Auctioning Visas: Do I Hear Billions?

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WASHINGTON-We've heard of auctioning wireless spectrum, oil leases, and Treasury securities. Why not immigration visas?

That's the thesis of a new book, Beside the Golden Door, by economists Pia Orrenius of the Federal Reserve Bank of Dallas and Madeline Zavodny of Agnes Scott College in Decatur, Georgia. They propose that the government auction off visas to employers, simplifying our complicated immigration system and creating revenue for the Treasury.

The authors suggest initial minimum prices-that would fluctuate according to demand-of $10,000 for a high-skill visa, $6,000 for a low-skill visa, and $2,000 for a seasonal visa.

This is a rational approach to the issuance of visas for immigrants who want to come to the United States, replacing the current alphabet soup of different visa types and redirecting immigration expenses from lawyers and smugglers to the government.

Congress is unlikely to adopt any immigration proposal swiftly. But what might tempt Congress is the auction revenues. When unemployment is high, as now, the number of visas, set by an independent commission, would be kept low. When the economy reaches full employment, the quota might be raised.

Auctioned visas would be good for five years, and could be sold to other employers if original purchasers no longer needed them. With an active market in visas, employers would buy them from each other, as well as at quarterly government auctions.

Orrenius and Zavodny outlined their ideas at the American Enterprise Institute (which published their book) on Wednesday. Orrenius, who came from Sweden as a child, told me, "The advantage of having the employer buy the visa is that every immigrant who enters the United States would come with a job."

Auctioning visas looks like a remedy for some of the problems of today's immigration system.

Now, it's difficult and expensive for an individual abroad to get a work visa, even though employers say they need high-skill immigrants in math and science jobs, and low-skill immigrants in the agricultural and hospitality sectors.

Current immigration law places family reunification before the economy. Only 16% of green cards authorizing permanent residence-and a path to citizenship-are granted for employment purposes; 63% for family; and most of the rest for refugees. In many countries queues for American green cards can stretch for over a decade.

Since green cards bring in few workers, most skilled workers use temporary visas, and many unskilled foreign workers are here illegally.

Orrenius and Zavodny want to eliminate illegal immigration, give priority to employment-based immigration, raise money to cover services immigrants use, and set visa caps that can grow with the economy. They would limit family reunification to spouses and children; other relatives would have to get their own permits.

Foreign workers would be granted a five-year provisional work visa through an employer who would commit to hire the immigrant. They would be free to move to another employer who had a work permit at any time. They could stay longer if they found someone to hire them, and could eventually apply for a green card and citizenship.

The number of permits offered at government auctions would depend on employer demand, as estimated by an independent group. If the price of the permits for a given skill level was high, this would be a signal for government to sell more permits for that group-and lower the number of permits if the price declined.

Orrenius and Zavodny suggest starting with approximately 1 million permits per year, reflecting the number of foreign workers granted different types of visas annually now.

Depending on the mix of high-skill, low-skill, and seasonal workers, revenues to the government might be about $6 billion. The authors suggest that these funds be allocated to communities, based on the numbers of immigrants they take, to cover local costs, such as schooling and health care.

University of Chicago economics professor Gary Becker has proposed raising even more money by auctioning off green cards to individual immigrants, starting at $50,000, raising about $50 billion annually.

Orrenius says that she thinks that it is more useful to the United States to have employers buy and award permits, rather than have the government issue them to individuals, because every visa would then go to someone with a job.

On the other hand, Becker's purchasers of green cards might buy houses, go shopping to help our economy, or start businesses. Many affluent families facing increasing violence in other parts of the world would be glad of the chance to buy a green card to come to America.

The trickiest immigration policy issues, politically, do not concern whether visas are auctioned to employers or awarded to individuals, but what to do with illegal immigrants here now, perhaps 11 million of them.

Orrenius and Zavodny propose to give current illegal immigrants provisional work visas, with a longer path to permanent residency than legal immigrants. Illegal immigrants who came as children would be awarded permanent residency. Everyone-native-born U.S. citizens and immigrants alike-would get biometric ID cards, linked to a retina or a fingerprint, which could perhaps be used to reduce voter fraud.

One problem: Conservatives don't want illegal immigrants to get legal work visas, because they say that this is "amnesty," rewarding illegal behavior. At the same time, many are against national ID cards as a way to identify and deport illegal immigrants, because national identity cards are viewed as an invasion of privacy, facilitating an Orwellian world in which a central government can monitor people's activities.

Some unions, such as the AFL-CIO, might object that auctioning visas sounds like an open-ended approach to expanding the number of lower-wage workers. Others, such as the SEIU and UNITE HERE, would welcome the opportunity to add immigrant members to generate more union dues and buttress failing pension plans.

With sky-high budget deficits ahead as far as the eye can see, perhaps the temptation of billions of dollars of additional revenues from auctions will succeed in persuading different factions to compose their differences and Congress to pass immigration reform.


Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is senior fellow and director of Economics21 at the Manhattan Institute. Follow her on Twitter: @FurchtgottRoth.   

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