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Progressive Immigration Policies Will Strengthen the American Economy

immigrant businesses

SOURCE: AP/Paul Sakuma

Rosen Sharma, president and CEO of BlueStacks, smiles at his former office in Palo Alto, California. In 2011 immigrant entrepreneurs were responsible for more than one in four new U.S. businesses, and immigrant businesses employ 1 in every 10 people working for private companies.

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Immigrants have been a critical part of the American economy since the founding of our nation, but they are even more important today as we look to the future of our economic recovery and our economy. While Congress debates the economic strategy to restore our nation’s fiscal health, an opportunity is on the horizon that would maximize the human capital and talent of the nearly 40 million immigrants who call America home.

In order to reap the rewards of this talented and diverse labor pool, we must develop a legislative solution to fix our nation’s broken immigration system. Immigration reform that creates a pathway to earned legal status—and eventually to citizenship—for the undocumented immigrants living in our country while at the same time updating our legal immigration system will unleash the potential of immigrant workers and students to work, innovate, and add hundreds of billions of dollars to the U.S. economy.

Let’s review how progressive immigration policies can help make this happen.

Legalizing our nation’s undocumented immigrants

  • Legalizing the 11 million undocumented immigrants in the United States would add a cumulative $1.5 trillion to the U.S. gross domestic product—the largest measure of economic growth—over 10 years. That’s because immigration reform that puts all workers on a level playing field would create a virtuous cycle in which legal status and labor rights exert upward pressure on the wages of both American and immigrant workers. Higher wages and even better jobs would translate into increased consumer purchasing power, which would benefit the U.S. economy as a whole.
  • The federal government would accrue $4.5 billion to $5.4 billion in additional net tax revenue over just three years if the 11 million undocumented immigrants were legalized.
  • The national advantage of legalizing the undocumented immigrants is obvious in the previous figures, but gains are also evident at the state level. The state of Texas, for example, would see a $4.1 billion gain in tax revenue and the creation of 193,000 new jobs if its approximately 1.6 million undocumented immigrants were legalized.
  • States that have passed stringent immigration measures in an effort to curb the number of undocumented immigrants living in the state have hurt some of their key industries, which are held back due to inadequate access to qualified workers. A farmer in Alabama, where the state legislature passed the anti-immigration law H.B. 56 in 2011, for example, estimated that he lost up to $300,000 in produce in 2011 because the undocumented farmworkers who had skillfully picked tomatoes from his vines in years prior had been forced to flee the state.
  • With nearly half of agricultural workers, 17 percent of construction workers, and 12 percent of food preparation workers nationwide lacking legal immigration status, it isn’t hard to see why a legalization program would benefit a wide range of industries. Business owners—from farmers to hotel chain owners—benefit from reliable and skilled laborers. A legalization program would ensure that they have them.

Passing the DREAM Act

  • Passing the DREAM Act—legislation that proposes to create a roadmap to citizenship for immigrants who came to the United States as children—would put 2.1 million young people on a pathway to legal status, adding $329 billion to the American economy over the next two decades.
  • Legal status and the pursuit of higher education would create an aggregate 19 percent increase in earnings for DREAMers—young people who would benefit from passage of the DREAM Act—by 2030. The ripple effects of these increased wages would create $181 billion in induced economic impact, 1.4 million new jobs, and $10 billion in increased federal revenue.

Reforming the high-skilled immigration system

  • Creating a 21st century high-skilled immigration system—a system that accepts highly qualified immigrant workers when there is a demand that cannot be filled by American workers—would stimulate innovation, enhance competitiveness, and help cultivate a flexible, highly skilled U.S. workforce, while protecting American workers from globalization’s destabilizing effects.
  • The United States has always been and continues to be the nation where creative and talented individuals from around the world can come to realize their dreams, and our economy has significantly benefited from their innovation. In 2011 immigrant entrepreneurs were responsible for more than one in four new U.S. businesses, and immigrant businesses employ 1 in every 10 people working for private companies. Immigrants and their children founded forty percent of Fortune 500 companies. These Fortune 500 companies collectively generated $4.2 trillion in revenue in 2010—more than the GDP of every country in the world except the United States, China, and Japan. Reforms that enhance legal immigration channels for high-skilled immigrants and entrepreneurs while protecting American workers and placing all high-skilled workers on a level playing field will promote economic growth, innovation, and workforce stability in the United States.
  • Our economy has benefited enormously from the talented immigrants who come here to study. Upon graduation, however, immigrant students face the tough choice between returning home and finding an employer to sponsor their entry into a visa lottery that may allow them to stay and work. Reforming the high-skilled immigration system would allow us to reap the benefits of having subsidized the education and training of these future job creators as immigrant students graduate and go on to work at our nation’s companies, contributing directly and immediately to our nation’s competitiveness in the global market.
  • Significant reform of the high-skilled immigration system would benefit certain industries that require high-skilled workers, such as the high-tech manufacturing and information technology industries. Immigrants make up 23 percent of the labor force in both of these industries and are more highly educated, on average, than the native-born Americans working in these industries. Still, immigrants working in science, technology, engineering, and math fields in the United States complement, rather than compete with, American workers. For every immigrant who earns an advanced degree in one of these fields at a U.S. university, 2.62 American jobs are created. By focusing on drawing human capital to our country and retaining it, Congress can help ensure that key sectors of our economy have an adequate labor pool to draw from and can boost our collective economic potential.

Our economy has much to gain from reforming our broken immigration system. But the biggest rewards will only be realized if Congress approaches immigration reform as an economic opportunity to be seized rather than an enforcement problem to be solved. Legislation that deals comprehensively with the issue by putting the nation’s undocumented immigrants, including DREAMers, on a path to citizenship while also reforming the high-skilled immigration system will strengthen the nation’s economy while increasing prosperity for all Americans.

Ann Garcia is a Research and Policy Associate for the Center for American Progress. Marshall Fitz is the Director of Immigration Policy at the Center.

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