Jan 25, 2018 in Economics

Economic Impact of Illegal Immigrants

According to Hanson, illegal immigration is normally the act of living within a country without clear entrance or residing permission from the government (1). He points out that lack of better and effective documentation is what has caused the intrusion of illegal immigrants in the United States; especially the Mexican-American immigrants, who are estimated to constitute approximately 12 million. He adds that since 1830s, the U.S corporations have been recruiting Mexican workers through government permission to cross border to work indefinitely either in railroads or on farms without government interference. This has raised a lot of concern regarding the effects of these illegal immigrants on US’s wages and public finance.

Recently, positive efforts have been made by lawmakers to enact immigration laws and requirements (Hanson 1)

In particular, the law requirements have been based on the fear of terrorist attacks and quick integration of the Spanish language in the nation as well as the fact that the white political figures had concerns that their demographic composition was being overwhelmed by other colors. For instance, President Bush signed an anti-immigration law, Secure Fence Act, which authorized the government to fund the construction of approximately 700-mile fence on its border with Mexico (Hanson 6). However, Hanson notes that the establishment of these “crack down immigration papers” has violated the human dignity by making life of even legal immigrants more difficult in the United States. For instance, the FBI statistics conducted from 2001 through 2006 noted an increase of 35 percent in hate crimes against Latinos due to the anti-immigration debate in the United States (LeMay 275).

Additionally, LeMay notes that the current state of immigration law, especially concerning the illegal immigrants in U.S., is unprecedented and unacceptable due to security threat posed by the porous U.S. borders and the labor abuse that these illegal immigrants undergo (275). This has elicited a lot of concern on whether illegal immigrants should be granted U.S citizenry under certain conditions or not. This has been widely opposed by policymakers who have continued to agitate for large-scale deportation of these people. Therefore, since ineffective immigration laws in U.S have resulted into a situation where many illegal immigrants live or work in America, which in turn has economically impacted on the nation, there is a need to adjust these laws either to have deportation or legalization of the illegal immigrants. This paper, thus, discusses the economic impact of illegal immigrants with regards to the US.

Positive Economic Impact of Illegal Immigrants

As pointed out by Hanson, legal immigrants normally account for two-thirds of the total population of foreign-born residents in America (12). This has created belief that only these legal immigrants have good economic impact on the United States as opposed to their illegal counterparts. Hanson strongly believes that reducing the population number of illegal immigrants would not enhance the U.S economic welfare.

According to Briggs, immigrant workers account for one-seventh of the total American work force, with illegal immigrants making up one-third of the total immigrants’ population (1). While these has resulted into low wages, as both the illegal workers and native Americans compete for low-skilled jobs; from economic perspective, it has increased the supply of workers, thus enhancing the U.S’ economy. On the other side, Briggs notes that almost 60 percent of illegal immigrants in the U.S are not highly educated as they poses less than a high school education and, therefore, compete for low-skilled jobs that are not occupied or neglected by the American population. While this has lowered the wage prices, Hanson denotes that it has benefited the rest of Americans who pay less for restaurant meals, agricultural produce, and construction, thereby uplifting the economy (16).

Additionally, Hanson points out that the steady increase among the native-born Americans in acquiring high school education has made it difficult to obtain low-leveled school achievers (23). For instance, he notes that there was a considerable fall from 50 to 12 per cent between 1960 and 2000 of working-age native-born who had less than twelve years in education system and resided in America. This made it difficult in finding these low-skilled workers who could fill up the subsidiary jobs, which could not only increase productivity but also lower the costs of good and services. Therefore, the presence of these low-skilled illegal immigrants provides a potential opportunity for U.S corporations in finding formidable working force for jobs which are disregarded by skilled American population, yet have impact on US’ economy.

On the other hand, Hinojosa points out that those illegal immigrants in the United States serve as a source of value added to the states’ economy (1). Apart from filling up low-skilled jobs, thereby increasing more creation of subsidiary jobs, it results into unrestricted contribution to US’ social security and unemployment insurance programs. Hinojosa notes that employers have benefited from illegal immigrants (1). This has allowed them to generate more profits, which they reinvest in more economic activities, thereby enhancing US’ economy. According to Hinojosa, the economic research indicated that the total consumption of goods and services based on undocumented immigrants’ paychecks coupled with their job production normally give American employers almost $800 billion, compared to the 20 percent of wages these illegal immigrants get (1). It, thus, gives American employers higher profits for more investment, which is essential for economic growth.

Moreover, Hinojosa notes that taking away illegal immigrants from the United States will amount to an economic disaster (1). He points out that the annual consumer base and remittance of this undocumented population is essential for the America’s economy. According to him, the U.S remittance authority denoted that 90 per cent of the total wages obtained by these illegal immigrants are spent within America, with only 10% taken abroad. This is almost $50 billion. In his calculation, deporting these illegal immigrants would mean taking away from $400 billion to $450 billion annually, which is significant for the America’s economy.

Furthermore, Hinojosa notes that illegal immigrants have stimulated massive economic activities and wealth creation opportunities in the United States (1). He points out that due to the fact that these illegal immigrants normally enter America when they are young and as working class, they usually do not collect benefits associated with Social Security or even Medicare, while they actually pay for the upkeep of the system with their payroll taxes. He adds that illegal immigrants do not normally get federal benefits, yet they usually pay income tax and sales tax, which greatly helps in healthcare system management and education process among other services. This in turn has enhanced the economic status of America.

Negative Economic Impact of Illegal Immigrants

Irrespective of their positive impacts on the economy, the illegal immigrants have also posed potential threat to the country’s economy. According to Hanson, the increased level of illegal immigration to U.S tends to undermine the stipulated law, thereby weakening the ability of the American administration to enforce essential labor-market regulation, which is important in enhancing economic growth (13). This is due to the fact that the heightened influx of illegal aliens to the United States has lessened American employers’ commitment to the country’s labor-market institutions. Hanson notes that this has led to the creation of a working population who inhibit limited upward mobility and exposure. It, thus, negatively affects the productivity of goods and services (13). Due to this, the United States engages in goods and services production process that can be easily overwhelmed in the international market by highly flourished products from other countries, thereby affecting its economy.

Briggs notes that the presence of illegal immigrants to work over grueling hours under unsafe conditions for a low wage has significantly affected the economic status of legal American people (1). He attributes to the common notion that people believe the illegal aliens normally do jobs not regarded by Americans, yet their wage is minimum. On the other hand, the labor laws restrict the Americans’ involvement in such opportunities. The domination of this cheap labor in the market has resulted in overall low wages even for the Americans, making it hard for them to sufficiently pay and sustain their mortgages. Additionally, Hanson notes that with the new government provisions, it has become increasingly easy for the illegal aliens and not the legal American citizens to gain access to the funded social services (30). This poses economic challenge to legal American families whose income is below their expectations and, therefore, requires free health care, food stamps, and education facilities.

On the other hand, Schneider points out that the presence of illegal immigrants in United States has resulted into consumption of the country’s resources and funding, which economically adds to the nation’s debt (1). He notes that the U.S government spends million of dollars in funding k-12, secondary education, and Medicare social services for these illegal aliens even in time of economic crisis thereby putting the country in debt situations. The education funding for these illegal immigrants costs U.S taxpayers almost $52 billion annually, notwithstanding their federal, state, and local household funding of $113 billion (Schneider 1).

As pointed out by Schneider, the Federation for American Immigration Reform (FAIR) notes that at the federal level, one-third of money spent on illegal immigrants corresponds to their tax collection (1). The agency also found out that less than 5 percent of incurred public costs due to illegal immigration can match the collected tax from these illegal aliens. This is due to the fact that most of the illegal immigrants do not remit income taxes, and to the few who do so, most of their revenues are used to refund the activities of other illegal aliens. This has continuously resulted into budgetary deficient as more money that could be used for investment and, thus, enhancement of economic growth is spent on these illegal aliens with less economic benefit.

For instance, Schneider points out that California’s fiscal budget of 2010-2011 had a deficit of $14.4 billion due to estimated $21.8 billion annual expenditure on illegal immigrants (1). He adds that the New York’s budget deficit of $6.8 billion seemed to be outweighed by the annual $9.5 billion costs incurred from illegal immigrants. Therefore, the presence of illegal immigrants tends to create more government expenditure that suppresses investment opportunities, which in turn put risks on the American economy.


In conclusion, it is evident that while the fiscal benefits contributed by illegal immigrants are essential for the U.S. economic growth, their presence, on the other hand, can adversely impact on the nation’s economic status. The paper has noted that the economic growth of the United States can only be achieved if the policymakers engage proper and effective immigration policy reforms that would ensure economic gain among the American workers, employees, and taxpayers. Moreover, there is a need to assess the economic influence and impact of the illegal aliens in constituting effective immigration laws. This would ensure that the benefits that are being realized from the aliens outweigh the government’s expenditure on them.


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