The Economist: The myths and realities of undocumented immigration
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Immigration reform is a complex issue and one that often spurs inflamed rhetoric and intense opinions across the entire political spectrum. In particular, the current election cycle has provided far more heat than light.
My firm has been analyzing this issue throughout the US for more than 20 years, including a major study of Texas in conjunction with the Ford Foundation earlier this year. Given the state of the current debate, it is worthwhile to provide a few results from our recent report. It is unbiased and data-driven, and hopefully offers a bit more illumination than radiation.
We estimated the total economic and fiscal benefits of the undocumented workforce, then adjusted them to reflect offsetting costs such as education, social services, and health care. We also estimated the potential consequences of mass deportation or other overly restrictive immigration policies for Texas.
In our recent study, Texas Needs the Workers, we found that the undocumented population is crucial to business operations across the state, especially in certain industries such as agriculture, construction, and various hospitality services. The estimated 1.7 million undocumented individuals in Texas, about 7% of the state’s population, generate gains of millions of jobs and billions of dollars in tax revenue. Without this source of labor, some businesses would not have the manpower necessary to continue to operate successfully, resulting in fewer jobs and decreased prosperity in the state as a whole.
It should be noted that more than 1.2 million of these persons are working in the state each day, a fact which in and of itself explodes a couple of myths. First of all, there are more than two undocumented workers for every non-worker. Thus, the notion that is often portrayed of large families streaming across the border to utilize US services is simply not true. The vast majority of the undocumented population is in the workforce, and the number actually fluctuates with labor demand. Second, the number of undocumented workers is more than twice as large as the number of unemployed Texans, which means that it is not possible that these workers are displacing large numbers of job opportunities for citizens, as is frequently asserted.
Although the majority of undocumented workers are employed in the construction and service industry groups, the agriculture industry also relies heavily on undocumented workers as a proportion of total farm labor. According to our analysis, the undocumented agricultural workforce produces $10.4 billion in net direct benefits to the Texas economy each year, yet shortages remain in some segments. In fact, the Texas Farm Bureau has noted that the current H-2A visa system is a primary cause of these constraints, with the result being that Texas loses out on the potential for additional economic activity.
With farms struggling to meet staffing needs and relying heavily on the undocumented population already here, it is easy to see how mass deportation would devastate the industry. The same is true of other sectors. In our report, we looked at a scenario where immigration policy restricts entry, includes more enforcement mechanisms, and does not provide a sensible approach to obtaining needed labor resources, thereby resulting in a reduction in the pool of labor now available through undocumented workers of about 35%. Under such policy, the loss of workers in the agriculture industry alone would result in a $1.89 billion reduction in Gross State Product and a loss of $5.93 billion in total expenditures, or more than 25% of total spending in this sector. A mass deportation or other policy reducing the workforce by more than 35% would have even greater consequences. It is clear that Texas’ agriculture industry would be hard hit, with farm failures the likely result. Food prices across the state and region would almost certainly rise.
The agriculture industry provides just one example of the devastating impact mass deportation would have across the entire state and country. Net spending across the entire state would be reduced by over $100 billion per year through such restrictive policies. If the mass deportation of the entire undocumented population were to occur, the loss would balloon to more than $650 billon per annum. Obviously, the losses to the country are much larger and, in fact, catastrophic.
The facts show that Texas benefits from our undocumented workforce. There are more open jobs than workers to fill them, especially in industries like construction, agriculture, and hospitality. Even if all currently unemployed US citizens filled positions held by undocumented workers (which is impossible for a variety of reasons), Texas would still be short hundreds of thousands of workers across all industries. Conversely, a rational immigration policy that allowed more efficient use of an essential component of the workforce would provide a notable net stimulus.
In the midst of an election cycle, it is easy to get caught up in a frenzy of sound bites and misinformation, but it is important to remember the incontrovertible facts. Undocumented workers play a significant positive role in our economy, and their economic potential would increase notably if they were allowed to come out of the shadows and seek a pathway to legalization. Instead of advocating for policies such as mass deportations that would cripple many of the state’s critical industries, we should look towards more permanent reforms that would promote a reliable and stable pool of much-needed workers.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.