The net benefits of illegal immigration.

Recently I was sent one of the sets of bogus statistics that the xenophobic Right, and some on the Left I might add, send around which bashes immigration. In particular, they have hissy fits about “illegal” immigrants.

What is an illegal immigrant? It is someone who moves to the United States without government permission. They lack a piece of paper granting them permission issued by some bureaucrat. I find it hysterical that the fringe lunatics on the Right scream about this illegal status. They argue that these people are immoral, evil, and criminals for violating the law—not for violating the rights of others mind you, merely for violating the law.

The same lunatic fringe distribute literature praising “patriots” who do precisely the same thing: violate the law. They have wet dreams over “patriots” who drive without driver’s licenses. And, they get dreamy eyed when some “patriot” gives them another scam that supposedly exonerates them from paying income taxes. Mind you, I am saying nothing about the wisdom of such laws. These groups have long lists of laws they want people to violate. They encourage people to violate the law; they applaud them for doing so. They honor them for it unless they were born in Mexico. For Mexicans they say: do as I say, not as I do.

This recent email contained some “statistics” that the Right was throwing around. It claimed that there are under 21 million illegal immigrants in the US. That is not an unreasonable estimate. Of these, four million are children in school. That would leave 16 million adults. Supposedly 10 million of these people have “skilled” jobs. The Right says they “stole” these jobs from Americans. It should be noted that you can’t steal a job. A job is a voluntary contract between a willing employer and a willing employee. It is a relationship, not a piece of property. No one has a property right in a job and what you don’t own can’t be stolen from you.

I was rather impressed by the quality of workers that supposedly come into the US illegally. If this email is to be believed, then over half the adults who live in the US illegally, have skilled jobs. I don’t know if “skilled” is defined as any job held by an immigrant, or if there are more immigrants who hold “unskilled” jobs not listed. But the labor participation rate for US adults is about 66 percent, and supposedly 60 percent of adult, illegal immigrants hold “skilled” jobs. That is rather impressive. Particularly when you consider all the racist legislation that has been passed by political weasels to make it impossible for illegals to find work.

Of course, at the same time, these illegals are living off of welfare. The “statistics” threw together numbers about what immigrants supposedly take out of the economy. And, they threw around some high numbers to confirm the worst suspicions of people worried about the “brown menace”. What I noticed was that the balance sheet only added up debits. Apparently the 10 million illegals with “skilled” jobs have all joined the tax protest movement and pay nothing in the form of taxes. There must be secret tills at the grocery stores for illegals where they buy their food without paying sales tax. No where did the balance sheet ask what is contributed by the labor of these of immigrants.

It is is claimed, and I think it is reasonable to say, that Arizona is more impacted by illegal immigration than most states. A large number of illegals live in Arizona. Enough that Democratic Governor Janet Napolitano signed racist legislation specifically directed at these people in order to prevent them from finding work. What a mensch! You didn’t think that only Republicans pander to hate, did you?

Economic nationalists, on the Right and the Left, argue that the influx of immigrant workers lowers wages for Americans. As these Malthusians see things, there is this economic pie of a predetermined size. If immigrants take a slice that means “native born” citizens are deprived. This sort of illiterate thinking has been widespread on the Left for centuries and inspires a lot of hatred for free trade in general. It is simply bullshit. People contribute to the pie. Each worker produces more wealth than he consumes. If he didn’t he wouldn’t be hired. That extra wealth he produces creates more working capital allowing the expansion of the economy. It also results in workers who find their own productivity going up. This increased productivity pushes up wages. The economic pie expands. Immigrants make the pie bigger not smaller.

Consider Arizona as an example. As this graph shows the percentage increase in annual wages in Arizona increased at a faster rate than in the United States as a whole. Yet, the xenophobes argue that the opposite is happening.

They have lots of things backwards.

A recent study (PDF) has the xenophobes in a dither. The Udall Center for Studies in Public Policy, at the University of Arizona, looked at the full balance sheet to see what immigrants put into the economy and what they take out. In particular they studied the impact of immigrants, mostly illegal, on the economic conditions in Arizona.

On a whole they found immigrants contributed more to the economy then they cost. No surprise there. Where the racists concentrate on only cost, this study also considered benefits. For instance, “non-citizen households” in Arizona had consumer spending, in 2004, of $4.41 billion. That created an estimated 28,000 full-time jobs. In addition that spending “generated tax revenues of approximately $318.6 million.

But then these illegals “steal jobs” as well. Supposedly “skilled” jobs according to the email I got. The Udall Center found that 14 percent of the Arizona workforce is made up of immigrants but they held a disproportionate number of “low-skilled” positions in agriculture, construction, manufacturing and some areas of the service industry. Almost 60 percent of agricultural workers were immigrants. About 22 percent of food preparers and servers were immigrants. About 35 to 41 percent of construction workers were immigrants. The same for 46 percent of textile workers, 51 percent of landscaping workers and 38 percent of maintenance workers.

There were some high skilled immigrants in particular professions but these were legal immigrants who are targeted by the US government for preferential treatment. So 19 percent of physicians in Arizona were immigrants, along with 36 astronomers and physicists and 16 computer hardware engineers. But, the typical “illegal immigrant” takes jobs that don’t pay as well and which, for the most part, are shunned by the native born.

I think one of the great absurdities in US immigration policy is that they ignore the need for people to mow lawns and sweep hallways. Working contributes to the economy of the state and the Udall Center found:

Non-citizens, for their part, contributed $28.9 billion, or eight percent of Arizona’s economic output, resulting in 278,000 full-time equivalent jobs. Their output included $10 billion in labor income, and $3.3 billion in other property income. The state tax revenues resulting from this economic activity were approximately $1.08 billion.

They also looked at what would happen if the illegal workers were removed from the workforce.

Agriculture: A fifteen percent workforce reduction in the agriculture sector would result in direct losses of 3,300 full-time-equivalent jobs, and losses of $600.9 million in output including lost labor income of $198.6 million, and lost other income of $116.1 million. The lost direct state tax revenue would be approximately $24.8 million. Construction: A fifteen percent workforce reduction in the construction sector would result in direct losses of 55,700 full-time-equivalent jobs, and $6.56 billion in output including lost labor income of $2.59 billion and $450.5 million in other lost income. The direct lost state tax revenue would be approximately $269.2 million. Manufacturing: A ten percent reduction in the manufacturing workforce would result in direct losses of 12,300 full-time-equivalent jobs, and $3.77 billion in output including lost labor income of $740.8 million, and lost other income of $286.1 million. The lost direct state tax revenue would be approximately $104.4 million. Service industries: In the service sectors analyzed, a sixteen percent reduction in the labor force would translate to direct losses of 54,000 full-time equivalent-jobs, and lost output of $2.48 billion including reduced labor income of $901.3 million, and reductions in other income of $273.0 million. The lost direct state tax revenue would be approximately $156.9 million.

I hope Governor Napolitano is realizing what a mistake she made pandering to the bigots.

The study concluded that the state of Arizona took in tax revenue of $1.64 billion from immigrant workers while the amount the state spent on immigrants was approximately $1.41 billion leaving a net benefit of $222.6 million to the state coffers. But that is only what they contribute to Arizona’s revenue. They also pay national income taxes and social security taxes. As Shikha Dalmia, a senior analyst at the Reason Foundation noted: “A stunning two-thirds of illegal immigrants pay Medicare, Social Security and personal income taxes.” And while they pay in, under US law they are forbidden to receive the benefits for which they pay. “The only services that illegals can still get are emergency medical care and K-12 education.” She writes:

What's more, aliens who are not self-employed have Social Security and Medicare taxes automatically withheld from their paychecks. Since undocumented workers have only fake numbers, they'll never be able to collect the benefits these taxes are meant to pay for. Last year, the revenues from these fake numbers — that the Social Security administration stashes in the “earnings suspense file” — added up to 10 percent of the Social Security surplus. The file is growing, on average, by more than $50 billion a year.

Of course, that is only a part of the total economic benefit of these workers. Their labor also means that more people who wanted gardening work done, had it done. It means that service in fast food restaurants was faster, that businesses were cleaner, and that fresher vegetables were in the market. Focusing only on the net benefits to government revenue presents but a portion of the benefits offered by immigrants.

Go back to basic economics. Individuals who make exchanges in a free market do so because all trading partners involved believe, according to their own values, that the result of the exchange will improve their well being. Now and then people make mistakes. But, not nearly as often as politicians do. People know what benefits them and what doesn’t. If Americans didn’t benefit from the labour of immigrants then immigrants wouldn’t find jobs. You wouldn't need legislation banning the hiring of immigrants.

Every day millions of immigrants engage in hundreds of millions of exchanges. They trade labor, they purchase milk, they pay rent, etc. Each trade they make benefits someone and the usual beneficiary is a citizen of the United States. Benefit plus benefit plus benefit doesn’t add up to deficit.

Fake libertarians, actually closet conservatives, argue that they want immigration, but only after the welfare state is abolished. Until then, they want to spend billions erecting a wall and more billions on increased immigration enforcement. They want to force billions more in costs on private businesses, forcing them to act as unofficial immigration agents for the federal government (involuntary servitude to the state). In fact, their misguided and hateful policies are net losses to Americans. Unlike the immigrants they wish to stop, these individuals are imposing actual losses. Again, that should be expected. They wish to use coercion against others. Coercion is only needed when you wish to impose involuntary costs on others. When people benefit, they act volutarily.

The welfare/immigration link is a canard. But it sounds better than the saying: “Hey, folks, we don’t want these brown people living here do we? I mean look at them. They aren’t like us.” The welfare argument is bogus. The numbers don’t add up. And so-called “free market advocates” ought to know that. And look at the measures that the xenophobes are promoting. What ever they think of welfare they are trying to prevent immigrants from working. If they don’t want people collecting benefits, then why are they limiting work opportunities?. That tells me that their real concern is not welfare at all. If it were they would make it easier for people to work.

That these psuedo-libertarians ignore the economic evidence to please the nativists in America shows that they either don’t actually understand markets, as they claim to, or that they have an agenda that is anything but libertarian. Some, I suspect, are both economically illiterate and bigoted. Some are ignorant, and some are just bigots.