Can the Latest Immigration Reform Bill Actually Help the Economy? Here's 5 Reasons Why it Will
Just this week, President Barack Obama said that he is hopeful of pushing through a divisive U.S. immigration reform bill currently being debated in Congress, a bill which would enable citizenship for as many as 11 million undocumented people as well as accelerate the process for educated professionals from countries such as China and India.
"I actually think that we have a good chance of getting immigration reform," he said. "If the Speaker (of the US House of Representatives) proposes something that says right away folks aren't being deported, families aren't being separated, we're able to attract top young students to provide the skills or start businesses here, and, then there's a regular process of citizenship." What exactly will the bill do for the U.S. economy?
Immigrants help to keep down the price of consumer goods, boost tax revenue, and enlarge the taxpayer base.
One rarely mentioned benefit of immigration reform is that immigrants lower the price of products used by highly educated consumers by 0.4 percent of GDP and for less-educated consumers by 0.3 percent. On average according to statistics, undocumented and documented immigrants pay out nearly $1,800 more in taxes than they will receive in benefits. In 2010, the number of households headed by undocumented immigrants paid upwards of $11.2 billion in state and local taxes, including $1.2 billion in personal income taxes, $1.6 billion in property taxes and $8.4 billion in sales taxes.
According to Think Progress: "The federal government would accrue $4.5 billion to $5.4 billion in additional net tax revenue over just three years if the 11 million undocumented immigrants were legalized. And states would benefit. Texas, for example, would see a $4.1 billion gain in tax revenue and the creation of 193,000 new jobs if its approximately 1.6 million undocumented immigrants were legalized."
Both high and low skilled immigrant labors create additional jobs across the U.S. economy.
Every one of the tens of thousands of low-skilled, non-agricultural, temporary workers who comes to the U.S. to fill a job that would otherwise be left open creates an average of 4.64 U.S. jobs. Not only that, but these low-skilled jobs are a necessary backbone to support the multitude of higher-skilled positions. Immigrants already comprise 23 percent of the labor force in high-tech manufacturing and information technology industries, not to mention that immigrants are more highly educated on average than the U.S.-born Americans working in the very same industries.
Construction workers, food preparation workers and nearly half of agricultural workers nationwide lack legal immigration status and a legalization program would ensure that business owners can reap the full benefits from having reliable and skilled laborers.
Newly authorized immigrant workers can produce enough new consumer spending to support the creation of 750,000 to 900,000 new jobs, directly a result of immigration reform. Every additional foreign-born student who graduates in science, technology, engineering, or mathematics then goes on to create an estimated 2.62 American jobs, provided that those students remain in the U.S. (which most of them do). In summary, based on the latest estimates, passage of the DREAM Act would add $329 billion to the U.S. economy in revenue and also create 1.4 million new jobs by 2030, greatly aiding in the country's economic recovery.
Immigrants are more likely to be entrepreneurial and to start new businesses which results in job creation for U.S.-born workers.
In 2011, immigrants were responsible for starting 28 percent of all new U.S. businesses and by doing so employed one out of every 10 U.S. workers. Immigrants exceeded their 13 percent share of the overall population historically by representing 18 percent of all small business owners in the United States and are far more likely than those born in the U.S. to start a small business.
Passing the DREAM Act would create a roadmap to citizenship for immigrants who came to the United States as children and put 2.1 million young people on a pathway to legal status. Immigrant-owned small businesses in 2007 employed an estimated 4.7 million people and generated an estimated $776 billion for the economy. On top of that, salient in this year's immigration reform bill in the face of ever increasing Hispanic immigrants, statistics show that more small business owners are from Mexico than any other country.
In just the last two decades, immigrants comprised upwards of 30 percent of the growth in small business creation. Not only that, but 18 percent of 2010 Fortune 500 companies were created by immigrants and resulting created jobs for 3.6 million people. When children of immigrants are included in that figure, the number of Fortune 500 companies with immigrant roots jumps to 40 percent, employing more than 10 million people.
Immigrants will increasingly be critical for continued economic growth and for ensuring a steady flow of new workers as a large segment of the population (baby boomers) retire.
Immigrants offer the potential for the U.S. to fix its demographic pyramid. The U.S. will not have enough new workers to support retirees without immigrants, a problem we have been hearing lots about in the debate over the Social Security program -- more people are collecting now than there are people paying into the system. Contrary to seventy years ago when there were 150 workers per 20 seniors, 10 years ago there were only 100 workers per 20 seniors and projections show that by 2050, there will be only 56 workers for every 20 seniors in an every decreasing statistic. The U.S. needs new taxpayers to help fund the Social Security and Medicare programs, as well as new workers to fill positions created by new retirees and to provide them with the basic health care services.
Nearly 65 percent of Latino immigrants in California have stayed more than 30 years as homeowners and thereby slow the increase in the old-age dependency ratio by more than one-quarter. A quarter of families with one parent who is an undocumented immigrant are uninsured and since undocumented immigrants don't qualify for coverage under the Affordable Care Act that means that without being able to apply for legal status the health care options for undocumented immigrants and their families are at risk.
The majority of immigrants in the U.S. today are from Latin America, creating a potential for diplomatic ties and international economic opportunities as the region becomes more of a powerhouse in the global economy.
29 percent of all immigrants and 58 percent of undocumented immigrants come from Mexico, a demographic which represents a gateway for America to one of Latin America's fastest-growing economies. Mexico now has the second largest economy in Latin America, growing at a rate of 4.0 percent in 2012 with a projected growth of 3.5 percent in the future, double the projected growth rate of the stagnating economy of the United States.
Through their link with their home countries, immigrants offer new prospects for the U.S. to capitalize on Latin America's economic expansion, a partnership which will pay dividends in the future. The U.S. has free-trade agreements with 11 of the 20 Latin American countries. Tying back into one of the points made above, immigrant-owned small businesses are uniquely positioned to compete in the global marketplace. Statistics show that immigrant-owned small businesses are more likely to be able to connect to the global marketplace: compare the over 7 percent of immigrant firms who actively export their goods and services when only roughly 4 percent of non-immigrant firms will do the same.