While a useful contribution to the immigration debates in the USA, the rejection of human capital factors – language proficiency, educational attainment – in favour of job offers.

But Bier, in citing Express Entry’s initial heavy weighting on job offers in 2015, fails to note that the government rebalanced the points towards human capital factors given the challenge in meeting levels (see The Canadian Express Entry System for Selecting Economic Immigrants: Progress and Persistent Challenges).

Last week, President Trump backed a plan that would create a new legal immigration category based on “points.” The idea is borrowed from immigration systems in several countries, including Canada, which award points to applicants based on various personal characteristics (language skills, educational attainment, family ties, etc.). The Canadian government, for example, establishes the cap on visas for the year, and applicants with the highest point total receive one of the cap slots for that year.

Advantages of a points system

Congress should not cap skilled legal immigration, which provides massive economic and fiscal benefits to the United States. Assuming it will anyway, however, a points system could be a fair and economically beneficial way to allocate some green cards, but policymakers should avoid some of the common pitfalls in implementing one.

Ideally, a points system should serve a single purpose: economic growth. Trying to enlist a points system for other goals—family reunification, humanitarianism, “assimilation,” etc.—ultimately results in an incoherent system that doesn’t serve any of them well. To be clear, this is not to say that these other goals should receive no representation in the immigration system anywhere, just not in a points system.

First, the main reason a points system makes sense (in the context of caps on skilled immigration) is that the points can consider characteristics that will result in greater long-term economic growth. A pure employer sponsorship model only considers the benefits to a single employer in the short term, but a points system can more adequately account for broader economic effects.

Second, a points system has the virtue of not requiring an employer to file anything with the government. Untying employers from the regulatory bureaucracy would be a massive improvement over the current system. Third, a points system stops long queues and waiting periods for employers from developing by issuing green cards to whoever had the most points in that application period, quickly connecting workers and employers. Fourth, if demand exceeds supply, a points system fairly and intelligently awards green cards without resorting to a lottery.

Factors a points system should consider

1. Job offers: This criterion should be almost mandatory. In order to increase economic growth, a person must work. Of course, Congress could adopt an expansive definition of “work” to include self-employed entrepreneurs and investors, but it should not get into the business of selecting immigrants for businesses. Employers should lead the hiring process. One mistake that architects of a points system can make is focusing too heavily on immigrants’ resumés rather than whether the U.S. market actually demands their services.

In 2015, Canada reformed its points system to weight job offers much more heavily after discovering that many immigrants with high qualifications on paper (at least according to the government) failed to find employment. In 2013, Canadian immigrants with university degrees earned 33 percent less than their Canada-born counterparts. In the United States, foreign-born college graduates earn more than U.S.-born. Any points system should be led by the market, not bureaucrats.

2. Earnings: A points system should prioritize applicants with the highest wage offers (or expected income from U.S. investments or businesses). Higher wages generally indicate higher productivity. Higher productivity means more economic growth. Under the U.S. system that limits legal immigration from particular countries (the “per-country limits”), higher-paid immigrants from India and China actually end up waiting longer than other immigrants. A points system prioritizing higher wages would also incentivize employers to offer the highest wage that they can to their immigrant applicants, guaranteeing that immigrants receive the market wage. Unfortunately, Canada does not rely on wages to prioritize job offers.

3. Ages: As with the job offer, it should be almost mandatory that applicants in a points system be under the age of 60, even if they have a high wage offer. Average immigrant wages in the United States almost double from their early 20s to their late 40s and decline precipitously thereafter. Retirees are on average very fiscally negative for the U.S. government. The decline actually occurs earlier among the highest earners (Figure 1).

This means that a points system should prefer a younger worker with a somewhat lower wage offer to an older worker with a somewhat higher wage offer—both because the younger worker’s productivity will rise while the older worker’s will fall and because the younger worker simply has many more productive years left. Again, that’s not to say that Congress couldn’t design a retiree visa. It just shouldn’t use a points system for that purpose.

4. U.S. work experience: While immigrants with job offers indicate that a U.S. company demands their services at one point in time, a points system should give extra consideration to immigrants with a history of employment in the United States. First of all, U.S. employment experience (usually on a temporary visa of some kind) proves that the immigrant lived up to expectations in the labor market.

Second, a period of employment proves that the immigrant wants to remain in the United States. Immigrants who secure a green card under the points system but then discover that the United States is not to their liking undermine the entire purpose of the system. U.S. immigrants have a fairly high emigration rate—which is partially due to faulty government policies, but also a result of immigrants choosing to leave voluntarily. For both reasons, prior U.S. employment demonstrates that the worker will likely continue to contribute to economic growth.

5. Minor children: According to the National Academy of Sciences (NAS) 2017 report, the second generation (e.g. children of immigrants) is the most fiscally positive generation. A points system would be wise to award more points to immigrants who have children who are automatically be eligible to immigrate with the primary applicant. A U.S. birth rate below replacement level is a critical threat to economic growth, as Europe is discovering, so a points system concerned with long-term growth should credit immigrants who bring children or have children here.

Many children of U.S. immigrants will contribute greatly to economic growth in a few years. In fact, 83 percent “of the finalists of the 2016 Intel Science Talent Search, the leading science competition for U.S. high school students, were the children of immigrants.” Again, because they have their entire lives ahead of them, children of immigrants provide another source of long-term economic growth.

6. Educated spouses: Under any immigration process, immigrants will always be permitted to bring their spouses with them, so any points system will need to evaluate the spouses of the applicants. Spouses shouldn’t count against the points system cap, but it should consider how an immigrant’s spouse could contribute to economic growth.

Evaluations of spouses should start with the same factors as the primary applicant, but because they are often following their spouses to the United States, spouses may not have jobs lined up in advance, so instead of focusing solely on wages and job offers, the system should award more points for immigrants with highly educated spouses. Immigrants with college degrees are much more likely to find employment in the United States than those who haven’t graduated college, and college graduation predicts higher wages among immigrants.

Factors a points system should ignore

Most proposed points system incorporate a variety of irrelevant factors. These include:

  • English language proficiency
  • Educational attainment
  • Occupation
  • International acclaim or prestigious awards
  • Family ties
  • Civics knowledge
  • Place of birth, religion, race, etc.

While educational attainment, English language proficiency, and certain high demand occupations are associated with higher productivity, they are not nearly as good of a measure as the actual wage offered to the worker. These factors could be useful in evaluating the likely productivity for someone without a job offer yet (as in the case of the spouses), but a good points system should maintain a job as a baseline for everyone (but the spouse and minor children) for that reason. Civics exams, country of origin, and family ties are totally irrelevant to determining someone’s productivity. A points system should never consider these factors at all.

The Trump points proposal

We don’t have the full details of Trump’s proposal, but the president’s speech last week provided a few lines about the White House plan. He said it would favor younger workers with an offer of employment, prioritizing those with higher wages. That’s a great start, but unfortunately, his plan also includes several irrelevant factors including preferences for people with higher education, a government-determined “valuable skill,” English language proficiency, and U.S. civics knowledge.

The vague White House slides about the plan describe three categories eligible for the points system—immigrants with “extraordinary talent,” those in “professional and specialized vocations,” and “exceptional students.” A points system would not need to separate categories in this manner unless the government plans to include irrelevant factors like which universities an applicant graduated from or which fields that they work in.

While there is no reason it should come at the expense of other immigration channels, a points system could be useful addition to the U.S. immigration system. The government should avoid the temptation to select the immigrants with the best resumés and make sure that the points are driven primarily by the private sector. The Trump plan appears to incorporate some of the important elements of an effective points system, but also includes elements that will undermine it. Hopefully, Congress can help the White House iron out these issues as it evolves it into actual legislation.