up benefits on behalf of their US born children because they don't want scrutiny from immigration officials.

They worry about what's going to happen to their paperwork and so on.

Steven J. Davis: Well, when you make your statement about benefits, are you talking about federal benefits or including state and local benefits as well?

Madeline Zavodny: So largely, I would say, what we think of as welfare programs. Of course, the most expensive benefit that most immigrant families get is education for their children.

And I think that's incredibly important because those children are largely going to remain in the United States and we want them to be well educated.

Steven J. Davis: Yeah, understood-

Wendy Edelberg: But that's not something that has changed a lot over time. I'm not sure that that's in your same category of things where fiscal policy has changed wildly over the last 100 years.

Madeline Zavodny: I think there were certainly questions until within my lifetime about whether or not the children of unauthorized immigrants were eligible for public education. And the Supreme Court ruled that the unauthorized kids get K through 12 public school. And we have a presidential campaign right now that's talking about undoing that.

Steven J. Davis: When was that Supreme Court decision? Just, I didn't mean to put you on the spot, but-

Madeline Zavodny: I don't know if it was in the 70s or 80s, but it was not as old as you might expect.

Steven J. Davis: Okay, but I wanna make clear, there are many benefits to which immigrants either aren't entitled or don't avail themselves of, as you explained.

But there are many benefits to the state and local level, education probably being the most important one in which they or their children are entitled to, even if they're here unlawfully. That's kind of point one. And point two is, it's important to recognize that the fiscal effects and other effects of immigration are highly uneven spatially in the United States.

So even though for the country as a whole, the fiscal impact of immigrants might be modest, so we can get into that more at the state and local level, it can be extremely concentrated in a few communities in which the local tax base, the revenue base, local public services are overwhelmed and of course that then shows up on the TV news and so on.

So you can disagree with me if you want, but I don't wanna convey the impression that immigration is nowhere a serious fiscal issue in the United States. It's probably not much of an issue in most of the United States, but it is a big issue in some parts of the United States.

I think we just ought to recognize that.

Wendy Edelberg: Go ahead, Madeline.

Madeline Zavodny: No, Wendy, you should talk about that because you know more about the concentrated state and local impacts.

Wendy Edelberg: Thanks, so let me make an advertisement for a proposal that Tara and I put out not so long ago about how the federal government should do more to transfer the positive fiscal benefits that they enjoy from just about all kinds of immigration.

To the state and local communities that feel the most fiscal pressure from, particularly immigration of people with less formal education. On net, all kinds of immigration are very likely a net fiscal positive. And certainly if they're not a net fiscal positive, even across all state and local and federal fiscal effects, even if they're not a net fiscal benefit, like in the first year they arrive, they are very likely a net fiscal benefit over the longer term.

But just as you were saying, Steve, those effects are very uneven. And the federal government gets a net fiscal benefit, essentially, immediately from all kinds of immigration. And state and local governments can feel a really strong negative fiscal effect, particularly from immigrants with less formal education through educating young children.

But also there can be some pretty sizable health care costs from serving this population. And so, we could do a lot of good by transferring the net positive fiscal benefits from the federal government to state and local governments for these newly arrived immigrants until after a couple of years even immigrants with less formal education who make lower wages.

After a couple of years, their fiscal benefits even turned positive for state and local governments. But for those first couple of years, there absolutely should be a transfer.

Steven J. Davis: Okay, so I just wanna flesh some of that out. And I hear what you're saying, but I think point one is we are pretty confident, based on various analyses, that at the federal government level, the net fiscal effect of past waves of immigration, including the recent one we're talking about, are positive.

Wendy Edelberg: 100%, yes.

Steven J. Davis: It's not enormous, but it's not a trivial amount either. It's a material positive impact on the federal government's fiscal position. State and local, I think we have less precise evidence, let me put that on the table first. But on balance, it looks like it might be a net fiscal drain, especially in the early years.

But I think the larger point politically and maybe economically, and this is what motivates in some sense, your proposal is there are certain localities that bear the brunt of the negative fiscal impact. So that's highly concentrated. And so, I think there is a pretty compelling case. We're all part of a fiscal union in some grand sense.

If we're going to decide as a society or if we're going to, in the wake of any explicit decision, have many millions of immigrants, then the cost and benefits of that need to be distributed across people and localities and so on. And we haven't done a very good job of that, especially with respect to the wave of immigration that appears that we've talked about in the last three years.

And I think much of the political backlash, not all, but much of the political backlash to the immigration wave, especially the recent one, is a reflection of that fact. There are some communities that are suffering economically, fiscally, because they're being asked to bear such a disproportionate share of the challenges of bringing new people into society.

Wendy Edelberg: I will definitely give you fiscally, I'm less confident about the economically. So, all right, so-

Steven J. Davis: The impact on the local economy?

Wendy Edelberg: Yeah, so I think the impact on the local economy, that’s the parts that I’m not sure of. If you do some sort of stylized kinda correlations, I’m gonna be short of calling them regressions, you see that employment growth is stronger in areas that have gotten these big immigration waves.

You see retail sales are higher in these local communities that have gotten big immigration waves.

Steven J. Davis: I wanna just drill in a little bit further. More people, you're likely to get more economic activity.

Wendy Edelberg: Yes.

Steven J. Davis: For sure unless you make it completely impossible for these people to work, which we don't do that, but we often make it challenging.

So, but nonetheless, there are still people who are renters in that area who all of a sudden, they may not be working at all or their wages aren't exactly rising in the wake of this. There are still pockets of people, part of the electorate in these communities, that are being buffeted and sometimes harmed by the economic responses to these highly concentrated immigration waves.

So, I think it's important that we recognize as economists that not everybody is moving in the same way in response to the economic effects of immigration.

Madeline Zavodny: I think the biggest costs are on straining the safety net in terms of homeless shelters and the schools. Cuz one thing that has been very different about this post-COVID wave is a lot more family units coming than we're used to.

That traditionally people who were newly crossing the border from the south where young men coming to work, this started to change, really in the 2000s of having more family reunification in the United States. But what is coming, what has been entering lately has been in part because of things falling apart in Venezuela and the perception that it is easier to enter and get asylum, perhaps if you are a family unit, is a lot more family units with children. So the strain on schools in some areas has been enormous.

Steven J. Davis: Okay, so agreed. And so, Wendy made the point that there's a fairly compelling argument, at least I think so, and I gather the two of you do as well, for redistributing the, whatever, fiscal surplus is associated with immigration and alleviating some of the fiscal difficulties in certain localities.

But I wanna ask you about another issue, Madeline. Are there sensible policy changes we could make in the near term that would further increase the net fiscal benefits associated with immigration? So, think, what could we do so that newly arrived immigrants, whether lawful or unlawful, for the moment, and you might wanna distinguish between those two.

So that newly arrived immigrants can quickly find gainful employment and start contributing to the tax rolls and the tax revenue base, and taking less in the way of social benefits?

Madeline Zavodny: I think this is really tricky in terms of what incentives you're giving to future streams. The faster you start granting employment authorization to people who are pursuing an asylum claim, the more people you're probably going to have trying to enter, because word of mouth is pretty fast among these communities.

Steven J. Davis: Let's simplify it a bit and focus on people who enter lawfully. So, I'm thinking of the spouses of people who enter on H-1B visas.

Madeline Zavodny: Okay, well, so-

Steven J. Davis: Most of them work often, right?

Madeline Zavodny: So they cannot work unless their spouse is approved for a green card, which typically takes a couple of years after all of the paperwork has been filed.

So the adjudication times are pretty big. So this is a very different group than we've been talking about, cuz this is predominantly Indian immigrants. They're very highly educated. Typically, the spouse on an H-1B visa is working in computer programming, maybe as a professor, maybe as a doctor, whatever.

And the spouse, typically a woman, who's not able to work until the H-1B visa-holding spouse is well along in the green card process, is also typically very highly educated. So this is a very different group that could make tremendous economic contributions, has a lot of human capital, and is just barred from working for years.

Steven J. Davis: That's the point I'm trying to draw out.

Madeline Zavodny: Absolutely, it's a nonsense, I think.

Steven J. Davis: We have human capital in the country, and it's the H-1B visa spouses, but it's also spouses of grad students, many of whom are also very highly educated and who have severe restrictions on their ability to work.

So we have talented pools of human capital who enter the United States lawfully. So we're getting away from the incentive you describe, which are serious ones, and yet we make it very hard for them to contribute economically. And to me, it's hard to see what the sensible rationale for that policy is.

It's hard to see who it benefits, but then it's pretty obvious that it undermines the net fiscal contribution of people who are lawfully in the United States, at least for a period of time.

Madeline Zavodny: Yeah, I don't really understand it. On the other hand, you could say, well, it is a choice that families make.

But the whole immigration process is so complicated and such a mess, I'm not sure that anyone really understands what they're getting into. And then while I'm ranting about this, I think the group for whom I probably have the single most sympathy is the group called The Documented Dreamers.

So these are the foreign born kids of the H-1B holders. So they're not US citizens cuz they weren't born here. And once they turn 21, they have to basically get their own visa to stay in the United States. But often, they've been here many years. We have borne the cost of educating them, and then what?

Steven J. Davis: Yeah, this has unfortunately become, this group has become a political football. And it's from an economic perspective, the way we treat these people make. And for me, from a basic humanitarian perspective, it really makes no sense.

Wendy Edelberg: But I think Madeline's talking about kids of people with visas.

Madeline Zavodny: Yeah, Documented Dreamers. Yeah, so there was under Obama, the DACA for the Undocumented Dreamers. And this is this other group that's just completely, so they're also, I think, a football, a bargaining chip that gets completely forgotten by some groups.

Steven J. Davis: Then the challenging questions about how to deal with unlawful immigrants, the perverse incentive effects that you can create that drive more unlawful immigrants.

So that's the hard part of US immigration policy, perhaps. But then there are these what seem like, from an economic, even a political and humanitarian perspective, kind of no brainer policy improvements. And this has all gotten lost in the political heat over the immigration issue. But there are many policy improvements we could make on the margin with respect to immigration.

But I think almost anybody, if you ask them, would think, yeah, that makes sense. And yet somehow don't do them.

Madeline Zavodny: Yeah, grad students, that we make them jump through all of these hoops after, again, we've borne a lot of the costs of educating them. And the fact that many of them times they can't get a visa to permanently stay in the United States and they end up going to Canada or somewhere that's just happy to welcome.

Steven J. Davis: Even former President Trump seems to recognize that one. We'll see whether it be-

Wendy Edelberg: Yeah.

Steven J. Davis: I'm not trying to give him too much credit here, but that one is at least in some of his recent remarks, he's made positive.

Wendy Edelberg: I think if we're gonna say positive things about what he said, we have to provide a whole lot of scaffolding to the two sentences.

Steven J. Davis: Understood, I'm trying to be hopeful here and say, maybe we can get some alignment of the two political parties regardless of who wins the next presidential election. Who controls the House, where we make some of these no brainer improvements in US immigration policy. That's my wish.

Madeline Zavodny: I will say the first Trump administration, the only one, so far, did absolutely nothing for H-1B holders and their families that I can recall.

Wendy Edelberg: I mean, we can't talk about, if we've now invoked Trump and his hoped for immigration policy. We have to talk about the fact that what he really wants to do is have out migration of 11 million people over a very short period of time. That would be unbelievably disruptive for the US economy.

Steven J. Davis: Yes, agreed. I think it's a crazy economic policy and it's a humanitarian disaster. So, I'm not at all in favor of that. I'm pretty sure neither of you are either. So look, let me see, before we close the show, let me see if there's anything else you wanna put on the table here before I sign us off today.

Wendy Edelberg: Just because the whole point, I'm gonna come back to this tangential thing that I raised about employment among the US born. And whether or not this surge in immigration has meant that immigrants are, I'm gonna use air quotes, stealing all the jobs. I just wanna get some numbers on the table that employment among the US born has gone up, not down.

So, we estimate that US born employment over the course from January 23 to January 24 rose by 740,000. Even though I completely appreciate that in the published numbers, it fell by 190,000. I am very, very confident that US foreign employment did not fall in this recent data because the only reason that those numbers are the way they are is because they're based on population declining.

The actual shrinking of the US foreign population, which I don't think happened. So, I just wanna say over, and over, US born employment rose. And I'm happy to talk to your listeners one by one to convince them that that's correct.

Steven J. Davis: Okay, you may get some millions of requests on that one.

Wendy Edelberg: Millions? There millions of listeners.

Steven J. Davis: You could do a whole show on how to think about the employment and also the wage consequences of immigration. It might seem like simple questions to some of our viewers. It's not so, but we're gonna have to leave it there. We're not gonna have time to dive into that today.

And I wanna just in closing, say, look, the immigration question economically and politically is a complex one. We've touched on some aspects of it today. There are for our viewers, we will put on the website for this show links to previous episodes of Economics, Applied, where we have discussed other aspects of immigration.

So I'll leave it there and I think we'll probably come back on this show to the question of immigration again. So thanks very much, Wendy and Madeline. It's been great to see you, and I enjoyed the conversation. I hope you did as well.

Wendy Edelberg: Thanks, Steve.

Madeline Zavodny: Thank you.