Aren’t Undocumented Immigrants a Drain on the Economy?

Especially in the current tough economic climate, a lot of usually-compassionate people feel like we just can’t sustain immigrants coming into the country right now. The presumption—which is actually inaccurate, according to economists—is that immigrants have a negative effect on the economy.

In fact, the discipline of economics is almost unanimously agreed that immigration is really good for the economy; while we’re in hard times economically now, we’d be in much harder times if it were not for immigrants. The Wall Street Journal surveyed 46 economists recently and found 44 of them said that illegal immigration, specifically, had been good for the U.S. economy. Why?

Basically, because immigrants fill in gaps in our labor market, at both the high and the low ends of the skills spectrum. America’s educational system does not produce enough scientists and engineers to meet the needs of a growing technology sector, so some of the brightest minds from across the world come to the U.S. (usually lawfully). But there are also major gaps in “low-skill” jobs, those which don’t require a college degree, or even a high school degree. Very few Americans are content to endure the long hours and strenuous work required of agricultural work, for example, which is why 50% to 60% of the food that touches our table was touched by immigrant hands along the way. Because immigrants are willing to do this hard work (at least for one generation—many do so knowing that their children will get the education that their country did not offer them and eventually have greater opportunities), we all enjoy inexpensive produce. The same logic applies to many other sectors of our economy, and we all benefit.

Beyond just their labor, though, undocumented immigrants are also contributing in many other ways. They are consumers, “stimulating” our economy as they go about their lives, and they are also disproportionately likely to be entrepreneurs, starting small businesses at nearly double the rate of native-born citizens.

Contrary to popular perception, most undocumented immigrants are also taxpayers. True, about one in four undocumented immigrants is paid in cash “under the table” (some U.S. citizens, I should note, do this, too), but the Social Security Administration estimates that three out of four undocumented immigrants has payroll taxes deducted from their paycheck and is paying income, Medicare, and Social Security taxes. Basically, that means that they are using a false Social Security card, typically with their name and an invented number. In fact, in 2007, the Social Security Administration took in $12 billion from names that did not match the right numbers.

They do not send this money back, though. While they might send a letter notifying the employer, which is usually where the discussion stops, because employers are wary to let go of good employee, the money gets sent out to folks like my grandparents who paid into the Social Security system a generation ago and are now entitled to its benefits. The convenient thing for our federal government is that those millions of undocumented immigrants who are paying in so much will never get a penny out of Social Security: their bogus number is not valid for receiving benefits. Undocumented immigrants provide a huge subsidy to our unsustainable Social Security system. The government could probably make a Social Security card that was not so easy to counterfeit—the current card, unlike practically any other governmental document, has no photo, no biometric information, not even a barcode; it looks to have been made with blue construction paper and a typewriter—but maybe they lack the incentive to do so.

Likewise, though the Internal Revenue Service has actually created a special “Individual Taxpayer Identification Number” that undocumented immigrants can use for filing tax returns (a false Social Security Number is not valid for that purpose, either) and, because they have been clear that they expect undocumented immigrants to pay taxes but will not communicate with the Department of Homeland Security so that they might be deported, many immigrants are filing taxes. But they are not eligible for most public benefits: without legal status, they are ineligible for welfare checks (Temporary Aid for Needy Families), food stamps, federal subsidized housing, Supplementary Security Income, and any other cash benefit.

Immigrants do carry some serious costs with them, particularly for public education (guaranteed by a Supreme Court decision for children through 12th grade) and for emergency room treatment that they are unable to pay. Those costs are primarily borne by local and state governments: in fact, the average immigrant costs state and local government more in services than he or she pays in taxes. At the federal level, though, the reverse is true: immigrants pay in much, much more than they take out, and the overall net result is positive: immigrants pay in $80,000 more over the course of a lifetime than they take out in services, considering federal, state, and local. No wonder the federal government, which is really the only level of government that can comprehensively fix this problem, seems so slow to enact reform, while state and local governments are eager to address the issue.

For a more thorough answer to these questions, we recommend reading chapters 7 of Welcoming the Stranger: Justice, Compassion & Truth in the Immigration Debate by Matthew Soerens and Jenny Hwang (InterVarsity Press, 2009). To go even deeper in understanding how economics relates to this topic, check out the resource page for further book recommendations.


3 Responses to Aren’t Undocumented Immigrants A Drain On The Economy?

  1. [...] That's a bunch of baloney. Believe it or not, these working class folks DO pay taxes. Sales taxes, payroll taxes, and Social Security contributions that they won't get to benefit from when they're older, if undocumented. They also use social services in a much lower extent than you think. Like health care – use it a lot less than they should. If they aren't documented, they aren't eligible for a lot of social services. [...]

  2. Joel Vosberg says:

    One of my biggest frustrations with our governments immigration policies and the church’s response is that many undocumented workers are being withheld fair wages for the work they do. Many times an employer will short change their paychecks, or not pay them at all, knowing that the worker does not have any recourse. If they go to the authorities, they put themselves and their families in jeopardy of separation, if they don’t they have most definitely shortchanged them food, shelter, clothing… God has said that in Mal. 3:5 He will be a swift witness against…those who oppress the wage earner in his wages, the widow and the orphan, and those who turn aside the alien …. are we as His witness’ on earth to do likewise?

  3. Joanne says:

    So I have read this article mostly for my debate tournament. I have got to ask where do you gather all this information?

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