US economy largely unaffected by illegal immigration

Tucson, Arizona | Published: 12.03.2009

WASHINGTON — A study released Wednesday concludes that illegal-immigrant workers do not drain jobs or tax dollars and have a neutral impact on the U.S. economy.
Because illegal immigrants occupy a small share of the work force — about 5 percent — and work low-skilled jobs at lower wages than other workers, their overall influence on the economy is trivial, according to the report, sponsored by the Migration Policy Institute, a pro-immigration think tank in Washington.
“The fate of the U.S. economy does not rest on what we do on illegal immigration,” said Gordon H. Hanson, author of the report and economics professor at the University of California-San Diego.
Illegal immigrants contribute a tiny 0.03 percent of the U.S. gross domestic product, with that gain going to employers who save money on cheap labor, the report says, while their cost to the economy is 0.10 percent of GDP, which mainly comes from public education and publicly funded emergency health care.
The net impact at minus 0.07 percent of GDP means that illegal immigrants have an essentially neutral effect on the economy, Hanson said.
The report does not factor in the spending or entrepreneurship that illegal immigrants contribute to the economy, said Marc Rosenblum, senior policy analyst at the Migration Policy Institute.
Where illegal immigrants do have a substantial impact, Hanson added, is in specific labor-intensive and low-skilled industries such as agriculture, construction, hospitality and cleaning services, where the share of native-born workers has dropped precipitously.
Because the U.S. has dramatically raised the education level of its adult population in the last 50 years — going from about 50 percent of all working-age adults without a high school diploma in 1960 to just 8 percent today — the native-born, low-skilled work force has shrunk, while employers continue to require low-skilled workers.
This leaves room for illegal immigrants to take such jobs at a low cost, the report says.
Illegal immigrants now account for 20 percent of working-age adults in the U.S. who don’t have a high school degree.
While the influx of illegal immigrants is one of the factors keeping low-skilled wages stagnant, the biggest losers in the current system are legal low-wage workers, both native and foreign born, who compete with the illegal immigrants, Rosenblum said.
Meanwhile, employers reap higher profits because of lower labor costs and more productive businesses.
The solution to this imbalance, proposed by the Migration Policy Institute, is to provide more visas and legal channels for unskilled workers to enter the U.S.
Today, low-skilled workers must have a green card — effectively requiring them to have close family members in the U.S. — or obtain a temporary work visa.
“We really need to approach migration control comprehensively by both strengthening enforcements and creating legalization mechanisms that will control the unauthorized population and improve the economic outputs that we get from immigration,” Rosenblum said.