Immigration Caps Harm Small Business, New Study Finds: News Releases: The Independent Institute

The Power of Independent Thinking


Stay Connected
Get the latest updates straight to your inbox.

News Release
September 25, 2013

Immigration Caps Harm Small Business, New Study Finds
American Workers Would Benefit from Allowing Firms to Hire Far More Foreign-born Labor

September 25, 2013, Oakland, CA – Government restrictions on foreign workers harm the U.S. economy and disproportionately harm small business, according to Broken Borders: Government, Foreign Workers and the U.S. Economy, a new Policy Report from the Independent Institute.

“The need for reform has never been greater than now, but current Senate immigration reform measures will not fix this problem,” said Broken Borders co-author Benjamin Powell, Ph.D., Senior Fellow at the Independent Institute.

“The most effective solution is ultimately an immigration market free from government limitations and interference,” Powell said.

Broken Borders notes the surge in worker immigration since the 1960s, charts the demand for migrant labor, and shows how the current quota system for visas creates a “severe imbalance” with growing demand. The authors show how this creates problems for small business and forces larger employers to hire illegally “or relocate some aspect of their business to foreign soil.”

A “mild step in the right direction,” the authors say, is the raising of immigration caps, as in the current Senate proposal. But that leaves in place the fundamentally broken system of command and control.

“It is simply not possible for government central planners to know what the right level of immigration should be without letting decentralized market forces work,” said Broken Borders co-author Zachary Gochenour, Research Fellow with the Independent Institute.

The authors find that “the economic fears associated with foreign workers are unfounded” and show that immigrants and foreign workers in the growing U.S. labor market create net benefits for the native-born population worth at least $41 billion a year.

Broken Borders finds merit in guest worker plans such as Red Card, which relies more on market forces to balance the quantity and distribution of guest workers across industries and regions, without a controversial “pathway to citizenship.”

Even better and more market-friendly, according to Powell and Gochenour, would be a U.S. policy of free immigration and virtually open borders, as characterized the United States before 1875.

“The United States would be better served by moving to unrestricted migration for both guest workers and those who want permanent residency,” concludes Broken Borders.

If free immigration and virtually open borders were adopted worldwide, the authors find “enormous economic gains” such as a one-time increase of 50 to 150 percent in world GDP.

To arrange an interview with the authors of the Broken Borders Policy Report, please contact Robert Ade at 202.725.7722, 510-632-1366, ext. 114, or [email protected]


The Independent Institute is a non-profit, non-partisan, scholarly research and educational organization that sponsors in-depth studies of critical social and economic issues. For more information, visit

  • Catalyst