UNEMPLOYMENT SOLUTION IS SUCCESSFUL

Story first appeared in the Bloomberg News.
Cammie Allie and Ann Costlow are small-scale entrepreneurs who have battled back from unemployment to create successful businesses. Allie manages apartment buildings in Portland, Ore.; Costlow owns four crêperies in Maryland. To get started, each drew on business coaching and income support from an unusual state-funded jobless initiative. These self-employment assistance programs provide 26 weeks of income support, typically about $10,000. Participants try to start enterprises, rather than being required to look full-time for traditional jobs.
Founding a business isn’t for everyone. Hours are long, initial earnings puny, and the failure rate high even in boom times. A weak economy makes everything harder. For some displaced workers, however, self-employment may be their best hope. In Oregon, those opting for self-employment get business pointers and detailed reviews of their startup plans. Examiners look for clear ideas about pricing, supplies, customers, and competition. Only candidates judged to have at least a moderate chance of success can proceed.
Oregon recently surveyed 369 people who have participated in its program since 2000. Seventy percent had started a business; nearly half of those were hiring workers. The small survey’s responses might be skewed toward recipients who thrived. Even so, Oregon’s successful entrepreneurs each created an average of 2.63 jobs.
Self-employment aid closely matches the cost of regular unemployment benefits, which can run $400 a person per week. Britain, France, and Sweden have operated similar entrepreneurial assistance programs since the 1980s, with good results. In the U.S., though, only about a dozen states have followed suit, and most programs are tiny.
Bureaucracy is partly to blame. Current state and federal rules don’t allow unemployed workers to pursue self-employment aid right away; instead they must qualify for regular jobless benefits first, which takes weeks. States also worry that some startup dreams might fizzle quickly, wasting taxpayer money.
Making the entrepreneur’s path risk-free is impossible. Still, that shouldn’t stymie such aid. Three of the biggest states—California, Texas, and Florida—are home to 30 percent of America’s unemployed. These states don’t offer entrepreneurial assistance to the jobless; setting up such programs would be a big help.
Two other changes could help make entrepreneurship a likelier path back to work. First, states should tell the newly jobless about the self-employment option right away, rather than making them wait a month or two before becoming eligible. Second, minor income from a side business—capped at a reasonable level of, say, $750 a month—shouldn’t be automatically counted against jobless benefits. In some cases, this year’s hobby can be built into next year’s business. When 4.7 people are out of work for every job opening, unemployed Americans deserve better odds of becoming their own bosses.

WHEN TALENT STOPS AT THE BORDER
David Cameron, the U.K. Prime Minister, had a bright idea: Hire the best person for the job. In the wake of the News Corp. (NWSA) phone-hacking scandal, he reportedly floated the idea of naming William Bratton, the former New York and Los Angeles police chief, to head Scotland Yard.
The suggestion was hit with a flash mob of criticism and was quashed by Theresa May, the Home Secretary, who cited national security and reminded Cameron that only British citizens should be eligible for the post. Her move was seconded by, well, lots of other people, including, not surprisingly, the police unions.
The Prime Minister, who lacks the authority to appoint the Metropolitan Police commissioner, took Bratton on as an unpaid adviser. He had crashed into globalization’s last taboo: the idea that a country could import a talented foreigner to lead a government entity.
What would be so odd about having Bratton, now head of Kroll, an international security firm, run the London police with an American accent, especially given the London riots?
Goods and ideas cross more borders with greater speed and frequency than ever before. Talent travels, too, whether it’s an Indian engineer at Google (GOOG), a Brazilian-Lebanese chairman of Nissan-Renault, a Japanese-French automobile confection, or a Chinese center in the NBA. Sensitive public jobs increasingly are entrusted to foreigners, even if they’re only “consultants.” David Kilcullen, an Australian, helped forge American counterinsurgency strategy in Iraq and Afghanistan. The former head of security at Ben-Gurion Airport in Tel Aviv, Rafi Ron, was brought in to shore up Boston’s Logan Airport. Jay Walder, an American, was the planning and finance chief of London’s transportation authority, then was hired to manage New York’s, and is on the way to do the same job in Hong Kong. When it comes to cities, it’s hard to think of a more sensitive job.
Skill and intellect are exportable commodities, and right now the public sector is largely a closed market. For governments at all levels and in all parts of the world, the most effective route to reform may be to import strong, innovative managers. Politically, perhaps, it remains a difficult sell. Questions of divided loyalties and hurt national pride will have to be addressed, as will citizenship regulations in many places. And yet breaking the Bratton Barrier would be a good thing, especially in the context of security, a transnational threat if ever there was one.

BOARDER FENCE FUNDRAISER SUCCESS

Story first appeared on the Associated Press.
Arizona launched a fundraising website Wednesday to build fencing along the U.S.-Mexico border, a newly authorized project that supporters said is needed to close gaps exploited by smugglers and illegal immigrants.
State Sen. Steve Smith, a first-term Republican who sponsored the legislation authorizing the fence project felt Arizona once again has to do the job the federal government isn't.
Smith, Arizona Senate President Russell Pearce, state Attorney General Tom Horne, Maricopa County Sheriff Joe Arpaio and other supporters gathered Wednesday evening in a restaurant in Smith's legislative district to kick off the fundraising campaign.
The public will back the effort, Pearce predicted.
Pearce commented that he knows where America stands and that we have a nation at risk. And why are we going to build a fence? Because you'll never get it built by the federal government, he added.
The website, buildtheborderfence.com, received 884 online donations totaling $39,085 within its first 17 hours, said Arizona Senate spokesman Mike Philipsen.
Initial online donations ranged from the minimum of $5 to dozens in the $250 to $500 range, Philipsen said. Contributions also can be mailed.
Smith said during a Tuesday interview that his initial goal is to raise $50 million.
He said this is not his end goal, but $50 million would be a fabulous start.
Smith said he was optimistic about the fundraising potential because people have donated nearly $3.8 million to a fund to defend the state's 2010 immigration enforcement law known as SB1010.
Smith said that effort raised money for an intangible service which was paying for a lawyer. Smith added that with this fundraiser, you can taste and smell what you're getting — you're paying for a secure border.
What the money will actually buy has yet to be determined. A border security advisory committee consisting of legislators, state agency directors and county sheriffs will make recommendations to the Legislature on how and where to spend the money.
Fencing currently covers about 650 miles of the U.S.-Mexico border, or about one-third of the 2,000-mile boundary. It ranges in quality from simple barbed wire or vehicle barriers to carefully engineered, 18- to 30-foot high fences near cities.
Smugglers often circumvent the barriers by cutting or driving through them, climbing over them, or digging often-elaborate tunnels under them.
Wednesday's website launch was keyed to the date most new laws passed during the state Legislature's 2011 regular session go into effect.
While Arizona lawmakers rejected several immigration enforcement measures this year that were opposed by business groups, the border fence measure didn't get as much attention.
Democratic lawmakers say that the fence project is a misguided and piecemeal approach to border and immigration issues that should be tackled more comprehensively. More recently, the Sierra Club said strengthened border barriers can damage the environment by causing flooding and blocking wildlife.
An immigrant-rights activist, Jaime Farrant of the Border Action Network, said the fence project could end up costing the state money if donations fall short and supporters press ahead anyway.
Smith and other Republicans argue that the federal government hasn't done enough to secure the border from crossings by illegal immigrants, drug smugglers and terrorists.
The new law authorizes use of inmate labor to help build the fence, which would go on private or government land. The federal government will be asked to allow construction of fencing on its easements along the border, but Smith said he also has specific state-owned and private land in mind.
The fundraising website's initial home page shows a location on the border where fencing currently consists of a series of vertical posts to bar vehicle crossings. In the foreground, ranch-style barbed-wire fencing intended to restrain livestock has a big gap.
The site also includes a state official's declaration that donations may qualify as state and federal income tax deductions. But it says donors should consult their tax advisers about that.
Smith said he expects the site's content will be updated as soon as Thursday. The advisory committee will get regular updates on how much money is raised, and a running tally may be added to the site, he said.

Republican Election Gains May Stall Business’s Immigration Push

Bloomberg

 

Intel Corp., Hilton Worldwide Inc. and other companies seeking a larger number of legal foreign workers through changes to immigration law likely will find their push thwarted by the Republicans’ sweeping election gains.

Lawmakers who will lead the debate in the new Republican- controlled U.S. House say they want to focus on securing the border and cracking down on illegal immigration, rather than other matters. Only after it is shown that fewer illegal immigrants are coming across the U.S.-Mexico border will they consider the revisions to immigration law sought by businesses, they say.

Representative Steve King, an Iowa Republican slated to head the House Judiciary Committee’s immigration policy subcommittee, said in an interview that he opposes lifting visa caps for lower-skilled foreign workers because doing so would depress U.S. workers’ wages. He said he would support increasing the number of visas for higher-skilled workers only if the potential employees meet criteria to boost the U.S. economy.

That means they should be young, well-educated and be able to speak English, King said. “That’s the indicator of whether they can assimilate into the broader society,” he said.

The business agenda calls for increases in worker visas for skilled and unskilled labor, along with more employment-based “green cards” -- proof of permanent residency in the U.S.

Political Change

Corporate officials and lobbyists must deal with midterm election results, in which the Republicans have won a majority of seats in the House, according to network projections.

“We’re as anxious as anyone else to see how it shakes out and whether this will be on the agenda next year,” said Peter Muller, director of government relations at Intel Corp.

Technology companies such as EBay Inc. and Cognizant Technology Solutions Corp. want Congress to lift the cap on H-1B visas for skilled workers. Since the start of the 2004 fiscal year, when a three-year temporary increase in the cap to 195,000 expired, the annual limit has been at 65,000. In fiscal 2010, the cap was reached in nine months.

Companies also want to lift the limit on employment-based green cards, now set at 140,000.

At Intel, about 6.5 percent of the company’s 40,000 U.S.- based employees hold temporary visas granted foreign workers, and the company helps those workers apply immediately to get green cards. “We want to keep them ideally for their entire career,” Muller said.

Still, the wait often is eight to 10 years, causing uncertainty both for the workers and for their employers.

Lower-Skilled Workers

The agenda for restaurant and hotel industries is focused on seasonal, lower-skilled workers. Jonas Neihardt, a lobbyist for McLean, Virginia-based Hilton, is pushing for a simpler system to verify the legal status of workers and a boost in the number of H-2B visas for non-farm seasonal employees, now capped at 66,000. Neihardt is urging that changes be made before the economy improves.

“We’re anticipating when things get better we’ll need more of those types of workers,” he said.

Senate Democrats in April outlined a rewrite of immigration law that, along with proposing a crackdown on drug trafficking and illegal immigration at the U.S.-Mexico border, sought changes that included a pathway to permanent legal residency for some of the estimated 11 million undocumented people in the U.S. It also called for a new three-year visa for temporary, low- skilled workers with an annual limit that adjusts with the economy, as well as immediate green cards for foreign students who get advanced degrees in engineering or math from a U.S. university.

The effort was hamstrung when Senator Lindsey Graham, a South Carolina Republican, stopped working with Democrats on a compromise, urging them to wait until 2011.

Latino Vote

Corporations are holding out hope that the importance of the Latino vote in the 2012 presidential elections will cause congressional Republican leaders to support a broad bill next year.

“It will be an uphill battle, but it could be that the Republicans would see that it’s to their advantage to get this issue behind them,” said Randy Johnson, vice president for labor policy at the U.S. Chamber of Commerce.

That hope belies the views of some of the Republicans ascending to power.

In the House, King is in line to replace Representative Zoe Lofgren as immigration subcommittee chairman. Lofgren, a California Democrat and one-time immigration lawyer, supports the comprehensive approach to rewriting policy.

King, 61, said he favors a piecemeal approach, with the initial spotlight on border security. He also wants to help draft legislation that would revoke birthright U.S. citizenship for so-called anchor babies of illegal immigrants.

Business Deductions

His priorities for business include a measure that would boost taxes on employers found by the Internal Revenue Service to have hired illegal immigrants. Those companies wouldn’t be able to treat the illegal workers’ wages and benefits as a deductible business expense, and they would also pay a penalty.

“It takes a $10-an-hour illegal and turns them into a $16- an-hour illegal,” King said.

Representative Lamar Smith, a Texas Republican expected to become chairman of the Judiciary Committee, said in an interview that while he would favor holding hearings about foreign worker visas and other immigration issues, next year he wants to draft legislation dealing only with border security.

“I’m still of the mind we have to secure the border first,” he said in an interview.

In 2007 Senator Jon Kyl of Arizona, the chamber’s No. 2 Republican, worked with Democrats on a comprehensive immigration bill that failed. He said in an interview that he won’t support anything beyond border security until the fight against illegal immigration improves in parts of his state.

“There has to be more of an effort to actually secure the border -- not just to spend money, not just to say we have more resources than ever before,” he said.

Kyl also said companies must realize that the recession -- which became the nation’s worst since the Great Depression -- changed the immigration debate.

He said labor unions are more opposed to expanding the pool of foreign labor now than before. “The temporary-worker program has gone backwards in terms of a consensus,” Kyl said.

France Faces European Action After Expulsions

NY Times

 

BRUSSELS — After an acrimonious dispute over its expulsions of Roma, France was told on Wednesday that it would face legal proceedings for failing to meet minimum European Union safeguards to protect the rights of the bloc’s citizens.

The decision followed a fierce clash between the European Commission, the bloc’s executive body, and President Nicolas Sarkozy of France that overshadowed a meeting of European Union leaders this month.

Wednesday’s action is less than the European commissioner for justice, Viviane Reding, promised a little more than two weeks ago, when officials also considered taking France to court over the more serious charge of discrimination. But she did single out the government in Paris for legal action.

Heather Grabbe, director of the Open Society Institute in Brussels, said: “They are on more solid ground doing it this way, but it doesn’t send a signal about discrimination. I applaud it if it is effective, but they need to follow through on rooting out discrimination.”

The dispute over the Roma, also known as Gypsies, has brought relations between the French government and the European Commission to a low point. One of the jobs of the bloc’s executive body is to be the guardian of European Union law.

The decision on Wednesday trod a narrow line between worsening the rift with Paris and backing down. The legal case accuses France of failing to incorporate minimum European Union standards protecting ethnic groups into national legislation, which it agreed to do under a 2004 law. While other countries are also thought to be in a similar situation, France was singled out on Wednesday with a formal letter, the first step in legal action.

The European Commission said in a statement that it would consider action against other nations.

In her initial statement this month, Ms. Reding said she was convinced that the commission would also have “no choice” but to initiate infringement action against France “for a discriminatory application” of European law.

But on Wednesday the commission decided against immediately beginning a discrimination case, sending Paris a series of questions instead.

On Wednesday, the French Foreign Ministry highlighted the fact that the legal measures were restricted to the state of its law, rather than directly criticizing measures taken by the French government.

“If it’s legitimate for the commission to question one or other member states on the application of community law, the real question is one of better integration of the Roma in the countries of which they are citizens,” it said in a statement.

Under European Union procedures, France will be given the chance to reply to the commission and, if it fails to satisfy the authorities in Brussels, could be taken to the European Court of Justice. That court could force the French to bring their laws into line with European Union rules or face fines.

France has sent thousands of Roma back to Romania and Bulgaria this year, destroying illegal camps where they were living on the outskirts of French cities.

The rift between Paris and Brussels emerged when Ms. Reding discovered that assurances from French ministers about their policies on Roma were contradicted by an official document that was leaked.

That document — which has since been withdrawn — showed that Roma had been specifically singled out by the French government.

In an unusually blunt comment, Ms. Reding referred to “a situation that I had thought that Europe would not have to witness again after the Second World War.”

In Brussels, some officials argue that there is little point in pursuing France over the discrimination issue because it has already withdrawn the document. Others say that, were a case taken to the European Court, it could open up the opportunity for civil cases in France by Roma whose rights were breached.

While the dispute has raised the plight of Roma as a political issue, groups campaigning for their rights say much more needs to be done.

Ms. Grabbe called on the European Commission to examine the behavior of other nations, including Italy. “They need to send a signal that this is not acceptable behavior in Europe.”

In a report published Tuesday, Amnesty international argued that European countries, including Germany, had been forcibly returning Roma to Kosovo and called for a halt to the practice. A different set of obligations applies to citizens from Kosovo because the country is not a member of the European Union and therefore they do not have the right to move freely through the bloc.

But Sian Jones of Amnesty International asserted that European Union countries risked breaking international law by sending Roma back “to places where they are at risk of persecution, or other serious harm.”

Thousands of Undocumented Workers Flee Arizona

Reuters

 

PHOENIX (Reuters) - Nicaraguan mother Lorena Aguilar hawks a television set and a few clothes on the baking sidewalk outside her west Phoenix apartment block.

A few paces up the street, her undocumented Mexican neighbour Wendi Villasenor touts a kitchen table, some chairs and a few dishes as her family scrambles to get out of Arizona ahead of a looming crackdown on illegal immigrants.

"Everyone is selling up the little they have and leaving," said Villasenor, 31, who is headed for Pennsylvania. "We have no alternative. They have us cornered."

The two women are among scores of illegal immigrant families across Phoenix hauling the contents of their homes into the yard this weekend as they rush to sell up and get out before the state law takes effect on Thursday.

The law, the toughest imposed by any U.S. state to curb illegal immigration, seeks to drive more than 400,000 undocumented day labourers, landscapers, house cleaners, chambermaids and other workers out of Arizona, which borders Mexico.

It makes being an illegal immigrant a state crime and requires state and local police, during lawful contact, to investigate the status of anyone they reasonably suspect of being an illegal immigrant.

The U.S. government estimates 100,000 unauthorized migrants left Arizona after the state passed an employer sanctions law three years ago requiring companies to verify workers' status using a federal computer system. There are no figures for the number who have left since the new law passed in April.

Some are heading back to Mexico or to neighbouring states. Others are staying put and taking their chances.

In a sign of a gathering exodus, Mexican businesses from grocers and butcher shops to diners and beauty salons have shut their doors in recent weeks as their owners and clients leave.

On Saturday and Sunday, Reuters counted dozens of impromptu yard sales in Latino neighbourhoods in central and west Phoenix/

"They wanted to drive Hispanics out of Arizona and they have succeeded even before the law even comes into effect," said Aguilar, 28, a mother of three young children who was also offering a few cherished pictures and a stereo at one of five sales on the same block.

She said she had taken in just $20 as "everyone is selling and nobody wants to buy."

LEGAL RESIDENTS FLEE

Arizona straddles the principal highway for human and drug smugglers heading into the United States from Mexico.

The state's Republican governor, Jan Brewer, signed the law in April in a bid to curb violence and cut crime stemming from illegal immigration.

Polls show the measure is backed by a solid majority of Americans and by 65 percent of Arizona voters in this election year for some state governors, all of the U.S. House of Representatives and about a third of the 100-seat Senate.

Opponents say the law is unconstitutional and a recipe for racial profiling. It is being challenged in seven lawsuits, including one filed by President Barack Obama's administration, which wants a preliminary injunction to block the law.

A federal judge heard arguments from the lawyers for the Justice Department and Arizona on Thursday and could rule at any time.

The fight over the Arizona law has complicated the White House's effort to break the deadlock with Republicans in Congress to pass a comprehensive immigration law, an already difficult task before November's elections.

While the law targets undocumented migrants, legal residents and their U.S.-born children are getting caught up in the rush to leave Arizona.

Mexican housewife Gabriela Jaquez, 37, said she is selling up and leaving for New Mexico with her husband, who is a legal resident, and two children born in Phoenix.

"Under the law, if you transport an illegal immigrant, you are committing a crime," she said as she sold children's clothes at a yard sale with three other families. "They could arrest him for driving me to the shops."

Lunaly Bustillos, a legal resident from Mexico, hoped to sell some clothes, dumbbells and an ornamental statue on Sunday before her family heads for Albuquerque, New Mexico, on Monday.

"It makes me sad and angry too because I feel I have the right to be here," said Bustillos, 17, who recently graduated from high school in Phoenix.

Economic Impact of Immigrants' Exodus from Arizona Debated

Arizona Republic

 

The exodus of illegal and legal immigrants predicted by some as a result of Arizona's tough new immigration law is expected to hurt a variety of businesses that directly and indirectly cater to immigrant populations.

It is difficult to estimate the potential economic impact, but economists and market analysts agree it could be substantial.

The fallout could cause a decline in sales at retailers and, ultimately, could cause some businesses to go under.

It could push up vacancy rates at older, Class C apartment complexes and retail centers in immigrant neighborhoods. Other businesses that cater to immigrants, such as check-cashing stores and taxi services, also could be impacted.

Senate Bill 1070 takes effect July 29. Arizona's immigration law makes it a state crime to be in the country illegally. It states that an officer engaged in a lawful stop, detention or arrest shall, when practicable, ask about a person's legal status when reasonable suspicion exists that the person is in the U.S. illegally.

Despite the expectation of economic fallout, many businesses say it hasn't come yet. Many of those same businesses reported an almost immediate impact after Arizona's employer sanctions bill took effect in 2008.

The Legal Arizona Workers Act, which took effect Jan. 1, 2008, gave the state authority to suspend or revoke the business license of any employer found to have knowingly or intentionally hired an illegal immigrant.

An estimated 100,000 illegal immigrants left the state as a result of the bill and some predict another 100,000 could leave as a result of SB 1070.

The impact of employer sanctions was quickly felt by Hispanic supermarkets such as Food City, which saw sales drop, and by retail centers that cater to the Hispanic population, such as Westcor's Desert Sky Mall.

Most of the businesses say they haven't yet seen a similar impact as a result of SB 1070, but note the measure hasn't yet taken effect, and they remain wary.

The apartment market is one area expected to take a hit.

"It could be significant," said Jim Kasten, president of Kasten Long Commercial Group, a Phoenix commercial real-estate brokerage that focuses on apartments.

The company recently surveyed Valley apartment owners and found that 60 percent believed they would be negatively impacted by SB 1070.

There are approximately 90,000 older Class C apartment units in metro Phoenix and about half of those are thought to be occupied by Hispanic immigrants, both legal and illegal.

Kasten said that increased vacancies could prompt landlords to lower rents even further to attract tenants, which could be detrimental to owners of Class A and Class B apartments as well.

Phoenix commercial real-estate analyst Bob Kammrath said that Class C landlords saw an immediate impact after the employer-sanctions bill was passed.

"They saw vacancies go up, and it became harder to lease up vacant units," he said.

Retail impact

Retail business in heavily Hispanic areas such as southwest Phoenix and downtown Mesa also saw an impact as a result of the employer-sanctions bill, but as of yet haven't seen a similar impact as a result of SB 1070.

"It's too early to tell, but the potential is there," Kammrath said.

He said that while many immigrants left after the employer-sanctions bill was passed, many may have returned because there have been few prosecutions under the law.

Kasten said that much of the impact of the employer-sanctions bill was felt between the time the law was passed and when it took effect.

"The perception of the law was scarier than the actual implications of the law," he said.

If that is the case with SB 1070, it could mean that the impact may not be much greater that what is currently being felt, he said.

Mall operator Westcor saw sales fall off at its Hispanic-oriented Desert Sky Mall in west Phoenix after the passage of employer sanctions, but like others hasn't seen a similar effect as a result of SB 1070.

"We're monitoring it," said Westcor spokeswoman Anita Walker.

Another business that caters to the immigrant population is the Phoenix Park 'n Swap near Washington and 40th streets.

Operations director Susan Barrett said the local swap meet attracts more than 10,000 people per week and caters to a predominantly Hispanic market.

On Wednesday night, which has been dubbed "Hispanic night," Barrett estimated that more than 90 percent of the vendors and customers are Hispanic.

She noted that the business saw an impact after the passage of the employer-sanctions law and also when there have been weekend rallies against SB 1070. But, she added the business hasn't yet seen a direct impact as a result of the new law.

"We're waiting," she said.

Small businesses hit

However, some small-business owners that cater to northeast Phoenix's Hispanic population saw an immediate drop in business since the passage of SB 1070.

Owners say they were already affected because their clientele was more likely to work in industries disproportionately affected by recent economic woes, such as construction. Many are contemplating closing.

"This is just going to make it worse," said Marissa Ruiz, owner of Contact Cellular, on Cave Creek Road. "On every corner on every street, there are empty businesses."

Owner Nick Solomon said business at shops he owns in northeast Phoenix's Palomino neighborhood, such as a laundry and grocery, decreased by 50 percent in the days after the passage of SB 1070.

An official at the Arizona Hispanic Chamber of Commerce said it only made sense that the state's small businesses would be affected by the state's new immigration law because many of their customers may no longer be in the state.

"When they leave, the local businesses that may have been catering to them . . . those people have to take a hit. The aisles are just not as crowded, it's a real impact but it's also an impact that has been steadily building," said James Garcia, spokesman for the organization.

Garcia said the chamber hasn't done any statistical research but has heard that small businesses in the Valley have been affected by the policy.

He said people tell him, "I had a restaurant in Guadalupe or I have a place in west Phoenix and it's been a real struggle" and "I've also heard recently, we were talking to one of these people with the ice cream in a little cart say, 'There used to be 35 of us with this small company. Now there are two,' " he said.

Immigration Out of Sight

By The Wall Street Journal

President Obama continues his quiet retreat from a campaign pledge to make comprehensive immigration reform "a top priority in my first year as President." Following a summit meeting in Guadalajara last week with the leaders of Mexico and Canada, Mr. Obama said that an immigration overhaul will have to wait until next year.

Mr. Obama has followed the Bush Administration's second-term strategy of tightening the border and punishing employers who hire undocumented workers, even unwittingly. What to do about the estimated 12 million illegal aliens here has gotten short shrift, as have guest-worker proposals that would create more legal ways for foreign workers to enter the country, reducing incentives to sneak in.

A new study published by the Cato Institute finds that the focus on repelling immigrant labor does more harm than good to the U.S. economy. "Increased enforcement and reduced low-skilled immigration have a significant negative impact on the income of U.S. households," write Peter Dixon and Maureen Rimmer, the study's authors. "In contrast, legalization of low-skilled immigrant workers would yield significant income gains for American workers and households." A program that allowed more low-skilled foreigners to enter the U.S. workforce lawfully would put smugglers and document-forgers out of business, explain the authors. "It would also allow immigrants to have higher productivity and create more openings for Americans in higher-skilled occupations."

Using a dynamic economic model that weighs the impact of immigrants on government revenues and expenditures, the study seeks to quantify the benefits of comprehensive immigration reform versus the enforcement-only approach. It finds that legalizing the entry of more low-skilled immigrants would result in economic gains of about $180 billion annually to U.S. households. A focus on more enforcement alone would not only result in an annual net economic loss of around $80 billion, say the authors, but fewer jobs, less investment and lower levels of consumption as well. "Modest savings in public expenditures would be more than offset by losses in economic output," says the report.

The common assumption is that low-skilled Latino immigrants are displacing U.S. natives and driving unemployment. The reality is that these immigrants don't tend to compete directly with natives. They more often take positions in the U.S. labor market that go unfilled by Americans, who are increasingly more educated and have better job opportunities.

Between 1960 and 2000, working-age native-born U.S. residents without a high school degree fell to 12% from 50% of the population. The general rise in U.S. educational attainment means low-skilled immigrants hold the kind of jobs that might not otherwise exist or would have to be filled by an American overqualified for that work. This would not only increase the costs of some goods and services but also decrease the overall productivity of U.S. workers. Immigrants let the U.S. use its human capital more productively.

Rattled by the recession, the President is hesitant to move on any form of legalized status for the undocumented, let alone a guest worker program for future labor flows. But re-enforcing the deeply flawed immigration status quo, rather than reforming it, isn't doing the economy any favors.

Work-Visa Numbers Get Squishy - and Get Played
As Originally Posted to the Wall Street Journal

The recipients of U.S. visas for specialized job functions are a small blip in the overall employment market. But they've taken on great symbolic importance in the past year.

With the filing period for employers beginning April 1, immigration advocates argue that granting more H-1B visas to foreign nationals creates jobs for Americans. Critics dispute that notion and say that financial firms receiving bailout funds have been hiring foreign workers while laying off tens of thousands of Americans. Both sides are playing fast and loose with the numbers.

"It's another form of March Madness," says Gordon Day, president of IEEE-USA, a professional association for engineers. Every year, "partisans on both sides of the immigration debate try to interpret every bit of data available to support their case."

Microsoft Chairman Bill Gates, New York mayor Michael Bloomberg and Republican Senator Judd Gregg of New Hampshire all have cited a study they claim shows that each one of these visas awarded to technology companies creates five jobs. Mr. Gates interpreted the study in testimony to Congress last year as finding that "for every H-1B holder that technology companies hire, five additional jobs are created around that person."

But the study shows nothing of the kind. Instead, it finds a positive correlation between these visas and job growth. These visas could be an indicator of broader hiring at the company, rather than the cause.

Click Image to Enlarge

Some think the claim that the study, conducted by the pro-immigration National Foundation for American Policy, demonstrates awarding visas boosts hiring is way off base. It "has all the scientific sense of cold fusion," says Harvard University economist Richard B. Freeman, "though of course it could be we have discovered the perpetual employment expansion elixir."

There are other problems with the study: It's confined to S&P 500 technology companies. That excludes the leading users of these visas, mainly Indian technology companies such as Infosys Technologies, Wipro Technologies and Satyam Computer Services. The analysis is based on changes in global employment, rather than just domestic employment. And the study also uses an indirect measure: letters seeking approval for visas, rather than the visas themselves.

Stuart Anderson, executive director of the Arlington, Va., foundation that conducted the study, said these limitations arose from the data available. He said the proxy used for visas rendered the findings conservative, since some firms file multiple letters for the same worker.

Representatives for Mr. Gates declined to comment. Representatives for Mr. Bloomberg and Mr. Gregg didn't respond to inquiries.

Some researchers find the general premise of the study persuasive, even if the study didn't prove it. Duke University statistician David Banks said correlation can't prove causation, but he did think the study "corroborates the idea that H-1B visas support job creation." It does so, he says, by contradicting the theory that companies seek foreign workers to replace domestic ones. Vivek Wadhwa, a senior research associate at Harvard, pointed to other studies that have shown positive relationships between immigration and innovation. But these generally lacked a hook as catchy as five-for-one.

An Associated Press article provided a hook for opponents of the visa program in today's lean economic climate. The AP reported in February that the dozen U.S. banks receiving the most bailout funds had requested visas for more than 21,800 workers over the last six years, but maybe a fraction were hired. Days later, Bernie Sanders, an independent senator from Vermont, was citing the report -- and modifying its conclusions.

"What has been the response of Wall Street to the loss of 100,000 of their own workers?" Sen. Sanders said, citing layoff figures from the last three months of 2008. "What these banks have announced is they are requesting 21,000 foreign workers over the next six years through the H-1B program to fill those jobs." Yet the six-year period in AP's study ended just as that period of layoffs began.

Confusion over the AP stats reflects the somewhat murky nature of H-1B visas. The visas last for three years and can be extended to six years. Employers begin by applying to the Labor Department for each potential hire, sending multiple applications if the worker may be based in various locations. Once those are approved, employers petition U.S Citizenship and Immigration Services for the visa, which is generally granted unless the cap of 65,000 is reached.

The AP wasn't counting petitions but the larger number of applications since these data were more readily available. Mr. Anderson, however, counted fewer than 1,000 petitions granted to 12 of the largest bailout recipients in 2008. He also compared the number of workers receiving visas last year to the total work force, finding it was fewer than 1% for each bank.

Sen. Sanders's co-sponsor on an amendment restricting banks' use of the visas, Republican Sen. Charles Grassley of Iowa, also confused the number of applications with the number of workers. Sen. Grassley's spokeswoman didn't respond to a request for comment.

While the AP may have double- or triple-counted some prospective workers, Mr. Anderson, in turn, may have overplayed his hand. As an AP spokesman noted, Mr. Anderson initially counted zero visas for Capital One rather than 104, because he misspelled the bank's name as "Capitol One." Also, it would have been fairer to compare the visa numbers to new hires, instead of comparing them to the total work force, as he did.

Several banks corroborated the notion that this isn't a major source of employees, though no bank would fully provide all relevant numbers. A Citigroup spokeswoman said holders of H-1B visas account for fewer than 1% of all employees; the equivalent figure was fewer than 0.04% at Wells Fargo. A Bank of America spokeswoman said such workers accounted for fewer than 1% of new hires last year. No bank would say how many such workers its contractors use.

"The major abuse occurs not with the banks' direct hires of H-1Bs but instead their shadow work forces," says Ron Hira, an assistant professor of public policy at Rochester Institute of Technology.

Ted Bridis, head of the AP's Washington Investigative Team, notes that the AP sought information from banks, including on third-party workers, but was rebuffed. AP spokesman Paul Colford says, "The AP stands by its scrupulous, rigorous reporting."

Others have backed off -- a bit. Warren Gunnels, senior policy advisor to Sen. Sanders, acknowledged that the AP numbers covered the last six years, and may overstate actual hiring of foreign workers. Then he suggested that the numbers, though they were used to back the amendment requiring banks to prove they can't find qualified Americans, aren't critical.

Even if alternative, lower numbers such as Mr. Anderson's are more accurate, "why would the supporters of increasing H-1B visas be so concerned about our amendment?" Mr. Gunnels asks. "At a time when the unemployment rate is soaring, do you really think there aren't enough intelligent Americans to fill these jobs?"