National Immigration Forum

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What’s in it for us?

January 08, 2010 - Posted by Maurice Belanger

Money


The Center for American Progress and the Immigration Policy Center released a papers on the economic benefits of comprehensive immigration reform.  The report was authored by Dr. Raul Hinojosa-Ojeda, of the North American Integration and Development Center at the University of California, Los Angeles.


The report, Raising the Floor for American Workers, gives us a very practical reason for implementing comprehensive immigration reform that includes a program to provide legal status to undocumented immigrants.  The program would have economic ripple effects that would, when compared to the alternative policy of mass deportation promoted by immigrant restrictions, have a net economic benefit of as much as $4.1 trillion for the U.S. economy over 10 years.


A scenario in which comprehensive immigration reform with a legalization program is passed would result in a positive gain of $1.5 trillion for the economy over 10 years.  The mass deportation scenario result in a $2.6 trillion loss over the same period.


The amount for the legalization scenario was derived from experience with the legalization program of the 1986 Immigration Reform and Control Act.  A number of studies have followed individuals who went through the legalization program to determine how they did once they gained legal status.


Legalization would set in motion a chain of positive circumstances that would ripple out from the immediate immigrant beneficiaries and effect the economy as a whole.


Legalization raises pay: A variety of studies have shown that legalization, even isolated from other factors, had significant positive effects on the pay of formerly undocumented workers. 


Freedom to choose: There are other factors that further hike the pay of legalized workers.  Workers with legal status have the freedom to leave jobs where they are being exploited.  They have more opportunity to find jobs that pay more.


A willingness to invest: With the threat of deportation lifted, a worker is much more likely to make investments that will improve his skills—learning English, for example.  These investments yield dividends in a timeframe that is longer than a worker might expect if he might be deported.  The dividends include opportunities for better jobs, further boosting income.


Raising the wage floor: As the fortunes of undocumented workers rise, so too do the fortunes of other workers.  In industries where there are large concentrations of undocumented workers, the availability of many workers who can be exploited by shady employers depresses wages for all workers.  When undocumented workers gain legal status, they also gain rights and the ability to walk away from a bad boss.  If the bad employers lose their exploitable workers, they have to pay more, and wages for all workers go up.


More income, more spending, more taxes: All of these workers have more money to spend, and that effects the economy as a whole.  According to the report,


The real wages of newly legalized workers increase by roughly $4,405 per year among those in less-skilled jobs during the first three years of implementation, and $6,185 per year for those in higher-skilled jobs.  … [This] translates into an increase in net personal income of $30 billion to $36 billion, which would generate $4.5 to $5.4 billion in additional net tax revenue …[and] consumer spending sufficient to support 750,000 to 900,000 jobs.


By contrast, the mass deportation scenario, which the report defines as the government deporting over four million immigrant workers and their dependents, would depress U.S. Gross Domestic Product by 1.46 percent annually.  Over 10 years, the economy would take a $2.6 trillion hit—not including the actual cost of deporting all those people, which would add more than $200 billion to the deficit.  According to the report, the wages of low-skilled workers in the U.S. would rise a bit, but the economy would lose a large number of jobs.


So what’s in it for us?  What do we get for comprehensive immigration reform?  More jobs, more taxes, and higher wages for all workers.


When Congress returns for its 2010 session, new stimulus legislation will be on the agenda.  It will be a struggle to have the government spend additional money in the context of a deficit that is already a trillion-and-a-half dollars. If Congress passed comprehensive immigration reform, they would simultaneously be enacting a new stimulus program on the cheap.


Photo by Flickr user yomanimus.

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