Heavy Lift

Truly Comprehensive Immigration Reform Would Span the Migrant Labor Lifecycle

Work is the engine that propels migration from Mexico to the United States. For both countries, therefore, the rightful focus of immigration to their common border is managing the flows of workers who cross it.While competing priorities have prevented the U.S. Congress from enacting comprehensive immigration reform legislation over the past several years, the core challenge at the U.S.-Mexican border has remained the same as ever: to balance the supply of workers with the demand for workers, neither of which stops at the border, regardless of border enforcement.

What the United States and Mexico ultimately need goes beyond immigration reform. What they need is a bi-national effort at labor reform. The scope of this effort should span the entire life-cycle of migrant labor, from the root causes that drive Mexican workers northward to the retirements of those workers either in Mexico or in the United States.

To manage the front end of the migrant labor life-cycle, the United States and Mexico should initiate a joint effort to establish a bi national organization, commission, or agency that would collect and share information about the work histories, employment and unemployment periods, and social security contributions of migrants in both countries. Making this information transparent to people in both countries would increase mutual understanding of migrant labor trends and of worker incentives that could alleviate the pressures to emigrate. Such an organization would also produce homogeneous and compatible monitoring and data systems that officials in both countries could use to support current and future immigration policies.

To manage the back end of the migrant labor lifecycle, the United States and Mexico should institute a bilateral social security agreement, which would make the social security contributions of legal workers portable between the two countries. Currently, the social security systems of both countries disregard the worker contributions paid into the system of the other country. As a result, Mexicans who work outside Mexico have a higher risk than non migrants of not meeting the minimum eligibility requirements for Mexican social security benefits upon retirement in Mexico.

The United States and Mexico already have bilateral social security agreements with several countries, but not with each other. Such an agreement, which would exclude undocumented migrants, would give legal migrants the potential of receiving retirement benefits that are comparable to those of nonmigrants in Mexico, thus giving legal migrants more flexibility to return to Mexico for job opportunities there or for family reasons. The flexible labor environment resulting from such an agreement could provide incentives for legal migrants to return home instead of staying longer in the United States in order to become eligible for U.S. social security benefits.

Immigration Drivers

Economic factors drive Mexican migration to the United States. The immigrant flows usually increase during periods of U.S. economic expansion and decrease during periods of U.S. economic contraction. There is a high correlation between swings in U.S. gross domestic product and fluctuations in Mexican immigrant flows, particularly since 2000 (see Figure 1).

The immigrant flows are also fueled by large wage differentials between the countries. A Mexican between ages 23 and 27 with ten years of education is likely to earn almost four times as much in the United States as in Mexico. A Mexican of that age with only four years of education can expect to earn nearly six times as much in the United States.

Economic problems in Mexico—such as crop failure, high unemployment, the country’s debt crisis in 1982, and its exchange-rate collapse in 1994—also contribute to migration. Finally, U.S. employers often seek additional low-wage Mexican workers through the family and other socialconnectionsof current immigrant employees.

Over the past century, the United States has held changing attitudes toward Mexican immigration and enacted shiftingpolicies as a result. At different times, U.S. immigration policies have been prompted by the demand among industrialists and farmers for cheap labor, by the concerns amongsome U.S. citizens about immigration posinga threat to the American way of life, or by both of these contradictory pressures.

Twice in its modern history,the United States has formally welcomedMexican workers through migration programs. The firsttime came in response to World War I:Between 1917 and 1921,there was a program allowing contract workers to enter from Mexico andexempting them from the literacy tests that applied to most immigrants from other countries. The secondtime came in response to World War II, with the so-called Bracero Program, which was the result of a bilateral treaty for the temporary employment of Mexican farmworkers. Originally envisioned as a wartime measure, this program was continuously extended to meet the growing demand for agricultural workers and ended up running from 1942 to 1964, allowing for the temporary migration of nearly 5 million Mexicans.

In 1965, the U.S. government made its first effort to limit the number of Latin American immigrants by amending the Immigration and Nationality Act. The Mexican government triedthrough the early 1970s to extend the Bracero Program, but Mexican policymakers eventually grew comfortable with the large flow of undocumented migration that resulted from the 1965 changes in U.S. law.

In the early 2000s, Mexican President Vicente Fox pursued an ambitious bilateral migration agreement with the United States, including a new guest-worker program. However, this goal became unattainable after the terrorist attacks of 2001, which shifted the focus of U.S. foreign policy toward national security. All negotiations stalled, and opportunities to pursue bilateral policies were effectively closed.

Binational Immigration Agency

It is time to reopen the doors of cooperation. A binational immigration organization might seem to arise from a futuristic view of U.S.-Mexican relations, but it could fulfill the needs of both nations. Since the terrorist attacks of 2001, the United States has deepened its commitment to border security and to preventing the illegal entry of people and goods. Mexico, for its part, needs to ensure the continued functioning of the legal binational labor market for purposes ofdomestic economic growth and stability from remittances (money transfers from Mexicans living abroad). Developing a binational organization committed to border security and the legal labor force would serve the interests of both countries.

Such an organization would not justmonitor the flow of migrant workers overall but would compile detaileddata on each individual migrant’s work history, employers, qualifications, occupations, employment and unemployment periods, family characteristics, and contributions to the social security systems of both countries. These data would be useful for strengthening border security, adding transparency to the legal labor market, and implementing a bilateral social security agreement. With respect to transparency, the data could be used to inform the migration reform debate in both countries, building awareness of the conditions in the United States that “pull”recurrent influxes of immigrants while highlighting the conditionsin Mexico—particularly its regional disparities and socioeconomic circumstances—that “push”people to migrate.

Greater understanding will produce better policies and programs. For example, a program that promotes employment in underdeveloped areas of Mexico would further a goal of keeping citizens in their places of origin. A proportion of the population will still migrate to the United States because of social networks or cultural traditions engendering the desire to move north. However, a thorough analysis of which types of migrants are likely to stay in their places of origin, if opportunities allow,would help policymakers design incentives.

The motives for Mexicanmigration vary depending on the personal circumstances of potential migrants, the extent of insufficient development and infrastructure, and the regional disparities in everything from business competitiveness and tax collections to the quality of schools and healthcare services. These variations make it important to craft different policies that can target a heterogeneous population.

The stereotypical perception of Mexican immigrants is that they come from the lowest rungs of Mexican society. In fact, Mexican immigrants in the United States are more likely to have completed eightto nineyears of education than those remaining in Mexico,and less likely to have completed either fewer years of education or college. In other words, the least educated and the most educated are less likely to migrate to the United States.

Geographically, most migrants come not from the most-disadvantaged areas of Mexico but from those with low or medium poverty levels (see Figure 2). The traditional migrant-sending regions of central and western Mexico, which have relatively low poverty levels, continue to account for a large, albeit shrinking, proportion of total migration to the United States. International migration is costly, after all, and those in poverty might be unable to afford the trip.

Recently, the migrant-sending regions have begun to spread throughout Mexico, and so the flow of migrants might increasingly come from lower-income areas and those with lower education and skill levels than in previous decades.It would be helpful for policymakers on both sides of the border to track these kinds of demographic, geographic, educational, and socioeconomic trends among migrants—and use the data to craftinnovative policies not only for immigration and labor but also for education, infrastructure, and economic growth.

Bilateral Social Security

Long-term Mexican migrant workers who were born before 1951have accumulated, on average, 10 percent more net household wealth than their nonmigrant peers.Workingin the United States, however,may also nullify a worker’s eligibility for public retirement benefits or restrict their amount. In both the United States and Mexico, access to public retirement benefits requires that workers pay into the country’s social security system for a minimum number of years. In the United States, theminimum is 10 years. Within the Mexican Social Security Institute, which is designed for private-sector workers, the minimum is currently25 years. Each country’ssystem also bases the calculation of an individual’s benefit amount on the contributions made by that person in only that country.

To make social security contributions portable between countries, many countries have instituted bilateral social security agreements, also called “totalization” agreements. Since 1978, the United States has entered into such agreements with 19 European countries, Canada, South Korea, Chile, Australia, and Japan. Mexico has made similar agreements with Italy, Argentina, Spain, and Canada.In June 2004, an agreement between the United States and Mexico to coordinate social security benefits was drafted, but it has yet to be reviewed by the U.S. Congress and subsequently approved by the Mexican Senate.

Of particular interest to U.S. multinational companies, a totalization agreement would eliminate the dual taxation ofemployees, who may be required topay social security contributions to their country of origin as well asto the other country in which they are working, both from the same earnings. A totalization agreement would thus enhance the profitability of multinational companies by reducing their costs of doing business abroad.

Of key interest to migrant laborers, atotalization agreement would allow legal workers who have employment histories in two countries, but who have not worked long enough in either country to qualify for pension benefits, to combine work credits from both countries in order to be eligible for benefits. Under a standard agreement, a legal worker who gains eligibility in this way would qualify for partial U.S. or Mexican benefits or both, based on the proportion of the worker’s total career in the paying country or countries.

Without such an agreement between the United States and Mexico, return migrants are less likely to qualify forsocial security benefits upon return to Mexico and could be more vulnerable to poverty in old age. Only about 35 percentof long-term return migrants who are 70 or older qualify for Mexican social security benefits, compared withabout half of nonmigrants of the same age. Such ineligibility for pension benefits could prevent some migrantsfrom leaving their work in the United States and returning to Mexico in their later years.

Those who do return are more likely to keep working. Although workamong men older than 70 is common in Mexico, it is more likely for return migrants than for nonmigrants: 44 percent of return migrants who are 70 or older work full-time or part-time, compared with 37 percent of nonmigrantsof that age. This could indicate that individuals with truncated labor histories in the United States and Mexico have to work up to older ages because they do not qualify for U.S. or Mexican social security benefits.Return migrants are also less likely than nonmigrants to have access to public health insurance, which accompanies social security benefits in Mexico.

Many legal migrants may extend their working lives in the United States to be able to claim U.S. retirement benefits.The increased labor flexibility provided by a bilateral social security agreement would make it easier for suchworkers to return to Mexico during their working lives and to reduce their lengths of stay in the United States.

A binational organization that promotes a better understanding of migration flows coupled with a bilateral social security agreement for legal migrant workers would serve as cornerstonesforbuilding solid immigration and labor policies that could benefit both the U.S. and Mexican populations.These two initiatives could also inaugurate a longer-term collaboration between the two countries that,as geographic neighbors, must jointly find solutions to promote the well-being of their people.

Emma Aguila, an economist at the RAND Corporation, is director of the RAND Center for Latin American Social Policy. John Godges, a RAND communications analyst, is editor-in-chief of RAND Review. This story first appeared in the Fall 2013 issue of RAND Review, the flagship magazine of the RAND Corporation.

Fall 2013 issue of RAND Review.

Related Reading

“Retirement and Health Benefits for Mexican Migrant Workers Returning from the United States,” International Social Security Review, Vol. 66, No. 2, April–June 2013, pp. 101–125, Emma Aguila, Julie Zissimopoulos.

United States and Mexico: Ties That Bind, Issues That Divide, Emma Aguila, Alisher R. Akhmedjonov, Ricardo Basurto-Davila, Krishna B. Kumar, Sarah Kups, Howard J. Shatz, Santa Monica, Calif.: RAND Corporation, 2012, 244 pp., www.rand.org/t/MG985-

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