Immigration's Effect on Economy is Murky

Immigration's Effect on Economy is Murky
Thursday , March 30, 2006
By Greg Simmons
Fox News

WASHINGTON — As the Senate works on a bill to impose the broadest reforms on immigration in 20 years, the debate continues to percolate over the impact on the U.S. economy by the presence and contributions of illegal immigrants.

Messages are mixed on the strength of the American economy, and the role of immigration is one of the main arguments being made on both sides of the debate over whether to tighten the flow of illegal immigrants or to make it easier for them to enter the country to prop up low-paying industries.

Wednesday, the Senate began debate on immigration reform after the Judiciary Committee forwarded a bill Monday that would increase spending on border security as well as create a guest-worker program favored by pro-immigration groups and President Bush. The committee measure differs from a House bill sponsored by Rep. James Sensenbrenner, R-Wis., that does not give leniency to those already in the country illegally and would create further restrictions, including stiffer penalties on employers and the illegal aliens themselves.

Determining the impact of illegal workers on employment rates, GDP and health care costs, among other numbers, is tricky because of the nature of their being undocumented. Government and private industries can't track numbers ­­— productivity, purchasing patterns or wages, for instance — like they would for legal sectors of the economy, because the underground market is just that.

The limitation automatically puts those interested in the finding out the economic impact of illegals at a disadvantage.

"There's no simple answer. It's very complex," said Michele Waslin, director of immigration policy research for the immigrant friendly National Council of La Raza.

Waslin's group and others seeking to expand the rights of immigrants to the United States say based on their findings, the economic balance falls in favor of an immigrant-friendly society.

Waslin cites as supporting evidence employment rates among immigrants — 94 percent among undocumented male workers, according to the Pew Hispanic Center; Social Security Administration statistics — more than $500 billion in unclaimed revenues attributed to payments from illegal workers; and government spending on immigration enforcement activities — $4.9 billion in 2002, according to the Migration Policy Institute, up from $1 billion in 1985.

"We're spending more and more money with fewer results," Waslin said of border security spending.

Waslin added that the United States has for some time been shifting to a higher-tech, better-educated society that isn't producing janitors, farm workers and other low-wage, low-education employees, even though the demand for those positions is strong. Regardless of whether Americans want to do the jobs, they aren't, and the jobs still need to be filled, she said.

"Americans aren't going to take the jobs at the current wage and work conditions being offered," Waslin said.

But Jack Martin, special projects director for the Federation for American Immigration Reform, and others say the economic balance tilts negatively as a result of immigration.

According to a Pew Hispanic Center study released in March, illegal immigrants entered the country last year at an estimated rate of about 1,300 per day, and an estimated 11.5 million to 12 million illegals live inside the United States. Pew estimates that illegal immigrants account for nearly 5 percent of the U.S. labor force, or about 7.2 million workers.

Martin said with a calculated 500,000 illegals entering the borders each year, the U.S. economy, and the country as a whole, can't sustain itself. He cited growth rates published by the Census Bureau that put the country doubling in size in the next 70 years.

Citing a "fiscal drain" of billions of dollars in education and urgent health care, among other services, the country will be choked in traffic and sprawl. To give an example of the negative impact, Martin said he's looked at the costs of illegal immigration to education, health care and prison systems in the Southwest and California. Californians, for instance, are paying about $1,000 per household to cover the costs generated by supporting an illegal immigrant population, he said.

Immigration in its current form "distorts our economy and it's having significant effects on the way that our society will be in the in the future if we don't get control over it," Martin said.

That's not the picture offered by Brent Wilkes, executive director of the League of United Latin American Citizens, who said immigrants, legal and illegal, pay property and sales taxes, spend their money here and are helping to revitalize communities that were depressed 20 years ago.

Wilkes cites a study by University of California-Los Angeles professor Raul Hinojosa, which says the total economic contribution of illegal immigrants from what they produce and what they spend is about $800 billion. Losing that by cutting off the flow of immigrants entirely and sending back the ones who are here illegally would be a tremendous blow to the gross domestic product, he said.

"If you get rid of $800 billion in economic activity, that's a big hit on the U.S. economy," Wilkes said.

Martin countered that immigrants, legal and illegal, aren't spending as much money in the United States as their native-born counterparts would be. He cited widely distributed statistics that $15 billion or more is sent home to Mexico every year in the form of remittances, or cash and wire transfers to family members.

Martin said he's also fearful that the current wave of immigration is actually chipping away at the underpinnings of society, an expense that is incalculable in dollar terms.

Waving off any idea that he's against cultural intrusion — he said he's lived in Latin America and speaks multiple languages — Martin said he has seen signs of a growing class divide in the United States, signs that are more often associated with developing countries. For instance, gated communities, increased wage discrepancies and more barriers to class mobility.

"That's the sort of big picture-type trend that we have to be concerned about," Martin said

The small picture, too, is a concern, said Mark Krikorian, executive director of the Center for Immigration Studies. Although he concedes that definite benefits for some specific sectors of the economy come from the illegal workforce, the overall costs to American citizens outweighs the benefits of illegal immigration.

"There's no question that illegal immigration, that unskilled immigration of all kinds, is a losing proposition," Krikorian said.

Krikorian's group just released a study this week that says illegal immigration is most harming the unskilled sector of the labor force. Krikorian said it shows current U.S. immigration policy isn't looking out for its own citizens.

A study of Census Bureau data revealed that while U.S. unemployment is under 5 percent, unemployment among high school dropouts is 14 percent and among those with only a high school education is about 7 percent, he said.

Krikorian said that shows that despite the claims otherwise, for non-immigrants "there isn't full employment in the low-skilled labor market."

Krikorian said that until immigration policy changes, the problem boils down to a simple point — low-wage citizen workers are being crowded out of low-pay jobs by illegal immigrants.

"These are crummy jobs and ... they're getting crummier," Krikorian said.