Immigration, Jobs, and the American Economy, Re-visited

Although the contentious last steps toward passage of President Obama’s health care reform package dominated last week’s headlines, it was not the only important debate taking place. On Sunday, March 21st, thousands of protesters attended an immigration reform rally in Washington, D.C., calling on legislators to overhaul the nation’s immigration system. The rally came days after President Obama publicly pledged to support the Bipartisan Immigration Reform Framework, advanced by Senators Chuck Schumer (D-NY) and Lindsey Graham (R-SC). The framework consists of four main proposals: biometric Social Security cards, to eliminate document fraud by illegal immigrants; strengthened border enforcement; a temporary work program; and a legalization path for those undocumented workers already in the United States.

These proposals will no doubt rekindle a long-running debate over the proper role of immigrants in American society. President Bush’s push for reform was sidelined by conservative opposition to the idea of “amnesty”: giving those undocumented immigrants who currently live and work inside the United States a legal path towards permanent residency. President Obama will no doubt face similar questions about the extent to which his reform package will address long-standing flaws in the immigrant process. Essential to understanding the importance of immigration reform is the impact immigration—legal and illegal—has on the U.S. economy. Both sides of the debate arm themselves with statistics to influence the debate. When President Bush announced his reform package, The Century Foundation analyzed the current research in a report, “Immigration, Jobs, and the American Economy.” To better understand what has changed in the past four years, we again look at the research.

Do Immigrants Reduce the Wages of U.S. Citizens?

Our 2004 research supported the argument that immigration reduces wages by about 2.4 percent for native workers with the least amount of education, while having an insignificant effect on the rest of the workforce. In a December 2008 study for University College, London, Brian Duncan and Stephen Trejo also concluded that the entry of immigrants continues to have only “very modest effects” for unskilled native workers. Heidi Shierholz of the Economic Policy Institute similarly found that immigration caused a decline in wages of 0.2 percent for native workers with less than a high school education. Additionally, it is not clear that curtailing immigration would completely erase this wage decline. Linda Levine, a Congressional Research Service specialist in Labor Economics, concluded in a 2009 report that other factors, such as the pace of technological change, might have more of an impact on low-skilled native workers. Recent estimates based on 1990–2006 data suggest that immigration has pushed down the wages of natives by less than 1 percent in the short run, while native wages have risen slightly in the long run. Further research by Pia Orrenius and Michael Nicholson, in a 2009 article for the Journal of Business Strategies, found that the negative wage impact flattens over time: “Recent estimates . . . suggest that immigration has pushed down the wages of natives by less than 1 percent in the short run, while native wages have risen slightly in the long run.”

Do Immigrants Cost the Government More Than They Contribute in Taxes?

We stated that immigrants posed more of a fiscal burden to local and state governments: overall they contributed more in tax revenue (federal, state, and local) than they consumed in government services. This was particularly true for their payments into the Social Security and Medicare programs, as immigrants take the place of an aging American workforce. Current studies continue to find that the belief that immigrants represent a net fiscal loss is untrue. The impact on local and state governments was more pronounced. A 2007 Congressional Budget Office report backed-up these claims, stating that tax revenue at the state and local level could not entirely offset the expenditures on social services. The CBO, however, said that this impact was modest in scope. A case study by the Urban Institute looking at Arkansas in the same year found that the financial contributions of immigrants actually resulted in a net surplus of $19 million, or about $158 per immigrant. Research also makes clear that curtailing immigration would have a negative effect on the nation’s economic base, reducing the income flows and economic activity upon which local, state, and federal tax revenue is based. In 2009, the Immigration Policy Center looked at the economic impact of immigrants in the state of Ohio, and found that removing all unauthorized immigrants would cost the state around $4 billion in total expenditures and $1.8 billion in economic output. Perhaps most interestingly, studies suggest that the second generation of immigrations will fill the hole created by the first generation’s use of government services.

How Much Do Immigrants Contribute to the Overall Economy?

Our previous survey of the research found that immigrants had a net positive effect on the overall economy, based on a variety of factors. They take jobs in regions where the labor supply is scarce, they take work that native workers refuse, and their rate of entry into the labor market makes up for an aging population. Current studies continue to add credence to salutary effects of immigration. Gordon Hanson, a professor at the  University of California, San Diego, wrote in a 2007 Council on Foreign Relations report, “The Economic Logic of Illegal Immigration,” that immigration allows for U.S. economic resources to be used more efficiently. Further research shows that immigration provides gains in innovation, competitiveness, and variety of available goods and services. This conclusion is echoed in Giovanni Peri’s working paper for the National Bureau of Economic Research, “The Effect of Immigration on Productivity: Evidence from U.S. States.” He found that native workers largely were not “crowded-out” by immigrants; rather, immigrants promoted efficiency in use of skills and resources. He concluded that every 1 percent increase in immigrants employed corresponded to a 0.5 percent increase in per capita worker income.  Indeed, if President Obama and this Congress are able to push through a reform package along the lines outlined by the Bipartisan Immigration Reform Framework, it would have a substantial impact on the health of the American economy. A joint report released by the Center for American Progress and the Immigration Policy Center found that a reform regime embracing legalization would “grow the economy by $1.5 trillion over 10 years.” 

Comments

[Mark]

There is one real solution to having sensible and just immigration reform. BOYCOTT. Everyone man, woman, child and their documented family members need to have a MASS BOYCOTT. Stay home from work, school, and everything else that they contribute to in society. Do this for a week and see how fast congress acts on immigration reform. Think the economy is bad now, think again. BOYCOTT BOYCOTT BOYCOTT FOR IMMIGRATION REFORM. PASS THE MESSAGE ALONG!!!

[Norski]

This article is too myopic in its view. It co-mingles Illegal Immigration and Legal Immigration and treats them the same. And it misses the real question regarding economic expansion and immigration. Why is economic growth in the USA that takes us past full employment and into the realm of new immigration more advantageous that it is to let that economic expansion take place where the people who would do those jobs currently live?

Why is co-mingling Legal and Illegal Immigration a problem? The entry of Legal Immigrants into the USA is controlled so that those admitted have the least possible effect on unemployment. This has a far different impact on the economy than that of Illegal Immigrants, who by a wide margin fall into one specific segment of the economy, the unskilled labor job market. Furthermore, Illegal Immigrants only make up 20% of the USA total immigrant population per a recent Pew Center estimates. So any statistical effect this group has is washed out by the 80% of Immigrants who came here legally. As a result, all the studies cited above that look at the effects of immigration as a whole say nothing about the impact of illegal immigration. To claim otherwise is statistical misrepresentation.

Why is no one looking at immigration in the context of placing future economic expansion where people live once we reach full employment, rather than forcing millions of people to relocate just to satisfy an outmoded belief that only economic expansion in the USA is good and all economic expansion elsewhere in the world is bad? People forget that economies cooperate. It is Business that competes. Are we competing against the Japanese economy? No! You cannot trade with another country unless that country has something to trade. Our companies compete against Japanese companies. Do you buy a Toyota or a Ford because one is better than the other for what you want? Or do you buy the Ford because it is made by an American company and skip the Toyota? Most people do not realize that both cars are manufactured in the U.S. employing American Workers. Yet both companies compete.

So here is where the huge misconception lies. That all economic development in the USA is good for the USA and all economic development elsewhere is bad for the USA. But in fact, in the past, when the USA had more jobs than there were workers, excess jobs were exported to other countries. A few decades ago that resulted in the economic development of Korea, Taiwan, and the other economic powers of the Pacific called the Four Tigers. Anyone remember the Marshall Plan? Did either destroy the US Economy? No! Today those who want to exploit poorer countries to import cheap labor into the USA use outsourcing as the universal boogeyman. But in fact, outsourcing at full employment is not outsourcing at all but rather is foreign expansion that is no threat to the US worker. After all, who can complain about a company expanding its workforce in another country when everyone is working here in the USA?

Let’s look at Mexico as an example of what could have been had Illegal Immigrants never entered the USA and we had reached full employment. Per the Pew Hispanic Center six million Mexicans have illegally immigrated to the USA, over three million of which are working. Per the CIA World Fact Book the 2006 GDP (Gross Domestic Product) of Mexico was $741.5 billion and the Labor Force numbered 38 million. That means that the average GDP per working person was $19,513. If the USA had exported three million jobs to Mexico and paid the average GDP rate (a mere $9.38/hr.) and the six million illegal immigrants would have stayed home, we would have pumped $59 billion in wages into the Mexican economy. In the USA economy approximately 57% of our GDP is made up of wages. Wages generate business, which in turn generates more wages, which in turn generate more business. Assuming this same job multiplier for Mexico means an additional $59 billion in wages added to the Mexican economy that would increase the GDP of Mexico by more that $103 billion or 14%. And the GDP of the USA would increase by as much a $5 billion with repatriated profits.

This is a win-win situation. So why is this not a topic of discussion? Why is it that both Legal and Illegal Immigration are never looked at in the context of what both cost the Immigrant’s home countries in lost economic and development opportunities? Is it that greedy people want a continued source of cheap labor and like true misers they what to keep economic development in their own backyard while denying it to other countries? This is a recipe for keeping the lesser developed counties of the world in perpetual servitude, rather than a fulfillment of the American Dream.

[McMorty]

Of the four main proposals, I believe that most citizens would agree with the first two: "Biometric Social Security cards, to eliminate document fraud by illegal immigrants; strengthened border enforcement" The other two should be dropped from the bill and addressed in seperate legislation.
I personally have no problem with "a temporary work program" provided that US citizens are given a chance at the job before it is filled, that a US citizen may also be allowed to displace the temporary worker, and finally the job be truely temporary so that the worker can stay no longer than 24 months without returning to their home country for a period no shorter than 6 months.
Finally if the first two were implimented correctly, there would then be no need for the highly contentious fourth misguided proposal in the legislation, as anyone already here would need to return to their home country within two years. The US does not need to bear the burden of millions of non citizens and their families regardless of the cost.

[Brittanicus]

Jobless American workers cannot understand the well-documented promotion of many groups assisting illegal aliens push for AMNESTY. Millions of American people have been forced into food banks, trying to save their homes or their only means of transportation from harassing creditors. Then there are all these organizations who should be fighting for its own countryman's hiring, instead of keeping the borders unsecured. The ACLU ( Leon Levy Foundation, the Open Society Institute, Peter B. Lewis and John Sperling had stepped up with pledges totaling $23 million spread over the next three years.) These name's link to the ACLU works daily to support immigration, especially of the illegal alien variety. The US Chamber of Commerce,corporate consortium organizations and even the quasi-government agency called The Council of Foreign Relations want the free flowing cheap labor?

The 100.000 pro-amnesty protest last Sunday and in the last two months special interest groups have been conspiring in Public Relations build-up throughout this nation; backed by tens of millions of dollars. This money from George Soros (Socialist-Marxist Billionaire), Carnegie Foundation, Ford Foundation and the giant Service Employers International Unions. In 2001, David Gelbaum hedge fund manager and investor gave the Sierra Club a $101.5 million donation; although Carl Pope head of the Club, who said it didn't affect their agenda, Gelbaum admitted: "I did tell Carl Pope in 1994 or 1995 that if they ever came out anti-immigration, they would never get a dollar from me..." I guess this is why the Sierra Club is completely silent to the mounds of trash stretching for miles, where illegal aliens break into our nation? Just goes to show the huge amounts of money laundered into the push for AMNESTY and dollars for politicians campaign contributions, that the average American cannot even comprehend.

This mix is in collusion with La Raza (The Race) that is said to have a silent agenda of overrunning the Southwest, with prominently Spanish speaking people. LA RAZA, gets its donations from THE FORTUNE 500 companies, U.S. CHAMBER of COMMERCE (an obvious front for corporate interests) LA RAZA also gets donations from WELLS FARGO and BANK of AMERICA and the GOVERNMENT OF MEXICO (we are Mexico’s welfare benefits system) These groups have major money influences in the corridors of power, whereas the general public who want a permanent E-Verify has been ushered to the back. Only these entities, including politicians who see immigration as a wonderful virtue as promoters of greed, gain and profit. Under the push for a Comprehensive Immigration Reform or more honestly assessed as Amnesty, Homeland Security Napolitano has cut the budgets of the fence building (not that it was the two-layer barrier in the first place) or overall positive enforcement.

Whereas, in the President Bush years this administration did not release illegal workers once caught, releasing significant numbers back in the workforce. All this lax enforcement seems to rising to a imminent crescendo of the possible Sen. Lindsey Graham, Sen. Chuck Schumer and Sen. John McCain apparent Amnesty resurrection? In any new reform Graham-Schumer want to substitute the E-Verify program, already grown in national business awareness for the National biometric ID card. E-Verify is a perfectly stabilized computer application, that is working in removing-some but not all illegal labor, which is gaining strength as it is modified.
Currently 8 million illegal immigrant are employed, as approximated as being in the workplace. While 14.7 million citizens and legal residents remain unemployed Investigating the truth about the population explosion of illegal immigrants and families in the US, has been carefully manipulated in government reports. But12 million illegal foreigners doesn't agree with the US Border Patrol in Tuscon.

We have politicians that have intervened in making E-Verify permanently such as Harry Reid and majority Speaker Nancy Pelosi who are unlikely to be reelected. ONE THINGS FOR SURE, ANY KIND OF AMNESTY WILL BE DIFFICULT TO PASS IN THIS ECONOMIC ENVIRONMENT, EVEN AS THE UNEMPLOYMENT RATE STILL RISES? THE PROTECTION OF EVERY US WORKERS JOB SHOULD BE FIRST ON ANY AGENDA, INCLUDING A HIGH LEVER OF NATIONAL SECURITY.

This week the strong ongoing evidence that the border states are in constant danger, when a Arizona Rancher was shot dead on his property near the Southwest border. Rob Krentz with his dog had been shot and killed and was found by an Arizona Public Safety helicopter. Authorities say they found footprints near Krentz's vehicle and followed them to the U.S./Mexican border. .Phil Krentz said that the last time he spoke to Rob, he was responding to an injured illegal alien. The border region is becoming a battleground and it's high time the Homeland Security Chief Napolitano issued orders for the NATIONAL GUARD, fully armed to keep US civilians safe from incursions of drug smugglers, illegal alien criminals and even terrorists. The US border Patrol, and scattered law enforcement is no longer enough to fight this spreading blood bath. Demand this today from our government lawmakers at 202-224-3121. Find out more on all illegal immigration outrages at www.numbersusa.com and www.judicialwatch.org.

For Immediate release: March 30, 2010. WHY SHOULD STATES PAY FOR FEDERAL IMMIGRATION-- INCOMPETENCY?
U.S. District in Denver heard arguments from a federal government attorney today, who asked the court to throw out a State of Colorado lawsuit against the federal government. The State of Colorado is suing the federal government for not meeting its constitution obligation to protect states from the illegal alien invasion.The lawsuit was approved by Colorado voters who passed Referendum K last November. Referendum K gave the state permission to sue the federal government to enforce immigration law.

[magyart]

I support immigration. Almost 1.5 million immigrants chose the legal pathway for citizenship. I have no doubt they contribute to our society.

However, illegal immigration degrades society.

[Norski]

Are Illegal Immigrants really a net gain for Social Security contributions? Every analysis to date tries to answer this question by only looking at half the equation. By what would happen if they were no longer contributing. But there is another side to the equation that never gets addressed. Since Illegal Immigrants replace American Workers and those same workers wind up on unemployment, what happens then?

In fact, Illegal Immigrants actually hurt our Social Security and Tax funds. If they were not doing the jobs they are working, American Citizens would be. The Pew Center proved that with a pair of studies done by J.S. Passel. And we continue to prove it today. The latest U.S. Bureau of Labor Statistics unemployment reports say most of our 22 million unemployed Americans are looking for work in the same areas where the 7.5 million employed Illegal Immigrants now work.

So without Illegal Immigration there would be NO net change in Social Security collections and NO net change in employment based tax payments. After all, the Illegal Immigrants did not bring the jobs with them. And they do not take the jobs with them when they are deported.

But with Illegal Immigration, Citizens who would be contributing to Social Security and taxation are instead contributing NOTHING while unemployed. Yet they will be collecting Social Security in the future and currently collect over $100 billion in unemployment and welfare annually. And even most of the studies cited above showed a drop in average wages, which in turn reduces Social Security contributions overall.

What Illegal Immigrants contribute to Social Security and taxation means nothing as long as we have millions more unemployed Americans than we have working Illegal Immigrants. And what they contribute to other taxes pales in comparison to the $100 billion cost in welfare and unemployment paid to those put out of work thanks to illegal immigration. One recent study placed the overall contribution of Illegal Immigrants to Social Security and Taxation at a mere $9 billion annually.

Rather than helping our Tax and Social Security Funds, the ripple effect of Illegal Immigration on unemployment and government services outstrips what Illegal Immigrants contribute by more than ten to one. We fool ourselves into complacency about the ripple effect of the cost of Illegal Immigration at our own peril. And looking at only half the equation is just whistling as we pass the financial graveyard.

[Mark]

Do the MATH. There are an estimated 12 million undocumented immigrants, now add another 12 million documented family members. They are have to survive some how here. If they spent the minimum of $9,000 on food, clothing, medication, movies, car insurance, supplies for home etc and even health care that number is very small. Now lets say a family of 4 spends $9,000. That $9,000x 24 million people what do you get? You get a minimum $216,000,000,000. Do any of us believe they only spend $9,000 annually to live? The economy is bad, try deporting 12 million people with 12 million documented family members.

[Juliee]

I agree with the BOYCOTT idea. Stop buying from businesses that hire illegal workers.

Report the business to both ICE and The IRS using this website.

www.wehirealiens.com

[Immigrant kid]

It fits our needs perfectly the advantage of immigration reform on the country: Greater supply of unskilled workers, a younger workforce, and skilled workers in needed sectors. But there is also a disadvantage of immigration reform like Greater poverty, more educational cost, lower unskilled wage levels, and increased danger of terrorism. Thanks to the post!