The Economic Effects of Immigration

Credit:TerryJ
Credit:TerryJ

(ESPAÑOL) Illegal immigration is on the tongues of practically everyone these days. Most of those who advocate for it cite humanitarian concerns and the American raison d’etre, while those advocating against cite the rule of law and security concerns. Once in a while, however, both sides come to the table to discuss the economic ramifications of the issue.

The proponents of more immigration like to point to increase in aggregate wealth of a larger population and the productivity they bring to the country, with a popular figure being thrown out in the vicinity of $50 billion. This is measured in the increased profitability of employers, who benefit from the increased low-skilled work force more so than the workers themselves, who see their wages drop by as much as 6 percent due to the increase supply in the labor force.

On the other hand, there are costs that come with an increase in the labor force. According to the National Academy of Sciences, the increase in immigrant families actually cause a fiscal shortfall of $43 billion to $299 billion. This shortfall is due to their relatively low income and higher participation in government programs like subsidized health care.

This means that even by conservative measures, low-skill, low-income immigrant families cost the government more than they contribute, at least in the short run. Even the “short run” might not seem so short, since there has been a noticeable slowdown in the rate at which their economic prospects improve over time. Although this can be attributed to ethnic enclaves where new immigrants can live and not assimilate easily into American culture, and therefore slow their social and economic ascent in the country, there is also likely an overall economic stagnation affecting all Americans, and new arrivals would experience the same setbacks.

The large influx of immigrants, legal or not, have serious economic ramifications for the country. But this does not present a challenge which we cannot confront. By identifying the economic challenges, we can propose and effectuate positive changes which reduce their fiscal burden and accentuate their contributions. However, both sides of the discussion must be appraised and understood to achieve any real compromise.