Pro's and Con's of Illegal Immigration on the Us Economy

General Topic: I Illegal Immigration Beneficial to the U.S. Economy?

Specific Topic: Pro's and Con's of Illegal Immigration on the U.S. Economy

EC 301 Intermediate Macroeconomics

08 December 2012

Many economists say the effect of undocumented illegal immigrant workers is minimal. While illegal immigrants have a negative impact on unskilled workers, and many lack technical training or a high school diploma, economists believe that overall, the American economy benefits minimally from illegal immigration. Some economist say that this benefit is so small that it's not worth breaking the law, and some argue that the economic benefit of hiring illegals outweigh the risks. (Davidson, 2011) The following term paper will present the specific views of some of our nation's economists that believe that illegal immigration degrades the U.S. economy and those who feel immigration increases our economy. Illegal immigration has both negative and positive impacts on different parts of the economy. We will start with the negative.

Some economists make good arguments for negative impacts of illegal immigration on our economy. Wages for low-skilled workers decrease. But that means the rest of America benefits by paying lower prices for things like restaurant meals, agricultural produce and construction. Another negative impact is on government expenditures. Since undocumented workers generally don't pay income taxes but do use schools and other government services, they are seen as a drain on government spending.

At the federal level, about one-third of outlays are matched by tax collections from illegal aliens. At the state and local level, an average of less than 5 percent of the public costs associated with illegal immigration is regained through taxes collected from illegal aliens. Most illegal aliens do not pay income taxes. (Martin, 2010) But for those who do, much of the revenues collected are refunded to the illegal aliens when they file tax returns. With many state budgets in deficit, policymakers have an obligation to look for ways to reduce the fiscal burden of illegal migration. California, facing a budget deficit of $14.4 billion in 2010-2011, is hit with an estimated $21.8 billion in annual expenditures on illegal aliens. New York's $6.8 billion deficit is smaller than its $9.5 billion in yearly illegal alien costs. (Martin, 2010)

The Colorado Alliance for Immigration Reform wrote in its article Economic Costs of Legal and Illegal Immigration, "The economic and social consequences of illegal immigration are staggering." Illegal immigrants cost billions of taxpayer dollars for medical services. Dozens of hospitals in Texas, New Mexico Arizona, and California, have been forced to close or face bankruptcy because of federally-mandated programs requiring free emergency room services to illegal aliens. Taxpayers pay half-a-billion dollars per year incarcerating illegal alien criminals. (Johnson, 2011) The article also goes on to say, "Immigration is a net drain on the economy; corporate interests reap the benefits of cheap labor, while taxpayers pay the infrastructural cost $60 billion dollars are earned by illegal aliens in the U.S. each year." One of Mexico's largest revenue streams consists of money sent home by legal and illegal immigrants working in the U.S. This is a huge shift of capital from America. (Johnson, 2011)

In addition to the negative impacts, anti-illegal immigration supporters feel if there is any benefit to the economy the overall impact on the US economy is small. Low-skilled native workers who compete with unauthorized immigrants are the clearest losers. US employers, on the other hand, gain from lower labor costs and the ability to use their land, capital, and technology more productively. The risks are the highest for the unauthorized immigrants, who see very substantial income gains after migrating. If we exclude these immigrants from the calculation, the small net gain that remains after subtracting US workers' losses from US employers' gains is very small. And if we account for the small fiscal burden that unauthorized immigrants require, the overall economic benefit is close enough to zero to be basically a wash. (Campo-Flores, 2010) On the other side of this immigration argument there are opinions of those that believe money and resources should not be poured into beefing up security at our borders to prevent illegal immigration. Supporters of this philosophy say that illegal immigrants actually help, more than burden the economy.

An estimated 12 million unauthorized immigrants live in the United States, and the past decade saw an average of 500,000 illegal entrants per year. Until recently, the presence of unauthorized immigrants in the U.S. was unofficially accepted. But since 2001, policymakers have poured huge resources into securing US borders, ports, and airports, and since 2006, a growing range of policies has targeted unauthorized immigrants within the country and