The Economic Impact of Immigration Reform
The United States is a nation built by immigrants and, throughout history, immigrants have kept our workforce diversified, businesses on the cutting edge, and helped to keep the country’s economy growing. However, with immigration reform legislation currently making the rounds in Congress, it is essential that accurate estimations of the economic costs and benefits to be experienced are thoroughly examined in relation to any specific bill.
Benefits of Immigration Reform
There is an agreement among the government and industry leaders in the U.S. that this country should be the world’s leading destination for highly skilled workers. Without the H-1B visa program, American employers could never be matched up with the right foreign nonimmigrant worker with the skill set needed. Without this program, there are a lot of employers who would not be able to find workers who possess the science, technology, engineering, and mathematical skills the company needs to innovate, grow, and boost the economy.
American has a rapidly aging society, particularly as the “Baby Boomer” generation is now entering retirement age. There is a growing consensus among both conservatives and liberals that shows immigration reform is needed not only to raise wages, but to in effect ensure the labor-force needs of the U.S. can be met by available foreign nonimmigrant workers.
According to a study done by the Bipartisan Policy Center and Macroeconomic Advisers entitled “Immigration Reform: Implications for Growth, Budgets, and Housing,” immigration reform would bring about many benefits to the U.S. economy. Specifically addressed in the study was the Immigration Modernization Act (S.744).
Reformation of S.744 would have the following impact on the American economy:
- Raising the U.S. wage by 0.5 percent, in the long term, (although wages would fall at first by approximately 0.2 percent during the first ten years, due to the induction of new workers into the workforce).
- Increasing the economic growth of America by 4.8 percent, as the parameters are measured by the Gross National Product.
- Lowering the federal deficit by $1.2 trillion (estimated to lower by $180 billion in the first decade and by $990 million in the second decade).
- Offset the aging and retirement of native-born workers by adding to the working population 13.7 million new workers who are primarily younger people. Only 6 percent of these individuals would be age 65 or more, as compared to 20 percent of American residents, as a whole.
- Increasing the demand for housing, which will stimulate additional spending on real estate and residential spending by roughly $68 billion each year.
- Increasing the size of the work force by approximately 8.3 trillion workers, which is an increase of around 4.4 percent.
What If Nothing Is Done?
Today, there are approximately 11 million undocumented illegal immigrants living in America. That’s a conservative estimate and if nothing is done with immigration reform, the current problems will remain. When a worker is working without authorization, there is no way to ensure that the wages they are paid are legal, their taxes are being paid or withheld properly, or that they are not being abused, driving wages down and stifling the economy of the United States.
Conservative economists feel modernizing the U.S. immigration system will stimulate economic growth and create more jobs. If America were to modernize its legal immigration system towards a merit-based system, it would help attract more investors, entrepreneurs, and skilled workers. More people from foreign countries would be open to coming into the United States legally to build a better life and in turn, pay taxes and open businesses which could potentially create more jobs for American workers.