A brief outline of how both immigration as a phenomena—and immigrant individuals specifically—benefit the US economy.

 

How does liberalized immigration policy fiscally benefit US natives?

Nativist politicians justify restricting immigration in many ways. Economically, they use two primary arguments: (1) immigrants are a drain on social services which cost the taxpayer money, and (2) immigrants steal the jobs of native-born citizens which causes a rise in unemployment and diminished wages. Both arguments quickly fall apart under scrutiny. Much of the research used in the next two sections is based on Professor Howard Chang’s analysis of the RAISE act, for a more long form analysis look here.

Immigrants are not an Economic Drain.

Those who say immigrants are a drain on the economy base their arguments on false facts and racial perceptions. In fact, economists find quite the opposite. Harvard Professor and leading immigration economist, George Borjas, found that native citizens in the US enjoy a surplus of 2.6-201.8 billion dollars annually (based on a range of varying assumptions) due to immigrant participation in the work force. The National Academies of Sciences, Engineering, and Medicine did a similar study which found that over the course of 75 years, each immigrant (and their descendants), on average, contribute 279,000 dollars to the US economy.

At a more theoretical level, immigration is demonstrated as inherently beneficial for the US. This is especially evident when evaluating public good expenditures. Large percentages of US spending is on services such as national defense (686 billion in 2019) and interest payments on government debt (389 billion in 2019). These expenditures do not increase as the population increases; therefore, the burden on each taxpayer only decreases with immigration. As interest payments rise on increasing debt, a greater population is a resource the US needs.

Immigrants don’t steal jobs or diminish wages.

The claim that immigrants take citizens’ jobs also disregards an important fact: immigrants do not come into a static job market. Immigrants create demand and spur economic growth when they enter the country. In another National Academies study cited by Howard Chang, they found that native wages suffer very minimally from immigrant workers. In fact, for the most part, immigrants don’t compete for the same jobs as natives. If anything, the US needs more immigrant labor (both skilled and unskilled) to fulfil increasing labor shortages. In January there were 7.6 million jobs unfilled and only 6.5 million natives looking for work. US employers are experiencing serious shortages of blue-collar workers in particular—a resource which is quickly becoming a necessary import due to rising levels of US college graduates.

Immigration is not a drawback on native employment, the US needs immigrants to fill positions and in doing so increase investment in dwindling US industries such as construction.

 

How have individual immigrants made a big difference in the US economy?

On a more personal level, there are many case studies of individual immigrants who have had an incredibly major impact on US job creation, tax revenues, and global competition. Immigrants have founded over half of the private companies in the US worth over one billion dollars and play a key managerial or development role in 70% of them. Together, these immigrant-founded companies are worth over 168 billion and on average employ 760 Americans each. Liberalized immigration hasn’t necessarily brought these immigrants to the country, but a liberal policy has greater potential to bring exceptional individuals than a restrictive one.

A National Foundation for American Policy Brief on Immigrant startups outlines some of the most notable cases of exceptional immigrant-founded businesses. Some mentioned are Elon Musk whose 3 companies (of which he is still a part) employ 26,000 people and are worth 45 billion together. Noubar Afeyan, a Canadian immigrant, has founded or cofounded 38 successful companies—his most successful employing over 300 Americans after only a decade. Brian Lee, an immigrant from Korea, cofounded Honest, which after 5 years employs 517 Americans and is valued at almost 2 billion. While these cases are not average, they demonstrate the kind of economic growth and native fiscal benefit which restrictive immigration policies preclude on the basis of false information. For more information on immigration of entrepreneurs specifically, see an earlier post on the International Entrepreneur Rule (link post here).