Deferred Action for Childhood Arrivals (DACA): An Economic Strategy in Trump’s America?

Although immigration reform is one of the largest issues facing the United States today, most of the discussion is centered on curbing the number of immigrants entering the nation rather than aiding those who have already established themselves here. In June 2012, President Barack Obama created a new program called “Deferred Action for Childhood Arrivals” (DACA) giving certain young undocumented people the ability to apply for temporary work permits and deferrals of deportations. During his Presidential campaign, now President Donald Trump vowed to repeal this policy in order to achieve his larger goal to “Make America Great Again.” Although Trump has not acted on this promise, his immigration policies thus far have set up the stage to repeal this Obama directive. In an effort to dispel the myths about DACA, studies have estimated that DACA would add millions in wages to both DACA eligible employees and state residents at large. Data suggests that concerns about DACA are far outweighed by the likely economic benefits of the program. By examining differences between increases in income for both DACA-eligible recipients and all state residents, my research indicates that DACA is beneficial not only for those who are eligible for it, but also for state residents at large. In addition, I seek to analyze data compiled by the Migration Policy Institute, which suggests that family income as a result of DACA increases for all wealth classes throughout the United States.

In 2013, the Center for American Progress (CAP) published an estimate for the increases in income for both DACA eligible recipients and state residents at large from 2012 to 2022, suggesting that DACA positively contributes to economic growth. When the data is analyzed on the state level (see figure 1) states such as California and Texas see a large increase in family wages. This is probably because these states have a higher number of DACA eligible recipients. However, there is no large difference in likely increases in wages between Southern states and non Southern states. This indicates that increases are not dependent on where a state is located, but rather by the number of already established immigrants there are within the state.

Increases in the income of DACA eligible workers can be explained by the new opportunities presented to them through a work permit and a social security number. According to a report by Roberto Gonzales and Angie Bautista-Chavez, 60% have obtained a new job, 45% increased their earnings, 21% have obtained internships, 49% opened a bank account, and 21% obtained health care. These opportunities are what allow their wages to increase, and according to the Center for American Progress, as lower income individuals gain access to capital, they rapidly recycle it back into their local economies. DACA would stimulate the economy due to a rise in thriving middle class populations. 64% of DACA eligible recipients live at or below 199% of the poverty line (figure 2), so they are likely to spend their income faster than individuals that live above 200% of the poverty line because they need more immediate access to resources. Moreover, over 3.5 million DACA eligible families live below 99% percent of the poverty line, suggesting that they would recycle their wages into the economy because they need immediate access to goods. Thus, economic advantages for DACA recipients translate to economic advantages for their communities.

Figure 2: Income levels of DACA eligible workers

The Center for American Progress projects wage increases for both DACA-eligible recipients and state residents at large. For every single state, the cumulative earnings of all residents are larger than the cumulative increase of DACA eligible workers (see figures 1 and 3). Some states have significant differences in the earnings between DACA eligible workers and state residents at large. Increases in income for DACA workers account for a portion of the increase in the incomes of all state residents, but there is greater economic prosperity for those who are not DACA recipients. If we remove the earnings of DACA eligible workers from the state as a whole, states are still expected to see substantial economic growth. For instance, California should expect a $7.15 million increase in income for families that are not DACA eligible, Illinois should expect a $6.65 million increase, and New York should expect a $6.15 million increase. This increase can be attributed to the creation of new jobs, increase in tax revenue, and the rapid recycling of income within local economies. This is important because many individuals fear that DACA would hurt other state residents and decrease economic stimulation. CAP attributes this increase to DACA, rather than economic growth more generally, by estimating the number of undocumented people in the states that would receive work permits and evaluating how that would affect wage growths within the states. They used data provided by the Migration Policy institute and GDP Analysis from the Bureau of Economic Analysis. A more detailed methodology can be found on the CAP website. To clarify, this data set looks at projected increases in income, not actual increases in income, between 2012 and 2022.

Figures 1 and 3 also illustrate that not all states would sustain significant benefits due to DACA. Many states that presumably do not have large populations of undocumented immigrants are less likely to benefit from DACA because the policy specifically targets those immigrants. States such as Rhode Island, Hawaii, and the District of Columbia have small populations of undocumented immigrants, so that is why CAP does not predict large increases in the cumulative earnings of their residents. The graphs also depict that these states will not be hurt by DACA; their economies will grow, just not as fast as those states that contain large undocumented populations.

There are many individuals who believe that DACA would increase spending on both the federal and state levels, cause undocumented immigrants to “steal” jobs, and hurt the U.S. economy. These fears have been exacerbated by the Trump administration, but the numbers prove that the opposite is true. DACA is a viable economic policy that will benefit the United States at large and should not be repealed by the Trump Administration.