Net Effects of Illegal Immigration

Milton Friedman’s immigration paradox is most easily explained like this: Illegal immigration only helps when it’s illegal1.

More specifically, Milton states that immigration of any kind is a net positive except in the presence of a welfare state. When a welfare state is present illegal immigration provides greater benefits to citizens, but not without some costs.

Effects on the Workforce

In 2014 there were an estimated 11.1 million unauthorized immigrants. Of those, about 8 million, or 72%, were in the U.S. labor force3. The same year, there were 118.72 million full-time employees. Therefore an estimated 6.3% of workers were unauthorized immigrants.

Two industries in which unauthorized workers are most represented include farming, at 26%, and construction, at 15%3.

The working-age native-born population grew by 16.4 million jobs between 2000 and 2013, however the number of native-born citizens holding a job decreased by 1.3 million in that time5.

According to data from the U.S. Department of Labor, nine of the top ten occupations with the most openings have wages that are categorized as “low” and “very low”6. These positions are also categorized as low-skill.

The cumulative effect of a greater number of low-wage, low-skill jobs and the availability of workers who are willing to work for pay that is less than federally mandated is a decrease in number of native-born workers. The displaced workers who are competing for these jobs typically have not complete a high school education7.

Companies who hire illegal immigrants are saving money on labor and taxes. These companies, logically, would have greater profit margins and ability to pass on savings to consumers.

Industries Impacted

The mass majority of companies who hire illegal immigrants are in the construction, agriculture, and tourism industries8:

1x-1

Taxes Paid

Federal government assigns workers an individual taxpayer identification number so employers can deduct taxes from wages. This allowed undocumented workers to contribute $13 billion in payroll taxes in 2010. In the same year, they accessed about $1 billion in benefits resulting in a net gain of $12 billion for American citizens8.

Economic Impact

It has been estimated that the economic impact of legal and illegal immigration bolsters the U.S. economy, in terms of GDP, by $1.6 trillion per year9.

Conclusion

Immigration, legal or otherwise, appears to be good for the United States economy. Illegal immigrants provide companies large and small the ability to access a low-skill, low-wage workforce that allows them to reduce their overhead and tax burden while bolstering productivity and increasing profit margins. This allows for greater competition on the open market, resulting in lower prices for consumers.

The loss of jobs available to American citizens is overshadowed by the economic output and tax revenues generated by immigrant workers. Reducing the number of undocumented workers by 50-100% would result in a net loss of total GDP, drastically increase food and construction costs, and result in a net loss of jobs. Fewer Americans would be making less money.

Rather than deportation, undocumented workers should be presented with a streamlined path toward naturalization with precedence for those who have been in the United States for longer than 5 years, are proficient in written and spoken English, and have children born in the United States. For those not currently meeting this criteria, programs helping undocumented workers and their families learn English and providing assistance with the naturalization process should be made more freely available.

Undocumented workers shouldn’t be demonized for seeking a better life in the United States, while suffering through the bureaucratic process of becoming a naturalized citizen. The time required to naturalize all current illegal immigrants exceeds 36 years based on current immigration law.

American citizen job loss is a result of low-cost, high-profit culture and companies unwilling to pay even minimum wages choosing instead to bypass the law and hire undocumented workers.

Economic considerations aside, the United States is a vast and diverse nation founded and built on the backs of immigrants.

 

References

1 Rector. 2007. Look to Milton: Open borders and the welfare state.

2 FairUS.org. 2008. History of U.S. Immigration Laws.

3 Krogstad, Passel, Cohn. 2016. 5 facts about illegal immigration in the U.S..

4 Statista. Number of full-time employees in the United States from 1990 to 2016 (in millions).

5 Camarota, Zeigler. 2013. Immigrant Gains and Native Losses In the Job Market, 2000 to 2013.

6 Schmid. 2015. Help wanted: Most U.S. job openings are for low-skill, low-pay workers.

7 Burke, Crook, Penner, Walsh. 2010. What Are True Costs And Benefits Of Illegal Immigration?.

8 Smialek, Case. 2015. What Would Happen to the Economy If Trump Got His Way.

9 Camarota. 2013. The Fiscal and Economic Impact of Immigration on the United States.

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