Workers Without Borders: The U.S.-Mexico Wall Makes No ‘Cents’

When it comes to borders, the free movement of labor forces is always a subject for debate. In the U.S. its center stage and there is little bipartisanship on how to ebb illegal border crossings. A physical wall between the America and Mexico is quoted by the current administration in the United States to cost US$5 billion and the threat of another government shutdown looms, while Congress denies approving the cost. The justification for it stems from the desire to curb the primarily unauthorized Mexican migrant-inflow from reaching the U.S. and taking American workers’ jobs. A wall would not remedy the perceived issue because it has no affect on the very high demand for undocumented labor.

The rhetoric is not new and the proposition of a physical wall is not either. Past administrations like that of Clinton’s in 1995 also proposed building it for the same reasons. If the issue is seen through a cost-benefit lens, the grim nature of the loss of jobs and the decrease in wages will not happen if people allow more migrant workers to enter the U.S. Analysis done by the National Bureau of Economic Research illustrates the kind of return on investment that building a wall would provide. It states that if Mexico were walled off, the resulting decrease in unauthorized foreign labor would yield one cent in extra income for existing low-skilled workers in the U.S. In comparison, for every additional cent low-skilled American workers earn, 19 cents is spent to produce the wall.

Looking deeper, the Secure Fence Act of 2006 provided funding to erect almost 550 miles of barriers on the U.S.-Mexico border between 2007-2010 with a cost of US$2.3 billion. Adjusted for inflation, another 550 miles of barriers today would cost US$2.6 billion. Considering that the Secure Fence Act reduced the number of Mexican workers in the United States by nearly 83,000, it is effect only inched up incomes for low-skilled workers in America by US$0.36 cents a year. This is the largest positive benefit of the Secure Fence Act, believe it or not, but all other groups of workers ended up worse off. For instance, due to the construction of the barriers and the subsequent decrease in unauthorized Mexican workers entering the U.S., the barrier decreased high-skilled workers per capita income by US$4.35. Insofar as borders are crucial in regulating the intake of foreign workers, the answer does not lie in eradicating them entirely or re-fortifying them to wall off influxes, the answer is somewhere in the middle.

Ultimately, the inflows of unauthorized migrants will not change if demand on the other side for cheap labor does not either. According to an article in the Harvard Business Review, “effective immigration reform would ensure that needed workers can enter the country legally to match the existing demand for such labourers.” This is a double-edged sword; businesses are happy to accommodate undocumented labourers, and those attempting to cross the border realize that, whether they do it legally or illegally. The latter is simply more attractive because it circumvents many roadblocks incurred in gaining legal entry.

Economic losses are greater when flows of migrant workers are kept out, yet the sentiment seems to be far from that realization. While the temperament of average Americans seems to be anything but tempered in regards to the border, it is important to note that the welfare gained from managing influxes of immigrants consistently outweighs the benefits of anti-immigration policies. Allocating funds to the construction of a wall would hurt the pocketbooks of all Americans and more worrisome is that businesses will still seek to fulfill their demand of cheap undocumented labor. Mandating the amount of migrants the U.S. takes in from Mexico is not wrong, but not adjusting that amount, in accordance with volumes in demand, could perpetuate the problem.