Trump’s immigration plan is half-right and half-wrong

President Donald Trump endorsed a plan to change the way the US immigration system operates. Half of the plan is very good. The other half is bad and counterproductive.
The plan, known as the Reforming American Immigration for Strong Employment (RAISE) Act, was developed by Republican senators Tom Cotton of Arkansas and David Perdue of Georgia. It would do two things. First, it would introduce a merit-based system that would admit immigrants according to their education level, language skills and professional qualifications, similar to what Canada and Australia use. Second, it would cut the total amount of legal immigration in half, reducing immigration based on family reunification to immediate family members only, and ending the lottery system for green-card permanent residence permits.
The first half of this plan—the merit-based system—is a very good idea. I’ve long advocated for exactly this shift in the way the US screens immigrants.
High-skilled immigration is important for several reasons. First, although low-skilled immigrants —manual laborers, blue-collar workers and the like—create a small but noticeable amount of wage and job competition for native-born Americans, skilled immigrants do the opposite. According to a recent National Academy of Sciences report, which took input from both immigration boosters and detractors, skilled immigrants actually raise the wages of their high-skilled US peers. This probably happens because knowledge industries rely crucially on new ideas—the more smart people we have creating new ideas, the more other smart people can take those ideas and use them for other applications. Also, the NAS report found that although low-skilled immigrants don’t have much of an impact on government finances, high-skilled immigrants create a strong positive fiscal boost. The aging US population needs high-earning young people to pay for old people’s pensions and retirements, to fund the public services they depend on, and to buy their houses and stocks. Skilled immigrants are the way to pay for native-born Americans to have a comfortable retirement.
Finally, skilled immigrants are a bit quicker to integrate into American culture. That means they will enjoy rapid mobility, and won’t become a permanent outsider class.
So high-skilled immigrants are pure gravy for a country like the US. Canada has been enjoying great success with its points-based immigration program—the RAISE Act would, in this way, represent the adoption of best practice from the US’s neighbor to the north.
But the RAISE Act also has a dark side—the deep cuts to the total number of legal immigrants allowed into the country every year. This will partially defeat the purpose of the points-based system the act would create. It makes no sense to shift to a skills-based immigration system, but then limit the number of skilled workers who are allowed in.
Fewer immigrants means less support for the aging native-born US population. It means a greater strain on Social Security and Medicare. It means pensions for city workers and police and firefighters going bankrupt. And it means stagnation of housing prices, because of reduced demand from young high-earning workers. In other words, slashing immigration would hurt the very native-born people that Trump’s immigration advisers, like Stephen Miller, claim to want to protect.

—Bloomberg