Effects of Immigration on the Economy of the United States
Currently, United States is the home to the largest population of immigrants in the world. Even though the assimilation of immigrants in this country is higher and faster than in developed European countries, the US policy on immigration still a contentious subject in society. Much of the debate is based on cultural issues, while the effects of immigration on economy are clear. The analysis of the effects of influx of immigrants on jobs finds little evidence to suggest that foreign workers have reduced wages or jobs for Americans. Many academic research and economic theory predictions confirm that wages are not affected by foreign workers in the long term, and there are positive effects of immigrants for the overall economy and for the natives (Llull, 2013). Therefore, an economic analysis on this subject can be done through analyzing the effects of the influx of foreign workers onto the supply of labor, equivalent growth in investments by firms to offset the drop of capital per laborer, and the possible social-political solution of the problem.
The stakeholders on the issues of immigration are those people or institutions that work closely with migrants or they are directly affected by them. Among the stakeholders are the government, farm owners, owners of small business, social workers, construction companies, retailers, and healthcare providers (Lewis, 2011). The government and politicians argue that most immigrants are low-income earners who consume more in social amenities than they produce. Moreover, the government spends more resources maintaining immigrants than benefits that derive from them (Abramitzky, Platt Boustan, & Eriksson, 2014). On the other hand, small business owners, construction companies, and farmers are stakeholders because they employ a good number of immigrants who offer their services at low costs as compared to American-born citizens.
Since immigrants are less educated and of less proficiency in linguistic skills needed for many jobs, they often take jobs that require manual work and that are quite labor intensive, for example, construction and farm work. Even the low educated natives avoid taking this occupation because they are most often paid less as compared to language-intensive jobs like sales and personnel services (Foged & Giovanni, 2016). Thus, farmers and construction companies feel that if immigrants are barred from entering the United States, the cost of labor will increase, thus negatively affecting their income.
Low-income earners and health providers also fall among the stakeholders in the issue of immigrants, while the former claim that foreign workers take jobs that are available for them. Furthermore, they claim that the high influx of immigrants increases labor supply, hence reducing wages. Consequently, health providers, who employ immigrants, argue that latter with healthcare skills provide the needed services at an affordable cost (Card, 2009). Thus, these stakeholders have different and conflicting perspectives on the issue of immigration.
Apart from American stakeholders, some stakeholders are found outside the United States. First, these are the families of immigrants in their native countries whom they support through sending a part of their earnings. They believe the immigrants should be allowed to work in the United States to enable them to send this much-needed financial support home. The home government taxes the remitted money for their operation (Llull, 2013). Furthermore, significant numbers of citizens moving out to other countries might weaken the home countries in the long run by decreasing the level of production and economic spending.
In response to the immigration issues in the United States, several organizations have been created to protect the rights of immigrants. Among these civil or political organizations is American Civil Liberties Union (ACLU) that offers pro bono services to immigrants, who have been detained in airports, and fights for their rights. The Blacks Alliance for Just Immigration is another political organization that engages and educates the refugees and black immigrant communities to advocate social, racial, and economic justice (Foged & Giovanni, 2016). Lastly, there is the Council on American-Islamic Relations (CAIR), one the largest advocacy and civil rights organizations, devoted to fighting against discrimination against Muslim immigrants.
Globalization, demographic forces, and environmental degradation mean that immigration pressures across borders are likely to continue in the coming decades. Therefore, global political efforts must be focused on a dialogue and cooperation among the countries affected. This includes protecting labor rights, promoting a fair sharing of burden, and the promotion of a secure and safe environment (Llull, 2013). This will only be achieved if all stakeholders in this matter agree to solve this issue both politically and economically.
Immigrant workers, legal and illegal ones, offer their services in almost all industries of the US economy. The number of undocumented workers working in the production and the construction industries in United States has dropped by 5%; however, 29% of undocumented workers still work in these sectors (Bureau of Labor and Statistics, 2017). The percentage of the immigrants, working in professional and management capacity in this field, has increased from 10% in 2012 to 13% in 2017. As for industries, more immigrants are employed in agriculture, leisure, and construction industries (Bureau of Economic Analysis, 2017). The majority of legal immigrants work in private households. The industries with a sizeable number of immigrants’ workers are the textile industry, apparel, and leather manufacturers – 365 (Bureau of Labor and Statistics, 2017). The retail industry has employed 10% of legal immigrants, followed by the education sector (8%), and finally, non-hospital services (7%) (Bureau of Labor and Statistics, 2017). This shows that legal immigrants are mostly employed in textile and leather manufacturing industry.
There is a popular view that immigrants take jobs that belong to American-born citizens. Although immigrants increase the labor supply, they also spend their income on American products like televisions, homes, food, and necessities. This, in turn, increases the domestic economic demand of American products. This generates a boost in demand for goods and services and creates the employment in the spheres that produce or sell goods. Despite increasing labor supply, in many instances, immigrants seem to complement American-born workers more than replacing them. As mentioned, because immigrant laborers are less educated and they often lack the linguistic skills for communication intensive jobs, they take labor intensive jobs in agricultural and construction sectors (Bureau of Economic Analysis, 2017). Therefore, immigrants offer their services in the subsectors of occupations that employ most foreigners and that are not in competition with Americans for jobs.
If the policy of deporting all illegal immigrants is implemented and all undocumented workers are deported, the US economy will be affected negatively. Over 7 million people will be deported, which will cause a reduction of GDP by 2.6 percent over a period of 10 years (Bureau of Economic Analysis, 2017). The shock would not be contained in some sectors of country. The industries that will lose most if illegal immigrants are deported are the agricultural industry, hospitality, retail, financial services, and even manufacturing industries (DeSilver, 2017). Even though immigrants contribute much in the United States economy, they are accused of remitting much many back home. In other words, it is a tax-free transfer of United States’ wealth out of the country. It is approximated that the immigrants of Mexican origin remit $20 billion annually (Bureau of Economic Analysis, 2017). The negative impacts of these transfers are significant.
With the transformation in immigration, the United States is in a crisis where the status quo can no longer accepted by the general public. In 2007, there was an attempt to immigration reform, when the bill proposed immigration reforms, using a temporary legalizing program that was projected to offer legalization to more than four million unregistered immigrants (Abramitzky, Platt Boustan, & Eriksson, 2014). An additional proposal was made to use a strategy of holding accountable for hiring illegal immigrants, offering a temporary guest worker program, a component that was supposed to provide a road to citizenship for illegal immigrants.
Even though the policy attempted to address the effects of illegal workers, it excluded other objectives such as moral/humanitarian, cultural, and social issues that it did not address. A policy on immigration should address and promote human rights as well as be attentive to family reunification to capitalize on the utility in society (Llull, 2013). Therefore, to formulate a good immigration policy, it is crucial to understand its characteristics such as fiscal sustainability, economic prosperity, and American identity.
Some countries have successfully implemented a friendly policy that benefits both immigrants and the natives. Canada is an example of the countries that the United States should emulate. Canada is known for its remarkably open policy for immigrants, and it accepts almost half of who seek asylum. The law makers in Ottawa have enhanced Canadian immigration laws to allow immigrant workers (Card, 2009). However, this country has also increased security and its police surveillance on its southern border.
Immigrants are people who are naturally driven and willing to take risks. As a result, the United States has benefited greatly from the committed and talented immigrants who have raised the natives’ standards of living and culture. Thus, the United States should continue encouraging immigration. The lawmakers should form policies that encourage legal immigrants since they contribute to the economy positively, thus allowing the nation to prosper (Abramitzky, Platt Boustan, & Eriksson, 2014). To ensure this, the following steps are necessary. The country needs to secure its borders, while there should be a friendly guest worker program. At the same time, the USA mist increase prosecution and surveillance on business that employ illegal immigrants, create a new environment that attracts talented people, and lastly, the government should find a reasonable and humane way to deal with the millions of immigrants who are already in the United States illegally.
Most economists agree that immigrants have positive effects in US economy. Whether low-skilled or high-skilled, legal or illegal, immigrants are unlikely to replace or reduce wages of native workers in the long run. Indeed, the last few decades’ experience suggests that immigrants can create long-term benefits and push the American-born citizens to having better jobs through productivity growth and innovation. Throughout history, great nations have failed due to their hard stance on immigration; however, the USA has been exceptional for centuries. It would be a tragedy if the country blindly turned its back on immigrants while other countries ascend to openness nowadays.
Abramitzky, R., Platt Boustan, L., &, Eriksson, K. (2014). A nation of immigrants: Assimilation and economic outcomes in the age of mass migration. Journal of Political Economy, 122(3), 467–506. doi: 10.1086/675805
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Card, D. (2009). Immigration and Inequality. American Economic Review, Papers and Proceedings, 99(2),1–21. DOI: 10.1257/aer.99.2.1
DeSilver, D. (2017). Immigrants don’t make up a majority of workers in any U.S. industry. Retrieved from http://www.pewresearch.org/fact-tank/2017/03/16/immigrants-dont-make-up-a-majority-of-workers-in-any-u-s-industry/
Foged, M., & Giovanni P. (2016). Immigrants’ effect on native workers: New analysis on longitudinal data. American Economic Journal: Applied Economics, 8(2), 1-34. DOI: 10.1257/app.20150114
Lewis, E. (2011). Immigration, skill mix, and capital skill complementarity. Quarterly Journal of Economics, 126(2), 1029-1069. DOI: https://doi.org/10.1093/qje/qjr011
Llull, J. (2013). Immigration, wages, and education: A labor market equilibrium structural model. Working Papers 711. Retrieved from http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/711.pdf