The Economics of Immigration Reform

The Immigration Policy Center published a report finding legalizing undocumented workers would improve wages and working conditions for all workers and increase tax revenues for cash-strapped federal, state, and local governments. The report entitled, “The Economics of Immigration Reform: Legalizing Undocumented Immigrants Would Benefit All U.S. Workers and Businesses,” further concludes that comprehensive immigration reform that includes a path to legalization for undocumented workers would pay for itself through the increased tax revenue it generates, in contrast to the failed and costly enforcement only immigration policies that have pursued. The report, albeit unprecedented, comes at a critical point after the U.S. economy collapsed in 2008, and we applaud the Immigration Policy Center for reminding America that comprehensive immigration reform is a workable answer to our vexing immigration problems.

Some of the Center’s findings:
Legalization increases government revenues by bringing ALL workers into the tax system.
  • The Congressional Budget Office (CBO) estimated that $66 billion in new revenue over 10 years would have been generated if the 2006 immigration reform bill, which would have legalized most of our undocumented population, had passed.
  • New legal immigrants to the U.S. would provide a net benefit of $407 billion to the Social Security system over 50 years, according to a study by the National Foundation for American Policy.
  • The “underground” construction workforce in New York City represented $342 million in lost tax revenue in 2005 because of employers who paid workers “off the books,” according to a study by the Fiscal Policy Institute.
Workers with legal status earn and spend more.
  • Undocumented workers who were legalized in 1986 paid more in taxes and spent more because their wages increased by roughly 15% after five years.
“Enforcement-only” policies are expensive and don’t work.
  • Even though spending on immigration enforcement has skyrocketed, the number of undocumented immigrants in the U.S. tripled to 12 million between 1990 and 2008.
  • The CBO estimated that a mandatory “E-Verify” employment-verification program would decrease federal revenue by $17.3 billion over 10 years because more workers would be paid “off the books.”
  • Trying to deport 10 million undocumented immigrants would cost at least $206 billion over five years, according to a study by the Center for American Progress.
America’s vexing immigration quandaries have failed through our current enforcement only policies and attacks on immigrants, carried through political pundits blasting anti-immigrant sentiment over airwaves. Blaming immigrations for America’s economic woes fails to appreciate that comprehensive immigration reform is a start to fixing America’s broken economy.

Copyright 2009 MALDEF — Mexican American Legal Defense and Educational Fund