photo by John Siebert
Is illegal immigration beneficial to the US economy?
While some find that illegal immigration has a negative effect on the US economy, others argue that these undocumented aliens provide a benefit to the American economy. The objective of this essay is to give an overview of the two argumentative sides of the issue. In the first part, arguments for the view that illegal immigrants contribute to the economy will be presented. The second part will portray the other point of view, i.e. immigration hurts the economy.
Pro-immigrationists argue that immigration has an overall positive effect. On average immigrants are found to provide a monetary net benefit as they contributed an estimated $10 billion to the US economy. That is what a study conducted by the National Academy of Sciences found. [1] It incorporated figures of the wages received by immigrants and the goods and services they produce in the course of their work. Others, such as the Economist , even go so far as to say that immigration has proved to be of great benefit in the range of US$10 billion which may not even be enough since the study does not look at the benefits supplied by people of diverse backgrounds and with different skills. [2] Moreover, immigration tends to start businesses and add diversity to the range of products and services, as it tends to introduce new commodities.
In addition, immigrants contribute to the US economy because they, on average, have more children, are over proportional of working age, and the receiving country has not had to pay for their education. Ronald Lee from the University of California at Berkeley found that American citizens make a cumulative profit of US$80,000 from each legal immigrant. [3] Parallel developments are noted by Great Britain 's Home Office. It estimates that foreign-born Britons pay 10 % more in taxes than they receive in financial assistance from the government. [4] Despite the American National Research Council's (NRC) finding that every first-generation immigrant carries a US$3,000 price tag, they also found that a second generation migrant contributes up to US$80,000 to the economy.
Another argument for immigration is that without immigrants daily life in American would come to a halt. The Economist , for example, argues that ordinary Americans are not willing to do the jobs currently done by immigrants [do]. A great number of Mexicans sweeps hotels, collect crops from the fields of American farmers and clean swimming pools. Without immigrant labour “food prices would climb steeply as produce rotted in the fields; hotel rooms would stand uncleaned; swimming pools would become septic tanks; and taxis would disappear from the streets. In short, the country would grind to halt.” [5] And if those immigrants were replaced with highly-paid Americans, the expenditures for housemaids and cleaners would rise. This, in return, will have the effect of lowering purchasing power for households and therefore hurt the US economy. The conclusion is that immigrants do have a positive effect on the economy.
Even if one thinks about trying to stop the incoming flow of immigrants, the powerful forces that are at work will undermine every restrictionesque effort made. Immigration, as pro-immigrations argue, is a part of globalisation and that you can not stop the effects of globalisation, i.e. the free flow of goods, capital, and people. In line with that, the Economist argues, “It is impossible to separate the globalisation of trade and capital from the global movement of people. Borders will leak; companies will want to be able to move staff.” [6] And the market will do its part to add to the pressure “Demand and supply (of immigrant labour) will constantly conspire even the most determined restrictions on immigration.” [7]
In contrast to this position, there is the view that immigration into the US must stop or at least be reduced substantially since it poses a threat to the US economy. This opinion is supported by arguments that immigration in general and illegal immigration in particular costs the average American taxpayer a lot. Immigration increases state expenditures in education, health care, incarceration, national security and other areas, anti-immigrationists point out as to the National Academy of Sciences. The same figures are cited by pro-immigrationists as show above, which have found that every American taxpayer loses between US$166 and US$226 annually because of immigration. Moreover, the US$10 billion contribution of immigrants is outweighed by the fiscal costs, which are $15 to $20 billion a year. [8]
The example par excellence for the negative effect of immigration is the state of California . The annual fiscal cost of three major areas of state expenditures, education, health care and incarceration, amounts to US$1,183 per household headed by a native-born California resident. [9] The cost would be higher “if other cost areas such as special English instruction, school feeding programs, or welfare benefits for American workers displaced by illegal alien workers were added into the equation.” [10] In the following it will be explained how costs add up to that number.
In the area of education, the annual cost for illegal immigrant children and their US-born siblings in California not covered by their families is an estimated US$7.7 billion, the FAIR report “The Costs of Illegal Immigration to Californians” finds. [11] Adding to that, nearly 15 percent of the K-12 public school students in California are children of illegal aliens. In addition, other outlays accrue from Limited English Proficiency (LEP) programs, school-based nutrition programs such as the National School Lunch Program (NSLP) and the School Breakfast Program (SBP) that include impoverished illegal alien students. [12]
In the area of health care, the costs for Californians add up to $1.4 billion a year. That is because of “medical costs that are incurred when an aliens' health is affected while illegally entering the country or from accidents while trying to get to interior locations or when aliens illegally residing in the country turn to emergency medical facilities for their treatment.” [13] Other costs include Medi-Cal well-baby maternity care, delivery expenses, and long-term care. In 1994, for example, California paid for 74,987 deliveries. In the same year the Proposition 187 was passed. That bill banned the use of tax money to provide for non-emergency care to illegal aliens. But then a US District judge overturned the ballot in 1999. California now provides both legal and illegal aliens with Emergency Medicaid, pre-natal care, and nursing home care. That in effect increases medical costs.
In the area of incarceration, California has to pay up to US$1.4 billion for incarcerated illegal aliens that “may have been apprehended entering the country after prior deportation or may have committed serious crimes while residing in California .” [14] The costs thereby incur from investigation, prosecution, translation and interpreter services, judicial management, incarceration and possible parole costs.
Parallel to the increase in state expenditures, anti-immigrationists argue that illegal immigration is also partly responsible for lowering inland revenue as illegal immigrants tend to do remittances more frequently than the average Americans. “Remittances that are sent abroad do not remain to (sic!) the local economy”, FAIR notes. “If U.S. citizens or legal residents earned the wages now earned by illegal aliens, the money would usually be spent locally with beneficial multiplier effects.” [15]
Furthermore, with illegal immigrants there comes poverty. In California , the US state that receives the most immigrants, poverty has increased more that anywhere else in the US in the past decade. On May 18, 2003 the San Diego Union-Tribune reported that “most of the new pockets of poverty are in areas with large immigrant populations.” [16] The California-based think tank RAND finds that “a declining demand for low-skill workers combined with a continuing influx of low-skill immigrants has increased competition for low-skill jobs within the state and has hurt the earnings of some low-skill workers.” Likewise, that has also widened the gap between the rich and the poor since it “contributed to a growing disparity between the wages of foreign- and native-born workers.” [17] The Council of Economic Advisors for example noted that “several factors have contributed to widening inequality. […] Immigration has increased the relative supply of less educated labor and appears to have contributed to the increasing inequality of income.” [18] U.S. Labor Secretary Robert Reich agrees, “Undoubtly (sic!), access to lower-wage foreign workers has a depressing effect [on wages].” [19] In its report “Skill Differences and the Effect of Immigrants on the Wages of Natives, the Bureau of Labor Statistics found that “50 percent of wage-loss among low-skilled Americans is due to the immigration of low-skilled workers.” [20] All of this has several effects: The average purchasing power is lowered, which, in return lowers purchases, which, subsequently lowers profits. That can make companies go bankrupt, which will lead to firings of employees. Those American workers who are replaced by illegal foreign workers, may then qualify for a number of programs paid for by the taxpayer, such as unemployment compensation. Rice University economist Donald Huddle calculates that the cost for benefits paid to natives displaced by illegal alien workers is around US$1 billion. [21]
Ohio University economist Lowell Gallaway introduces another argument. The low-wage labor supplied by high immigration comes at a price. Part of that price is lost productivity. He argues that “poor English skills among foreign-born residents cost more than $75 billion a year in lost productivity, wages, tax revenue and unemployment compensation.” [22] Business and social transaction costs rise, as time, effort and money are spent overcoming language and cultural barriers.
Adding to all these facts, illegal immigration poses a threat to the national security of the United States . Illegal immigrant smuggling gangs are dangerous, because they may engage in narcotics traffic or cooperate with terrorist groups such as al-Qaeda. The Economist reports that “American officials worry that these smuggling gangs could serve as a conduit for terrorists or their weapons to enter the United States . Al-Qaeda is reported by American sources to have been in contact with Honduran coyotes.” [23]
As shown above, there are both arguments for and against immigration. Since there are a greater number of think tanks arguing against rather than for immigration, more studies and figures are available supporting the anti-immigrationist view. The problem of the immigration issue touches a sensitive area of the American self-projection as the Beacon of Freedom that welcomes the tired, the poor, and the huddled masses. Xenophobic calls for overly excited approaches by do-gooders do not solve the current problem. Silence, though, is not a solution either. What seems to be necessary is a nation-wide debate in which America 's neighbours might be included in order to analyze and discuss the matter thoroughly.
Written by ILAF SCHEIKH ELARD
[1] The New Americans: Economic, Demographic, and Fiscal Effects of Immigration , National Research Council/ National Academy of Sciences , May 1997
[2] The Economist. “Who gains?” The Economist 09 March 2000 .
[3] ibidem
[4] The Economist. “A modest contribution.” The Economist 31 October 2002 .
[5] The Economist. “ Oh, say, can you see?” The Economist 09 March 2000 .
[6] The Economist. “ The longest journey .” The Economist 09 March 2000 .
[7] ibidem
[8] Immigration and the Economy . Federation for American Immigration Reform. 01 January 2006 <http://www.fairus.org/site/PageServer?pagename=iic_immigrationissuecentersfa6e>.
[9] The Costs of Illegal Immigration to Californians . Federation for American Immigration Reform. 01 January 2006 <http://www.fairus.org/site/DocServer/ca_costs.pdf?docID=141>.
[10] ibidem
[11] ibidem
[12] ibidem
[13] ibidem
[14] ibidem
[15] ibidem
[16] Leonel Sanchez, "Poverty Expands Its Reach," San Diego Union-Tribune , 18 May 2003 .
[17] Kevin McCarthy and Georges Veruez, Immigration in a Changing Economy , RAND , 1997
[18] Council of Economic Advisors , Annual Report to the President , February 1994, GPO, Washington DC .
[19] U.S. Labor Secretary Robert Reich , November 1995.
[20] Skill Differences and the Effect of Immigrants on the Wages of Natives, Working Paper 273, Bureau of Labor Statistics, December 1995, David Jaeger.
[21] The Costs of Illegal Immigration to Californians . Federation for American Immigration Reform. 01 Jan. 2006
[22] “Can't Anyone Here Speak English?” USA Today , 28 February 1997 .
[23] The Economist. “ Dangerous desert, breached border .” The Economist 06 January 2005 .
Related Websites for further information:
Center for Immigration Studies (16.02.05)
The Economist Survey on Migration (16.02.05)
The American Immigration Law Foundation (16.02.05)
On The Issues (16.02.05)