Why Does Immigration Matter to the U.S. Economy?

Why Does Immigration Matter to the U.S. Economy?

Does immigration help or hurt the economy of the United States? We should address this vital policy question in our current political climate. Immigration issues appear to be taking over the U.S. news cycle as of late. Asylum seekers waiting at crowded U.S. detention centers along with President Trump’s family separation policy remain hotly debated topics. Indeed, many political scientists agree that immigration topics will play a large part in the 2020 election cycle. When we sift through some of the more politically motivated rhetoric, it is easier to look at actual data surrounding immigration. Some economists make a strong case that immigration benefits the U.S. economy more than it hurts the economy after analyzing the data. 

Immigrants Add More Tax Revenue Than the Amount of Government Benefits They Use

In a recent speech, President Trump stated that undocumented immigration “hurts American workers, burdens American taxpayers, and undermines public safety.” He went on to say that it “places enormous strains on local schools, hospitals, and communities in general.” Are President Trump’s statements true? Many economists would say they are not. 

First, immigrants contribute more money in tax revenue than they take from federal and local governments. Immigrants provide a net gain for the U.S. economy. The National Academies of Sciences, Engineering, and Medicine found that second-generation immigrants contribute more to the tax system than all other native-born Americans. Individually, second-generation immigrants add around $1,700 per person per year. Native-born Americans contributed less on average, approximately $1,300 per year. 

Do Unauthorized Immigrants Drain Public Resources?

It is difficult to say with certainty whether unauthorized immigrants offer a net gain for the U.S. economy or a net drain because these immigrants are undocumented. Undocumented immigrants typically do not qualify for any public welfare benefits and they generally are younger. These factors indicate that they likely do not drain public coffers more than typical Americans. 

Additionally, undocumented immigrants work significantly more than U.S. born residents. Only half of U.S. born citizens who do not have a high school diploma work. On the contrary, 70% of undocumented immigrants with no high school diploma work. Typically, the more people work, the more tax revenue increases. The Institute on Taxation & Economic Policy reports that undocumented immigrants contribute an estimated $11.6 billion a year in taxes. 

Finally, many undocumented immigrants receive no public assistance. Federal law requires that only immigrants who have been lawful permanent residents for at least five years may receive public benefits. Many of the 9 million immigrants who fit that category do not qualify for welfare because their income levels are too high.

Undocumented immigrants do make use of the public school system for their children. However, from an economic standpoint, those children will likely get better-paying jobs and pay higher taxes as adults. As mentioned above, second-generation immigrants pay more in yearly tax revenue than native-born Americans. School children whose parents are first-generation immigrants will generate a significant amount of tax revenue as adults.

A Massive Deportation Would Hurt the U.S. Economy

President Trump is cracking down on undocumented immigration. Could deporting undocumented immigrants hurt the U.S. economy? Many economists argue that the removal of as many as 8 million undocumented workers in the U.S. will hurt the economy. Ryan Edwards and Francesc Ortega of Queens College CUNY report than undocumented workers contribute around 3% of gross domestic products within the private sector. This amount equates to approximately 4 trillion dollars over the course of a decade.

Some states will face a more significant negative impact if the executive branch enforces deportation. California would likely suffer a drop of 4% in its private-sector output. This percentage equates to an 83 billion dollar loss. The states of Texas and New York would likely witness 51 billion dollars and $33 billion declines in output, respectively, over the next decade.

The above estimates assume that upon the deportation of a significant number of workers, their jobs will remain unfilled. Some native-born Americans and some documented immigrants might fill these vacant positions. With current population numbers, it is difficult to imagine that they would all remain filled, though.

The American Action Forum estimated that American’s Gross Domestic Product (GDP) could suffer a 1.6 trillion dollar loss resulting from mass deportation. In addition to the cost of lost revenue, the actual cost of physical removal could be astounding. Taxpayers would foot the bill for hiring thousands of necessary new immigrant agents to enforce the mass deportation. We would also need to pay to feed and house the millions of undocumented workers until transportation could be secured. The actual cost of transporting 8 million-plus people back to their countries of origin would be quite significant. It could cost as much as $400 billion in new federal level spending to cover massive deportation.

Allowing Undocumented Immigrants to Enjoy Legal Status Would Benefit the Economy

In their National Bureau of Economic Research Report, the Queens College economists mentioned above found economic benefits for legalizing immigrants. Studies have shown that immigrants who move from undocumented to a documented status are noticeably more productive in their work habits. If they became citizens, the unauthorized immigrant population’s economic contributions would increase by about 20%. In turn, the private-sector GDP in the U.S. would increase by 3.6%

The topic of immigration is at the forefront of our national discussions at the moment. Many immigrants are experiencing feelings of anxiety or stress as a result of some of the anti-immigration rhetoric. If you are an immigrant and you are concerned about what you see in the news, we are here to help. You might be seeking an immigrant visa, or have questions about your status as an immigrant. Whatever your situation, the experienced Miami, Florida immigration attorneys at Canero Immigration Law Firm can help. Contact us to set up a consultation today.

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