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Five Economic Arguments Used to Target Immigrants and Why They’re All Wrong

Most people who use economics to argue against accepting immigrants haven’t been keeping up with research.

I very distinctly remember my first economics course. It was a held in a large lecture hall in the Business building of my university, one of the nicer facilities on campus. Around fifty 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 just begin shouting a reference to a sitcom from the sixties at the top of his lungs in order 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.

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 then 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, an extremely 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 for many students who would not go on to higher economics courses, they leave that class one step away from deducing that an influx in immigrant workers to an area 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 accurate discussions of labor and economics can not be made 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 that 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.

“Undocumented Immigrants don’t pay taxes!”

So this is grossly untrue. According to a report by the Institute on Taxation and Economic Policy, undocumented immigrants contribute over $11.2 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 $2.1 billion per year. Information from the IRS show that undocumented immigrants paid a total of $23.6 billion in taxes.

Another report by the Institute on Taxation and Economy Policy found that 50–75% of undocumented immigrants pay Federal personal taxes through payroll and ITINs. Undocumented immigrants pay payroll taxes through their employer. Many have fake social security numbers and as a result, payroll is taken regardless of citizenship status.

In 2014, Chief Actuary of the Social Security Administration Stephen Goss said that undocumented immigrants contributed $12 billion to social security.

Unauthorized workers usually demonstrate their employment eligibility with fake IDs and fake social security numbers. Once hired, these “questionably documented” 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 can 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 factor in many immigration reform bills in decisions to offer pathways to citizenship.

Gee, Gardner, & Wiehe (2016) actually found that undocumented immigrants paid an average of 8% of their incomes to taxes compared to the average nationwide tax rate of only 5.4 percent paid by the top one 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 $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.

“Illegals are stealing jobs and driving down wages!”

This is one of the most prominent anti-immigrant arguments I hear. Those wielding it have an oversimplified view of our economy. To them, if an immigrant gets a job, then a native-born American is therefore denied from 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. An article from Bloomberg reports that as ICE increases their crackdowns on undocumented immigrants, American workers have failed to replace them. Tom Nassif, President of the Western Growers’ Association, says that of the 2 million farm workers in California, 1.5 million are undocumented.

The Washington Post 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 lead farmers to increase wages past the minimum wage and even offer benefits such as healthcare and 401k packages. This still has not been enough to lure enough American-born workers into the field. Why is this? Well I’ll save you $6,000, three five-month courses on micro-economic theory, macro-economic theory, labor economics, and four gut-wrenching tests on indifference curves, consumption bundles, budget restraints, and the decision to work to tell you that it basically comes down to the fact that Americans do not want 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 typically 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 their analysis of research, adding that immigrants did not cause any sizeable decrease in wages or employment. In fact, they found data that indicated that immigrants actually increased wages and employment for U.S.-born workers. Friedman and Hunt (1995) also found that there was little empirical evidence that immigrants depressed employment and wages.

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

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 in 1987. That’s a huge influx. The study wanted to examine if these Vietnamese workers were taking business from non-Vietnamese manicurists, or if they were finding and establishing new business. They found that for every 5 Vietnamese manicurists that entered the industry, 2 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. The study goes on to see if these displacements were because of pre-existing non-Vietnamese workers leaving the industry or because of potential non-Vietnamese workers choosing not to enter the industry. They found that only 9–11% 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 a surprising finding that indicated for every five Vietnamese workers entering the industry, a net of three jobs were created.

This shouldn’t be that shocking, since immigrants are twice as likely as native-born Americans to start businesses. The CNN article went on to say that many immigrants were low-skilled workers who, pushed the Great Recession, started businesses to secure a steady income for their families. A study by the Partnership for a New American Economy found that 40% of Fortune 500 companies were founded either by immigrants or the child of immigrants.

One point I’ve received against these links is that they talk about immigrants as a whole and do not differentiate between legal status. This is true, but it only reaffirms the need for a legal pathway. Legalizing the status of millions of undocumented immigrants grants 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 many of 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 businesses, because incorporating their business would force them to fill out an I-9 form, making them an ‘employee’ of the business. Since it is illegal to employ undocumented immigrants, the undocumented entrepreneur would be breaking the law by employing themselves. A pathway to citizenship/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% of working-age undocumented immigrants were entrepreneurs, generating $17.2 billion in income.

“They leach off our welfare!”

Let me be clear: undocumented immigrants are unable to access most welfare programs such as food stamps (SNAP), the Child Health Insurance Program (CHIP), non-emergency Medicaid, the Temporary Assistance for Needy Families (TANF), Social Security (SSI), and are barred from Affordable Care Act insurance exchanges or receiving ACA insurance subsidies.

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

WIC provides low-income mothers and children to purchase nutritious food and formula vital to healthy development at an early age. Research has found that the program was linked “to declines in early childhood obesity, low birth weights, premature births and infant deaths, and an increase in childhood immunizations.” This makes sense. While the mother may be undocumented, the children will be fully-fledged American citizens who deserve this assistance. 
From an economic perspective, it’s also cheaper. By ensuring that a child has the appropriate nutrients in their earliest developing stages of life, we reduce the risk for a host of health implications later in life, health implications that will be treated with care paid for by American taxpayers, which includes undocumented immigrants if you remember that they also contribute a significant amount of tax dollars to the government.

Critics will always be able to name a local or state policy that benefits undocumented immigrants. They may bring up public education as well 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 should they not benefit from the programs that they are funding?

“Immigrants are coming here to use up our healthcare!”

So interestingly enough, undocumented immigrants actually underutilize medical services despite facing higher amounts of life stressors. Chavez (2012) conducted a study on undocumented Latino immigrants and found that they were less likely than both legal immigrants and native-born citizens to utilize medical services and primarily receive clinic-based care.

Also, to reiterate, undocumented immigrants are not eligible for Medicaid. Undocumented immigrants are only eligible for Emergency Medicaid. This means treatment for life-threatening medical situations, not doctors’ visits. Not cancer treatment. Not vaccines. It should be noted that this is far from quality healthcare, as immigrants suffering pain are literally forced to wait until their conditions become life-threatening. One study found that 99% of patients in North Carolina from 2001 to 2004 were undocumented, but that 84% of these costs were 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 for all people in the U.S. Before you panic about the cost, you should note that in 2012, Congress forced the military to buy tanks that it neither wanted nor needed for the cost of $3 billion. The last time the U.S. engaged in tank battles was during the Gulf War nearly twenty years ago. Or this gem, where 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, then we need to advocate for laws that allow undocumented immigrants to access more holistic medical care. That’s because preventative care is cheaper than emergency care. The New England Health Institute issued a report that found that we waste $38 billion on emergency care that could be cut dramatically if those people had gone to a primary-care physician.

Another report from Baylor College of Medicine found that for dialysis patients, emergency care was 3.7 times more expensive for American taxpayers than regular dialysis. The old saying about how it is better to prevent than to cure continues to apply to today’s healthcare system.

“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 ole American spirit of entrepreneurship. Refugees, on the other hand, simply become an ongoing charity case. They’ll be dependent on government handouts and become a public burden. 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 more to make investments and establish a life for themselves in their host country.

Dr. Kalena E. Cortes conducted a study using Census data to compare the earnings, educational attainment levels, and proficiency in English 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%. Additionally, refugees were more likely to become citizens, attain higher educational 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 educational 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 for a person who blindly and stubbornly opposes the immigrant on xenophobic grounds. For people like this, it is difficult to reason with them 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 after proving that immigrants do not burden our society, I can convince you to leave behind money as a reason to justify a person’s existence and instead adopt a worldview that places value in ourselves, and our fellow human beings.

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