Immigration, Politics, and Their Effects on American Business

By Carlos Gutierrez

Immigration is one of the hottest political issues in our country. It is also one of the most important economic opportunities. However, the political rhetoric is overshadowing the positive impact that comprehensive immigration reform can have on our economy. The land of immigrants has forgotten the benefits of immigration.

A country’s growth is a function of the size of the work force plus the productivity of all its workers. If the work force is not growing then it will be extremely difficult to grow exclusively through productivity. Demographers point to a required “average fertility rate” (children per child-bearing-age women) of 2.1 just to keep the population flat. Our current level is 1.9. Without immigration our population will decline, and a declining population means a declining economy, a declining society.

There are three components to a comprehensive immigration reform bill. To finally fix the problem, legislators must get all three right. It won’t be easy.

The first is border security. This includes the southern border and, importantly, the use of technology to monitor visa over-stays (40 % of undocumented immigrants come in legally through airports and overstay their visa) and an employee verification system, known as e-verify, that enables an employee to verify the legitimacy of an applicants' papers. While “border security” is an important part of the solution, it is no silver bullet. Our system will remain dysfunctional until our legal system is overhauled and adjusted for the 21st century.

Our dysfunctional legal system is an important reason why we have illegal immigration. Low quotas and bureaucracy have made it impossible for employers to find the labor they need. This has forced many employers with a difficult choice: hire undocumented workers, go out of business, or move overseas. This last outcome has happened in both the hi-tech industry (R&D centers moving to Canada) and farms (moving to Mexico). The inadequacy of our system came alive in two separate conversations I had with a restaurant owner and a farmer. The restaurant owner stated, “If I had the labor, I would grow from three restaurants to eight. I would then hire more U.S. citizens to help manage the larger company.” The farmer said pretty much the same: “If I had more labor, I would expand my crops, which would require opening more distribution centers. I would hire more U.S. citizens to manage the centers and perhaps even export.” These two examples are microcosms of what is happening throughout the country. The American Enterprise Institute for Public Policy Research’s and Partnership for a New American Economy’s December 2011 report Immigration and American Jobs cites that for every 100 immigrant workers, 40 additional jobs are created for U.S. citizens.

The Senate bill improves the current system although it falls short. The quotas must be adjusted frequently. For example, the quota for construction workers is 15,000. I recently told a group, partially joking, that we need 15,000 construction workers in Miami alone. The quota for agriculture is 112,000, but the Migration Policy Institute estimates that we need between 500,000-1 million workers per year. Our current problems will persist unless our lawmakers recognize the importance of a sound immigration system that serves the needs of our economy.

The third and final element of comprehensive reform is the solution for dealing with approximately 11 million undocumented workers living in our country, many for decades. It has been a bi-partisan conclusion that rounding up and deporting 11 million people (including children) is not viable or humane. The other extreme would be to grant a special, accelerated path to citizenship for those 11 million. This would be amnesty and unfair to those who have been waiting in line to get their papers legally. The answer lies somewhere in the middle. President Obama has threatened to veto any bill that doesn’t have a time-certain path to citizenship. Our law already contains a path to citizenship. It’s hard to conceive that the president would deny 11 million people legal work status just because he doesn’t get his way on something that may happen 13 or 15 years in the future. Our law, however, doesn’t contain a path to legalization. This would include paying fines, back taxes and, importantly, undergoing a background check. This is not amnesty. Children, who were brought here by their parents, would be allowed to apply for citizenship under the Dream Act (KIDS Act in the House of Representatives). If “legalized” immigrants want to apply for citizenship, they use the process established in current law.

This is the time to fix our immigration system. It will be a boost for our economy and will enable us to compete and win globally. The House of Representatives needs to develop a bill that improves the Senate Bill. No action in the House would be irresponsible. Immigration has been our secret sauce since the founding of our nation. This is no time for the land of immigrants to become insecure about immigration.

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Carlos Gutierrez is the former CEO of Kellogg Company, the former vice chairman of Citigroup’s Institutional Clients Group, and a former secretary of commerce – where he was a core member of President Bush’s economic team. The president said, “[Gutierrez] knows exactly what it takes to help American businesses grow and to create jobs.” Few people have had the success in business he has, and fewer still have such a clear perspective on how effective policy is made. The son of Cuban immigrants, Gutierrez rose to become the youngest CEO in Kellogg’s 100-year history, and Fortune named him one of the most powerful Hispanic-Americans in business and called him “the man who fixed Kellogg.” Suave and charismatic, he addresses immigration reform and how politics and policy affect business.

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