Friday, July 19, 2013 | 2 a.m.
Immigration reform will boost Nevada’s economy and bolster its tax revenues, but not as much as states with larger populations of immigrants without legal residency or those states that collect state income tax, according to two studies released in the last week.
Nevada’s job market and gross state product stand to benefit if the immigration reform legislation passed by the U.S. Senate eventually becomes law, according to a study by Regional Economic Models Inc. released Wednesday.
The largest increase in tax revenue is expected to come from immigrants with a new legal status who transition from off-the-books labor and start paying income taxes. The ITEP study, using previous research, estimates income taxes are paid by just 50 percent of immigrants currently in the United States illegally.
Nevada has no income tax, and immigrants here illegally already pay the taxes that make up the bulk of the Silver State’s revenue stream: property and sales taxes.
Overall, the study predicts that a path to legal status would bring in an estimated $2 billion in additional tax revenue for all 50 states each year.
The study assumes that immigrants who receive legal status from the legislation would see a large increase in their wages, about 10 percent on average, because of increased bargaining power and the ability to move more easily within the labor market.
John Tuman, a UNLV political scientist who has studied immigration and immigrant populations from Latin America, said it is very difficult to predict the outcomes of large immigration reform bills, such as the Senate legislation, that will have sweeping effects.
“A lot of workers, regardless of their immigration status, can’t do much to increase their wages with the overall situation in the current economy,” Tuman said. “Normally what workers have is leverage. If they are productive, they can go somewhere else where they pay more. But if the economy is slow and there are a lot of workers, then you don’t have that leverage in the economy.”
By 2018, if the bill becomes law, the country would create an additional 594,000 jobs and gross domestic product would increase by $49.93 billion, according to Regional Economic Models Inc. a nonpartisan private analysis firm that studies government decisions from an economic standpoint.
"This study puts the immigration reform debate in the context of the broader economy. People in every state stand to benefit from these policies, which will expand the economic pie for individuals and businesses across the nation,” said Fred Treyz, CEO and chief economist at Regional Economic Models, Inc. “Undocumented workers, by entering the mainstream workforce, will add to overall U.S. productivity, and their increased spending will drive job growth throughout the economy.”
The states that will benefit the most are those that have the largest populations of immigrants without legal status, such as California, Texas and Florida.
Yet, the REMI study predicts Nevada, too, will benefit from various provisions in the Senate legislation. The study estimates granting legal residency would add $157 million to the gross state product in 2014 and $1.2 billion by 2045.
Nevada’s economy would not benefit as much as other states with larger immigrant populations, and with large technology and agriculture industries.
The study also predicts that adding high-skilled workers through an expansion of the employment visa program would lead to economic growth and the need for other labor in the state. In 2014, the study estimates, the expansion in high-skilled work visas would add $121 million to Nevada’s gross state product.
The report also dug into individual job sectors and where each state would see the most growth in its labor force. Not surprisingly, Nevada stands to see the largest increases in the number of workers employed in accommodation and food services, construction, real estate and professional and technical services.
“It’s not that high-skilled workers are irrelevant in Nevada, but they are relatively less important (than in other states),” Tuman said, referring to states such as California that use a lot of high-skilled visas in Silicon Valley and other areas.
“In Nevada, the labor market is focused more on immigrants with different skill sets than the high-skilled visa program. Although, immigrants have been important for filling jobs in health care in Nevada.”
The report argues that a new program included in the Senate bill, a W visa that would provide a non-immigrant temporary status to low-skilled workers in fields where the employer is unable to hire sufficient domestic workers, would be a boon for the economy. In Nevada, the program would add $300 million to the gross state product by 2018 and $450 million by 2044.
The Center for Immigration Studies, which advocates for limited immigration and has opposed the Senate bill, argues these reports overestimate the gains that will be made by low-skilled workers and fail to adequately account for the use of public services by new legal residents. Additionally, they argue immigrants themselves will occupy the majority of positions created by the growth in the work force.
“The federal entitlement programs are broken anyway,” said Douglas Holtz-Eakin, an economist and president of the American Action Forum, which has advocated for immigration reform.
“These programs are very expensive and we can’t afford them with or without immigration reform,” he said. “The wage impact is being overstated. When you are doing a very big reform like this, you want to tailor it to the long term and not just what’s ahead in October, November and December.”
A Congressional Budget Office report released in June indicated that unemployment would tick slightly up and wages would tick down, especially for those on the extreme ends of the labor spectrum. However, those trends would start to reverse after five to 10 years, and there would be a subsequent increase in wages and employment as capital investment caught up to increased labor availability and consumer demand.
“There is no consensus in the literature,” Tuman said. “But generally, many scholars expect that there wont be any net effect in boosting or reducing wages.”