The Truth About Immigration: Economics

Photo by Pascual De Ruvo (Public Domain)

In this day and age, everyone seems to be an “expert” on immigration. Well, they like to act like experts anyway. But it seems like all they do is spread nonsensical hyperbole that they themselves deem to be factual. They do this without ever even looking anything up because it feeds their conscious (and sometimes unconscious) bias towards any non-white folks.

It’s the same logic and thinking that goes into nearly every conversation about police brutality disproportionately affecting people of color. Most of the responses to the actual statistics come from a place of black-on-black crime in an attempt to deflect from the facts. The same type of fallacious logic is used in regards to immigration and the reams of misinformation on the topic.

Lucky for us, there are truckloads of information in the way of bipartisan studies conducted by many institutes and think-tanks. It’s an issue that finds an overwhelming consensus because of the historically positive economic impacts of immigration. In fact, immigration is needed to prevent looming economic stagnation while continuing to boost the Gross Domestic Product (GDP) of the United States and maintaining much-needed tax revenue.

Immigrants Increase GDP

One of the major talking points of the far right, which includes Donald Trump and the majority of the Republican Party, are the negative economic impacts of migrants coming to the United States. Nothing could be further from the truth here. There is no negative impact of immigration worthy of discussion.

Despite the positive impacts of immigrants on the United States’ economy and society, the tenor of the new administration threatens to move the United States to a more restrictionist policy environment. It’s all part of an anti-immigrant rhetoric that has its roots white supremacy. Some folks argue that this language isn’’ racist. But a quick look through history dictates otherwise.

The truth is that increased immigration enforcement —as well as potential restrictions on legal immigration and refugee resettlement— will impose fiscal costs on taxpayers and threaten immigrants, their families, and their communities across the country.

Stepping up detentions and deportations will not only cost taxpayers billions of dollars, while also breaking apart families and place vulnerable individuals —such as survivors of domestic violence and sexual assault in the United States, as well as women and children fleeing violence in their homelands— in peril.

There is broad agreement among researchers and analysts that immigration raises total economic output. By increasing the number of workers in the labor force, immigrants enhance the productive capacity of the U.S. economy.

Estimates suggest that the total annual contribution of foreign-born workers is roughly $2 trillion, or about 10 percent of annual GDP and the contribution of unauthorized immigrants is estimated to be about 2.6 percent of GDP.

Additionally, providing documented status to many current unauthorized immigrants (which should increase their productivity by allowing better job matching) and allowing more immigration would increase annual GDP growth by 0.33 percentage points over the next decade. Removing all current unauthorized immigrants would lower annual GDP growth by 0.27 percentage points during that same period.

Labor Force Impacts

Another misnomer about immigrants comes in the form of negatively impacting wages, wage growth, and eliminating opportunities for American-born citizens. Again, this is another tall tale that has circulated in many industries, particularly among tradesman, for decades. It’s a falsification that also has its roots in white supremacy just as much as referring to all Hispanics and Latinos as Mexicans does. An old trope with no basis in reality.

In truth, unauthorized immigrants are largely overrepresented in the labor force relative to the size of the overall population. In 2015, 7 million unauthorized immigrants worked in the United States. They represented 4.9 percent of the U.S. labor force, although they comprised only 3.5 percent of the U.S. population.

It’s also worth noting that immigrants complement, rather than compete with, U.S.-born American workers—even lesser-skilled workers, according to extensive research. Researchers find that American born workers and immigrants have different skill sets and tend to work in different jobs and industries, even when they have similar educational backgrounds.

In fact, immigrants tend to complement the skill sets of American workers, thus enhancing their productivity.

The impact of immigration on the wages of American-born individuals is small but positive over the long run. Economists estimate that from 1994 to 2007, immigration alone increased average wages of American born individuals 0.4 percent, or $3.68 per week. Immigrants also consume goods and services, creating jobs for American born workers and other immigrants alike. These results are consistent with those of other studies by economists.

Immigration appears to have a minimal impact on average African American wages and employment as well. The work of scholars suggests that immigration had little effect on the wages and employment of African American men between 1960 and 2010, regardless of their level of education.

Economic Sustainability

The United States is positively affected in a variety of different ways by the arrival of immigrants. Workers with more education and higher salaries tend to pay more taxes relative to their use of government programs, and that is reflected in the more-positive fiscal impacts of high-skilled individuals.

Across educational categories, the immigrant population is estimated to have a slightly more-positive fiscal impact in nearly every category.

Expenditures on cash welfare assistance, Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), Medicaid, Medicare, and Social Security are all lower for immigrants than for American born individuals. When restricting the comparison to age —and income-eligible individuals— there is no noticeable change.

Working-class, immigrant-headed households with incomes less than 200 percent of the federal poverty line rely less on public benefits and social services than comparable American born households.

In 2015, working-class, immigrant-headed households with children received 9.3% of their overall income from public programs such as the SNAP and Social Security compared to American born-headed households, which received 15% of their income from such programs. Research consistently shows that working-class immigrants use social programs such as Medicaid and Supplemental Security Income at lower rates than American born households.

It’s also worth mentioning that fewer than one in five immigrants lives in poverty.

In fact, more than half of the immigrant population are homeowners. In 2015, 50.7 percent of immigrant heads of household owned their own homes, compared with 65.2 percent of American born heads of household.

Home-ownership rates are comparable between American-born and naturalized immigrants, 64.6 percent of whom owned their own homes in 2015. Immigrants are also becoming homeowners at a faster rate than the American born population.

From 1994 to 2015, immigrant home-ownership rose 2.3 percentage points while American born home-ownership remained flat. Jacob Vigdor of the University of Washington estimates that immigrants contribute $3.7 trillion to housing markets nationwide.

Over the next 20 years, immigrants will be crucial to filling the job openings left open by Baby Boomers while simultaneously promoting the growth of the labor market. From 2020 to 2030, 7 million American born individuals are expected to leave the labor force. 2 million immigrants and 6.9 million children of immigrants are projected to join the labor force during the same period.

Looking further, from 2015 to 2065, immigrants and their descendants are expected to account for 88 percent of U.S. population growth. As such, immigrants and their children will be critical both in replacing retiring workers —preventing labor market contraction— and also in meeting the demands of the future economy.

When looking at all these statistics, it would behoove Americans to be more welcoming of migrants entering the United States. This post is the result of researching many studies from many different sources that indicate incoming market contraction, as well as a sizeable drop in GDP if we were to continue on the isolationist path of the current administration.

Sources