The Financial Consequences of an Open Immigration Policy
The U.S. has reached both an inflection point and a tipping point in regard to the economic effects of an open borders immigration policy. The topic has always been the red headed step child, in that those in the know where aware of it, but didn’t want to tell the dirty little secret to the rest of us. We’ve seen in increasing abundance of late disturbing images from the southern border depicting a massive migration into the United States. Let it be said first that this is certainly a humanitarian crisis, with anyone having a heart understanding the toll it is taking on the vast majority of those standing in line to swim across the Rio Grande et al to enter America. With that said however, what you don’t hear on the evening news are the deleterious financial consequences that go along with it.
Prior to the numbers increasing almost exponentially, in the mid 2010’s studies suggested that immigration into the United States was a net positive. According to the National Academies of Sciences, Engineering and Medicine, America’s immigrant population climbed by more than 70 percent between 1995 and 2014, when it stood at 42.3 million, accounting for roughly 13 percent of America’s total population.
The primary economic concern centers on the added pressure on the work force and whether the marginal productivity is positive or negative. Regardless of whether we view this labor as legal or illegal, the aggregate influence must be what is analyzed. One must note that the influx of immigrants is one that almost exclusively occupies the lower tranches of the labor market. The changing demographics in America have produced a continued need for surplus labor in areas that were either occupied by local workers or are entirely new today. This directly contradicts one argument that immigrants are taking jobs away from native Americans. However, although immigrants increase the supply of labor, they also spend their wages on homes, food, TVs and other goods and services and expand domestic economic demand. This increased demand, in turn, generates more jobs to build those homes, make and sell food, and transport TVs. Standard economic theory implies that while higher labor supply from immigration may initially depress wages, over time firms increase investment to restore the amount of capital per worker, which then restores wages. We must remember that not all immigration labor is in the lower tranches. Immigrants also bring a wave of talent and ingenuity, accounting for a disproportionate share of workers in the fields most closely tied with innovation. A 2021 survey of the top fifty venture capital funded companies found that half had at least one immigrant founder and three quarters had immigrants in top management or research positions.
Data will show that immigrants in general, whether documented or undocumented, are net positive contributors to the federal budget. However, the fiscal impact varies widely at the state and local levels and is contingent on the characteristics of the immigrant population, including, age, education, and skill level living within each state. Prior to the recent massive wave of illegal immigration this notion of being net positive was plausible. More often than not, immigrants are less educated and their incomes are lower at all ages than those of natives. As a result, immigrants pay less in federal, state, and local taxes and use federally-funded entitlement programs such as Medicaid, SNAP, and other benefits at higher rates than natives.
According to the Federation for American Immigration Reform (FAIR), the net cost of immigration increased from the $113 billion their 2010 study found to $116 billion now. Even after accounting for taxes paid by illegal immigrants, they’re still a massive burden on the overall economy. Nobel laurate Milton Friedman was probably correct in his day by saying that illegal immigration could actually be preferable to legal immigration, as illegal immigrants wouldn’t be able to benefit from our welfare state as non-citizens. If only he was right.
While illegal immigrants are estimated to pay roughly $19 billion in taxes, there are a myriad of those who pay no taxes at all. An argument could be made that these same jobs being performed by immigrants would be performed by citizens at a higher wage, thus resulting in greater tax revenue for the government.
In the long run, many economists say, immigration is a net economic positive. Because most newcomers are in their prime working years, they tend to contribute more in taxes than they draw in federal benefits. This is especially important as the U.S. population ages. Immigrants, whether high or low skilled, legal or illegal, are unlikely to replace native-born workers or reduce their wages over the long-term, though they may cause some short-term dislocations in labor markets.
This author is either ignorant or completely dishonest. As someone who works in the construction industry, I have witnessed the displacement of American workers by lower wage, non tax paying illegal labor. Many illegal immigrants are not tethered to any local community and can follow the labor market around much easier than citizens. The illegal immigrant will always have an unfair financial advantage over the citizens and legal immigrants.
Drsique, in the words of Horist, maybe you should have just got a better job, get some education, work your way up the ladder to a job an immigrant can’t get.
While I honestly think that’s a stupid way to look at this, I feel for your pain. It sucks to get beat out over money, race, religion, and even affirmative action, whether you support or not. Fresh out of college, I lost a job racking rocks (to prep new homes for seeding), got fired by a black man and replaced by his nephew. Two years later, I cruised by in my new Camero and waved. Once I lost a job promotion to a person who was black and I was more competent, experienced, and better looking (kidding). I was pissed, but my uber-partisan liberal mother noted: get over it, it’s not like your “position” (nice way of saying white Christian male) has not provided a benefit or two. I was humbled and grumbled no more. Did take 2 more years and a lot of smiling to get that promotion, but in the end, God blessed me with a much better job anyways. Thanks mom.
I learned a silly saying that has guided my through this; I am sure if you take it to heart, you will do better in your construction career. IF IT’S TO BE, IT’S UP TO ME. I know, poster with a cute cat, but really, in the end, Highlander, there can be only one. And that one is you.
There will always be competitors who charge less. Wait, the longer you work, the longer you work better than most, the more money you will make and, at some point, everyone will be cheaper than you —– immigrant, illegal OR legal US citizen. It’s the circle of life.
Still sucks, but if it’s to be, it’s up to me, and I am sure you can rise to that occasion. You are, after all, an American. It’s what we do. We persevere, we adapt, we overcome, we come out on top. While being uber fair to all, or at least strive to be.
OK, I am lowering the flag and going back to taxes. I think turbo tax messed up on the automatic stuff. Or, if I am wrong, gonna be some cheating goin on….. :>)
JT, I like the cut of your jib; sourced and includes some counter point. Better than most round these parts, thanks for that. However, a FAIR story is not fair to most and unfair to many. You should second source it, although I found your ending to move you much closer to fair and balanced. Too bad we had to wait until the end.
The first chart, basically a “where were you born” chart is misleading since potentially each datapoint could be a legal, what would that say about YOU? It would say you’re a spinner which I don’t think is the case given the rest of the story. But this chart could be misleading. For example, in the 1860’e to early 1900’s, it is the highest ever. That’s when my family came over and were foreign born but legal. My wife’s father, the 60’s and same: legal. And, not that it’s important, but we paid a price: Irish need not apply, could not vote, Polacks too stupid to work good jobs, you know the drill — legal but not equal under the law. So, what does the chart say about legal and illegal post 2020 — we really don’t know — that seems like spin because we know what the assumption is round here especially since you directly link it to the southern border. FYI – asylum seekers are legal.
But couldn’t one conclude from this chart: good enough for us in 1900, turned out fucking a skippy matter of fact, so why not OK today? Not enough data I would conclude to make any conclusions. But you have, and that’s spin.
Why question FAIR? FAIR is a lobbyist organization with the expressed goal of reducing immigration. Their stats should be viewed with that in mind. It was founded in 1979 by an eye doctor from Michigan who also was a white nationalist. It makes about $11 million a year. They have been financially supported by racist groups over the years and have a number of ties to white supremacy. He also created CIS which supported and help create Trump’s family separation and other sweet immigration policies.
I have used both as sources, but usually back up with a secondary source of the non-white-supremacy type. SPLC rates FAIR as a hate group. Since much of FAIR’s activities are media based, they are tracked as an EXTREME hard right group with low factual content as in “Overall, we rate FAIR Questionable based on Extreme Right-Wing Bias as it relates to immigration, promotion of propaganda and conspiracies, as well as having connections to documented Hate Groups.”
For CIS, basically the same: “Overall, we rate CIS a questionable source based on publishing misleading information (propaganda) regarding immigration and ties either directly or indirectly to the John Tanton Network, a known White Nationalist.”
One reason I have used them is that they attempt to count things others do not as in it’s the only place I can find a number. Still, I try to bound it with other sources for support. Tom does not, he relies on a single source, a hard right extremist source, that has been BUSTED many times in the past.
But you redeem yourself somewhat in your close: “While illegal immigrants are estimated to pay roughly $19 billion in taxes, there are a myriad of those who pay no taxes at all. An argument could be made that these same jobs being performed by immigrants would be performed by citizens at a higher wage, thus resulting in greater tax revenue for the government.” Not sure what a myriad is numerically, but let’s be clear:
– Everyone pays sales tax if the seller does not cheat
– Unless the payer excludes it, fed and state taxes are deducted from the paycheck. A sizeable number pay these taxes and never get full benefits
– Everyone pays property taxes even if they rent, property tax often pays most public school expenses so illegals pay their fair share here.
– It’s estimated they put in $12B to Social Security every year and will never get it back. So, your $19B total looks short. The SS tax payment is a big one against the 1.5T we pay out each year, it’s noticeable.
– If asylees get a work permit post 180 days of being here, they pay taxes
You add: “In the long run, many economists say, immigration is a net economic positive. Because most newcomers are in their prime working years, they tend to contribute more in taxes than they draw in federal benefits. This is especially important as the U.S. population ages. Immigrants, whether high or low skilled, legal or illegal, are unlikely to replace native-born workers or reduce their wages over the long-term, though they may cause some short-term dislocations in labor markets.” Got that right brother, and then add in the tax and social security missing, as noted above, and you gots rock n roll.
Thank you for your support :>) I think the big one here is allowing illegals to use public school system; that’s a huge payment although, let’s face it, they are working, living, and financially supporting the community that pays — so that puts some fairness into it. Everyone pays property tax, even renters given the owner does via their rent fees, so even the biggest benefit, public school, they put money into just like the rest of America. The rest is chump change when balanced against the payments. IMO. And if we raised minimum wage above the poverty level, much of the SNAP and WIC payments would disappear. Of course, Horist would not like that since the price of his Big Mac would rise to the place it should have been all along before his policies subsidized McDonalds slave pay.
Like the story, however a little more balance like the SS payment and perhaps a higher priority to your close……. Better than most around here, thanks.