Is Immigration Reform Bad for the Struggling American Economy

The issues surrounding the U.S. immigration problem have long been a hot button topic. Interestingly enough, it wasn’t much of a hot topic during the recent 2012 presidential debates, though it’s certainly been discussed thoroughly in the media. That’s because everyone realizes that immigration plays a central role in how America recovers economically. But will immigrants hurt or help the economy?


Are Immigrants Contributing to the Local Economy?

By looking at how much immigrants have contributed through income, taxes/property and sales, we can see how much they have hurt or helped the economy in the past. Then you would need to find the cost to the government for public services, including healthcare, law enforcement and education. This however, is not easily done.

The intangible problems of a person depending on society for services while participating in the economy makes for a difficult equation. Many advocacy groups, government agencies and academic institutions have issued reports on state and local fiscal impact of illegal immigrants on the budgets. Drawing one conclusion is difficult. The agencies issuing the data reports used different criteria and methodologies to come up with their findings.

2012 Census Data

According to the American Immigration Counsel’s outlet, Immigration Impact.com, the 2012 census showed 45.5% of employed immigrants are naturalized citizens. When broken down, it is obvious that job rates for this group grew at a higher rate and for a longer time than those of immigrants who are not citizens. Naturalized citizens have experienced employment growth since 2009 and every year since. There is an expected increase of 5.6% in 2012.

Politically Skewed Data

While it is encouraging to see naturalized citizens acquiring work, many anti-immigration groups have included both naturalized and undocumented workers in employments counts, making it appear as though undocumented workers are taking all jobs created in the U.S. This incendiary practice simply makes it harder to think clearly about the problems of job creation and immigration. Because it’s hard to find accurate information, it’s best to see what happens in states that welcome immigrants and those that don’t.

Virginia vs Arizona

Both Virginia and Arizona report high numbers of immigrant residents. The State of Virginia has been more open towards accepting immigrants, but hasn’t taken active steps to welcome them or offer a path to citizenship. Arizona took a strong stance against immigration in 2007 and saw many negative effects. Here are some findings on how each state fared following Arizona’s law change making it harder for undocumented immigrants to find jobs there. Note: the nation was suffering through the real estate recession at the time.

  • In Virginia, home prices were down about 15 percent over the recession years 2006 – 2010, compared to the 30 percent national average. Arizona home prices fell over 40 percent during that time.
  • US Census data showed an approximate drop in new business formation of 4 percent in Virginia versus an 8 percent decline in Arizona.
  • Income taxes collected in Arizona dropped 3.9% the year the state passed E-verify laws. Economists believe employers of undocumented workers opted to pay workers under the table rather than lose them to E-verify laws. In Virginia, income tax revenues continued to rise, despite a recession.

These are just a few of the economic indicators we can compare when looking at these two states. Forbes outlined some specific fallout Arizona experienced after passing the E-verify laws:

  • Arizona lost $141 million from its economy
  • Tourism declines  caused 2,761 lost jobs
  • Farms lost over 15 percent of their workers. Documented and American born citizens did not take these jobs, despite a national recession occurring during the same time frame.

Looking at real-world results, rather than skewed estimates targeted to take one political stance over another, we find that squeezing out immigrants costs money and reduces tax revenues. This simple fact should make it clear that a total ban on undocumented workers doesn’t help the economy. Until a state passes a law that creates a path to citizenship and we gain the perspective of time, we won’t know if welcoming immigrants is the better solution. For now, we only know that banning undocumented immigrants is not the way to go.

One way to be sure immigrants contribute to our economy is through the EB-5 Visa program, which requires immigrants to make substantial investments in the economy and the created jobs. Find out more by visiting cn.eb5investors.com.

Image Credit: The Independent Report

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