The Truth About Immigration: Economics
Originally published in 2018, this first article in a five-part series remains relevant and includes updated sources and data
Armchair experts espouse a lot of misinformed rhetoric regarding migrants based on the divisive language used by former and current president-elect Donald Trump. I’m here to clear the air with facts that some of them may not like.
In this day and age, everyone seems to be an “expert” on immigration. Well, they like to act like experts anyway. But it looks like all they do is spread nonsensical hyperbole that they deem 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 regarding immigration and the reams of misinformation on the topic.
Lucky for us, there are truckloads of information from bipartisan studies conducted by many institutes and think tanks. Immigration is an issue that finds an overwhelming consensus because it has historically positive economic impacts. Immigration is needed to prevent looming economic stagnation while continuing to boost the United States Gross Domestic Product (GDP) and maintain 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, is 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 Trump 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 in white supremacy. Some folks argue that this language isn’t 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 but also break 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.
“Some of the projected budgetary effects of the immigration surge stem from broader changes in the economy that the surge is expected to bring about. In CBO’s projections, the surge boosts total nominal gross domestic product (GDP) by $1.3 trillion (or 3.2 percent) in 2034 and by $8.9 trillion over the 2024–2034 period. The surge increases the total amount of wages paid each year by a percentage that grows steadily over that period and reaches about 3 percent in 2034. Those additional wages are a major contributor to the boost in revenues because they are subject to both payroll and income taxes. In addition, two main factors resulting from the surge—faster growth of the labor force and greater demand for residential investment—boost the rate of return on capital and put upward pressure on interest rates. The increases in interest rates are a major contributor to the boost in federal spending.”
Labor Force Impacts
Another misnomer about immigrants comes in the form of negatively impacting wages, wage growth, and eliminating opportunities for U.S.-born citizens. Again, this is another tall tale that has circulated in many industries, particularly among tradesmen 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 do — old tropes with no basis in reality.
In truth, unauthorized immigrants are largely over-represented 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 U.S.-born workers and immigrants have different skill sets and tend to work in different jobs and industries, even when they have similar educational backgrounds.
Immigrants tend to round out the skill sets of American workers, thus enhancing their productivity.
The impact of immigration on the wages of U.S.-born individuals is small but positive over the long run. Economists estimate that from 1994 to 2007, immigration alone increased the average wages of U.S.-born citizens by 0.4 percent or $3.68 per week. Immigrants also consume goods and services, creating jobs for U.S.-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.
“Immigrants of all skill levels are vital to our economy and country. From agriculture to tech, the United States relies on immigrants to ease the labor shortage, foster innovation, and start businesses that create jobs for all Americans. Our latest data shows how immigrants have become an integral part of the U.S. economy and made significant contributions.”
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 people.
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 U.S.-born citizens. 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 U.S.-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 U.S.-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 U.S.-born households.
It’s also worth mentioning that Fewer than 1 in 5 immigrants live in poverty.
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 U.S.-born heads of household.
Home-ownership rates are comparable between U.S.-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 U.S.-born citizens.
From 1994 to 2015, immigrant homeownership rose 2.3 percentage points while U.S.-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 labor market growth. From 2020 to 2030, 7 million U.S.-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 the 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.
UPDATE: The Importance of Immigrant Labor to the US Economy — Center for Migration Studies, September 2024
“According to the American Community Survey (ACS), immigrants paid $382.9 billion in federal taxes and $196.3 billion in state and local taxes in 2022. Undocumented immigrants, using Individual Tax Identification Numbers (ITIN) numbers, paid $59.4 billion in federal and $13.6 billion in state and local taxes in 2022. Undocumented immigrants also paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance in 2022, programs for which they are ineligible.”
Sources
Brookings Institute: A dozen facts about immigration
Center for American Progress: The Facts on Immigration Today
Pew Research: Immigrants in America: Key Charts and Facts
Just Facts: Be Informed: Immigration
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You know you're right as far as the data goes, brother. Your work is important and needed. Thank you for sharing this article again!
However, they don't care about what immigrants bring to the community ... they showed over and over again that either they (white supremacists) don't want immigrants at all or they (rich white supremacists) only want immigrants that will make them and only them money.
If we were to do things for the greater good, we wouldn't be where we are today nationally and internationally :-/.