Illegal Migrants and the US Economy

Running Head: DO ILLEGAL IMMIGRANTS HURT THE U.S ECONOMY 1

Do Illegal Immigrants Hurt the U.S Economy?

Name:

Institution:

DO ILLEGAL IMMIGRANTS HURT THE U.S ECONOMY 2

Do Illegal immigrants hurt the U.S economy?

The most avidly and important debated impacts of illegal migrants involve the labor force

and the economy of the United States. Djajić and Michael (2014) points out that there are

approximately 12million illegal immigrants in the United States who exhibit both negative and

positive impacts on the economy of the country. Those in support of illegal immigrants contend

that they work on jobs that Americans would not wish to do. For this reason, Americans are not

in competition with illegal migrants for jobs, hence no considerable impact on the wage rate.

However, the most affected Americans are those without a high school diploma because they

tend to compete with illegal migrants for low skilled jobs. Nonetheless, paying lower wages to

illegal migrants reduces production costs, and in return, reduces the prices of good in various

industries including construction, agricultural produce, and restaurants. Additionally, they

stimulate the United States economy by spending their income even though they spend some as

remittances to their country. Despite the role they play in stimulating the economy of the United

States, they utilize government services. Besides, they are paid in cash, making it impossible to

be subjected to deductions through federal tax (Hirbyand, 2012). They only pay federal tax after

acquiring illegal information. Regardless, their wages are so low that their contribution to the

economy is insignificant. Additionally, they interfere with government spending because they

receive a wide range of benefits including healthcare, education, welfare, and food assistance

programs. Based on this analysis, it is evident that the overall impact of illegal migrants in the

United States is unclear and the paper aims to present both sides of the debate.


Analysis of whether or not Illegal immigrants hurt the U.S economy

The United States throughout history has been considered a safe haven for immigrants

coming from different parts of the world. These immigrants are often in pursuit of economic

opportunities and freedoms guaranteed by the Americans. However, in the recent decade, the

increase in number of illegal migrants has become a political and troubling issue and scholars are

debating on whether they have positive or negative contribution on the economy. The September

11 terrorist attack has taken the debate of illegal migrants to a new dimension as both scholars

and politicians have urged the nation to control the influx of illegal immigrants as they pose a

threat to the security of the nation.

According to Classical economists, immigration benefits the United States by subsidizing

labor supply. This means that, the sending countries, to be precise where these immigrants come

from bears the financial burden of raising the individual worker to a state he/she can offer

services in the labor market (Nadadur, 2009). For this reason, the illegal migrants positively

affect the United States economy by spurring investment, increasing demand, and keeping the

host- nation industries competitive as a result of increasing capital productivity. However,

contemporary economists focus on the negative impacts of illegal migration on the United States

economy. These theorists contend that undocumented immigrants harm the economy by

displacing Native Americans from low-skilled labor and depressing wages. Additionally, they

neutralize the pressure in the market resulting in declining wages (Amuedo-Dorantes, Pozo &

Puttitanun, 2015). Native workers and labor unions have often used this argument to advocate for

stringent immigration controls to safeguard the United States wage structure and jobs. Scholars,

on the other hand, posit that illegal immigrants work on jobs that no native worker would fill.

For this reason, the scholars conclude that deporting illegal migrants would result in the decline


of the United States economy because Native Americans will not be willing to work on the jobs

being performed by illegal immigrants.

The labor market theory divides the United States economy into secondary and primary

sectors. The former is differentiated from the later by temporal employment and no or little hope

of internal promotion. In reference to occupations, the secondary sector is characterized by

service jobs, unskilled work, or low jobs with diminished returns on education, job

impermanence, and low earnings (Nadadur, 2009). In contrast, primary labor sector is defined by

employment stability, skilled work, effective trade unions, availability of job ladders, and

excellent management. This type of segmentation occurs in the labor market because of the

manner in which employers utilize primary labor and capital in contrast to secondary labor to

address the uncertainties that characterize the economy. Employees in the primary sector are cost

and capital intensive to lose, train, and acquire whereas employees in the secondary sector are

cheap to train and does not have a significant impact to the company if they stop working

(Nadadur, 2009).

Given the fact that employers are subjected to unstable demand for their goods and

services, they consider skilled labor as an incentive to realize their stable parts of demand and

unskilled labor to meet the demands of the unpredictable portions. As a result, the secondary

labor market is defined by little opportunity for upward mobility, low wages, and job insecurity.

Based on this theory, native workers often pursue employment in the primary sector that requires

higher skills and the job is secure with higher pay. The demand for workforce in the secondary

sector compels employers to utilize unskilled labor provided by illegal migrants to realize the

less demand (Caponi & Plesca, 2014). Therefore, it can be argued that illegal migrants bring

benefit to the economy of the United States, the reason why the business community is not in


agreement with the deportation of undocumented immigrants. It is also imperative to dismiss the

claim that illegal immigrants hurt the economy of the United States. In fact, the economy of the

United is stronger given the value of its currency in the global market, the GDP per person has

considerably increased, the productivity per worker has also increased, and the rate of

unemployment is declining (Dixon, Johnson & Rimmer, 2011). However, immigrants might not

be responsible for this economy boom, but it is unethical to blame them for hurting the United

States economy when in reality it is performing well. According to Mathews (2013), the influx

of immigrants corresponds with the substantial and steady decline in unemployment in the

previous two decades from 73% to 561%. Additionally, the presence of illegal immigrants with

backgrounds in information technology, engineering, and science will remove the worry of

outsourcing jobs to other countries. Therefore, allowing these individuals to offer services within

the country will boost the economy through paying taxes. This does not result when companies

outsource jobs.

However, critics contend that in sourcing rather than outsourcing would result in illegal

migrants taking jobs away from natives. This is attributed to the fact that employers would favor

foreigners because they can work for low-pay. For this reason, economists argue that the United

States should adopt a immigration policy that is more liberal. However, the adoption of this

policy will result in controversy especially for those who are concerned about the concept of the

American culture integrity, the sanctity of the law, and fairness (Grossman, 2004). Nonetheless,

it is evident that illegal migrants do more good than hurting the economy of the United States.

They are willing to take those jobs that Native Americans cannot do such as laundry, janitors,

construction among others.


Defining the Problem

Illegal immigrants are shifting into the United States in massive scales. Currently, it is

approximated that more than ten million illegal migrants are residing in the United States and

their population continue to increase at a rapid rate. In fact, it is said that their population

increases by 700,000 annually (Kane & Johnson, 2006). However, the presence of so many

illegal migrants is a clear indication of American attractiveness as well as how dangerous its

boarder has become. The main reason why illegal migrants come to the United States is to seek

better jobs and consequently improve the economy of the country. On the other hand, they

reduce the value of the country by weakening the national security and the legal environment.

Even though illegal migrants do not cause direct threat, their presence distracts resources,

interferes with the law, and makes it very challenging to detect criminals and terrorists (Kane &

Johnson, 2006). In reality, the major threat posed by the increased number of illegal migrants is

security rather than the economy of the country.

Proposing a Possible Solution for the Problem

There are various solutions that the United States government should implement to

address the issue of illegal migrants. Some of these solutions include maintaining the status quo,

deporting all undocumented immigrants, and increasing boarder security, documenting all illegal

migrants residing in the United States and increasing boarder security, and the use of the guest

worker program. Following is a detailed analysis of the proposed solutions.


Maintaining the status quo

According to this solution, the United States is not expected to do any changes to the

existing systems. For instance, no undertaking of more security measures, no adoption of

additional policies, and not making the current undocumented immigrants United States Citizens.

Increasing border security and documenting all undocumented immigrants

This solution provides illegal migrants currently residing in the United States with a

chance to obtain citizenship. However, to become the United States citizens, they must strictly

adhere to the procedures of the existing naturalization process. Nonetheless, the government

should provide them with a grace period to acquire their citizenship minus the fear of getting

deported. Accordingly, all necessary measures will be undertaken to secure the border from

illegal migrants.

Increasing border security and deporting all undocumented immigrants

This entails pursuing and deporting all undocumented immigrants currently living in the

United States. Accordingly, the government should tighten the security at the boarders to ensure

that no illegal migrant gains access to the country. However, this solution is quite expensive and

requires great manpower.

Guest worker Program

As per this program, the United States government should permit illegal migrants to

reside in the country as long as they can prove that they are employed and have registered with

the program. However, for the program to be effective, all guest workers need to be identified

biometrically. This will help companies in America to validate guest workers. Currently, no


effective system exists to enhance internal enforcement. Therefore, effective implementation of

the biometric identification will limit the employment of undocumented immigrants because it

will be easier for employers to verify electronically whether or not a worker is eligible to offer

services in the country. In addition, guest worker programs must be made attractive to migrant

workers. This can be achieved by taking into consideration both negative incentives such as

punishment and positive incentives to enhance compliance. The guest worker program should

not entail individual access to social benefits and citizenship. According to Filindra & Pearson-

Merkowitz (2013), acquiring citizenship comes with various benefits including entitlement

programs and social spending, rights that should be limited to American citizens. In fact,

providing foreign visitors with Head Start, unemployment, and welfare will considerably

interfere with the incentives to shift to the United States.

With this program in place, the existing undocumented immigrants should be compelled

to vacate the country and then permitted to enter the country via border checkpoints

characterized by stringent compliance, documentation, and identification with the United States

law. The government should ensure that any employer or migrant who fail to adhere to the

regulation is punished. Punishment should take the form of deportation or banning the guest

worker from entering the United States for ten years. Other forms of punishment that should be

applied include freezing all assets belonging to illegal workers including those of their employers

as well as prison time. As per the solutions analyzed above, the best solution that the United

States should adopt to eliminate the issue of illegal migrants is the introduction of the guest

worker program. Through this program, migrants will no longer have to snick into the country.

On the contrary, they will be forced to go through the process so that they get employed.


Interpreting statistical data from at least two peer-reviewed scholarly sources

Nadadur, R. (2009). Illegal Immigration: A Positive Economic Contribution to the United States.

Journal of Ethnic & Migration Studies, 35(6), 1037-1052.

According to the above article, migrants increase the cost of providing healthcare

services including incarceration, education, and healthcare. Despite the fact that the illegal

immigration Reform and Immigration Responsibility Act prevented undocumented immigrants

from accessing various public services, the government continues to provide assistance and

emergency medical services for infants and pregnant women. In regards to gender distribution,

56% or 4.9million of illegal immigrants are males (adults), 37.5% or 3.9million are adult females

and 15.4% or 1.6million are children. As per these demographic profiles, it is argued that the

distribution of these people does not necessarily mean that they will utilize a government

assistance program. However, a child or a wife compared to an adult male utilizes government

assistance. Likewise, research indicates that immigrant families compared to natives do not

utilize public services more frequently. The main reason why immigrants fear using public

services is attributed to the fact that they will be discovered by the authority.

The authors also note that illegal immigrants total health-care costs on an annual basis

totals to $ 658 million. For this reason, they exert a considerable burden on uncompensated

emergency care treatment and Medicaid. Uncompensated medical care in 2004 was responsible

for $ 1.4billion, to be precise in California. The article also notes that the emergency and

Medicaid costs in seven states with increased number of illegal immigrants totaled to $

445million, to be precise in 1995.


The federal government also incurs the cost of educating illegal migrant’s children. In a

study conducted in 2004, it was concluded that the government spends $ 371 million on

educating immigrant children. However, this estimate does not take into consideration state-level

expenditures. Taking an example of California, illegal migrants are accountable for $ 3.2billion

annually on education. Compared to other expenditures, educating immigrants exerts more

burdens on the federal government and the states government. Apart from education and the

provision of public services, the immigrants also through incarceration exert financial pressure

on governments at the state, local, and federal level. According to a study released in 2000 from

New Jersey, Arizona, Illinois, Florida, New York, Texas, and California, it was concluded that

accommodating illegal immigrant offenders was approximately $ 367.7million. In a similar

study conducted in California in 2003, it was evident that the state spends $ 1.4billion annually

on accommodating illegal migrants. Based on the analysis of the article statistics, it is evident

that illegal immigrants exert different fiscal cost on federal, state, and local government in terms

of incarceration, public education, and healthcare.

Caponi, V., & Plesca, M. (2014). Empirical characteristics of legal and illegal immigrants in the USA. Journal of Population Economics, 27(4), 923-960.

The authors using deportees as their study sample aimed at finding out when they entered

the country (United States) and time they spend in the country before being deported to their

home country. According to their study findings, about 18% of the deportees pointed out that

they were forcefully separated from their kids who were younger than 15 years. However, 38%

of the deportees interviewed did not have children. Analyzing the outcome of interest, 16% of

the deported migrants had the intention of illegally crossing the border thirty days after being

deported. Equally, 66% of the deportees who were separated from their kids showed the intent of

returning to the United States compared to 54% of parents or nonparents who not forcefully


separated from their kids. The authors also noted that demographic attributes including length of

stay, marital status, and age significantly differed. Parents were more likely to get married and

provide accommodation to nonparents. Surprisingly, those separated from their kids exhibited

lengthy period of stay, to be precise nine years compared to nonparents whose length of stay was

only three years.

In conclusion, illegal immigration hurts the economy of the US since it brings in an

unregulated group of employees that are frequently underpaid. The unregulated workers are

rarely reported for tax reasons and they take jobs that legal migrants or citizens would have

taken. Hence, stricter immigration regulations should be implemented to prevent the issue of

illegal immigrants. The economy is made up of free flow of goods, services, and money

including the production of the same services and goods. Illegal immigration, therefore, has a

direct economic effect on major financial sectors across the country. It is highly concentrated on

the drive for corporations to reduce costs as a result of tight market pressures. On the other hand,

illegal immigrants regularly work because they want to support their families back at home.

Additionally, illegal immigrant employees are willing and ready to work for a smaller amount

than the minimum wage. However, the money that they earn does not go back to the economy of

the US, but into their home countries’ economies .Illegal immigrants are significant to the

economy of the US, and vital to particular industries such as agriculture. However, they exert a

considerable burden on the public services, education, and the United States healthcare sector.


References

Amuedo-Dorantes, C., Pozo, S., & Puttitanun, T. (2015). Immigration Enforcement, Parent-

Child Separations, and Intent to Remigrate by Central American Deportees.

Demography, 52(6), 1825-1851.

Caponi, V., & Plesca, M. (2014). Empirical characteristics of legal and illegal immigrants in the

USA. Journal of Population Economics, 27(4), 923-960.

Dixon, P. B., Johnson, M., & Rimmer, M. T. (2011). Economy-Wide Effects of Reducing Illegal

Immigrants In U.S. Employment. Contemporary Economic Policy, 29(1), 14-30.

Djajić, S., & Michael, M. S. (2014). Controlling Illegal Immigration: On the Scope for

Cooperation with a Transit Country. Review Of International Economics, 22(4), 808-824.

Filindra, A., & Pearson-Merkowitz, S. (2013). Together in Good Times and Bad? How

Economic Triggers Condition the Effects of Intergroup Threat. Social Science Quarterly

(Wiley-Blackwell), 94(5), 1328-1345.

Grossman, J. B. (2004). Illegal Immigrants And Domestic Employment. Industrial & Labor

Relations Review, 37(2), 240-251.

Hirbyand, J.(2012). How Does Illegal Immigration Hurt the Economy. Retrieved from,

http://thelawdictionary.org/article/how-does-illegal-immigration-hurt-the-economy/

Kane, T., & Johnson, K.(2006). The real problem with immigration and the real solution.

Retrieved from, http://www.heritage.org/research/reports/2006/03/the-real-problem-with-

immigration-and-the-real-solution

http://www.heritage.org/research/reports/2006/03/the-real-problem-with-immigration-and-the-real-solution

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Mathews, C.(2013). The economics of immigration: who wins, who loses, and why. Time

Magazine. Retrieved from, http://business.time.com/2013/01/30/the-economics-of-

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Nadadur, R. (2009). Illegal Immigration: A Positive Economic Contribution to the United States.

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Illegal Migrants and the US Economy