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FacebookImmigrants boost economy — but how much?
A study could help state avoid more surprises, but politics preserve willful ignorance
Leila Navidi
Construction worker Juan Rodriguez stands outside Los Paisanos Bus Co. last month after saying goodbye to two friends who are going back home to Mexico.
Mon, Apr 14, 2008 (2 a.m.)
Roberto Alvarez sits after services at Ebenezer Christian Church last month in Las Vegas. Alvarez has three brothers in the construction business who, like many immigrants in the area, are out of work.
Jose Pepe Hernandez gets a hug before boarding a bus bound for Mexico. He is going back because he can no longer find work in residential construction in Las Vegas. The effect on Nevada's economy of the departure of many immigrant workers has taken officials by surprise.
Nevada’s invisible workers are causing trouble for the state.
After dozens of interviews, the Sun concluded in an April 6 story that 60 percent to 80 percent of the Las Vegas Valley’s residential construction workers are illegal immigrants. Tens of thousands of these immigrants who have lost construction jobs are no longer feeding money into the economy. Many are leaving Las Vegas.
Because these workers live and work under the radar, economists did not foresee the effects of their lost wages and spending on state revenues.
The result is “we plan in the dark,” says Jeremy Aguero, principal of Applied Analysis, a Las Vegas consulting company whose clients include Clark County, the Wynn resort and the Legislative Counsel Bureau, the state’s research arm.
And now that the state government is lurching forward with steep spending cuts midway through its budget cycle, some say flawed revenue projections are partly to blame.
As Assemblyman Moises Denis, D-Las Vegas, explained: The 2007 state budget “didn’t take into account the true impact immigrants have on the economy, so we underestimated how (the downturn in homebuilding) would affect our economy. Things are worse than they might have been because immigrants are leaving.”
Aguero and Denis say the lesson for the state is that if it wants to avoid stumbling from budget year to budget year, it must find a way to count the entire workforce and calculate the effect of illegal immigrants on the economy.
Others in politics and business remain unconvinced of the merits of such a study. They don’t think it would be unbiased, and they doubt the results would convince both sides of the polarized debate on immigration.
Denis says he tried to float the idea of funding research on the issue before the 2007 legislative session. One of three Hispanics in the Legislature, he has a district that’s about 70 percent Hispanic. At the time, he spoke of the need to “have information to make informed decisions.” But most of his colleagues didn’t get it.
“Most people I talked to thought it was a good idea from an economic point of view, but not from a getting-elected point of view,” he recalls. Denis says he plans on reviving the idea, seeking support this time from the private sector.
Aguero says there’s “no question” the issue needs to be looked at. “They’re an essential element to an essential part of our economy — and maybe multiple parts of our economy,” he said.
Denis, who has lived in his Las Vegas neighborhood for more than 30 years, says the way immigrants are undercounted in the economy reminds him of what he faced as PTA president at C.C. Ronnow Elementary School in the mid 1990s. For years, he says, the School District would assume that his children’s school’s population would shrink based on incomplete information about the apparently aging demographics of the surrounding neighborhood. He kept trying to point out that the school was growing because of the influx of Hispanics. Finally, the district began taking into account the growing Hispanic student body at C.C. Ronnow and surrounding inner-city schools, he says.
As for economic impact, Texas is the only state to have completed a study focusing on illegal immigrants. Private groups in Iowa and Oregon have recently issued reports as well. In Nevada, the Progressive Leadership Alliance of Nevada looked at immigrants as a class, legal and illegal, in a 2007 report. That report didn’t look at costs to local and state governments.
The 2006 Texas report, compiled by the state comptroller, concluded that undocumented immigrants added $17.7 billion to the gross state product and $1.58 billion to state revenue in 2005, while “taking away” $1.16 billion in state services.
Mark Sanders was then spokesman for Texas Comptroller Carole Keeton Strayhorn and helped write the report. He says that “it was such a hot potato that quite frankly some people didn’t want it done.”
A lot of people in that state’s government “had a preconceived notion of the impact of illegal aliens on society,” Sanders says. So the results proved to be an “eye opener ... that probably lowered some of the rhetoric against illegal aliens.” The study took about six months to complete and cost the state nothing because the comptroller’s staff already did research on taxes and state revenue.
But in the end, Sanders says, “the report got caught up in politics,” meaning its results were dismissed by Strayhorn’s opponents and by those who believed illegal immigrants are inevitably a drain on the economy. This is what Aguero calls the “passive racism of low expectations.”
State Sen. Bob Beers says, “It would be nice to know if immigrants produce a net gain or not ... but I would be concerned with the methodology of such a study” and how it would be seen.
“There’s no way to do such a study that one side isn’t going to question the other side’s methodology, assumptions and work,” he says.
Cara Roberts, spokeswoman for the Las Vegas Chamber of Commerce, says studying the economic impact of immigrants is not one of her group’s priorities. Instead it is focused on lobbying the federal government to create a guest worker program “so that employers can find and legally hire workers.” The chamber, Roberts adds, “is opposed to the hiring of undocumented workers.”
Beers says time may have a way of answering questions about undocumented workers and Nevada’s economy if those workers continue to leave.
“Perhaps we’ll see what the impact of immigrants would be through observation of the local economy after they’re gone.”
Discussion: 23 comments so far…
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I truly hate to hear of people loosing jobs, however the bottom line is that some of these people are here taking much needed jobs from those who are citizens that have taken the time and much effort to be in the US as leagle citizens. It does not matter to these people what they are doing to our economy! Our schools are overflowing and the welfare system is bogged down because they enter the country as illeagles and then send the majority of the money they make home to support the rest of the people that have yet to cross the border as more illeagle's. Then the majority of these people dont bother to even attempt to learn the language or begin the process of becoming a citizen. This is a serious problem that is getting worse with each passing day, and as of yet, our government is doing almost nothing about it! What most people are failing to understand is that it does matter in the long run that these people are here illeagally. It affects everything we have from the welfare systems to the home foreclosure mess that we are in.
After careful review, anyone with a even a modicum of logic can come to no other conclusion: illegal immigration must be halted, illegal immigrants here now must be deported and legal immigration needs decreased from the approx. 2 million allowed in per year currently.
Please review the following report on the FISCAL COST OF IMMIGRATION by economist Edwin Rubenstein just released this past week:
http://www.esrresearch.com/Rubensteinrep...
A partial summary of the report:
The Fiscal Impact on 15 Federal Departments surveyed was: $346 billion in fiscal related costs in FY 2007
Each immigrant cost taxpayers more than $9,000 per year.
An immigrant household (2 adults, 2 children) cost taxpayers $36,000 per year.
Legal immigrants were not separated out from illegal immigrants for the fiscal impact study, but if they had been, the fiscal cost per ILLEGAL immigrant would be even more shocking than the figures quoted above.
The most extensive and authoritative study, prior to economist Edwin Rubenstein's "The Fiscal Impact of Immigration" (April 2008) , is the National Research Council (NRC)’s The New Americans: Economic, Demographic and Fiscal Effects of Immigration (1997).
The NRC staff analyzed federal, state, and local government expenditures on programs such as Medicaid, AFDC (now TANF), and SSI, as well as the cost of educating immigrants’ foreign- and native-born children.
NRC found that the average immigrant household receives $13,326 in federal annual expenditures and pays $10,664 in federal taxes—that is, they generate a fiscal deficit of $2,682 (1996 dollars)per household.
In 2007 dollars this is a deficit of $3,408 per immigrant household.
With 9 million households currently headed by immigrants, more than $30 billion ($3,408 x 9 million) of the federal deficit represents money transferred from native taxpayers to immigrants.
Our national immigration policies have to work for the United States. While improving the plight of the world’s poor is a laudable goal, the finite resources we have available to fulfill that goal would be swamped if there wasn’t some orderly and manageable system in place to limit entry into the United States to what this nation can actually support. The more illegal aliens that are permitted to subvert the immigration system, the fewer immigrants we can accommodate who might actually produce a positive benefit for our country.
The more we become a nation of illegal immigrants, the deeper we fall into anarchy.
The High Cost of Cheap Labor
Illegal Immigration and the Federal Budget
Among the findings:
Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household.
Among the largest costs are Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and free school lunches ($1.9 billion); the federal prison and court systems ($1.6 billion); and federal aid to schools ($1.4 billion).
With nearly two-thirds of illegal aliens lacking a high school degree, the primary reason they create a fiscal deficit is their low education levels and resulting low incomes and tax payments, not their legal status or heavy use of most social services.
On average, the costs that illegal households impose on federal coffers are less than half that of other households, but their tax payments are only one-fourth that of other households.
Many of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth. Thus, greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them.
If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion.
Costs increase dramatically because unskilled immigrants with legal status -- what most illegal aliens would become -- can access government programs, but still tend to make very modest tax payments.
Although legalization would increase average tax payments by 77 percent, average costs would rise by 118 percent.
The fact that legal immigrants with few years of schooling are a large fiscal drain does not mean that legal immigrants overall are a net drain -- many legal immigrants are highly skilled.
The vast majority of illegals hold jobs. Thus the fiscal deficit they create for the federal government is not the result of an unwillingness to work.
The results of this study are consistent with a 1997 study by the National Research Council, which also found that immigrants' education level is a key determinant of their fiscal impact.
For the complete report see:
http://www.cis.org/articles/2004/fiscale...
How will the Democrats build their over-powering constituency without them? Even the Republicans have turned to pandering to the illegals out of fear of being rendered irrelevant.
The issue and challenge is NOT how to count these folks so we have an accurate number of illegals, it is how do we get them OUT!
There will be an affect immediately to the budget because of the uncounted illegals who are now out of work and not spending but get REAL... As they leave Las Vegas, the medical system, the School District, and every other industry that is so over whelmed by the illegals using their systems, will become more manageable and now be able to provide services to who they were intended to service: NEVADA CITIZENS.
Once we rid the state of illegals and get a competent president in place, the economy will pick up and AMERICANS will be put to work where illegals used to work.
I am sick and tired of illegals affecting every single facet of my financial life. Why should I have to fund an illegal segment of society from birth through death? I feed them breakfast and lunch at school, I pay to hire teachers that can speak their language, I pay to immunize their children, I pay to birth their families, etc.
It MUST stop. I say buy them all tickets and say adios!
Zeezil, if I had eight hours to waste I might begin to address how flawed your analysis is. I don't have eight hours so I will have to limit myself to just one of the numerous immigrant related economic impacts that you so conveniently ignore.
Ask yourself this question--without immigrants, how much would a lettuce farm in Salinas, California have to pay to get its lettuce picked? There is a reason no one else in this country is willing to do the job--picking lettus is hell. It requires a young, strong laborer who is willing to be hunched over the entire day, while toiling in excruciating heat and mud. My guess is that the farmer would have to pay at least $12/hr to each worker (if In n' Out pays $10/hr, there is no way anyone would pick lettuce for less than $12/hr).
So if the farmer is now paying that lettuce picker $6.00/hr, he is making an extra profit of $6.00 per hour, per laborer. Due to his significant savings on labor costs, he is in a higher tax bracket than any laborer could be--immigrant or not. Therefore, all the money that would have otherwise gone to a poor laborer in the lowest tax bracket, is now being taxed at the farmer's high tax bracket. Uncle Sam comes out on top.
But you, in your racist fuled haze, conveniently ignore the increased corporate profits created by immigrant labor, and the increased taxes the government receives when the profits are taxed at a much higher tax rate than what a nonimmigrant laborer would ever pay.
You also conveniently ignore addressing how those savings are passed on to the consumer. How many lettuce farms would go out of business if they were forced to pay market rate for non-immigrant laborers? The reduced supply and the increased costs would drive the price of lettuce through the roof. California lettuce growers would never be able to compete with lettuce growers from Mexico and other parts of the world.
The government would then be forced to make a tough decision--either restrict imports of lettuce from Mexico and the rest of the world, which would mean astronomically high prices for lettuce, or allow the Mexican lettuce into the country and put California lettuce growers on unemployment. Either way,the public pays a huge price.
A lettuce farm is just one example. The same could be true of hundreds of industries throughout the US. Whether you like it or not, US industry and the US consumer have become dependent on cheap immigrant labor. The pink elephant that your study, and the study you site, mysteriously ignore.
OK, LawDog - lettuce is cheap but if the price of lettuce went up but the citizen was not having to pay all the other costs of illegal immigrants, paying more for lettuce is not a big issue.
I should not have to pay to school their chilren and pay their medical bills. PERIOD. I will pay more for lettuce any day rather than pay their welfare bills.
Judy, you don't understand my comments. Uncle Sam's overall taxable income increases because corporations, which reap all the benefits of cheap immigrant labor, are taxed at a much higher tax rate than non-immigrant laborers would be.
In fact, Nevada benefits way more than other states because non-immigrant laborers would not be taxed at all (no state income tax). However, the state does tax increased corporate profits generated by cheap immigrant labor.
And lettuce is just one example of thousands. Countless commodities which you use every day are much cheaper to you because they were produced with the help of cheap immigrant labor. Moreover numerous businesses, even entire industries, would otherwise cease to exist if not for the small profit margins made possible by cheap immigrant labor.
Judy, let me give you an example of how Uncle Sam makes more money off immigrant workers than he does off of non-immigrant laborers.
Let's go back to my example of the lettuce farmer. Let's say that after nonlabor expenses the farmer is left with $1 million. The best case scenario for the government is that he pays nothing for labor. That would mean that all of the $1 million would be taxed in the highest possible tax bracket. The worst case scenario for Uncle Sam is if the entire $1 million is split amongst hundreds of workers who, due to their meager income, pay little to no taxes. Each additional dollar that ends up as farmer income, rather than laborer income, is taxed at a higher rate. This generates more income for the government.
In the case of immigrant laborers vs. non-immigrant laborers, cheap immigrant laborers generate more income for the farmer than would expensive non-immigrant laborers. This income is taxed at a much higher rate than the same income would be if it were paid to the laborers.
So the government, especially the Nevada government which extracts zero taxes from laborers, actually generates more income if businesses pay less for labor. This means more money for schools and other things that affect the Judys in the valley on a day to day basis.
African Americans are the biggest losers when it comes to illegal immigration.
1. Illegals probably are harming the employment rate of African Americans more than any other ethnic group
2. Illegals probably are having a significant suppression effect on the per hour wage of African Americans who do not hold a college degree.
3. Eventually by the sheer weight of the influx of illegals, Latino’s will dominate the Democratic party and reduce the influence and power of the African Americans
Obama does not care and the Democratic elite do not care.
The biggest losers are Republicans. If a segment of the Republican party was not inherently racist, Republicans might see how easy it might be to gain the Latino vote.
Latinos are for the most part socially conservative--they oppose abortion and are big on family values. Wall Street conservatives already know the importance of Latinos in providing their businesses with low cost labor.
So the question is if social conservative Republicans and Wall Street Republicans would both benefit from gaining the Latino vote, why do Republicans want impose the toughest laws regarding immigration?...Because a segment of the Republican party cares more about America being white than it does about the main issues the party was founded on.
Its too bad...because I'm a socially conservative Wall Street Republican and I understand what an opportunity the party is losing...
To LVLawDog,
I appreciate and understand your analysis from a taxation standpoint. However,these extra profits earned or taxes collected from one institution or Mr.Farmer does not seem to 'trickle down' to cover increased local demands in public services-in our schools or in our hospitals. When I lived Dallas, it was the same. A large undocumented immigrant population without health coverage using Parkland hospital's ER as a primary care facility-just as UMC and other valley hospitals are being used today. I'm not convinced we're seeing any parity in public services due to the fact undocumenteds'employer is paying more in taxes vs wages.
Beezie, good point. I agree with your theory that the local governments suffer a greater share of the problems posed by cheap immigrant labor while the state and federal governments receive the lionshare of the benefits.
However, if the problem is deciding how to better allocate the increased tax income created by immigrant laborers, is the best solution deportation of such workers? Especially when deporting such immigrant laborers would compromise the health of numerous businesses and industries? The same businesses and industries which the government has allowed to become dependent on immigrant labor in order to maintain their profit margins?
I think the best solution is to conduct a thorough study of who wins and who loses and allocate the money between the governments as needed--which is what the article seems to be advocating.
First off illegal’s don’t pick much lettuce, look at the real figures of how many illegal aliens work on farms. We could put our prisoner to work picking lettuce and not the criminal illegal aliens.
Illegal’s kill our community and the American way of life:
Living 8 in a one bedroom apartment
Stealing every thing in site
Hit and runs
Making Las Vegas another TJ
Filling our schools with anchor babies
Breaking our health system
These are the facts, I have been a victim of illegal aliens numerous time. I have caught them stealing from me, metro tells me to move. I have been the victim of identity thief by illegal’s. My car has been hit and run 2 time last year by illegal aliens. I have worked for companies in this town that employs illegal alien and not because of work ethic but for cheap labor. The quality of work by illegal’s is substandard just look at Mexico.
I won’t do any business with anyone that hires illegal’s or that employees speak anything other than English.
I spent my youth in the military only to get stepped on by illegal aliens, I have hard working citizen friend out of work because of illegal aliens. I have watch salaries shrink do to illegal aliens. And they are going to protest in May? Go to your own country and protest!
Watch out for these people calling people like me racist, look at the groups they belong to like la raza (the race), they are racist.
BTW, Press 1 for deportation
Ship All The Illegal Disease Carrying,Spanish speaking,Anchor Baby's and their family's back where they came from MEXICO! Let them Take All Their Effort and Build Up their Third-World slum. Iam Sic Of Hearing Spanish out Of their Mouths While living in MY Country! They Are in America ILLEGALLY!
Thank God they're leaving - the sooner the better. Illegals are a drain on society and send most of their money back to Mexico anyway so who needs 'em.....I know I don't - the only ones who want them around are the people to cheap to pay an American a living wage to get the job done right!
This is not America anymore, it is something else, and it is just a huge mess. Look around, no one speaks the language anymore. Everyone is catered to, the Mexicans, Muslims, Russians, Eastern Europeans, Indians, Africans you name it. Just walk through any casino and listen and watch. And no they are not all tourists only a hand full are. The rest are East Coast immigrants taking over this country. And you know what it is too late, we are already doomed to a country that will be broke in the next 50 years trying to appease all of these groups.
" . . . any worker can pick 100 heads of lettuce an hour, so if they are being paid $7 an hour then its 7cents a head and if you pay them double or $14 an hour then its 14 cents a head, labor cost."
Quoting 'Asker' in response to the question: "Would apples cost $5/ea, lettuce cost $4/hd, beef $20/lb, etc, if all the illegals left, BUT!!!!?"
http://answers.yahoo.com/question/index?...
2many, don't worry I've been called racist too because I told Carpets-N-More that the only installer I would allow into my home had to be a black or white AMERICAN who spoke English and was a legal citizen - in other words if they sent me a Mexican I wasn't going to let them into my home. Guess what, they sent me just what I asked for 1 Black and 1 White American born and bred, English speaking AMERICAN :) Some call it racist, I call it being a concerned American citizen who is trying to take back my country and preserve jobs for our citizens.
Editor - if you think the pictures you're using here evoke sympathy think again - I see these so-called 'sad faces' and laugh - they're getting what they deserve - NOTHING! and that's as it should be considering they shouldn't even be here. What ever happened to the concept of rounding up all these illegals and shipping them the hell out of here and back to where they belong? I'd even chip in for the ticket!
I have read many comments here who are racist in nature. I agree that the problem of immigration is one who needs to be dealt with whether you are republican, democrat or independent. To Aggie and Azsk8fn: I am an American citizen, my father was a Vietnam war veteran, my great grandfather was a WW2 veteran and I am one of those Spanish speaking people you talk on your post. Not all of us who speak Spanish are illegal, just like not all of the people who speak English are legal. and BTW: Unless you are native American, YOU ARE THE THE PRODUCT OF IMMIGRATION.