Legalizing undocumented immigrants would boost economy

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A new study published by the Center for American Progress and the Immigration Policy Center demonstrates that the legalization of the 11 to 12 million undocumented immigrants in the United States could raise the Gross Domestic Product (GDP) of this country by $1.5 trillion over 10 years, and bring other benefits to U.S. workers and the nation's economy.

The study, authored by Dr. Raul Hinojosa-Ojeda, founding director of the North American Integration and Development Center at UCLA, uses a sophisticated "general equilibrium" modeling methodology which examines the impact of the legalization of about 3 million undocumented immigrants in the late 1980s (through IRCA, the Immigration Reform and Control Act of 1986 and a supplemental legalization program for agricultural workers) as the basis for predicting what would happen if a new legalization program were implemented now.

The study and many other useful documents can be found on the website of the Immigration Policy Center, at www.immigrationpolicy.org.

Hinojosa puts forth three possible scenarios:

*An immigration reform which legalizes the undocumented presently in the United States with full labor rights, and creates a method of connecting future labor flow to U.S. labor needs.

*An immigration reform that turns the current undocumented immigrants into permanent guest workers, without labor rights, and only allows for new massive legal immigration through guest worker programs, in which immigrant workers have limited labor rights.

*An "enforcement only" approach, in which all resources are concentrated on apprehending and deporting the undocumented.

Hinojosa cites statistics which show that when the 3 million previously undocumented workers were legalized through IRCA and the special farm worker program in the late 1980s and early 1990s, there was an immediate jump in their earnings, which was especially notable for women workers. This was because they no longer had to fear deportation if they sought better wages, and also because they were able to get jobs previously closed to them due to their legal status. By 1992, according to U.S. Department of Labor statistics cited by Hinojosa, men who had legalized themselves through IRCA saw an average increase in wages of about 13.2 percent while women had increased their wages by about 20.5 percent.

This writer worked during that time and subsequently with a large number of Mexican immigrant workers who had legalized through IRCA. Not only were they able to move on to better jobs and demand better wages, in many cases they were able to participate in union organizing drives, strikes, and other labor actions. This was beneficial to all American workers because, as the title of Dr. Hinojosa's study says, it "raised the floor" for wages and working conditions for all workers, which had been artificially depressed by the undocumented workers' lack of rights on the job. And as wages rose and people who had been working "off the books" began to have regular tax, Social Security and Medicare withholding, federal revenues increased.

Extrapolating the results of the IRCA legalization forward, Hinojosa predicts that even greater benefits could be obtained by immigrant workers and all workers if the current undocumented population were to be legalized. He predicts that a legalization program with full labor rights for workers would increase this country's GDP by $1.511 trillion in 10 years, 0.84 percent of the current GDP.

On the other hand, if only a guest worker option were available to current undocumented workers and for future immigration, there would be a less powerful impact on the GDP. Hinojosa projects it to be $792 billion, or 0.44 percent of current GDP.

To intensify the present "enforcement only" policy, the expense of which has been rising sharply (from a cost per individual apprehension of an undocumented immigrant of $272 in 1992 to $3,102 in 2008), would produce only negative effects, according to Hinojosa. GDP would be reduced by 1.4 percent, or a loss of $2.6 trillion over 10 years. Hinojosa thinks that some wages for low income workers might rise a bit (however, there are other ways of doing so, such as improving and enforcing U.S. labor laws).

A limitation of the study is that Hinojosa does not try to extrapolate from economic and political trends in Mexico and other immigrant-sending countries, except a brief mention of the issue of remittances sent by Mexicans working in the United States to their relatives in Mexico, which Hinojosa thinks would rise with legalization, improving the economic perspectives of the people in the homeland and thus reducing the incentive to emigrate. But after the implementation of the North American Free Trade Agreement in 1994, together with the bailout of the Mexican financial system by President Clinton and Robert Rubin in 1994, undocumented immigration from Mexico to the United States doubled. This shows the sensitivity of migration patterns to what happens in sending countries.

It is difficult, but essential, to break the mindset which assumes that there are a fixed number of jobs in our economy, and that any new workers who come here, with or without papers, are "taking jobs" away from U.S. born workers. Although Hinojosa's study is probably too technical for many people, its conclusions are important and show the necessity of a comprehensive immigration reform that legalizes the 8 million or more undocumented workers as quickly and completely as possible.

Photo by Korean Resource Center (http://www.flickr.com/photos/krcla/ / CC BY-SA 2.0)

 

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  • I was the author of this article; name left off by mistake.

    Bradwhyg makes a common mistake which is to assume that there is a fixed number of "jobs" in the economy, which does not change with population and other changes. In fact, when new workers enter the workforce, they do not just "take" jobs from this imaginary fixed number, they also engage in other activities (as consumers and taxpayers) which change the total number of jobs. Otherwise, not just new immigrants, but each kid who leaves high school or college and enters the job market would be pulling down everybody else's wages. Every worker would be the enemy of every other worker.
    The problem with the system of undocumented labor is that because those workers are repressed, they are forced to accept lower pay and so can not contribute to the economy as much as other workers do through their spending and their taxes. This is why legalizing the undocumented would benefit the economy; because their employers would have to pay them more and so they would end up spending more in the economy and also paying more taxes because of higher incomes. This would create more jobs in the public and private sector.
    As for Center for American Progress having its own agenda, this is no argument unless you can demonstrate that such an agenda distorts the information and analysis which it puts out.
    Finally, why the snide remark about Hinojosa-Ojeda obviously being biased? Can you tell this from his Spanish surname alone?

    Posted by Emile Schepers, 04/19/2010 11:20pm (4 years ago)

  • First the Center for American Progress is a pro CIR/ Amnesty organization. Any study done by that organization will reflect their political point of view. It is also interesting that the "research" was done by Raul Hinojosa-Ojeda. Obviously he wouldn't have an agenda.

    Secondly the only way CIR would boost the GDP is if the illegal aliens brought their jobs with them. So long as they are taking jobs from Americans their presence reflects a negative. Currently the US imports 125000 legal foreign workers each month thru the various visa programs. The US at this time is only creating at most 95,000 jobs a month. There is a negative 30,000 jobs available each month, 360,000 a year. There are an estimated 8 plus million illegal aliens working, while 15 plus million Americans are unemployed. The US gov is still currently using the 12 million figure for total illegal aliens. Even if the entire 12 million illegal alien figure were working, you still have the original 15 million unemployed Americans plus what ever additional Americans became unemployed by displacement.

    Basic economics have shown that a surplus of labor always leads to a decrease in wages. A decrease in wages, which are already at a 30 year stagnation level will not increase the GDP.

    The "study" is assuming many things are going to happen if illegals are legalized. It is assuming American workers are all currently employed. Newly legalized workers will start making more money and move up the economic ladder. And most importantly that former illegal aliens will stop sending money abroad and spend it in the US.

    Posted by Bradwhg, 04/19/2010 10:58pm (4 years ago)

  • I'm a US citizen and I agree. Amnesty for Illegals as soon as possible is in the best interests of the nation.

    Posted by Hector Maquieira, 04/19/2010 10:35pm (4 years ago)

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