Immigration
Step Four: Don't Allow History to Repeat Itself
FALSE PREMISE ONE: IMMIGRANTS TAKE JOBS & LOWER WAGES
The American people are – and will always be – our number one priority. So, as we figure out the best way to navigate the realities of immigration, it’s super important that we thoroughly understand the impact jobs and wages have on every American.
To that end, what effect do immigrants truly have on the American workforce? First, let us acknowledge that the impact unauthorized immigrants have on the wages of U.S.-born workers is extremely difficult to measure…. but some have tried.
A report by the National Academies of Sciences, Engineering, and Medicine (NASEM) – which was created in 1863 by President Abraham Lincoln to be the collective scientific national academy of the United States – released during the first Trump administration concluded “that the long-term impact of immigration on the wages and employment of native-born workers overall is very small, and that any negative impacts are most likely to be found for prior immigrants or native-born high school dropouts.”
“First-generation immigrants are more costly to governments than are the native-born, but the second generation are among the strongest fiscal and economic contributors in the U.S. This report concludes that immigration has an overall positive impact on long-run economic growth in the U.S.”
A study from the National Bureau of Economic Research (NBER) – a private, nonprofit, nonpartisan organization – revealed that “H-1B-driven increases in STEM workers in a city were associated with significant increases in wages paid to college educated natives. Wage increases for non-college educated natives are smaller but still significant.”
Looking from a broader perspective, two studies from IZA World of Labor – a German-based economic research institute – address the question of whether immigrants take the jobs of native-born workers. The first, conducted jointly with George Washington University and Temple University, found that “immigrants – of all skill levels – do not significantly affect native employment in the short term and boost employment in the long term.” The report goes on to say that “immigrants who are self-employed or entrepreneurs directly create new jobs. Immigrant innovators create jobs indirectly within a firm, leading to long-term job growth. New immigrants fill labor shortages and keep markets working efficiently. High-skilled immigrants contribute to technological adaptation and low-skilled immigrants to occupational mobility, specialization, and human capital creation; both create new jobs for native workers. By raising demand, immigrants cause firms and production to expand, resulting in new hiring.”
The second study, conducted jointly with University of California, Davis, said this: “Politicians, the media, and the public express concern that immigrants depress wages by competing with native workers, but thirty years of empirical research provide little supporting evidence to this claim. Most studies for industrialized countries have found no effect on wages, on average, and only modest effects on wage differentials between more and less educated immigrant and native workers. Native workers’ wages have been insulated by differences in skills, adjustments in local demand and technology, production expansion, and specialization of native workers as immigration rises. Immigration has a very small effect on the average wages of native workers. There is little evidence of immigration lowering wages of less educated native workers. In the long term, immigration, especially of high-skilled workers, increases innovation and the skill mix, with potentially positive productivity effects. In many countries, the share of graduate workers is higher for immigrants than for native workers. Firms have absorbed immigrants by adopting appropriate technologies, expanding production, and moving native workers into more communication-intensive jobs.”
Researchers from the UC Davis released another report in April 2024, this time as a NBER working paper series, that “extended and updated a framework that has been broadly used since the 2000s-2010s, to enrich and update our understanding of the recent national effects of immigration on U.S. wages, employment and labor markets.” They concluded that “immigrants have a substantial degree of productive complementarity with natives. This offsets the competition effect, resulting in a boost of native wages and in an increase of natives’ employment-population ratio in response to inflows for most native workers.”
The researchers continued: “We also show that after the year 2000, inflows of immigrants became more concentrated among college educated compared to the past, and that their complementarity with skilled natives was large enough not to harm, but rather to boost the wages of less educated American workers. Additionally, we find that one possible mechanism through which immigration results in a positive complementarity and a wage boost for natives is through positive occupational responses among natives. This is consistent with specialization between natives and immigrants along the lines of comparative advantage, so that an increase in immigration prompts natives to upgrade and specialize in terms of occupations.”
FALSE PREMISE TWO: IMMIGRATION COSTS THE UNITED STATES WAY MORE THAN IT BENEFITS US
In July 2024, the Congressional Budget Office (CBO) released a report saying the recent immigration surge “boosts federal revenues as well as mandatory spending and interest on the debt in CBO’s baseline projections, lowering deficits, on net, by $0.9 trillion over the 2024–2034 period. Some of the effects on the budget result from the increase in the number of people paying taxes and collecting federal benefits. Other budgetary effects stem from changes in the economy over that period that are brought on by the surge, including increases in interest rates and in the productivity of workers who are not part of the surge.”
That’s pretty compelling stuff. However, drilling down on other numbers involved in this analysis can be a complex, unsatisfying task. For example, both supporters and critics of immigration use the exact same report by the NASEM to defend their positions. This is a perfect illustration of how intricate the issue is, and how there are costs and benefits on both sides.
For instance, the NASEM analysis found that lower-income households benefit from lower consumption costs (i.e., clothing, housing, food) that exist because of immigrant labor. But, at the same time, these same people are the most affected by any negative wage impact that may occur because of immigrant labor. In the end, one of the report’s double-edged conclusions was that “through lower prices, low-skilled immigration created positive net benefits to the U.S. economy during the last two decades of the 20th century, while also generating a redistribution of wealth from low- to high-skilled native-born workers.”
That said, on balance the report determines that “immigration is integral to the nation’s economic growth.” “Immigration supplies workers who have helped the United States to avoid the problems facing stagnant economies created by unfavorable demographics – in particular, an aging (and, in the case of Japan, a shrinking) workforce. Moreover, the infusion by high-skilled immigration of human capital has boosted the nation’s capacity for innovation, entrepreneurship, and technological change. The literature on immigrants and innovation suggests that immigrants raise patenting per capita, which ultimately contributes to productivity growth. The prospects for long-run economic growth in the United States would be considerably dimmed without the contributions of high-skilled immigrants.”
One of the more interesting points of the report is that, while first generation immigrants add a certain amount of cost to the system, this is balanced by the following generations. By the second generation, America sees a net positive result, thanks to an increase in education levels and, as a result, wages.
A 2024 analysis by the Institute on Taxation and Economic Policy – a nonprofit, non-partisan think tank – discovered this:
Undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022. Most of that amount, $59.4 billion, was paid to the federal government while the remaining $37.3 billion was paid to state and local governments.
Undocumented immigrants paid federal, state, and local taxes of $8,889 per person in 2022. In other words, for every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue.
More than a third of the tax dollars paid by undocumented immigrants go toward payroll taxes dedicated to funding programs that these workers are barred from accessing. Undocumented immigrants paid $25.7 billion in Social Security taxes, $6.4 billion in Medicare taxes, and $1.8 billion in unemployment insurance taxes in 2022.
At the state and local levels, slightly less than half (46 percent, or $15.1 billion) of the tax payments made by undocumented immigrants are through sales and excise taxes levied on their purchases. Most other payments are made through property taxes, such as those levied on homeowners and renters (31 percent, or $10.4 billion), or through personal and business income taxes (21 percent, or $7.0 billion).
Six states raised more than $1 billion each in tax revenue from undocumented immigrants living within their borders. Those states are California ($8.5 billion), Texas ($4.9 billion), New York ($3.1 billion), Florida ($1.8 billion), Illinois ($1.5 billion), and New Jersey ($1.3 billion).
In a large majority of states (40), undocumented immigrants pay higher state and local tax rates than the top 1 percent of households living within their borders.
Income tax payments by undocumented immigrants are affected by laws that require them to pay more than otherwise similarly situated U.S. citizens. Undocumented immigrants are often barred from receiving meaningful tax credits and sometimes do not claim refunds they are owed due to lack of awareness, concern about their immigration status, or insufficient access to tax preparation assistance.
Providing access to work authorization for undocumented immigrants would increase their tax contributions both because their wages would rise and because their rates of tax compliance would increase. Under a scenario where work authorization is provided to all current undocumented immigrants, their tax contributions would rise by $40.2 billion per year to $136.9 billion. Most of the new revenue raised in this scenario ($33.1 billion) would flow to the federal government while the remainder ($7.1 billion) would flow to states and localities.
FALSE PREMISE THREE: UNDOCUMENTED WORKERS VIOLATE OUR "RULE OF LAW."
Critics argue that since it’s against American law to be an undocumented worker in this country, these workers are inherently criminals.
This premise is absurd. It’s high time we demonstrated a little empathy and a lot of compassion. Many Americans are undoubtably against 1787’s ideas, but that doesn’t mean those same people cannot – or should not – have compassion for those who are so desperate to live in our glorious country. How about demonstrating a little gratitude, people? Sometimes we forget, but it is entirely possible to hold two ideas in our heads at the same time.
Universally, our deepest desire is to create the best life possible for our families. Every person who was born in America needs to answer this question, truthfully: If you were born in Mexico and your children were living in abject poverty [oh and, by the way, you make $14.83 a day (the general minimum wage in Mexico), are feeding your family nothing but rice and beans for the second month in a row, living in a house with no running water, all while dodging bullets from dangerous drug cartels], what would you do to create a better life for them?
Easy answer: Every single one of us would do anything – anything – necessary to provide them a better future. Build a wall…we would dig a tunnel. And that would not make us criminals.