Leveraging Immigration for Competitiveness

Few countries have a democratic government and historical openness towards immigrants as has the USA. It has long been a beacon for people that are willing to chance the move in order to provide for a better future for themselves and their families. In fact, only the Native American Indians and the African slaves that were forcibly brought to the country in one of the largest ever crimes against humanity, did not immigrate to the USA. All other persons are either immigrants or part of a family based on immigration. Thus, it is fair to state that immigration has been, and is, core to the growth and wealth of the country.

Immigration is also core to the competitiveness of the nation. It helps the USA compete with its economic competitors through the following: downward wage pressure; additional consumers and tax base; and, the desire for educated persons in science and other areas of need for the economy to participate in the enlightenment experiment/ democracy.

Current political trends lean-in to highly controlled immigration based on the fear of increased criminality and internal competition for work/ jobs. However, the country needs robust immigration in order to compete (see above) versus its main competitors in Asia. These competitors do not draw mass immigration and are much more homogeneous societies. This is their primary weakness when competing versus the USA.

The US lever of immigration to support its industrial base is unique to very few nations in the world. This lever has the possibility to be actuated and managed as follows:

• Family Immigration Plan (FIP). A family focused immigration plan that targets immigrants from low-cost countries that have a desire to immigrate to the USA with a 5-10 year path to citizenship. They would contractually bind themselves to working in FIP for that period of time with the wage and benefit structure described below.

• Creation of an Immigrant Minimum Wage (IMW). IMW= Current Average Burdened China Wage (C ) + Logistics Cost Factor to the USA (LC) + Estimated Burden (EB). The IMW would have a reduced state and federal income tax structure applied.

• Employer Subsidized Housing (ESH). This would be structured as state and federal tax benefits that are provided to employers that provide housing for immigrant families.

Coupled with the above, for the past 5-10 years the fully burdened Indirect Labor Costs (ILC) of indirect workers (ie engineers, quality control, purchasing, etc) and management in low-cost countries in Asia have been either equal-to or greater-than the equivalent burdened cost structures in the US. As a consequence, if the factories move back to the US, these cost structures should remain competitive and provide for an increased US and state tax base.

Conclusion: The need to compete with China and other Asian based economies while maintaining and participating in a global system of trade is important to the future of the USA. US leadership needs to leverage its core advantages (re: immigration and its higher education system that supports innovation) in order to win in an open trade global economy.