Illegal immigration effects

Abstract 

This essay explores the effects of illegal immigration on the economy of U.S taking into account the effect of this immigration on consumption, labor force market, American economy, and budget equilibrium. U.S happens to have the most population of the immigrants, which is a major concern to most people. According to different people’s opinion, illegal immigration has both positive and negative effect on the labor force and economy of U.S. With no doubt, illegal immigration has negative economic effects, but to some these effects are beneficial. The immigrants bring benefits to the average Americans (their income increases), while still impose tangible costs on others such as the government expenditure on these immigrants to provide Medicare, education, and law enforcement. Immigration increases or improves the fiscal situation of the government as they pay more in taxes which is a burden to them especially the less-educated immigrants. According to the researches, most immigrants account for the large percentage of graduates in science and technology areas, and hold the senior positions at firms that are capital-funded while the less percentage are the unskilled workers. There are many misconceptions regarding impacts of immigration on economy and workforce, and also the budgetary effect of illegal immigration. One of the ways to measure the contribution of the immigrants into the U.S. economy is by quantifying the salaries and wages they earn. Most of the immigrants are likely working, or own business. The percentage of immigrants who own businesses is higher than U.S. born people. The immigrants therefore have a major impact on the economy. Illegal immigrants have a right to public education and other governmental benefit which is evident from the ruling passed on the Plyler v. Doe case. This paper discusses these effects by analyzing the performance of the illegal immigrants on the labor market on US economy or negative effects. 

Introduction 

United States has the largest number of immigrants across the world and it so happens that with the immigration policies, immigrants in the US assimilate faster compared to European nations. This rise in the population of illegal immigrants has many have concerns on potential security threats, wages and on public finances of the country. Most of the issues concerned with the immigrants are cultural; however, there are economic effects of immigration both negative and positive. The U.S economy is majorly attributed to the numerous workforce it provides, a work force comprising of taxpaying people. The U.S economy majorly depends on these taxpayers to maintain its high economy among others things. In the past recent years, the United States government has tried tackling illegal immigration which has proven to be a challenge. There are concerns that there are negative effects on wages and public finances as a result of unauthorized entry of immigrants into the country. This fight is affecting the U.S. economy in different ways. For example the government is using resources to fight illegal immigration by putting up measures such as tasks forces that prosecute illegal immigrants, surveillance officers at the borders, erecting border walls at the border among others. These measures cost the taxpayers a lot of money. Besides, big firms employ undocumented immigrants to illegitimately do manual middle waged jobs which to the U.S. economy is has positive and negative effects. The negative effects accrue since the illegal immigrants work without paying taxes. There are economics benefits and costs of allowing undocumented immigrants live in the United States with their families. Only a small fraction of the immigrants obtain social security and Medicare reimbursement, the majority have no influence on the federal expenses. The CBO reports that since these immigrants do not qualify for federal programs, the expense of extending the services to them is lesser than the revenues arising from their labor provision. 

Literature Review

According to Montorio, immigration reduces the wages for the American workers but at the same time increase the value non-labor assets of the workers such as real estate and pension. He further says that when immigration population rises, the housing prices and house rent rise. Immigration worsens the situation for low-skilled natives but the other part of the population gains. When immigration increases, there are plenty of physical skills in demand (2007). Illegal immigrants provide source for unskilled labor thus stimulating the local and state economies which in return complements the work force. Androff, Becerra, and Ayon, on the other hand, immigration increases wages for native workers and encourages specialization. They explain their finding using the argument that the entry of low-skilled workers into the U.S. contribute to the creation of new jobs. The economy takes time to grow and labor market keep on adding jobs, therefore, immigrants do not decrease employment rates for the natives. There is the misconception that most immigrants are not educated, which is changing, many immigrants are enrolling in schools, getting education and competing with native workers for skilled labor. Immigrants play a major role in U.S. economic output as the prime working ages make up the highest their population. 

Although they cover a small percentage of the country’s population, most of them are in the labor force department. It is against the United states immigration and Naturalization act law to high an illegal worker knowingly (Marshall, 2008). Most U.S. employers do not follow this law since to them illegal immigrants is a source of cheap labor which most natives are not available to partake. The business is gaining in hiring the illegal workers for below-market wage and they do not have to pay taxes. This issue of hiring illegal workers is receiving a lot of attention since to the government this is unfair competition. Moreover, most of them are business owners and since economic output is counted from the proprietor’s income, wages, and salary, illegal immigrants largely contribute to the U.S. economy. Illegal immigrants deserve fair treatment for their contribution to the U.S. economy and the government should not allow employers to continue with the harsh treatment towards the immigrants. They deserve better payment and mandate to services such as Medicare.

Although, some studies conclude that undocumented immigrants receive more in benefits such as free Medicare than they pay in taxes, and may go against the better wage payment, while other researchers find the opposite. Some argue that the local and federal governments increase their spending on the illegal immigrants through the utilization of social and education systems. The illegal immigrants have a right to health care programs, public education, emergency rooms, anti-poverty ventures, and welfare which they do not remit taxes. The immigrants bring benefits to the average Americans (their income increases), while still impose tangible costs on others such as the government expenditure on these immigrants to provide Medicare, education for their children, and law enforcement. Immigration increases or improves the fiscal situation of the government as they pay more in taxes which is a burden to them especially the less-educated immigrants. 

This argument is supported by the Federation for American Immigration Reform and the Center for Immigration Studies which conclude that illegal immigrants cost the taxpayers a lot through the utilization of these federal and state welfare programs (Camarota, 2011). FAIR go ahead to argue that the highest cost of budget deficit the state is facing is the provision of public education to the children of the illegal immigrants. This law is supported in the Plyer v. Doe case. Following the expenditures on the undocumented immigrants, these researchers conclude that the costs of these immigrants is way bigger the benefits of those living and working in the U.S.

According to Hanson findings, illegal immigrants have positive effects to the economy output as they provide cheap labor, both skilled and non-skilled. Illegal immigrants offer most technical professionals such as engineers, computer scientists, and web designers among other high skilled labor jobs. Immigration has a major effect on the market shares of the firms in U.S. through the provision of cheap labor which some argue raises the productivity of these firms or lowers the trading cost with the rest of the world (Hanson, 2011). He further argues that, immigration lowers wages for U.S. born workers as they compete with the undocumented immigrants for jobs. Native workers have to deal with the increased tax burdens or high housing price while the immigrants evade this responsibility. It is therefore, likely that the immigrants pick the job even with the low pay leaving the native workers jobless. 

Another finding by Hanson is that the immigrants are linked to innovation and while in schools they are likely to study science and engineering courses than the natives. They increase their chances of working in high-tech firms than the natives. He further says that most of these immigrants come to the country to study in US universities or look for temporary employment fulfill contracts for most high-tech firms. Immigration increases the supply of cheap, low-skilled labor which increases the productivity of the firm but the wages of these workers are very low. Labor economists concur that several net gains exists having larger pool of labor supply although it may hurt others. It is with no doubt that the illegal immigrants add to the growth of the U.S. economy because of their consumption of goods and services, and investments. They fill millions of important work position, lower costs of goods and services, and increase productivity. Although some researchers may argue that illegal immigrants increase costs of U.S. social programs even with their beneficial act of filling low-wage jobs in firms which most natives decline. The immigrants receive tax deductions and they escape paying for taxes that they are not entitled. In some cases, the immigrants receive tax refunds for which are created from the credits. The low wages effect causes unemployment among many Americans which causes an increased burden on tax payers. Organizations such as The Federation for American Immigration reform argue that illegal immigrants use welfare programs which are a major cause of budget deficits (Shapiro and Velluci, 2010).

Moreover, Androff, Becerra, and Ayon argues that illegal immigrants’ workers do not take away jobs from natives but rather improve the state and local economies as they provide necessary unskilled labor. These contributions improve the workforce of the country. Companies and their stockholders hire illegal immigrants who work at lower wages and conditions which Native American does not accept. This condition provides better returns and higher profits to the stockholders. Business people will argue it is easier to extract surplus from cheap labor and that is what the illegal immigrants are providing to the economy. Citizens in the United States benefit from illegal workers as they supply employees on construction projects, restaurant areas and maintenance staff. The restaurant staff comprises of illegal immigrants who get paid with low wages which the American workers would not take. Big firms also prefer employing illegal immigrants as they can evade paying for the Federal Insurance Contributions Act and medical insurance. The increased labor force is a beneficial to the economy as it lowers labor costs which the consumer enjoys. The lower labor cost is a disadvantage to the Americans as they receive lower wages than what they demand. They argue that higher immigrant student enrollment is likely to lead to the more job creation in all educational-related services. This increment in student enrolment increases the state and local revenue as a result of generated income and sales taxes. According to Androff, Becerra, and Ayon, they argue that higher student enrollment leads to increased economic activities such as purchase of educational materials. Businesses therefore, look forward to the yearly surge in superior profits from the sale that benefits the local economy since there are sales taxes generated from purchasing educational materials. There is no definite or sure answer to whether illegal immigrants have a positive or a negative effect on the U.S. economy even with the many debates from different researchers (Androff, Becerra, and Ayon, 2012). 

There is a possibility for illegal immigrants to benefit from legal permanent family member or U.S. citizen through use of public support programs such as unemployment insurance and welfare. It may be challenging for illegal immigrants to receive income support through a state or federal program because of their immigration status. According to Androff, Becerra, and Ayon health care costs is a major issue associated with illegal immigrants. Most of these illegal immigrants do not qualify for the government programs and therefore, do not have health insurance. The government has to provide care to the immigrants which are an extra cost of spending to the federal state. Illegal immigrants often use the emergency rooms rather than the health care as they have a right to emergency rooms regardless of their ability to pay or immigration status. It is under the Medicare Modernization Act of 2003, that there was the provision of money annually to reimburse health care providers and hospitals for the costs accrued from extending emergency health care services to illegal immigrants. This right claim can lead to higher costs for hospitals. Most undocumented immigrants do not receive income credits or receive a tax refund in case of an overpayment. U.S. Social security and Medicare programs depend on payroll tax revenue for financial solvency which requires illegal immigrants to pay income taxes through ITINs (2012). 

However, most illegal immigrants do not file taxes as they fear deportation and therefore, they are never refunded their tax refund. The immigrants do not receive Social Security benefits as they are to pay Social security and Medicare through payroll reductions. Most of illegal immigrants are not subjected to federal tax reduction since receive payments in cash. Although some may argue that, the reason they receive low wages and their contribution is insignificant. They do not pay federal tax but receive government benefits such as food assistance programs. Moreover, is an illegal immigrant child is born, the child is considered an American citizen and automatically have rights to the government services (, Androff, Becerra, and Ayon, 2012)

Hypothesis/research question

“Has illegal immigration had a positive effect on US economy by providing cheap labor or a negative by taking advantage of public services?” 

To answer that, many business persons and economists argue that the American economy depends on illegal immigrants to provide cheap labor but on the other hand, the government increases its expenditure to take care of the immigrants. Illegal workers will accept low wages, pay taxes, and use the money gained for consumption which expands the national economy (Snow, 2013). The government spends on these immigrants to provide Medicare, education, and law enforcement. The taxes which the immigrants pay are not enough to compensate for all these expenditure. By using these governments services such as public medical services and education, the taxpayers spend way too much which is not compensable. 

Methodology

The research used secondary data from peer reviewed papers and reviewed researches on the case concerning the effects of immigrants on U.S. economy with their cheap labor provision and using government services. This literature review used Plyler v. Doe case to explain the importance of public education provision to everyone regardless of their immigration status. Denying illegal immigrants right to education violates the Equal Protection Clause of the Fourteenth amendment as discussed in the case. Few studies have researched on effect of illegal immigration as it is a major concern in the U.S. economy and using the information gathered the researches provide a picture of the effects both positive and negative. Disadvantages arising from these data collection methods were weak data analysis and most cases depended on a single case exploration making it challenging to reach a generalizing conclusion. The advantage of this case study is that some longitudinal studies relied on journal writing for qualitative data which provides a descriptive account of behavior while some seek evidence from both numerical and categorical responses of Native Americans and illegal immigrants.

Results findings

From Plyler v Doe case 1982, the immigrants have the basis to using government services such as healthcare, education among other benefits. The issue at hand was whether the undocumented children had the right to attend public school and if denied was it a violation of the Equal Protection Clause of the Fourteenth Amendment? The court explained that it was a violation since education maintains the fabric of the society and acts as a basic tool to the economically productive lives of the individuals. While the legitimate interest of the state is protecting itself from illegal immigrants’ effects, the court argued that the immigrants did not come to the country to get free education. Education deprivation poses as an obstacle towards the achievement of the individual in life. Although there are economic costs that come with providing public education, the Supreme Court decision on this case guaranteed that the illegal immigrants’ children have a right to education in public schools in U.S. The federal government also has a program where undocumented children participate in English language programs (United States Courts).

Conclusion

Economists believe that American economy accrues many benefits from illegal immigration. Immigration makes the U.S. GDP increase; however, people should not confuse the larger GDP as a benefit to the Americans (native-born). Illegal immigrants cause a low demand for unskilled labor, high cost to state and federal government, and lower salary for grandaunts for the entry jobs. The less-educated immigrants earn less income and therefore drain the net fiscal while the higher-income immigrants particularly the more-educated are net fiscal benefit. Some of the arguments against illegal migration is that the federal, and state government are burdened with the high costs through provision of health care programs, anti-poverty programs, public education and welfare which the immigration do not pay taxes. Besides, big cartels high illegal immigrants to illegitimately do manual middle waged jobs which to the U.S. economy is has positive and negative effects. The negative effects accrue since the illegal immigrants work without paying taxes and on the other hand, it has positive effect since this condition of cheap labor provides better returns and higher profits to the stockholders. Besides, business people argue it is easier to extract surplus from cheap labor and that is what the illegal immigrants are providing to the economy. Critics of undocumented immigration argue that illegal immigrants lower domestic wages and increase levels of expenditure on public services such as public education and health care which results to high economic costs. Overall, as from different scholars, immigration increases the levels of income of Native Americans since it allow the utilization of domestic resources more efficiently. Based from the researches, lower income immigrants and those with larger families cause a larger drain on government expenditure. Although illegal immigrants lower the wages for some workers, they also generate extra income for the economy by increasing productivity of resources through labor supply. The overall economic contribution of the undocumented immigrants such as employment, generation of tax revenue, and purchases results in economical benefit which outweighs the negative effects such as expenses on provision of services.

References

Androff, D., Ayon, C., Becerra, D., (2012). Fear vs. Facts: Examining the Economic Impact of Undocumented Immigrants in the U.S. Journal of Sociology & Social Welfare , xxxix (4). Retrieved from https://www.wmich.edu/hhs/newsletters_journals/jssw_institutional/individual_subscribers/39.4.Becerra.pdf

Camarota, S. A. (2011). Welfare use by immigrant households with children: A look at cash, Medicaid, housing, and food programs . Washington, DC: Center for Immigration Studies.

Hanson, G. (2007). The Economic Logic of Illegal Immigration. The Bernard and Irene Schwartz Series on American Competitiveness: Council on Foreign Relations. Retrieved from https://gps.ucsd.edu/_files/faculty/hanson/hanson_publication_immigration_illegal.pdf

Marshall, K. S. (2008). The Unfair Trade Practice of Hiring Illegal Alien Workers. University of Pennsylvania Journal of Business Law, vol. 11: 1. 

Montorio, R.N. (2007). The Issue of Mexican Immigration: Where Do We Go From Here? Journal of International Business and Law, 6(1), article 8. Retrieved from http://scholarlycommons.law.hofstra.edu/jibl/vol6/iss1/8

Shapiro, J.R.and Velluci, J. (2010). The Impact of Immigration and Immigration reform on the wages of American workers. New Policy Institute. http://ndn.org/sites/default/files/paper/Impact_of_Immigration_on_US_Wages_-_Shapiro-Vellucci_-_Final-_May_24_2010_0.pdf

Snow, N. (May 13, 2016). Undocumented Immigrants and their Impact on the US Economy. Retrieved from http://inhomelandsecurity.com/undocumented-immigrants-impact-us-economy/

United States Courts. Access to Education-Rule of Law: Plyer v. Doe. Retrieved from http://www.uscourts.gov/educational-resources/educational-activities/access-education-rule-la