Among the least well understood impacts of immigration are its impacts on economics, taxes, and jobs of native-born Americans. This is a complex subject and details will vary from location to location. It is certainly complicated by the current economic conditions in the US and around the globe. The causes of the current economic conditions are also complex but often linked to the risky investment policies of banks and Wall Street, as well as, a real estate market that was unsustainable and suffered from the issuance of loans that were certain to fail.
The over all impact of immigration policy options was evaluated by the Immigration Policy Center using historical data. They concluded that enforcement only policies have been counter productive having a negative impact on wages and that a comprehensive policy would “raise the wage floor for the entire US economy – to the benefit of both immigrant and native-born workers.”
The Policy Center used a computable general equilibrium model to arrive at their estimate of the economic ramifications of three scenarios.
Scenario 1 is comprehensive immigration reform. This scenario is estimated to result in an increase in GDP of at least 0.84 percent. This is equivalent to 1.5 trillion dollars over ten years. Additionally wages are increased for native-born and recently legalized immigrants.
Scenario 2 is the temporary worker program. This scenario is estimated to result in an increase in GDP of at least 0.44 percent. This is equivalent to 794 billion dollars over ten years. Additionally wages decline for native born and recently legalized immigrants.
Scenario 3 is mass deportation. This scenario is estimated to result in a decrease in GDP of 1.46 percent. This is equivalent to 2.6 trillion dollars over ten years. Additionally wages would increase for less-skilled native-born workers and decrease for higher-skilled native-born workers. Additionally a wide spread decrease in jobs would result.
Analysis by the New Policy Institute shows that high levels of immigration have not had an adverse effect on wages of native-born workers. On the contrary, long term effects have been to raise wages in part because of increased capital expenditures made to take advantage of the labor pool. While the average wages have increased due to immigration, there are exceptions where low income wages have decreased in locations with the presence of large numbers of immigrants. This later concern has been shown to be reversed if immigration reform was to be implemented. This would allow immigrants to move from high immigrant locations. It would also lessen the practice of some employers to pay less than the minimum wage and to withhold earned wages. This alter practice is illegal, is not limited to immigrant workers (60 to 70 percent of low wage earners in the US have been either not paid or under paid), and not only hurts the directly effected worker, but reduces money being spent in the local economy and the subsequent loss of sales tax which many communities depend on.
Immigrants are 30 percent more likely to start new businesses than native-born Americans. Many of the very large high tech businesses have been founded by immigrants. Latino owned businesses in Colorado had sales of 5.1 billion dollars in 2002 and employed 34,000 workers. The numbers have only continued to increase.
Immigrants accounted for 11.4 percent of the work force in 2002. If all undocumented immigrants were removed from Colorado the state would lose 8 billion dollars in expenditures and 3.6 billion in economic output according to the Perryman Group.
Analyses show that immigration does not over the long term adversely impact local, state or federal budgets. In locations where there are large numbers of immigrant children there is typically a net financial burden for schools and for medical care. On the federal level there is not a net burden. Immigrants pay federal taxes and have Social Security and Medicare withholdings for which they have largely not receive any benefit. Dynamic models show that over long times there are substantial net gains from the life time earnings of immigrants, many of whom arrive post school age without elderly parents.
It is clear that immigrants have made strong contributions to the economy. Decisions that are made around immigration need to be based on more than philosophical grounds. Like any other issue it is best to have as many facts as possible. Decisions made around immigration not only impact the immigrants and their families, as well as, employers who have depended on immigrants to grow and maintain their businesses. Decisions will have many other consequences, especially as age demographics continue to change leaving more and more need for younger workers.
Economics provide another reason for implementing immigration reform this year.