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Undocumented
Immigrant
Workers: Boon for U.S. Economy
The U.S. has benefited from illegal immigrants, most economists say
NEW YORK (By Chris Isidore, CNNMoney) May 1, 2006 In the heated debate over the impact of illegal immigration on the U.S. economy, Andrew Sum is one of those focusing on the negative. The economist - the director of labor market studies at Northeastern University in Boston - argues that the large supply of immigrants has displaced some low-skilled U.S.-born workers. "About 85.5 of every 100 new workers are new immigrants in this decade," he said. "At no time in the last 60 years have we come close to this." But even Sum would concede that the U.S. economy is larger, and growing faster, due to the supply of illegal immigrants, and that most Americans with higher job skills are better off for their presence. "Without the immigrants, we would have a decline in labor force of 3 to 4 percent," he said. "We couldn't have grown nearly as much as we did in the '90s if we didn't have immigrants. And in the last few years our growth would have been slower. The only thing I've argued is that we've ignored that illegal immigration has put a lot of young adults into economic jeopardy." Sum's views point out the dichotomy that many economists see when looking at the impact of immigration on the economy. Few economists will argue with the concept that the economy is stronger for the presence of the low-cost labor force. And while most admit they have to make at best make guesses, rather than the educated estimates they would like to make. But most say that economic growth would be a half a percentage point to 2 points lower without immigrant workers.. But even most of those who think it's good for the economy do see an impact on lower-skilled U.S.-born workers. Few economists expect the economy to take a noticeable hit Monday from the call for immigrants to stay away from work and take part in protests against legislation that will crack down on illegal immigration. "It's only for a day; much of the work not done on Monday is just going to be made up for on the week afterwards," said Benjamin Powell, senior fellow at the Independent Institute, an Oakland-based think tank. But Powell and many economists say that the economy would face significant problems if there was any significant cut in the amount of immigrant labor coming into the country. "Immigration is actually critical," said Bernard Baumohl, executive director of the Economic Outlook Group, a research group in Princeton Junction, N.J. "It allows the U.S. economy to grow more rapidly without higher inflation pressures." Some economists argue that not only do U.S. consumers benefit from lower prices as a result of the low wages most immigrants are paid, but that the availability of lower-wage labor helps create more work for higher-skilled, higher-paid workers who are generally native born. "If I'm a builder and I can hire more wallboard guys cheaply, my (ability to use) skilled carpenters goes up," said Northeastern's Sum. Some economists say that if immigrant workers weren't present, rather than native-born workers getting better wages to do the same jobs, many jobs done by immigrants might not get done at all. If immigration reform pushed wages higher for lower-skilled workers that would probably stop many average Americans from hiring household help they can now afford. The same is true for some manufacturers and service sector employers as well. "The average wage of the low-income American would be higher. But some of those jobs wouldn't get done at all and output would be lower," said David Wyss, chief economist for Standard & Poor's if immigration reform reduces the low-wage labor pool. A crackdown in illegal immigration in 2004 caused a shortage of workers needed to bring in the lettuce crop in the Western United States, said Powell, which he said caused a $1 billion loss for the industry as many growers had to leave their fields not harvested. "To hire Americans to do it, they would have had to raise wages so far, it wouldn't have been worth it for them," said Powell at the Independent Institute. "It caused less of a loss to leave the crop to rot." As for complaints that many critics of immigration cite - demand for social and government services by immigrants - most economists believe that is outweighed by the increased economic activity, even if some specific school districts or public hospitals struggle with the costs associated serving the immigrant community. |
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