How do undocumented workers affect the American economy?

By Mary Orders, Medill, Immigrant Connect

“We could not eat in the United States without them,” said Jorge Mújica as he explained the effects undocumented workers have on the economy. “Not only because we plant and we harvest and then we transport, but because we wash the dishes at the restaurants and we cook the food.”

The debate over whether undocumented immigrants add to the economy through labor and paying taxes is persistent and polarized. It is estimated that they pay upwards of $11.64 billion a year in state and local taxes, according to “Undocumented Immigrants’ State and Local Tax Contributions, ” a March 2017 report issued by the Institute on Taxation and Economic Policy (ITEP), a non-partisan research group that focuses on tax fairness and sustainability to ensure that officials, the media, and the public have access to accurate information.

“You come here without documentation, you start working, you use a

Jorge Mújica’s twitter page

fake social security number, your employer retains your taxes and sends them to the administration, and you cannot ever claim those taxes,” added Mújica, who is the strategic campaigns organizer at Arise Chicago, a faith-based group that seeks to address systemic poverty.

“This country was founded on immigrants,” said Marielos Cabrera, a daughter of a Guatemalan immigrant and student at the University of Wisconsin. “I work at a school coordinating an after school program for Latino youth, and the parents of these kids are so invested in their children. It is hard to watch them work so hard and know that there are others in this society who see them as freeloaders.”

Others believe that undocumented immigrants present an economic burden on America. The main argument is that immigrants reduce the wages of American citizens. “Those unregulated workers are often underpaid which keeps wages lower in a particular occupation and region,” said Michael McDonald, a finance professor at Fairfield University.

Sept. 2016 Pew Research Center report showing that the unauthorized immigrant population from Mexico has continued to decline. Click on photo to read the report.

The debate between the benefits and hardships created by undocumented workers has become one of the bedrock tests that define the political and ideological fronts as President Trump aligns his administration’s priorities. A look at the state of Arizona can help to unpack the debate. Over the past few years, the state has enacted laws that allow for a much more aggressive crackdown on undocumented residents. This prompted huge numbers of migrant workers to leave for Mexico and other border states.

“We used to have many migrant families. They aren’t coming back,” Rob Knorr told The Wall Street Journal after Arizona stepped up its enforcement. Knorr, a prominent jalapeño pepper farmer chose to reduce his acreage and create a machine that could remove pepper stems, the job of the migrant workers who had been deported.

Economists of all political views agree that the state’s economy took a hit when this happened, according to the WSJ article “The Thorny Economics of Illegal Immigration.” However, the mass exodus also reduced competition for low-skilled jobs. This in turn helped American citizens who work in construction and agriculture get new jobs or increases in wages. The debate became enriched and tradeoffs were more visible to be weighed. Government spending for schooling for  immigrant children, for emergency hospital care and for incarceration fell, worker shortages occurred, wages for non-immigrants rose.

Adam Davidson capsulized the debate in his 2013 New York Times Magazine piece, “Do Illegal Immigrants Actually Hurt the U.S. Economy?” He reported that labor economists have concluded that undocumented workers have lowered the wages of the 25 million American workers without a high-school diploma from 0.4 to 7.4 percent, but that undocumented workers don’t compete with skilled laborers, they complement them by doing the more routine tasks and freeing up fellow workers to be more available for higher paying jobs. The cost-benefit breakdown also fluctuates geographically depending on the net costs to state and local governments, which in turn also explains the ideological divide.

In conclusion, as Davidson puts it, “There are many ways to debate immigration, but when it comes to economics, there isn’t much of a debate at all. Nearly all economists, of all political persuasions, agree that immigrants — those here legally or not — benefit the overall economy.”

 

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