The Economic Arguments Used Against Immigrants, and Why They’re All Wrong | by Khoi B. | Medium
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The Economic Arguments Used Against Immigrants, and Why They’re All Wrong

Undocumented populations don’t burden society — if anything, they keep it running

Khoi B.
Khoi B.
Aug 5, 2018 · 12 min read
Photo: Drew Angerer/Getty Images

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I distinctly remember my first economics course. It was held in a large lecture hall in the business building of my university, one of the nicer facilities on campus. Around 50 students would groggily shuffle into the room wearing sweatpants and baseball caps, some sporting hangovers under their eyes and others wearing mosaics of pizza stains and cheap Chinese food on their school T-shirts.

My professor was not an organized man. His lectures more resembled ramblings than a lesson plan. Every few sentences he would suddenly begin shouting a reference to a sitcom from the ’60s at the top of his lungs to momentarily jolt his bored audience back into reality. He zipped through examples like they were nothing, one of them being a supply-and-demand curve regarding labor and wages.

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A simple supply-and-demand graph that can be found in any introductory economics course.

“Labor works the same way as any other commodity. What happens if there are fewer workers suddenly?”

The class replied, “Wages rise.”

“That’s right. And what happens when a bunch of workers suddenly show up?”

“Wages fall,” the class responded in a monotone.

“Excellent! Now what about this example about bikes…”

That was all that was discussed in terms of labor economics, a nuanced and complex field that entails an ungodly amount of calculations, research, and variables. I do not blame my professor for breezing through this topic, as he had a lot of other things to get to, and the intricacies of wage determination may not be appropriate for a beginner economics class.

But the effect was that many students who would not go on to higher economics courses left that class one step away from deducing that an influx in immigrant workers will cause a drop in wages for the economy. Why? “Because that’s basic economics!”

This is what professor James Kwak at the University of Connecticut calls “economism.” He defines it as “the misleading application of basic lessons from Economics 101 to real-world problems, creating the illusion of consensus and reducing a complex topic to a simple, open-and-shut case.” It’s like learning the basic parts of a circuit in an introductory electronics class and then claiming that you understand how to build a supercomputer.

To clarify, I am not stating that supply-and-demand graphs are wrong. I’m saying that discussions of labor and economics cannot be based solely on that graph. Supply and demand is a basic concept, just like how counting is basic and necessary in math, but you need additional procedures and knowledge to find answers to complex calculations.

In my last essay, I told the story of my own family and stated that my stance on immigration is that first and foremost all immigrants are human, and that alone is enough to allow them to continue to live peacefully in the United States. This essay will jump more into the nitty-gritty numbers and facts that address faulty economic arguments often used among nativist circles.

1. “Undocumented immigrants don’t pay taxes!”

This is grossly untrue. According to a report by the Institute on Taxation and Economic Policy, undocumented immigrants contribute an estimated $11.74 billion in local and state taxes. This report further finds that if comprehensive immigration reform were to come through, tax revenues from undocumented immigrants could increase by $2.18 billion per year.

Various studies have also found that 50–75 percent of undocumented immigrants pay federal income taxes, either through individual tax identification numbers or false social security numbers. In 2014, Chief Actuary of the Social Security Administration Stephen Goss estimated in an interview with Vice News that undocumented immigrants contribute an annual $12 billion to social security. As Vice explains it:

Unauthorized workers usually demonstrate their employment eligibility with fake IDs and fake social security numbers. Once hired, [these workers] end up on the payroll and have taxes automatically taken out of their checks, like any other employee. That money then goes to the federal treasury to fund programs like Social Security and Medicare.

As to income taxes, the federal government set up individual tax identification numbers so that undocumented immigrants could file income taxes. They are incentivized to do this because it provides documentation of their residency as well as shows their “good character,” which has been a deciding factor in many immigration reform bills that offer pathways to citizenship.

The Institute on Taxation and Economic Policy found that undocumented immigrants pay an average of 8 percent of their income to taxes, compared to the average 5.4 percent paid by the top 1 percent of taxpayers.

In 2013, the Congressional Budget Office estimated that immigration reform (specifically that of S.744) would decrease our budget deficit by $135 billion over 10 years, and by about $820 billion over the course of 20 years. To clarify, this is not an argument specifically in favor for S.744, but to show that immigration reform would allow for undocumented immigrants to become documented, pay taxes, increase their access to the economy, and increase revenues for our country.

2. “Illegals are stealing jobs and driving down wages!”

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Image: Pew Research Center

Those wielding this prominent anti-immigrant argument have an oversimplified view of our economy. To them, if an immigrant gets a job, then a native-born American is therefore denied a job. They view the economy as a zero-sum game where you either win or lose, when reality is much more complicated.

One thing that many fail to understand is that most immigrants are taking jobs that native-born American workers do not want. Bloomberg reports that as ICE increases crackdowns on undocumented immigrants, American workers are failing to replace them. Tom Nassif, president of Western Growers Association, says that of the 2 million farm workers in California, 1.5 million are undocumented.

The Washington Post also reported on this interesting case study in North Carolina:

That year, 489,000 people were unemployed statewide. The North Carolina Growers Association listed 6,500 available jobs. Just 268 of those 489,000 North Carolinians applied, and 245 were hired. On the first day of work, 163 showed up, and a grand total of seven finished the season. Of the mostly Mexican workers who took the rest of the jobs, 90 percent made it through to the end.

The labor shortage in California has led farmers to increase wages and even offer health care and 401(k) packages. This still has not been sufficient to lure enough American-born workers into the field. Why? I’ll save you $6,000; several monthslong courses on microeconomic theory, macroeconomic theory, and labor economics; and four gut-wrenching tests on indifference curves, consumption bundles, and budget restraints; and tell you that it basically comes down to Americans not wanting the jobs that undocumented workers have. American citizens have options. Undocumented immigrants don’t. Several studies have shown that undocumented immigrants typically work in riskier jobs than native-born Americans and receive much lower incomes than both native-born workers and authorized immigrants. Americans are only willing to work these physically laborious occupations for a wage that is far above what businesses are willing to pay.

If that’s not enough, Maria Enchautegui of the Urban Institute compared the occupations of undocumented and native-born workers without a high school education, and found that these workers compete for completely different jobs. The Brookings Institute echoed these findings in its own analysis, adding that immigrants do not cause any sizable decrease in wages or employment. In fact, the institute found data indicating that immigrants actually increase wages and employment for U.S.-born workers.

Does that mean that immigrants don’t cause any negative effects on employment? No. Every action has its pros and cons. But the list of cons for immigrant workers is very small.

A pathway to citizenship or legal residency would be a boon to our economy, reaping much-needed jobs and tax revenues for cash-strapped communities.

Let’s look at another example from California. Between 1987 and 2002, over 35,700 Vietnamese manicurists entered an industry that, in 1987, only had a total of 35,500 total workers. That means that there were more Vietnamese workers entering the industry than there were total manicurists in the entire state. That’s a huge influx. Researchers wanted to examine if these Vietnamese workers were taking business from non-Vietnamese manicurists. They found that for every five Vietnamese manicurists who entered the industry, two non-Vietnamese workers were displaced.

This doesn’t seem to be helping my pro-immigrant argument, does it? But let’s examine the study more closely. Researchers looked at whether these displacements were due to non-Vietnamese workers leaving the industry or choosing not to enter the industry in the first place. They found that only 9–11 percent of displacements were instances of workers being pushed to exit the industry, which yes, is unfortunate, but it is a very small number. Additionally, researchers made the surprising discovery that for every five Vietnamese workers entering the industry, three jobs were created.

This shouldn’t be that shocking, since immigrants are reportedly twice as likely as native-born Americans to start businesses. A study by the Partnership for a New American Economy found that in 2010 more than 40 percent of Fortune 500 companies were founded either by immigrants or their children.

It’s been pointed out to me that these sources refer to all immigrants and do not differentiate between legal and unauthorized status. This is true, but it only reaffirms the need for a legal pathway. Legalizing the status of millions of undocumented immigrants would grant them access to financial capital and permits that would allow their businesses to expand. Currently, it is difficult to get any loan approved without a social security number, and many undocumented immigrants are put off from attaining the permits required for entrepreneurship because it would mean interaction with law enforcement, and potentially deportation.

Currently, undocumented immigrants must be the owner and sole proprietor of their business, because incorporating their business would force them to fill out an I-9 form, legally making them an “employee.” Since it is illegal to employ undocumented immigrants, undocumented entrepreneurs would be breaking the law by employing themselves. A pathway to citizenship or legal residency would be a boon to our economy, reaping much-needed jobs and tax revenues for cash-strapped communities. The New American Economy reported that in 2014, 9.5 percent of working-age undocumented immigrants were entrepreneurs, generating $17.2 billion in income.

3. “They leach off our welfare!”

Undocumented immigrants are unable to access most welfare programs such as food stamps, the Child Health Insurance Program, non-emergency Medicaid, Temporary Assistance for Needy Families, and Social Security. They are also barred from Affordable Care Act insurance exchanges and subsidies.

There are only a few programs that undocumented immigrants are eligible for: the Special Supplemental Nutrition Program for Women, Infants, and Children; Head Start; and Emergency Medicaid.

The nutrition program, known as WIC, helps low-income mothers and children purchase nutritious food and formula vital to healthy development at an early age. According to the Guardian, research has “linked the program to declines in early childhood obesity, low birth weights, premature births and infant deaths, and an increase in childhood immunizations.”

Is our society really at the point where we are going to deny pregnant women medical care because of their citizenship status?

From an economic perspective, it’s also cheaper. By ensuring that a child has the appropriate nutrients in the earliest stages of life, we reduce the risk for health complications later in life, which reduces the tax dollars needed to pay for health care.

Critics will always be able to name a local or state policy that benefits undocumented immigrants. They may bring up public education and argue that our schools shouldn’t be teaching noncitizens. But if undocumented immigrants have shown that they pay their fair share in taxes, why shouldn’t they benefit from the programs they are funding?

4. “Immigrants are coming here to use up our health care!”

Interestingly enough, undocumented immigrants actually underutilize medical services despite facing more life stressors. A UC Irvine study of undocumented Latino immigrants in Orange County, California, found that they were less likely than both authorized immigrants and native-born citizens to use medical services.

Also, to reiterate, undocumented immigrants are not eligible for Medicaid. They are only eligible for Emergency Medicaid, meaning treatment for life-threatening medical situations. Not doctors’ visits, not cancer treatment, not vaccines. This is far from quality health care, as immigrants suffering pain are literally forced to wait until their conditions become life-threatening. One study found that 99 percent of Emergency Medicaid patients in North Carolina from 2001 to 2004 were undocumented, with the vast majority hospitalized for pregnancy complications and childbirth. Is our society really at the point where we are going to deny pregnant women medical care because of their citizenship status?

The total cost of Emergency Medicaid is $2 billion annually. Before you panic about the cost, you should note that in 2012, Congress forced the military to pay $3 billion for tanks that it neither wanted nor needed. The last time the U.S. engaged in tank battles was during the Gulf War nearly 20 years ago. Also, in 2014 Congress spent $1.5 trillion on a single jet with a host of mechanical issues.

Are we really going to say that we can spend trillions on unneeded military equipment, but we can’t spend it on saving the lives of people who live and work in our communities?

If we want to reduce the cost of Emergency Medicaid, we need to advocate for laws that allow undocumented immigrants to access more holistic, preventive medical care. The New England Health Institute issued a report in 2010 that found we waste $38 billion annually on emergency care, a figure that could be cut dramatically if those people could go to a primary care physician. Another report from Baylor College of Medicine found that for undocumented patients with end-stage renal disease, emergency-only care was 3.7 times more expensive than regular dialysis.

5. “Refugees are unable to assimilate and will remain a public burden!”

This argument goes like this: With legal economic migrants, we know what we’re getting. We can cherry-pick the “good” immigrants carrying degrees, wealth, and the good ol’ American spirit of entrepreneurship. Refugees, on the other hand, become an ongoing charity case. They’ll become a public burden, dependent on government handouts. After all, economic migrants had more time to prepare and save up for the move to the United States, while refugees usually had to make the move with relatively short notice.

But let’s also think about another factor: If things don’t go well for economic migrants, they can always return home. That is not an option for refugees, which might incentivize them to make investments and establish a life in their host country.

Automation, the decline of unions, outsourcing, the retail bubble, heightened housing, and education costs have contributed much more to our current state of economic anxiety than any immigrant.

Kalena E. Cortes conducted a study using census data to compare the earnings, education levels, and English proficiency among economic immigrants and refugees from 1980 to 1990. The findings showed that while economic immigrants initially had higher earnings, by 1990 refugees eclipsed them in earnings by 20 percent. Additionally, refugees were more likely to become citizens, attain higher education levels, and become more proficient in English.

Immigrants have shown that they benefit our country. While we will inevitably face new challenges associated with immigration, it would be unwise to blame all of our economic woes on immigrants when much larger macroeconomic trends can attribute for declines in wages and employment in specific sectors. Automation, the decline of unions, outsourcing, the retail bubble, heightened housing, and education costs have contributed much more to our current state of economic anxiety than any immigrant.

I can continue to list reason after reason as to how they benefit us, but it will do little to sway a person who blindly and stubbornly opposes immigrants on xenophobic grounds. It is difficult to reason with people like this because bigotry is by definition unreasonable. I also do not wish to continue the dangerous neoliberal practice of justifying the existence of immigrants on the extent to which their lives profit the rest of us. Such an argument denies the basic dignity, potential, and inherent value of a human life. I write this article for those of you who have not yet reached this conclusion yourselves — not in a condescending way, but in hopes that by proving that immigrants do not burden our society, I can convince you to look beyond money as a means to justify a person’s existence and instead adopt a worldview that places value in ourselves, and our fellow human beings.

Vietnamese-American writer, urbanist, and slam poet.

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