Economic Impacts of Immigrants in the United States

Economic Impacts of Immigrants in the United States

I. Introduction

The United States is a country of immigrants and their descendants. Now, more than ever, immigration has become one of the most discussed and controversial topics in recent public and politics, as United States have faced influx of millions of immigrants. It has been reported that nearly 40 million immigrants, including both legal and illegal, are living in this nation (Camarota). The increasing number of immigrants in the United States has given a rise to following questions: How do immigrants in the United States affect the U.S economy? Are newcomers from other countries actually helping the U.S economy? Supporters of immigrants working in the United States argue that immigrants are boosting our economy. Legal immigrants promote the growth of U.S economy through adding innovation and productivity in highly skilled field. Illegal immigrants add labor force to the labor market and boost the economic activity in consumer market by producing more products. Shika Dalmia, senior columnist at Reason.org, said “Accepting more immigrants are wins for everyone since immigrant workers escape poverty, business owners gain unfulfilled productivity, and consumer gets product in cheaper price” (Panel Discussion). On the other hand, negative views of immigrants working in the United States assert that immigrants, particularly illegal immigrants, are ruining the economy by taking benefits of welfares of the government and taking jobs of American-born natives. In this paper, I will demonstrate how immigrants, both legal and illegal immigrants, are affecting the economy of the United States. Statistics and analyses of many economists have shown that activities of immigrants, whether illegal or legal, are promoting the growth of the economy, by adding productivity in both educated field and low skilled field, and by fulfilling demand that labor market needs.

Impact in Economic activity of the U.S

        Before we look in depth of this topic that I am going to elaborate, I have to mention that I am focusing solely on economics, not ethics of the immigration. Should we allow illegal immigrants to come into the United States? My answer is no, because they are not documented. However, in terms of economics, immigrant workers in general take a huge role in the U.S economy. Immigrant workers provide a boost to the U.S economy by making the economy more productive and innovative. [pic 1]

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The data table (Figure 1) above from BBVA research shows that foreign-born workers are contributing about 15 percent to 16 percent of the GDP (Gross Domestic Product) of the United States annually, which is about 12 billion dollars to 18 billion dollars worth of product (Murray). This graph also indicates that more immigrant workers are equivalent to higher rate of productivity. As one could see from the chart, it is obvious that the immigrants’ contribution to U.S economy is increasing. The influence that immigrants have in U.S economy is immense that U.S economy would shrink significantly without immigrants.

Immigrant workers promote the economic growth by adding innovation and creativity in the highly skilled field. The Economic Report of the President stated that most of the workers, 29%~50% of the scientists, in STEM (Science, Technology, Engineering, & Mathematics) field are, in fact, immigrants (Lawrence 7). Immigrants in the United States enhance the productivity in the STEM field by cooperating with American natives. Even within skilled group, various thoughts and talents that immigrants and natives bring to the market might complement to each other instead of competition. Not only they are exceptionally productive and innovative within the field, they add the entrepreneurship in the field. During the panel discussion at University of Rochester, one of the panelists Shika Dalmia stated,

Immigrants or a child of immigrants founded more than 40 percent of Fortune 500 companies. These companies employ more than 10 million people and generate annual revenue around $4.2 trillion. (Panel Discussion)

Immigrants can potentially increase the size of U.S economy in the global market by working with American-born citizens. It would bring economic success in the future if Americans and immigrants work together more under the same goal.

        On the other hand, immigrants at the low skilled field contribute immensely in the consumer market in terms of economic activity. Since there are more available workers in the labor market, more products are available in the consumer market. The economist Bruce Murray elaborates the consequence of having more immigrant workers: “If you are a purchaser of those services, and you live in a high-immigrant locale, the increase of the supply of immigrant labor is going to help make those services available at a lower cost. So that increases your real income because each dollar you earn now goes further.” (Murray) The ultimate consequence of having immigrants working in the United States would be better standard of living for American natives and consumers in the industry.

 Individuals who do not support immigrants working in the United States, like Dr. Thompson at University of Michigan, argue that both legal and illegal immigrants are hindering the growth of the economy by taking advantage of government aid system. His major argument is that American taxpayers are annually losing money since immigrants are getting aid from the government without paying taxes. Since more immigrants in the United States are demanding aid from the government, government has to increase the annual budget, which would lead the economy to have more deficits each year. He claims that they are taking more services than they are contributing to U.S economy. However, this claim can be easily dismissed. The nonpartisan Congressional Budget Office stated,

Between 30 percent and 50 percent of unauthorized immigrants pay federal, state, and local taxes. Illegal immigrants are estimated to pay in about $7 billion per year into government service, such as Social Security. In addition, they spend millions of dollars per year, which supports the US economy and helps to create new jobs. The Texas State Comptroller reported in 2006 that the 1.4 million illegal immigrants in Texas alone added almost $18 billion to the state’s budget, and paid $1.2 billion in state service they used. (CBO 20)

The quote from Congressional Budget office suggests that immigrants, whether illegal or legal, are contributing to our economy more than they are using the service of the government. Even though some immigrants exploit the government system without paying taxes, the amount of benefits that immigrants bring to U.S economy is significant. Hence, immigrants are stimulating the economy by adding innovation in educated field and enhancing the consumer market in the society.

Impact in labor market

Not only immigrants boost the economic activity, they also fulfill insufficient productivity in the labor market of the United States. In the report published from Congressional Budget office, it was stated, “The growth of the economy derives from capital accumulation, productivity increases, and growth of the labor force” (CBO 5). The arrival of large number of immigrants, including both legal and illegal, increased 16% of work force to the labor market in U.S economy (Boudreaux 23). Since both legal and illegal immigrants are adding themselves in the labor market, it is promoting the growth of the economy. It also has been reported that immigrants, both legal and illegal immigrants, have accounted for more than half of the growth of the U.S. labor force (Lawrence). Since there are more work forces available in the market, more products are being produced, which generates the better standard of living for American.