For Immigration Policy, Perception is Reality

By June 29, 2017Blog

By Tim Shea

Special Contributor

There is no question that immigration is an enormously complex issue. In many ways, it represents a focal point of some of the most divisive debates of our time: jobs, national security, the opioid epidemic, criminal justice reform, cultural identity, etc. Successful immigration policy requires legislators to address the nuanced and often-conflicting viewpoints of these debates, which explains why the U.S. Congress has been more or less paralyzed on the issue for the past several decades.

At its essence, however, immigration—the free movement of people and labor across national borders—is fundamentally an economic issue. As such, it is subject to one of the most basic tenants of economics, that efforts to centralize planning and decision making processes often come with serious drawbacks. Central planning frequently ignores local knowledge of the economic strengths, weaknesses, and needs within a community, knowledge that is so essential to the proper function of the market-driven economies found within the United States. That is precisely why SB 4, which effectively wrests away from municipalities any ability to shape immigration policy within their borders, is such a bad deal for Texas’ economy.

Part of the reason SB 4 has the potential to be so damaging is that the decidedly restrictionist approach exhibited in its text is widely panned as being xenophobic and hostile to foreigners at large. By blanketing the entire state with this “aura of intolerance,” Texas is dissuading the business and investment of a great many foreign individuals and firms, even those who have no ties to illegal immigration. Perhaps this perceived hostility is not entirely fair; many valid arguments can be made for immigration restrictions without resorting to retrograde views on race and culture. Fair or not, though, perception is nine-tenths of the law reality.

One need look no further than the aftermath of the Trump Administration’s so-called “travel bans” to see these dynamics playing out. In the months following issuance of the Executive Orders, travel intelligence firm ForwardKeys found a 6.5 percent decline in international bookings to the U.S., while airfare analytics site Hopper reported that international searches for the U.S. had dropped by 10 percent. These trends likewise seem to extend to what should be the more sober and profit-driven realm of business travel. In May, the Global Business Travel Association (GBTA) projected a total of -$1.3 billion in 2017 revenue to U.S. businesses as a result of the policy, and another GBTA survey showed that nearly half of European businesses would be less likely to host meetings and events within the Unites States. Bear in mind that these trends were observed in the wake of executive orders that were only in effect for a matter of days.

It is therefore not a stretch to imagine that SB 4 will have a similar impact at the state level that the travel bans had on U.S. tourism sector as a whole. Nor is it hyperbole to say that such an impact will be hard felt, particularly by the low-income workers that comprise much of the leisure and hospitality workforce. A 2015 study from Dean Runyan Associates, for instance, estimated that international tourism accounted for nearly $7 billion in spending in 2015, or a full 10 percent of total tourism spending in the state. This spending in turn supported more than 66,000 jobs. Even a modest 5 to 10 percent decline in international visitation would thus translate into hundreds of millions of dollars in lost revenue and the destruction of thousands of jobs.

To be fair, in a state where employment is nearing 13 million people, the loss of a few thousand tourism jobs might be considered a fair tradeoff. But it is unlikely that the negative perceptions to Texas brought about by SB 4 will be limited just to tourism. International trade and foreign investment, both of which are pillars of the Texas economy, will also be affected. The economic ramifications of SB 4 could therefore be significant and far-reaching.

It is hard to overstate just how important international trade is to the Texas economy. With its strategic location, numerous sea and airports, and business friendly climate, Texas is the hub for foreign trade in the United States. Nearly a quarter of a trillion dollars of goods were exported from Texas in 2015, far and away the most of any state in the Union. All of that economic activity translates directly into jobs. As far back as 2013, trade supported up to one out of every five jobs in Texas. What’s more, the state has become increasingly reliant on trade to fuel the rapid job growth observed over the past decade.

The Texas economy has also become heavily reliant on foreign direct investments. More than 1,400 projects totaling some $212 billion were undertaken on Texas soil by foreign companies between 2011 and 2016. Of those, 761 were greenfield projects which created 84,000 jobs, according to the Governor’s Office.

In short, the state’s economy has become inextricably linked with consumers, businesses, and trading partners across the globe. A Texas without robust foreign tourism, trade, and investment is a Texas in decline. Now, it is possible that the effect of SB 4’s passage on these areas will be minimal—that foreign businesses and visitors will not drastically change their behavior, or that the damage done will be negligible—but again, recent history has not shown this to be the case. The public response to both the Trump travel bans and North Carolina’s HB 2 clearly demonstrate that businesses and consumers are willing to “vote with their dollars” on social and cultural issues, even when they have no direct skin in the game. Given the number of Texas’ jobs and businesses that rely on international markets, it seems a foolish risk to take.

This is especially true given that SB 4 is a solution in search of a problem. Residents have freely and consistently elected local governments that support sanctuary policies, and, if they want those policies to change, they can bring this about at the local level. By becoming involved, the state legislature has expressed the opinion that Texans are not capable of knowing what is best for their own communities, an attitude that flies in the face of the virtues frequently espoused by that very body.

Ironically, SB 4 will only further increase the burden born by all Texans. Numerous municipalities have already filed a suit against the state government, and the ensuing legal battle is certain to drain millions of dollars and hundreds of man hours from both state and local coffers. These are resources that could have been used to solve the considerably more tangible and agreed-upon challenges facing the state. Instead, months or years will be devoted to a legal battle over an unnecessary law whose Constitutional status is, at best, questionable.



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