Shannon K. O'Neil

Latin America's Moment

O'Neil analyzes developments in Latin America and U.S. relations in the region.

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Estimating the Costs of Restrictive Immigration Laws

by Shannon K. O'Neil
April 2, 2012

Migrant farm workers walk back to their camp with food and other supplies in San Diego Migrant farm workers walk back to their camp with food and other supplies in San Diego (Fred Greaves/Courtesy Reuters).

Much has been written about the rise of restrictive immigration laws in states such as Arizona, Alabama, and Georgia, both by those for and against these measures. What is now emerging are initial assessments of the economic costs and benefits of these policies.

One area affected is employment. Supporters of these laws argue that by discouraging undocumented migrants these policies free up jobs for native workers. So far the preliminary evidence suggests otherwise. In Georgia, 56 percent of farmers report having difficulty finding workers, and nearly half of restaurant owners claim to be experiencing a labor shortage (while overall employment numbers in Georgia increased since the law was passed–coinciding with the U.S. economic recovery–they have not increased in sectors traditionally employing unauthorized workers, a better measure of the effects of the law). Other reports on Alabama and California also show or predict widespread drops in total employment, and the elimination of thousands of jobs due to less intended consequences of the new laws.

A broader more technical study done by the Americas Society/Council of the Americas estimates that cities with restrictive immigration laws lower local employment numbers by nearly 20 percent, compared to similar cities without such ordinances. One reason the report suggests is that immigrants largely complement rather than substitute native workers, expanding jobs for all.

Looking at the overall state level economic effects, the picture does not get better. A cost-benefit analysis by University of Alabama researcher Samuel Addy predicts that the effects of law HB56 on Alabama’s GDP will range from two billion to nearly eleven billion dollars (roughly 1 to 6 percent of Alabama’s GDP), depending on how many of the state’s unauthorized workers actually “self-deport”– i.e., leave the state. A separate report, written in October 2011, by Tom Baxter at the Center for American Progress states that Georgia could lose between $300 million and $1 billion a year due to its new immigration legislation.

These costs come in part from the many roles illegal immigrants play in local economies. They are not only workers, but also consumers. They and their families pay rent, shop at the local supermarket, clean their clothes at the laundromat, go out to dinner, and buy clothes at the mall. Their departure from a state means less business for local stores (and less tax revenue for local and state governments).

There are areas where the state could end up saving money: K-12 education and healthcare being the most talked about. However, these areas may also not be as straightforward for cutting costs as many may have thought, with some commentators pointing to lost revenue from federal funding and the associated costs of checking student’s migrant statuses as mandated in Alabama’s laws. An article by Arizona Central, a Phoenix local newspaper, speculated that if every undocumented immigrant disappeared from Arizona, the estimated savings for healthcare and education combined would be in the millions, much less than the projected billions in economic losses. While the motivations behind many of these laws may be to improve the economic prospects for U.S. citizens, the early results show instead the opposite–increased costs for natives and non-natives alike.

 

Post a Comment 7 Comments

  • Posted by Johnny Walker

    If these stats are for employment how does it include illegal immigrants? Every job I’ve seen requires proof of legal status … just curious
    jw

  • Posted by hank

    Ms O’Neill
    Every last economic statement may be true regarding the deporation, forced or not, of illegal immigrants. However, what you did not address is the fact that these people are breaking the law. Whether a person comes here to work on a visa and doesn’t have the money to renew, or they come here without the proper papers in the first place, the laws are put in place to ensure order in our nation. Allow me to speculate, just as your Arizona Central news paper did. A Mexican immigrates to the U.S. illegally, where, unable to find a job, he or she turns to a life of petty crime. Soon, that petty crime is unable to afford the life that our illegall immigrant wants, turning them to a life of more seriuos crime such as high stakes burglary, selling drugs, and perhaps murder. You can’t say that it couldn’t happen, as I would guess it doesn’t in 95% of the cases. yet it still does happen. If the U.S. government would collect all the fees for immigrants coming to America, I am sure that they could average one hundred million dollars or more i additional income every year. Would that wipe out the debt? Of course not, but it would be a start. Then the immigrants could become part of the legal work force and contribute an even greater amount to their newly adopted communities by joining the tax base. But, alas, the biggest reason for them not to remain illegal is that it’s the law, adnd no one i above it. Thank you.

  • Posted by Armando T.

    Always a different point of view, a punctual and positive perspective on these bilateral issues, presenting accurate information and backing it up with a profound research…reading you I’m not only getting precise, consistent information but also a depth knowledge of the current affairs in the American Continent.
    Once again, thank you Shannon…it is so good learning…

  • Posted by Shannon K. O'Neil

    Hi JW. These statistics are for overall jobs, but get at the jobs indirectly created by unauthorized workers living in an area. So this includes the sales clerks, food servers, check out cashiers, teachers, and public employees whose jobs are supported by the economic activities and taxes paid by this part of the local population.

    When unauthorized workers leave, the preliminary evidence suggests that native workers don’t fill their jobs (at least fully), and other native workers lose these other jobs as overall economic activity slows down.

  • Posted by Johnny Walker

    Thanks Shannon – I think the subtlety I missed was:

    “One reason the report suggests is that immigrants largely complement rather than substitute native workers, expanding jobs for all.”

    Which is the gist of what the data is showing?

    And I never thought of it that way until I considered the economic activity of illegal immigrants outside work itself.

    jw

  • Posted by CHARLIE STEVENS

    Shannon left one of the largest industries – construction. Every job site I visit or contractor I talk with will tell you that we don’t have enough Natural Americans to do the work. If the housing market starts to improve dramatically we are in deep do do.

  • Posted by Teri Gillingham

    I own my own construction company and only hire documented workers and I still have a hard time finding people that actually want to do the work because I have to keep my labor costs down.

    I think we need to be honest with the fact that Natural Americans do not want to work at McDonalds or as a waitress based on the wages that are paid. Most of this positions are minimum wage and most people can’t live on that kind of income.

    The large amount of jobs we’re referring to still only pay minimum wage or a little more. They are now and always have been.

    Regardless to where you are from, anyone that owns a home and a car, cannot afford to work in the service, construction and hospitality industries and survive on that kind of income.

    Teri

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