One Small Way to Fix the World: Welcome Guest Workers

June 22, 2009
If you could do one thing to make the world a better place, where would you start? The current issue of The Atlantic suggests fifteen ways to fix the world. One of them, which you’ll hear a lot more about in the year to come, is from the always-brilliant Kerry Howley: Welcome guest workers.Howley uses CGD research to make the great point that just letting a person from a developing country work briefly in the United States can in many cases do vastly more for that person than any other known development intervention. CGD non-resident fellow Lant Pritchett has shown this with a quick, stunning calculation.Lant’s math goes like this: We’ll compare the income benefits of the famous microcredit pioneer, the Grameen Bank in Bangladesh, to the income benefits of temporary labor mobility by guest workers. In the year 2000, the total loans of the Grameen Bank amounted to about US$200 million, so taking one published estimate of roughly a 15% rate of return on those loans averaged across male and female borrowers, the bank was generating roughly US$30 million per year in new income for Bangladeshis. But together with Lant and Claudio Montenegro, I’ve calculated that in the same year, the income gain to a Bangladeshi from working in the United States would have been at least US$10,000 per year. (This is the study Howley refers to.) If we divide the gain from the entire Grameen Bank by the per-person gain from labor mobility ($30 million/$10,000), we get 3,000. That is the number of Bangladeshis whose collective income gain from working in a rich country would outstrip the collective income gain from the Grameen Bank.In other words, just letting 3,000 Bangladeshis work in the United States for one short year, and then go home, would generate more new income for Bangladeshis than the entire Grameen Bank did that year. That’s a tiny and temporary flow of people; for comparison, five times that many Bangladeshis became permanent residents of the United States in 2006—the year the Grameen Bank won the Nobel Prize for its efforts.Lant’s killer question, asked in a recent speech (PPT, 5MB) is this: If he could get 3,000 Bangladeshis temporarily into a rich country, would he get the Nobel?Howley rightly focuses on the development benefits of guest workers, but they are also good for American strength and security. First, guest workers strengthen the country by fueling economy growth. What about the recession? Guest workers cannot flood the labor market when there are no jobs for them, only to sit idle. By definition, people can’t come as guest workers unless there are jobs for them, since guest worker visas are linked to being hired for a specific job. When times are bad, employers won’t hire them and they won’t get visas. A guest worker program just creates legal channels for people to come when there are jobs, so their hard work can fuel the recovery.Second, guest workers make America more secure because they bring movement into the light that is otherwise forced into the dark. This is why all three people who have ever held the post of Secretary of Homeland Security have clamored for an expanded guest worker program. Here’s Tom Ridge, interviewed by the Wall Street Journal’s Jason Riley:
"I don’t see how you can have a good security policy without a good guest-worker program."
Here’s Michael Chertoff, from the same source:
“The only way to truly get enforcement done is to create legal pathways to satisfy what is an undeniable work need.”
And here is the current Secretary of Homeland Security, Janet Napolitano:
“I am in favor of creating an effective guest worker program … to regain true control of the United States/Mexico border.”
Remarkably, these people—charged exclusively with protecting U.S. national security interests—are calling for a policy that is powerfully conducive to global development and poverty reduction. Now that’s a win-win. Keep this in mind as the national conversation about immigration continues over the coming year. Fix the world: welcome guest workers.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.