Immigrants substantially affect national economy

http://newsnet.byu.edu/story.cfm/60008

Immigrants substantially affect national economy
By Jennefer Barton
7 Jun 2006


Experts and average Americans alike are having a difficult time assessing the impact illegal immigration has on jobs, wages, products and the U.S. economy in general.

"Immigration has altered the country on all kinds of dimensions," said Tom Maloney, associate professor in the Department of Economics at the University of Utah.

In the U.S., experts have mixed perspectives on the issue. For example, some argue that illegal immigrants benefit the country because they work for lower wages and thus allow consumers to obtain services at lower cost. Others argue that illegal immigrants have reduced job opportunities for U.S. workers.

But the experts all agree that whether they remain in the U.S. or are forced to leave, illegal immigrants have a significant impact on the nation's economy.

The National Research Council has estimated the net fiscal cost of immigration ranges from $11 billion to $22 billion per year, according to the Center for Immigration Studies.

The cost is caused by a low level of immigrants paying taxes and a higher rate of consumption of government services, both because of their relative poverty and their higher fertility. They are disproportionately low-skilled and thus earn low wages, the National Research Council stated.

Immigrants make up one in nine U.S. residents, one in seven U.S. workers, and one in five low-wage workers, stated the Urban Institute Web site.

The U.S. Census Bureau estimates a net increase of 500,000 illegal immigrants annually.

An incentive for immigrants to come to the U.S. is the average American wage exceeds the average Mexican wage by a factor of 10. Americans make more money while doing the same job as someone in Mexico, according to the Center for Immigration Studies.

"It's interesting to compare my generation to the generation of my children," said Mike Ransom, chairman of BYU's Department of Economics. "When I was a teenager, I got jobs working as a laborer, I grew up in Idaho and got work on farms. When my kids go out and try to get a job, none of these jobs are available."

Because immigration increases job competition, it reduces wages and can make jobs limited for American citizens.

"What has happened is they've driven out jobs that would normally go to less educated people," Ransom said.

Immigration reduces the average earnings of American men in the same occupations by $1,700 annually, which is around 4 percent, said George Borjas, professor of economics and social policy at Harvard University.

The Americans in most competition with immigrants are those workers without a high school degree, said Borjas in his article, "Increasing the Supply of Labor Through Immigration."

Maloney, currently researching the economic connection of Utah and Mexico, said these findings are also true in Utah.

"In Utah, if you look at Mexican immigrants overall, about 21 percent of undocumented Mexican immigrants are what are called labor workers," Maloney said. "They do a lot of semi-skilled manufacturing work, more than in a number of nearby states. There are about 25 percent of immigrants working in semi-skilled manufacturing, 25 percent in service work, and 25 percent in unskilled labor work."

Although immigrants drive competition up in labor and wage, experts say immigrants lower the cost of things Americans use daily.

"It's great for many of us," Ransom said. "Restaurant meals are inexpensive, getting somebody to do your yard work is inexpensive, even getting your house cleaned is inexpensive. There's so much competition between these workers, they have to charge much less than usual."

With the recent spotlight on this issue, it presents a big "what if." What if illegal immigrants are forced to leave the United States?

"If illegal immigrants were forced to leave, there could be changes in trade flow," Maloney said. "What I mean by that, is if folks are not coming into work in agriculture and service jobs, we would have to import from all over the world to get the resources immigrants provide. It would be very expensive for us."

If immigrants leave the country, the economic implications would be huge, Ransom said.

"They occupy housing, they have jobs people depend on, there would have to be a big resorting of things," Ransom said. "Then you can expect a fairly catastrophic change."