Should the U.S. Adopt a Merit-Based Immigration System

Since his days on the campaign trail, President Donald Trump has pressed for what he refers to as “merit-based” immigration. He has praised Canada’s points-based selection system and endorsed proposed legislation that would prioritize immigrants with the strongest English skills, highest education levels and highest-paying job offers. He’s right: The U.S. should select more of its immigrants on the basis of merit. But the definition of “merit” should include the value of needed workers across the entire skills spectrum.

Essential Workers

Before COVID-19 and the resulting economic calamity and border closings, U.S. employers were hiring about 450,000 new immigrant workers per year. These workers fill a wide range of jobs, from farmwork, food processing and construction to research science and medicine. The response to the coronavirus has brought into stark relief how essential many of these occupations are.

Whatever the coming economic recovery looks like, employers will rely on immigration for needed workers. Indeed, given the aging of the U.S. population and declining birthrate, immigrants and their U.S.-born children are projected to drive all growth in the working-age population through 2035.

Most foreign workers arrive outside of official employment-based channels. The current employer-sponsored immigration system brings in only 140,000 long-term, employment-based immigrants each year, and about half of those are the spouses and children of selected workers. The current system is also strongly skewed toward higher-skilled immigrants: Most employment-based green cards require a college education or advanced degree; only 5,000 are available for employers that want to sponsor low-skilled workers.

The U.S. also allows employers to bring in hundreds of thousands of temporary employees, including farmworkers, high-skilled H-1B workers and other seasonal workers (to fill summer resort and landscaping jobs, for example). But firms that want to keep these workers on long-term have very limited channels to do so. The system is not well-aligned with the interests of U.S. businesses, immigrant workers or the economy overall.

Redefining Merit

The U.S. needs a reformed merit-based immigration system that is more flexible—with “merit” defined as the ability to contribute positively to the nation’s economy. And merit-based immigration need not involve a points-based system. In times when there is a demonstrated need for workers by a particular employer or in a particular job sector, immigrant workers with needed skills should be admitted in greater numbers—whether those skills are rapidly picking and bundling radishes, caring for the elderly, or conducting scientific research or engineering studies. Annual limits should be flexible, expanding when labor markets are tight and contracting when jobs are scarce.

A merit-based system should also preserve a primary role for employers in choosing desired workers. In Canada, Australia and other countries with traditional points-based systems, initial selection of workers based on factors such as language skills, educational attainment and field of work led to high levels of “brain waste”—the problem of foreign-trained doctors driving taxis, for example. Over time, these systems were changed to prioritize workers with in-country experience and employment offers. The U.S. system has much lower levels of brain waste. That’s because employers are the best judges of which workers are poised to succeed in their line of work. 

A broader, more flexible merit-based immigration stream would supply employers with needed workers, support U.S. workforce growth amid an aging population and bolster overall U.S. economic growth. To build a successful merit-based system, we must recognize that there is merit in many different types of skills and that employers, rather than governments, are best at evaluating who has merit. 

Julia Gelatt is a senior policy analyst at the nonpartisan Washington, D.C.-based Migration Policy Institute, an independent, nonpartisan think tank dedicated to the analysis of the movement of people worldwide.

Merit-based immigration built on a points system offers low risk but only limited returns. It increases the value generated by the median immigrant but is not designed to capitalize on immigrant entrepreneurship, fails to recognize nontraditional sources of talent and inadequately integrates many immigrants into the economy. To promote long-term economic growth, the U.S. can afford to take more risks in pursuit of higher rewards.

Superstars and Startups

The typical way to think about the benefits of immigration is to assume that the value of immigrants rises in proportion to their education, experience and other traditional qualifications. It’s easy to see why points-based systems are attractive: Raise the average skill level among immigrants, and you raise the value of your immigration system proportionally.

But this ignores the potential of—and the immense opportunities that flow from—immigrant superstars. One entrepreneur with a billion- dollar idea may generate more value than thousands of dependable, hardworking, high-skilled workers.

Traditional merit-based systems are not designed with superstars in mind. Points-based systems value tried-and-true characteristics and reward applicants who follow reliable, well-traveled paths. These systems raise the value created by the median immigrant, but they may thin the ranks of outliers who generate considerably more value. Superstar entrepreneurs are more likely to make precisely the types of risky career decisions that hurt their chances under a points-based selection system.

Points-based and other immigration systems that focus on raising the median skill level of immigrants are great for improving efficiency at the margin; they’re just not designed to bring in new, industry-disrupting ideas.

Decentralizing the Talent Search

If we’re willing to give up the idea of a points-based system and the security and safety it offers, our immigration system can take advantage of a decentralized search for talent undertaken by investors and employers.

For example, a startup visa could piggyback on the judgment and discretion of investors who have the means, incentive and skill to identify immigrants with superstar potential. The program could offer visas to immigrant entrepreneurs who want to launch startups in the U.S. and who have raised a certain amount of investment capital.

Notably, Australia, Canada and New Zealand, often held up as models for immigration reform by proponents of points-based immigration, have all found that points-based systems are insufficient for entrepreneurship. As a result, each of those nations runs a startup visa program in parallel with its points-based system.

Employer Sponsorship

Even outside the market for superstars, points-based systems can be static in the face of changing market conditions. That is why it is vital to retain employer sponsorship, with reforms to ensure that scarce visas go to employers with the greatest needs. That approach provides a level of flexibility that a points-based system would be unable to match.

Additionally, ensuring that immigrants to the U.S. have jobs waiting for them helps them better integrate into the economy. For all of the weaknesses of its immigration program, the U.S. historically has had a lower foreign-born unemployment rate than countries with typical merit-based systems. It should be no surprise that countries with points-based systems have introduced reforms that give extra weight to applicants with existing job offers.

Ultimately, what the case for points-based immigration misses is what every HR professional already understands: There’s no one simple scorecard to identify talent. A firm wouldn’t hire only on the basis of age, years of work and years of education. Our immigration system shouldn’t work that way either.