Posner and Weyl on Sponsoring Immigrants
By David Henderson
University of Chicago professor Eric Posner and Microsoft employee Glen Weyl wrote last week about their intriguing proposal for immigration. It’s titled “Sponsor An Immigrant Yourself,” Politico, February 13, 2018.
I like parts of it but I don’t totally understand it.
Here’s their reasoning for why the proposal makes sense to them:
The problem posed by migration is that the benefits are not evenly distributed. They flow to the migrants themselves and the corporations that hire them. Consumers do receive better products and lower prices, but ordinary people don’t really perceive these benefits. And working-class people may suffer a decline in their wages (some or many of them, depending on which economist you ask, but most agree the decline is not large), or (certainly, in most cases) believe that immigration undercuts their wages and threatens their cultural values.
So, immigration expands the economic pie but gives too meager a slice to ordinary people. The goal must be to retain, and in fact expand, immigration while ensuring that its benefits are distributed fairly. The current system does the opposite: channeling the benefits of migration to immigrants and domestic elites. Right now, special classes of citizens–mostly corporations (and in practice, big corporations) and family members–can sponsor temporary or permanent migrants, benefiting shareholders mainly, as well as ethnic enclaves.
Notice that they go from some pretty good reasoning in the first paragraph above to a conclusion in the first sentence of the next paragraph that’s a non sequitur. If they are making the point that “ordinary people” don’t perceive these benefits, a point they do make in the first paragraph above, they may be right. But they jump from this alleged lack of perception of benefits to the conclusion that ordinary people don’t get many benefits. They may be right even there, but they do nothing to establish that claim.
Here’s the gist of their proposal:
This system should be wiped away and replaced with a system of citizenship sponsorship for immigrants that we call a Visas Between Individuals Program. Under this new system, all citizens would have the right to sponsor a migrant for economic purposes.
Here’s how the program would work: Imagine a woman named Mary Turner, who lives in Wheeling, West Virginia. She was recently laid off from a chicken-processing plant and makes ends meet by walking and taking care of her neighbors’ pets. Mary could expand her little business by hiring some workers, but no one in the area would accept a wage she can afford. Mary goes online–to a new kind of international gig economy website, a Fiverr for immigrants–and applies to sponsor a migrant. She enters information about what she needs: someone with rudimentary English skills, no criminal record and an affection for animals. She offers a room in her basement, meals and $5 an hour. (Sponsors under this program would be exempt from paying minimum wage.) The website offers Mary some matches–people living in foreign countries who would like to spend some time in the United States and earn some money. After some back and forth, Mary interviews a woman named Sofia who lives in Paraguay.
Sofia, who grew up in a village, has endured hardships that few Americans can imagine. She is eager to earn some money so that she could move to her nation’s capital city and get some vocational training. A few weeks later, Sofia arrives in Wheeling, after taking a one-week training course on American ways. If things don’t work out, the agency that runs the website will find a new match for Sofia, and Mary will find someone new as well.
Wiping away a system in which corporations can hire immigrants is extreme. We would lose a lot of benefits from doing so: benefits that now are captured by corporations, their customers, the workers who complement these immigrants, and, of course, the immigrants themselves.
So I think it’s better to (1) not wipe out the current system and (2) implement theirs too. It’s good economically and it’s good politically. Economically, for the reasons above, and politically so that corporations won’t fight their proposal.
So how does this benefit the Mary Turners who hire immigrants? I had thought this was straightforward: gains from hiring cheap labor. But no, that’s not the main way. Posner and Weyl write:
According to our calculations, a typical family of four could boost its income by $10,000 to 20,000 by hosting migrants. The reason is that migrants to the United States usually increase their wages many times, allowing them to pay as much as $6,000 to hosts for sponsorships (and our average family could sponsor up to four visas, one for each member).
Hold on. Where did this $6,000 come from? I agree with the authors that this could easily be a minimum estimate of the gains to the immigrants. But why would they voluntarily pay their hosts for sponsorships? Is their a price set by the government? Do the sponsors price it on their own? The authors have left out an important step that’s more than a detail.
I could see immigrants coming here, figuring out they’re in the wrong job, and then getting a better job. There’s nothing wrong with that. The authors seem even to countenance that possibility. It would just be nice to see them spell out better the particular structure that they are proposing.
They also anticipate the following:
Others might try, in entrepreneurial fashion, to find foreign workers for American businesses–which would not be allowed to sponsor migrants under our proposal–taking a cut in the process. Google and Exxon would need to pay people like Mary to find migrants for their businesses.
Notice the completely unnecessary step they introduce because of their proposal to forbid corporations from hiring immigrants directly. They purposely advocate making the labor market less efficient.
Does this mean I oppose their proposal? Not necessarily. I would need to see the basis for their pricing of sponsorships and also how many people they would allow under their program. Allowing, say, 2 million people a year through this system rather than say the approximately 1 million people now would probably be an improvement. But if we get the same number of immigrants under their proposal that we get now, it’s probably worse.