Perspectives On Immigration: Immigrants And The U.S. Economy

Critics of immigration argue that there is a huge cost to the American taxpayer, that immigrants come to take advantage of government “handouts” and compete with American workers for jobs. The facts do not support those arguments.  Quite the opposite.  The Center for American Progress (CAP) found that immigrants added about $2 trillion to the U.S. Gross Domestic Product (GDP) in 2016, with more than 40 percent of Fortune 500 companies founded by immigrants and their children.  Immigrants, they argue, complement rather than compete with American workers, and will be crucial to filling job openings as Baby Boomers retire.

The Center for American Progress is admittedly liberal, and, yes, George Soros is among its many funders – along with WalMart, Wells Fargo, Citigroup, Eli Lilly Co., the United Arab Emirates and other decidedly non-liberal financiers. But although the language is a bit different, the conservative Committee for Economic Development of The Conference Board (CED), applying a cost/benefit analysis, agrees:

“Each immigrant of working age who arrives in the US represents an immediate infusion of human capital into the economy. As with any form of investment, human capital once formed delivers a stream of future income, adding to GDP. New immigrants carry with them human capital formed from education, training, and child rearing they received in their home country. Once they arrive in the US, they add to the productive capacity of the economy, the value of which can be assessed by the present value of their future earnings. As a result, the return on the investment in immigration is quite high, as the US economy benefits from the early investment in immigrants’ human capital, made in their home country. As the population of new immigrants shifts toward a more educated one, these human capital endowments become larger.”

CED estimates the human capital contribution of new immigrants at about $314 billion a year, with immigrants more likely to be better educated over time.  In fact, in 2015, nearly half of immigrant arrivals had bachelor’s degrees or better, with the number of lower-skilled (and often undocumented) workers declining.  A benefit CED includes in its calculations is that the cost of child-rearing and education have already been met in their home countries and will not be borne by U.S. taxpayers.

CAP researchers found that the poverty rate for immigrants in 2015 was 17.3 percent; for U.S.-born, 14.3 percent.  Even so, immigrant working class households received 9.3 percent of their overall income from public programs such as food stamps, Social Security or welfare, while U.S.-born-headed households received 15 percent of their income from such programs.  They also found that more than half of the foreign-born are homeowners, and that immigrants are becoming homeowners at a faster rate than the U.S.-born population, contributing some $3.7 trillion to housing markets.

Unauthorized immigrants – the current politically correct term – are increasingly entering the U.S. legally and overstaying their visas.  The U.S. Department of Homeland Security (DHS) found the largest sources of visa violators are from Canada, Mexico, and Brazil.  Mexicans make up half of the unauthorized immigrant population, but Mexican legal residents grew faster than their illegal counterparts.  The majority of unauthorized immigrants are long-term U.S. residents, with about two-thirds living in the U.S. for over ten years.

As of 2014, 21 percent of the unauthorized population lived in California, 15 percent in Texas, 8 percent in Florida, 7 percent in New York, 5 percent in New Jersey, and 4 percent in Illinois.  Current immigration law prevents many from applying for legal status.  Some 3 million could qualify for a Green Card because they have a close relative who is a U.S. citizen, but they would have to leave the country and face up to ten years waiting because of re-entry bars put in place in 1996, when Democrat Bill Clinton was president and Congress had a Republican majority.

There are many misleading “statistics” floating around.  For instance, the British Daily Mail, in a March 14, 2019 story about the largest groups of naturalized immigrants in each state, had a sub-head: Indian Settlers Came Top in Nine States….” and later, Somalians were the largest group of settlers in three states….  Both statements are factual, but, and it’s a big BUT, the immigrants from India totaled less than 8,000 in those nine states, and Somalians added up to under 2400 in the three states cited.  When you compare that with over 40,000 Mexicans in California, over 20,000 Mexicans in Texas, over 20,000 Dominicans in New York, and almost 6,000 Mexicans in Arizona, well….Montana, with its largest group of naturalized immigrants being Mexicans, all 33 of them, might not perceive why there is any controversy.

Note that in New York, there are some one million Puerto Ricans that dwarf the Dominican migration.  They are not included in the statistics because the island is a U.S. territory (colony), and its people U.S. citizens, albeit often treated as second-class when it comes to hurricane relief, etc.  Island residents cannot vote for U.S. president, but those that move to the mainland can.  Islanders pay Social Security and Medicare taxes, but not federal income tax.  They have no representation in Congress.

The non-partisan Economic Policy Institute (EPI), which is supported in large part by labor unions who might be expected to minimize any positive impacts by immigrants on the labor force , found in 2014 that “there is broad agreement among academic economists that in the long run, immigration has a small but positive impact on the labor market outcomes of native-born workers, on average.  There is some debate about whether, within the overall small positive effect, certain subgroups are harmed, in particular native-born workers with low levels of education.  The evidence shows that in the long run, immigrants do not reduce native employment rates. But some evidence suggests that in the short run, immigration may slightly reduce native employment, because the economy takes time to adjust to new immigration.”

Government policy may have more impact on American jobs than unauthorized workers: “Congress has set a yearly limit on the number of new permanent and temporary immigrants who may enter the country legally in order to work, and these limits do not fluctuate based on the state of the labor market. For example, in 2010, the unemployment rate in construction was over 20 percent, but the Department of Labor nevertheless certified thousands of temporary foreign worker visas for the construction industry.”

There is little evidence that immigrant labor depresses the wages of U.S. workers, but new immigrants do put  pressure on earlier immigrants.  The bigger problems are programs like the Guest Worker which tie an immigrant employee to one employer, with limited rights and no bargaining power.  If treated badly, their only recourse is to leave the country, probably in debt from the costs of getting here.  “Prevailing wage” rules allow those employers to pay less than the market rate, and that does depress wages.

Unauthorized workers who complain about conditions or pay face threats of arrest and deportation, and so it is greedy employers who force wages downward, and not the immigrant workers.  And according to the Social Security Administration, three-quarters of those unauthorized immigrant workers are on formal payrolls, using someone else’s (or a made-up) Social Security number – with FICA and Medicare taxes to the tune of $7 – 13 billion a year withheld that they will never collect on.

Similarly, income taxes withheld from paychecks are often never claimed for fear of deportation if they file.  CAP estimates that unauthorized immigrants contribute about $7 billion in sales and excise taxes annually, plus $3.6 billion in property taxes and over $1 billion in personal income taxes.  Legal status would raise that another $2.2 billion.

Mass deportations, on the other hand, would cost the federal government billions of dollars, over $10,000 per person, and states with large unauthorized immigrant populations would take a significant hit to their economies, $103 billion in California, $60 billion in Texas, $40 billion in New York, and $26 billion in New Jersey.

The bottom line, as conservative John Daniel Davidson wrote in the March 14, 2019 issue of The Federalist, is that  “…low-skilled workers are coming to America in large numbers because American employers want to hire them.  (Emphasis in the original.)

“That was true in the 19thcentury, when large numbers of Chinese immigrants were employed as railroad laborers, and it’s true today, as even larger numbers of illegal immigrants from Mexico and Central America find employment in farming, construction, and manufacturing.  In other words, market forces are at play. U.S. employers have a demand for cheap labor and plenty of foreign-born laborers are willing to meet it.”

(Part 3 will examine the roots of the present migrations, especially from Central America and Mexico.  Part 4 will consider the ”War on Drugs” and the role of immigrants.)

About Albert Vetere Lannon 107 Articles
Albert grew up in the slums of New York, and moved to San Francisco when he was 21. He became a union official and labor educator after obtaining his high school GED in 1989 and earning three degrees at San Francisco State University – BA, Labor Studies; BA, Interdisciplinary Creative Arts; MA, History. He has published two books of history, Second String Red, a scholarly biography of my communist father (Lexington, 1999), and Fight or Be Slaves, a history of the Oakland-East Bay labor movement (University Press of America, 2000). Albert has published stories, poetry, essays and reviews in a variety of “little” magazines over the years. Albert retired to Tucson in 2001. He has won awards from the Arizona State Poetry Society and Society of Southwestern Authors.