{"id":1004189999,"date":"2017-09-11T00:32:09","date_gmt":"2017-09-11T08:32:09","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004189999"},"modified":"2025-02-27T22:22:57","modified_gmt":"2025-02-28T06:22:57","slug":"raise-ing-red-flags-a-self-defeating-immigration-plan","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/raise-ing-red-flags-a-self-defeating-immigration-plan\/","title":{"rendered":"RAISE-ing Red Flags: A Self-Defeating Immigration Plan"},"content":{"rendered":"

By Hugh F. Kelly, PhD, CRE<\/p>\n

Why Proposed Limits Are Bad for Real Estate<\/h2>\n
\"Hugh<\/a>

Hugh F. Kelly, PhD, CRE<\/p><\/div>\n

Somewhere in Washington, D.C., there must be a hidden office with a frosted glass window on the door that reads, \u201cThe Department of Really Dumb\u00a0 Ideas.\u201d Over the years, both major U.S. political parties have taken long-term leases on that space\u2014often at the same time.<\/p>\n

So it is in a purely non-partisan spirit that we focus this month on a proposal that history teaches us will inflict unnecessary damage on\u00a0 commercial real estate and the economy.<\/p>\n

The bill in question is the Reforming American Immigration for Strong Employment Act, or RAISE Act for short. Sponsored by Sen. Tom Cotton (R-Ala.) and Sen. David Purdue (R-Ga.), and backed by President Trump, it indulges the Washington penchant for uplifting acronyms that paper over worse-than-dubious policy prescriptions.<\/p>\n

A central provision of the legislation would cut the number of green cards issued by the government from 1.1 million to 500,000 annually. In doing so, the RAISE Act would extend restrictions beyond the flow of undocumented workers to limiting legal immigration.<\/p>\n

Proponents stress the putative impact of low-cost immigrant labor on wages for lower-skilled U.S.-born workers. Moreover, the bill seeks to recast immigration policy to apply a so-called \u201cmerit-based\u201d points system favoring highly educated, English-speaking, and already affluent candidates.<\/p>\n

Debunked Claims<\/h2>\n

But in a remarkable feat for such a far-reaching proposal, the RAISE Act has managed to earn a thumbs-down from across the ideological spectrum. An analysis by Alex Nowrasteh of the conservative-leaning Cato Institute debunks the claim of a positive effect on wages, noting that the current system is actually quite effective in matching immigrant skills to U.S. economic needs.<\/p>\n

Arguments by the RAISE Act\u2019s backers that the \u201cfamily-based green card\u201d process compares negatively to Australian and Canadian \u201cskills-based\u201d selection run afoul of the facts, too. Family-based immigrants make up 0.21 percent of our population base, a smaller group than either Australia (0.26 percent) or Canada (0.23 percent).<\/p>\n

From the left, the National Immigration Law Center argues that the RAISE Act \u201cinaccurately suggests less legal immigration means more jobs for American workers.\u201d<\/p>\n

Importantly, the technology industry\u2014which has long coveted larger immigration volumes from the STEM (science, technology, engineering, and mathematics) skill set\u2014 maintains that RAISE \u201cwould severely harm the economy and actually depress wages for Americans.\u201d<\/p>\n

At this point, you may still be asking: What does any of this have to do with real estate? A lot, it turns out.<\/p>\n

Connecting the Dots<\/h2>\n

Let\u2019s start with a fundamental dilemma that will face the U.S. in the coming decades: the demographics-driven labor shortage.<\/p>\n

As long ago as 2002, projections showed that the number of workers would drop significantly in the current decade, followed by an even sharper drop in the 2020s. Those estimates showed that the labor force would keep growing more slowly through 2050 than it had at any time since before the Baby Boomers hit the job market in the 1960s.<\/p>\n

The saving grace for the U.S. economy was the countervailing growth in the global labor supply, according to studies cited by the Boston Fed. The Immigration and Naturalization Act of 1965, which the RAISE Act seeks to undo, enabled the U.S. to supplement demographic \u201cnatural increase\u201d (the surplus of births over deaths) to a degree unmatched by our major competitors, which maintained far more severe exclusions.<\/p>\n

So here\u2019s where we start to see the problem. GDP is tied to growth in the number of workers and their productivity, but the RAISE Act would sharply limit potential GDP growth. That\u00a0 spells trouble for all forms of real estate demand.<\/p>\n

Shrinking Pools<\/h2>\n

The RAISE Act\u2019s dampening effect would worsen\u00a0 already constrained labor conditions. As of August, the headline unemployment rate stood at 4.3 percent. The more inclusive U-6 rate, often considered a better indicator because it factors in underemployed and discouraged workers, was 8.6 percent, down from 9.7 percent a year ago.<\/p>\n

For commercial real estate, these trends have wide-ranging consequences. Developers have been raising red flags since mid-2016 about the shortage of construction workers. Likewise, the agricultural sector\u2014by the way, one of our strongest in terms of the international balance of trade\u2014depends upon robust immigration to manage harvests and get product to market. The skills \u201cmeritocracy\u201d of the RAISE Act is unlikely to help these sectors at all.<\/p>\n

Nor is it likely to help one of industrial real estate\u2019s principal sources of demand\u2014 e-commerce. On Aug. 2, Amazon held job fairs across the country with hopes of a big haul: 50,000 hires for picking, packing, and shipping jobs at its fulfillment centers. The positions come with medical benefits and tuition prepayment assistance.<\/p>\n

Those perks are vital, as one challenge of the labor shortage is to show new recruits that an entry-level job is not a dead end, but the first rung on the ladder of advancement. Fields where Amazon will pre-pay 95 percent of tuition include such high-demand areas as aircraft mechanics, computer-aided design, machine tool technology, and nursing.<\/p>\n

As for the RAISE Act, we\u2019ve seen this movie before, and it never ends well. Efforts to clamp down on legal immigration persist in bubbling up every couple of generations\u2014the Chinese Exclusion Act (1882), the National Origins Quota (1924) and the McCarren-Walter Act (1954). History always proves these measures to be economically debilitating as well as morally embarrassing. This is no time to forget that history, nor to repeat its mistakes.<\/p>\n

\u2014Hugh F. Kelly, PhD, CRE, is Special Advisor to the Fordham Real Estate Institute at Lincoln Center. He taught for more than 30 years at the NYU Schack Institute of Real Estate. Kelly served as the 2014 national chair of the Counselors of Real Estate.
\nHe is the author, most recently, of 24-Hour Cities: Real Investment Performance, Not Just Promises (Routledge, 2016).<\/p>\n

Image by wildpixel\/iStockphoto.com<\/em><\/p>\n

Originally appearing in the\u00a0September 2017 issue of CPE<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Somewhere in Washington, D.C., there must be a hidden office with a frosted glass window on the door that reads, \u201cThe Department of Really Dumb Ideas.\u201d Over the years, both major U.S. political parties have taken long-term leases on that space\u2014often at the same time.<\/p>\n","protected":false},"author":1082,"featured_media":1004190000,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1521,37752,23891],"tags":[36149,37510],"class_list":["post-1004189999","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-digital","category-research-center-economy-ecommerce","category-national","tag-hugh-kelly","tag-raise"],"acf":[],"yoast_head":"\nRAISE-ing Red Flags: A Self-Defeating Immigration Plan - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/raise-ing-red-flags-a-self-defeating-immigration-plan\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"RAISE-ing Red Flags: A Self-Defeating Immigration Plan\" \/>\n<meta property=\"og:description\" content=\"Somewhere in Washington, D.C., there must be a hidden office with a frosted glass window on the door that reads, \u201cThe Department of Really Dumb Ideas.\u201d Over the years, both major U.S. political parties have taken long-term leases on that space\u2014often at the same time.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/raise-ing-red-flags-a-self-defeating-immigration-plan\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2017-09-11T08:32:09+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-02-28T06:22:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2017\/09\/feature1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"827\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Hugh F. 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