Tuesday, August 05, 2008

Economic reality and immigration

Economist Ray Perryman (http://www.perrymangroup.com/) knows about as much about the Texas economy as anyone who makes a living studying it. The Perryman Report is consulted by policy makers, business leaders and academics who share a concern for economic forces and the reality facing Texas citizens, consumers, labor and employers.

The Perryman Report & Texas Letter (March 2008) contains an important essay, "An Analysis of the Economic Impact of Undocumented Workers on Business Activity in the US with Estimated Effects by State and by Industry."

Noting the concerns of a shrinking workforce brought about by the aging of the Baby Boomers, Perryman is keen to impress upon his readers, no matter what their ideological or political positions, the central role of immigrants in helping sustain and grow the American economy. Perryman regards "enforcement-only" strategies and responses to undocumented immigrants as inadequate and naive in light of economic reality. As he says early in his report, "Overly restrictive policy has the potential to devastate certain industries. . . . While a national reform initiative is imperative, it must be cognizant of the potential economic fallout in order to avoid unnecessary disruptions, dislocations, and unintended consequences" (page 1).

Here are some facts from Perryman's research and wisdom:

  • 1 in 8 people living in the U. S. is an immigrant

  • Total number of immigrants is up by 10 million since 2000 to over 37,000,000 nationwide

  • 33% of our immigrant population accesses some major welfare program compared to 19% of native-born families, but most of these immigrant consumers are documented, rather than undocumented

  • A higher percentage of immigrants are employed than natives, but have lower educational levels, work at lower skill jobs and earn less for their work

  • Estimates of the undocumented immigrant population in the U. S. ranges from 11.1 to 12 million

  • California, Texas, Florida, and New York have the highest number of undocumented residents

  • Undocumented immigrants arrive in increasing numbers with 180,000 annually in the 1980s, as compared to 850,000 per year between 2000-2005

  • 78% of undocumented immigrants come from Latin America, with 56% of the total arriving from Mexico

  • Approximately 4% of U. S. school-age children are undocumented

  • The cost to educate undocumented immigrant children and U. S. born children of undocumented immigrants is estimated to be $30 billion

  • 8.1 million undocumented immigrants work in the U. S. economy

  • Between 50 and 75% of undocumented immigrants pay federal, state and local taxes.

  • Social Security and Medicare contributions made by undocumented workers support the benefits of older American citizens, as the immigrants will not be able to collect such benefits

  • Undocumented workers pay "far more" in taxes than they receive in benefits from various governments; while some state and local entities experience a net loss in cost of benefits versus taxes paid. "Viewed on the whole. . .the group more than compensates for the services it receives" (page 3).

  • Removing all undocumented workers would result in $1.757 trillion in annual lost spending, $651.511 billion in annual lost labor output, and 8.1 million job losses.

  • After the U. S. economy "adjusted" to such a loss of labor and capital, Perryman estimates that the sustained losses would include $551.569 billion in annual spending, $244.971 billion in annual labor output and more than 2.8 million lost jobs.

Amazing analysis.

The economic and labor data line up well with my personal experience in inner city Dallas. We must craft policies that provide guest worker status to immigrants who simply want to work, make a contribution to the U. S. economy and better their lives and those of their loved ones.

Doesn't that sound thoroughly American?

[More from Ray Perryman later.]



Chris said...

Of course a study by the Heritage Foundation showed the exact opposite. It found that a household headed by an individual without a high school education, including about two-thirds of illegal aliens, cost the U.S. taxpayers more than $32,000 in federal, state and local benefits. That same family contributes an average of $9,000 a year in taxes, resulting in a net burdrn of $22,449 each year.

Over the course of a household's lifetime that tax burden amounts to 1.1 million dollars.

If the figure of 12 million illegal aliens is used for estimation purposes, the total tax burden is 2.2 trillion dollars.

Justin said...


The vast majority of Americans are essentially living off the dole whether they know it or not. Whether they are immigrants or otherwise. When one percent of wage earners are paying like 40% of the income taxes in this country, that's gonna happen.

So, while I don't agree that tax dollars should be spent that way, its pretty ridiculous to make the argument that you and Heritage and Rush are making. Shoot, I bet a large number of Rush listeners are living off the government in a huge way as well.

Chris said...


If that is true, we shouldn't import anymore.

Anonymous said...

Larry, I think your figure of 8.1 billion undocumented workers should be adjusted downward. ;)

Jeff W

Anonymous said...

My own personal experience would indicate the Perryman numbers are probably correct. I cannot fathom how an undocumented household, whose members aren't entitled to many govt benefits, could cost $22K a year. In fact, they often pay SS and other payroll taxes and never receive the benefits. I highly doubt the Heritage Foundation's assessment.

Larry James said...

Jeff W, yep. . .slip of the figure on the board or worn out mind! Thanks for the correction. . .of course, I meant to type
"8.1 million"! Thanks for the correction and I will correct the text.

Adam Gonnerman said...

Very interesting. Working with Brazilian (and to a lesser extent, Hispanic) immigrants in New Jersey I see daily the benefits they bring. The best neighborhood in Newark is the one populated primarily by Portuguese and Brazilian immigrants. You can generally walk the main street there (Ferry Street) until midnight with minimal risk of assault. I've read the same of their impact on previously blighted communities in Detroit as well.

It makes more sense to create a workable system permitting legal immigration (the current system really doesn't leave many doors open) than work only the enforcement side. Unless, of course, the real reason for getting the undocumented folks out is xenophobia.

Larry James said...

Couldn't agree more, Adam. Thanks for taking the time to give us this helpful confirmation.

Anonymous said...

"Unless, of course, the real reason for getting the undocumented folks out is xenophobia."

(psst... Chris, this is your cue)