Anti-Immigrant Policies Are Not Only Cruel, They Also Have an Economic Cost

U.S. Citizenship and Immigration Services (USCIS), the government agency that processes visas, green cards and citizenship applications, claims it’s going broke. USCIS officials are threatening to furlough some 13,400 employees as early as August 30, after initially planning the measure for August 3. The furloughs would add to what was already a huge backlog in application processing, creating a disaster for tens of thousands of immigrant applicants. As many as 126,000 people already approved for citizenship may not be naturalized in time to register for the November elections.

Trump administration officials blame the agency’s financial problems on the COVID-19 pandemic, but critics say the main problem is the Trump administration’s three-year campaign to close off channels for legal immigration. This has increased the agency’s operating expenses and has discouraged current and prospective immigrants from filing applications and paying the processing fees that provide the bulk of USCIS funding.

The agency is asking Congress for a $1.2 billion bailout. That may seem like a minor expense in the present massive economic crisis, but the USCIS’s financial troubles are a timely reminder that anti-immigrant policies have a cost: such policies generate a net economic loss for the great majority of the U.S. population, in addition to causing tremendous human suffering.

The Wall and the Stimulus

One obvious example is the cost of immigration enforcement. The government budgeted $24.7 billion for enforcement in fiscal year 2019, more than two and a half times the cost in 2003, and one-third more than the 2019 budgets for the other major federal enforcement agencies combined. Even this isn’t enough to satisfy anti-immigrant politicians: President Trump is now pouring an additional $11 billion into upgrades and extensions for the 650 miles of fencing on the Mexico-U.S. border. (Despite the expense, the new or upgraded barriers can be breached with an electric saw that retails for as little as $100.)

Still, direct costs like Trump’s wall are insignificant compared to the opportunity costs of anti-immigrant measures — the economic benefits that U.S. society loses by denying full rights to immigrants.

Consider the exclusion of undocumented workers and their families from the “stimulus checks” that Congress approved in the spring. The payout that the government offered U.S. residents in the March CARES Act was linked to the recipient’s Social Security number, which most undocumented workers are legally barred from acquiring. Payment by a federal ID makes sense as an administrative matter, but there’s another federal ID that could have been used in addition to the Social Security number. Approximately half of undocumented households file their federal taxes with the Individual Taxpayer Identification Number (ITIN). By refusing to utilize the ITIN, the government denied the stimulus to millions of undocumented workers, and even to their citizen spouses if they filed joint returns. An estimated 16.7 million people live in mixed-status families, and many of them were impacted by the decision to write off people who file with the ITIN. (The HEROES Act, which the Democrat-led House of Representatives passed in May, would allow use of the ITIN in a second stimulus package, but the White House is unlikely to agree to this.)

The stimulus check was supposed to have a dual purpose: to help working people get by during the crisis and to help keep the economy running by maintaining consumers’ purchasing power. The marketplace, like the virus, doesn’t care about immigration status: From a purely economic standpoint, the country needs to tide undocumented workers over — an estimated 74 percent of them are designated “essential workers” — and it also needs them to keep purchasing goods. Excluding these workers made the stimulus from the CARES Act less effective for no reason other than a desire to punish undocumented workers and their families.

The Costs of Exploitation

A still larger opportunity cost arises from the denial of labor rights to many foreign-born workers.

The U.S. workforce includes about 7.6 million undocumented immigrants. Lack of legal status makes these workers exceptionally vulnerable to exploitation by employers; undocumented workers receive significantly lower wages than citizens or other immigrants with the same job qualifications. Various studies estimate that this “wage penalty” ranges from 6 percent to more than 20 percent. In addition, there are about 250,000 people who work at seasonal jobs (such as harvesting crops or landscaping golf courses) in the United States through the H-2A and H-2B visa programs; these guest workers labor in conditions that the Southern Poverty Law Center calls “close to slavery.” A 2011 study suggested that many are being paid from 25 percent to 40 percent less than other workers in similar fields.

A legalization program for undocumented workers would almost immediately raise their wages, while guest workers would get the same sort of boost from a work visa program with strong protections for labor rights — along the lines proposed last year by Bernie Sanders’s immigration plan and, separately, by the Migrant Justice Platform, a set of policy proposals from a group of immigration activists and experts.

The benefits a full-scale legalization would offer undocumented immigrants can be seen in the results of the 2012 Deferred Action for Childhood Arrivals (DACA), an Obama-era program the Trump administration keeps trying to end (unsuccessfully so far). DACA doesn’t grant legalization, but it has temporarily shielded nearly 825,000 undocumented youths from deportation and has allowed them to apply for work permits. A September 2019 survey of 1,105 DACA recipients found that 58 percent had moved to jobs with better pay, 48 percent had moved to jobs with better working conditions and 17 percent had earned professional licenses. Their average hourly wages shot up by 86 percent.

The effect of a general legalization wouldn’t be as dramatic for undocumented workers who came to the United States as adults — DACA recipients arrived as minors and must attend college or join the military to qualify, so they have advantages like greater English proficiency and are more likely to have college degrees — but it would still be substantial. Based on the libertarian Cato Institute’s estimated wage penalty for unauthorized workers, the pay average increase would be around 11 percent.

A Real Stimulus

Workers born outside the U.S. wouldn’t be the only ones getting a pay hike. Millions of workers in low-wage occupations currently have to accept lower pay because they’re forced into wage competition with underpaid guest workers and undocumented immigrants. The combination of legalization and a fair work visa program would raise wages for many U.S.-born workers as well.

This wage increase for millions of lower-wage workers — whatever their place of origin — would in itself provide an important stimulus to an economy facing its worst crisis since the 1930s.

During the 2007-2009 Great Recession, Raúl Hinojosa-Ojeda, a professor at the University of California, Los Angeles, proposed an amnesty for undocumented immigrants as a response to that crisis. “Legalization increases short-term incomes, job-creating consumption and net tax revenues in the low-wage segments of the labor market,” Hinojosa-Ojeda wrote, and it “sets the long-term foundation for an expanding middle class and a more sustainable economic recovery.” He projected that an amnesty “would result in a net income rise of $30-36 billion, support 750,000–900,000 new jobs, and generate $4.5 to 5.4 billion in net tax revenue.”

The current situation is far worse than the one a decade ago, and the economy is probably not going to recover quickly even once the pandemic is contained. A meaningful recovery will require dramatic measures like the Green New Deal that can create jobs while at the same time saving the environment, repairing infrastructure and building a more equitable society. But any effective recovery program will also need to include a rational approach to the millions of residents who happen to have been born outside the United States.

Ideally, the U.S. immigration system should get a complete overhaul. But there are measures the politicians could easily put in place right now: the HEROES Act’s extension of stimulus payments to ITIN filers, for example, and the diversion of Department of Homeland Security funds from immigration enforcement to disaster relief (the opposite of the Trump administration’s approach). Above all, the country needs long-overdue reforms to the guest worker programs, and the type of legalization program already favored by a large majority of U.S. citizens.

As Hinojosa-Ojeda noted in his proposal for the last recession, a humane immigration policy “is now an economic necessity, as well as a moral and civil rights imperative.”