The Immigrants

Give me your tired, your poor,

Your huddled masses yearning to breathe free. . . .

These words carved into the base of the Statue of Liberty speak to America's vision of itself. We were, and still are, a nation of immigrants. In the 1980s alone, a stunning 8.7 million people poured into the U.S., matching the great immigration decade of 1900-10. But with the country facing difficult economic and social problems, is it time to put aside our romantic past and kick away the immigrant welcome mat?

A lot of Americans feel the answer is "yes." Ina BUSINESS WEEK/Harris poll, 68% of respondents said today's immigration is bad for the country, even though most thought it was good in the past. President Bush has found it politically expedient to refuse refugees from Haiti. And in areas like recession-weary Southern California, immigrants are being blamed for everything from rising unemployment to a rocketing state budget deficit. "I understand, in the past, `give me your tired, your poor.' Today, the U.S. has to look at our own huddled masses first," says former Colorado Governor Richard D. Lamm, who is running for the U.S. Senate.

This rising resentment against immigrants is no surprise. The million or so immigrants--including 200,000 illegals--that will arrive in the U. S this year are coming at a time when unemployment is high and social services strained. Unlike past waves of immigration, the new immigrants are mainly from Asia and Latin America. And just like the American work force, these immigrants are split between the highly skilled and well-educated and those with minimal skills and little education. Hungry for work, the newcomers compete for jobs with Americans, particularly with the less skilled. The large number of untrained immigrants, especially those from Mexico, are finding it harder to move up the employment ladder than did past generations of newcomers. And in the cities, the new immigrants seem to inflame racial and ethnic conflicts.

But on balance, the economic benefits of being an open-door society far outweigh the costs. For one thing, the U.S. is reaping a bonanza of highly educated foreigners. In the 1980s alone, an unprecedented 1.5 million college-educated immigrants joined the U.S. work force. More and more, America's high-tech industries, from semiconductors to biotechnology, are depending on immigrant scientists, engineers, and entrepreneurs to remain competitive. And the immigrants' links to their old countries are boosting U.S. exports to such fast-growing regions as Asia and Latin America.

Even immigrants with less education are contributing to the economy as workers, consumers, business owners, and taxpayers. Some 11 million immigrants are working, and they earn at least $240 billion a year, paying more than $90 billion in taxes. That's a lot more than the estimated $5 billion immigrants receive in welfare. Immigrant entrepreneurs, from the corner grocer to the local builder, are creating jobs--and not only for other immigrants. Vibrant immigrant communities are revitalizing cities and older suburbs that would otherwise be suffering from a shrinking tax base. Says John D. Kasarda, a sociologist at the University of North Carolina at Chapel Hill: "There issubstantial evidence that immigrantsare a powerful benefit to the economy, and very little evidence that they are negative."

In 1965, when Congress overhauled the immigration laws, nobody expected this great tide of new immigrants. But that law made it easier to bring close relatives into the country and, influenced by the civil-rights movement, eliminated racially based barriers to immigration. Prior to that, it was difficult for anyone who was not European or Canadian to settle here. The result: a surge of immigrants from Asia and Latin America, especially from countries like South Korea and the Philippines that had close economic and military ties to the U.S. And once a group got a foothold in the U.S., it would continue to expand by bringing over more family members.

NEW WAVE. The aftermath of the Vietnam War provided the second powerful source of immigrants. Over the last 10 years, the U.S. granted permanent-resident status to about 1 million refugees, mostly from Vietnam, Cambodia, and Laos. And now the end of the cold war is tapping another immigrant stream: Over the last three years, the fastest-growing group of new settlers has been refugees from Eastern Europe and the former Soviet Union.

Throughout the 1970s and 1980s, a total of some 5 million illegal immigrants from Mexico and other countries settled in the U.S., drawn by opportunity here and fleeing economic troubles at home. Many settled in Southern California and Texas. In 1986, Congress passed the Immigration Reform & Control Act (IRCA), which imposed penalties on employers who hired illegal immigrants but also gave amnesty to many illegal immigrants. About 2.5 million people have become permanent residents under the amnesty program. And the pending North American Free Trade Agreement, by strengthening economic ties between Mexico and the U.S., might very well increase illegal immigration in the short run rather than diminish it.

Opening the gates to Asians and Latin Americans dramatically altered the face of immigration. In the 1950s, 68% of legal immigrants came from Europe or Canada. In the 1980s, that percentage fell to only 13%. Conversely, the proportion of legal immigrants coming from Latin America and Asia rose from 31% to 84%, including illegal aliens granted amnesty under the 1986 law.

As the ethnic mix of the new immigrants changed, so did their levels of skill. At the low end, the plethora of low-wage service-sector jobs drew in a large number of unskilled, illiterate newcomers. About one-third of immigrant workers are high school dropouts, and one-third of those entered the U.S. illegally.

But the number of skilled immigrants has been increasing as well. "The lev-el of education of recent immigrantshas definitely increased over the last 10 years," says Elaine Sorensen, an immigration expert at the Urban Institute. About one-quarter of immigrant workers are college graduates, slightly higher than for native-born Americans. Some groups, such as Indians, are on average much better educated than today's Americans. Observes Steven Newman, an executive at the New York Association for New Americans, which will resettle about 20,000 immigrants from the former Soviet Union this year, including many engineers, computer programmers, and other skilled workers: "The only thing they lack is English skills."

TALENT BASE. Even immigrants who were doing well in their home countries are being drawn to the U.S. Take Subramonian Shankar, the 43-year-old president of American Megatrends Inc., a maker of personal-computer motherboards and software based in Norcross, Ga. He was director of personal-computer R&D at one of India's largest conglomerates. Then in 1980, he came to the U.S. In 1985, he and a partner founded AMI, which last year had sales of $70 million and employed 130 workers, both immigrants and native-born Americans. "I couldn't have done this in India," says Shankar. "That's one good thing about America. If you're determined to succeed, there are ways to get it done."

And U.S. industry has been eager to take advantage of the influx. About 40% of the 200 researchers in the Communications Sciences Research wing at AT&T Bell Laboratories were born outside the U.S. In Silicon Valley, the jewel of America's high-tech centers, much of the technical work force is foreign-born. At Du Pont Merck Pharmaceutical Co., an $800 million-a-year joint venture based in Wilmington, Del., losartan, an antihypertensive drug now in clinical trials, was invented by a team that included two immigrants from Hong Kong and a scientist whose parents migrated from Lithuania. People from different backgrounds bring a richness of outlook, says Joseph A. Mollica, chief executive of Du Pont Merck, "which lets you look at both problems and opportunities from a slightly different point of view."

The next generation of scientists and engineers at U.S. high-tech companies will be dominated by immigrants. While about the same number of Americans are getting science PhDs, the number of foreign-born students receiving science doctorates more than doubled between 1981 and 1991, to 37% of the total. In biology, the hot field of the 1990s, the number of non-U.S. citizens getting doctorates tripled over the last 10 years. And about 51% of computer-science doctorates in 1991 went to foreign-born students. "We are getting really good students--very, very smart people," says Victor L. Thacker, director of the office of international education at Carnegie Mellon University, which has doubled its foreign enrollment since 1985.

UP THE LADDER. Attracted by the research opportunities and the chance to use what they know, about half of them stay in the U.S. after graduation, estimates Angel G. Jordan, a professor and former provost at Carnegie Mellon, who himself emigrated from Spain in 1956. And the 1990 changes to the immigration law, by increasing the number of visas for skilled immigrants, will increase the number of foreign graduates who remain in the U.S.

Besides boosting the nation's science and engineering know-how, the latest wave of immigrants is loaded with entrepreneurs. Korean greengrocers and other immigrant merchants are familiar sights in many cities, but the entrepreneurial spirit goes far beyond any one ethnic group or single line of business. Almost by definition, anyone who moves to a new country has a lot of initiative and desire to do well. Says Dan Danilov, an immigration lawyer based in Seattle: "They're willing to put in more hours and more hard work."

And do they work. Paul Yuan, for example, left Taiwan with his wife in 1975, seven days after their marriage, eventually settling in Seattle with several thousand dollars in life savings and no work visas. For two years Yuan, a college graduate, worked in Chinese restaurants. Then, in 1978, he became a legal resident and opened his own travel agency while working nights as a hotel dishwasher. Today, at age 43, Yuan owns a thriving Seattle travel business, and he and his family live in a $4 million house. In 1965, 21-year-old Humberto Galvez left Mexico City for Los Angeles. He started pumping gas and busing tables, working his way up the ladder, with a lot of bumps along the way. After starting, then selling, the chain of 19 "El Pollo Loco" charbroiled chicken restaurants in the Los Angeles area, he now owns six Pescado Mojado (wet fish) seafood diners, employing 100 workers.

Immigrant entrepreneurs have also made big contributions to the U.S. export boom. Businesses run by immigrants from Asia, for example, have ready-made connections overseas. Immigrants bring a global perspective and international contacts to insular American businesses. And it is not just Asians. From Poles to Mexicans, "the utility of the immigrant groups is that they bring their fearless spirit of competing globally," observes Michael Goldberg, dean of the University of British Columbia's business school.

That's certainly true for Benjamin and Victor Acevedo, two brothers whose family moved from Tijuana, Mexico, to California in 1960, when they were 3 and 8. In 1984, the Acevedos started up a wood-products company in the south San Diego community of San Ysidro, just across the U.S.-Mexico border. Cal-State Lumber Sales Inc. now commands 10% of the architectural molding market in the U.S. and had 110 employees and $147 million in sales last year. And as long-term trade barriers with Mexico crumbled over the past few years, the Acevedos have been able to take advantage of their bicultural heritage. "My brother and I started shipping all over Mexico, and our export business boomed," says Ben Acevedo.

URBAN BOOSTERS. Perhaps the least-appreciated economic benefit from the new immigrants is the contribution they are making to American cities. Immigrants have been drawn to the major metropolitan areas. They are invigorating the cities and older suburbs by setting up businesses, buying homes, paying taxes, and shopping at the corner grocery. In the past decade, population in the nation's 10 largest cities grew by 4.7%, but without new immigrants it would have shrunk by 6.8%, according to calculations done by BUSINESS WEEK based on the 1990 census. Almost a million immigrants came to New York City in the 1980s, more than offsetting the 750,000 decline in the rest of the city's population. Indeed, about a third of adults in New York, 44% of adults in Los Angeles, and 70% of adults in Miami are now foreign-born, according to the 1990 census.

Immigrants have turned around many a decaying neighborhood. Ten years ago, Jefferson Boulevard in south Dallas was a dying inner-city business district filled with vacant storefronts. Today, there are almost 800 businesses there and on neighboring streets, and about three-quarters of them are owned by Hispanics, many of them first- and second-generation immigrants. "They were hungry enough to start their own businesses," says Leonel Ramos, president of the Jefferson Area Assn. And sociologist Kasarda adds: "Thereis a whole multipliereffect throughout the community."

Moreover, immigrants provide a hardworking labor force to fill the low-paid jobs that make a modern service economy run. In many cities, industries such as hotels, restaurants, and child care would be hard-pressed without immigrant labor. At the Seattle Sheraton, 28% of the hotel's staff of 650 is foreign-born, and most work in housekeeping, dish-washing, and other low-paying jobs. "We don't have American-born people apply for those positions," says Carla Murray, hotel manager for the Seattle Sheraton.

MARGIN DWELLERS. But all the economic vitality immigrants add comes at a price. While economists and employers may celebrate industrious immigrants, many barely survive on the economy's margins. "They don't go to the doctor, don't buy insurance, don't buy glasses, don't buy anything you or I are used to," says Hannah Hsiao, head of the Employment Program at the Chinese Information & Service Center in Seattle. A firing, unpaid wages, a deportation, or some other calamity is always threatening. And racial discrimination makes their lot even harder, especially those who don't speak English. Some, like economist George J. Borjas of the University of California at San Diego, worry that these poor and unskilled immigrants are condemned to years of poverty.

In many cities, newcomers and longtime residents struggle over jobs and access to scarce government resources. Immigrants are straining health and education services in some cities and suburbs. And many African-Americans believe the apparent success of immigrants is coming at their expense. In New York City, blacks picketed a number of Korean greengrocers. According to the BUSINESS WEEK/Harris poll, 73% of blacks said businesses would rather hire immigrants than black Americans.

The people hurt worst by immigrants are native-born high school dropouts, who already face a tough time. They compete for jobs against a large number of unskilled immigrants, including illegals from Mexico and the Caribbean who are poorly educated, unable to start their own businesses, and willing to work harder for lower wages than most longtime residents.

For Americans who have at least a high school education, however, the influx of immigrants hasn't had much negative impact. High school graduates, for example, saw their real wages decline by 10% in the 1980s. But almost all of that drop came from import competition and rising skill requirements of many jobs, and only a fraction from immigrant competition, according to a study by Borjas of UC, San Diego, and Richard Freeman and Lawrence Katz of Harvard University. "It is extremely convenient to point a finger at immigrants," says Muzaffar Chishti, director of the Immigration Project for the International Ladies' Garment Workers' Union in New York. "But the problems of black employment are outside the immigrant domain."

Moreover, for all their struggles, most immigrants are hardly wards of the state. Illegals are not eligible for welfare, and even many legal immigrants shun it, fearing that it will make it harder to become a citizen in the future. A study by Borjas shows that in 1980--the latest national data available--only 8.8% of immigrant households received welfare, compared to 7.9% of all native-born Americans. And with the education and skill levels of immigrants rising in the 1980s, the expectations are that the spread between the two hasn't worsened, and may have even narrowed. In Los Angeles County, for example, immigrants amount to 16% of the 722,000 people on Aid to Families with Dependent Children, the government's main welfare program. Yet immigrants are more than 30% of the county's population. "Immigrants benefit natives through the public coffers by using less than their share of services and paying more than their share of taxes," says Julian L. Simon, a University of Maryland economist.

SCHOOL DAZE. One real concern is whether urban school systems can handle the surge of immigrant children. "The public school is the vehicle through which the child of immigrants becomes Americanized," says Jeffrey S. Passel, a demographer for the Washington-based Urban Institute. But in many cities, the task of educating immigrant students has become an enormous burden. In Los Angeles, 39% of the city's students don't speak English well, and in Seattle, 21% come from homes where English is not the family's first language. In the nation's capital, the school system is nearly overwhelmed by a huge number of Vietnamese, Haitians, and Salvadorean children. "If the school system is inadequate, then it's much more difficult to help immigrants move up the economic ladder," says Robert D. Hormats, vice-chairman of Goldman, Sachs International and head of the Trilateral Commission's working group on immigration.

City schools, despite the constraint of tight resources, are finding innovative ways to reach immigrant children. In Seattle, about half the immigrant students speak such limited English that they qualify for a program where they are taught subjects in simplified English. The Los Angeles schools offer dual language classes in Spanish, Korean, Armenian, Cantonese, Filipino, Farsi, and Japanese. Other organizations, such as unions, are also teaching immigrants English. In New York, the Garment Workers Union, often called the immigrant union, offers English classes to its members and their families.

In the coming decade, it won't be easy to assimilate the new immigrants, whether they come from Laos or Russia. But the positives far outweigh any short-term negatives. In today's white-hot international competition, the U.S. profits from the ideas and innovations of immigrants. And by any economic calculus, their hard work adds far more to the nation's wealth than the resources they drain. It is still those "huddled masses yearning to breathe free" who will keep the American dream burning bright for most of us.

      The 1990 Immigration Act took effect this year. The new law boosts legal 
      immigration by 40%. It still favors family members of U.S. citizens and 
      permanent residents, but it more than doubles the slots available for skilled 
      workers. Political refugees come under a different act. Here's the likely 
      pattern of immigration in 1992:
      Close relatives of U.S. citizens, and spouses and children of permanent 
      residents                                                520,000
      Skilled workers and their families                       140,000
      Citizens of countries with relatively few immigrants
      in recent years, such as Argentina and Ireland            40,000
      Political refugees, including those from the former
      Soviet Union                                             141,000
      Illegal immigrants                                       200,000
      *TOTAL                                                 1,041,000
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