The United States has more immigrants than any other nation.
The United Nations defines immigrants as:
and nearly 50 million immigrants live here in the U.S.
Some of which came from places like Mexico over into the U.S.
It’s at the forefront of national debates and is driving political discourse.
But what do we know about immigration’s effect on the actual economy?
The United States is often referred to as a ‘nation of immigrants.’
And it’s no wonder.
With 49.8 million immigrants, that’s about equal to the entire populations
of Australia, Ecuador and Switzerland combined.
Saudi Arabia, Germany and Russia follow the U.S., with about 12 million immigrants each.
However, only about 15 percent of the U.S.’ total population is foreign-born,
well below countries like the UAE, Saudi Arabia and Australia.
But in cities like Miami, Los Angeles and El Paso, Texas, that percentage is substantially higher,
ranging from 26 to 40 percent.
The U.S.-Mexico border has become a focal point in the migration debate.
Immigrants continue to make up a larger portion of U.S. society.
This has skyrocketed since 1970 when foreign-born residents
made up less than five percent of the population.
So what have economists learned about the impact of migration?
Well, when we talk about the economy as a whole, it’s pretty good news.
One report found that an extra one percent increase in a country’s migrant population
adds on an extra two percent GDP per capita in the long term.
The IMF research found this boost happens in two ways.
One, it impacts productivity per worker because migrant skills often complement the existing population’s.
Number two, it increases the percentage of working-age people in a country
because migrants tend to fall within this age bracket.
That helps pay for things like Social Security.
The IMF recently advised advanced economies like the U.S., the U.K. and Japan
to open up their borders to avoid being overwhelmed by their aging populations.
So with the largest immigrant population in the world, how is American business influenced by immigrants?
Two-thirds of U.S. economic growth since 2011 has been directly attributed to migration.
The same study found that U.S. immigrants are two to three times more likely than U.S. natives to do things
like start a company, create a patented innovation or even win an Academy Award or Nobel Prize.
Researchers say this is because migration is a risk,
meaning the type of person who chooses to migrate tends to be more entrepreneurial.
That entrepreneurial spirit may be why migrants have started 30 percent of American businesses,
despite only making up about 15 percent of the population.
Forty percent of Fortune 500 companies were started by immigrants.
And so were half of all unicorns, that’s startups valued at more than $1 billion.
Another study found 50 out of 91 unicorns have immigrant founders.
Those 50 startups had a combined value of $248 billion - that’s more than Finland’s GDP.
These unicorns employ an average of 1,200 people each.
While these trends are impressive, they do skew toward higher-skilled migrants.
Contrary to popular belief though, the IMF found both
high and low-skilled migrants contribute to higher productivity.
But if it’s all such great news, then why is there so much backlash against immigrants?
Well, while immigration helps an economy overall, those benefits aren’t felt evenly across society.
Many migrants face a language barrier, which can mean integration takes a while,
but they are still able to contribute to a country's economy through fast-growing scientific and
technical industries, where they don’t necessarily need to command as many communication skills.
Lower-skilled migrants, including a large portion of the roughly 11 million who came to the U.S. illegally,
also skew toward jobs that don’t require communication.
But there’s one industry that pretty much relies on undocumented workers here in the U.S.
More than half of all hired farmers are estimated to be undocumented.
The sector has the highest share of unauthorized workers - by a lot.
Following farming, is construction, where about 15 percent of its workers are undocumented.
And overall, about five percent of the U.S. workforce consists of undocumented immigrants.
Overall immigration’s effects on American wages are very small.
But it has pushed down wages in these industries, particularly farming and construction.
The country's existing immigrants are most likely to be impacted by newer immigrants and lower wages.
That’s followed by American-born high school dropouts, where wages can fall between two and five percent.
But some argue these are jobs native-born Americans don’t want and that lower wages
are indirectly helping those people by helping local businesses succeed and then grow.
A booming economy would mean native-born residents will see more opportunities in better-paid industries
like sales and personal services, both of which require a command of the English language.
And low wages in the farming sector, ultimately means food costs less for the U.S. consumer.
The U.S. is among the countries with the lowest amount of household income going toward food,
spending on average just 6 percent of their annual budget on groceries.
But what about taxes?
Many politicians have cited a figure from the conservative-leaning
Federation for American Immigration Reform, which reported federal, state and local governments
spend $135 billion a year on undocumented immigrants.
Several non-partisan organizations have disputed that number though, saying it overestimates the number of
such immigrants and doesn't account for many of the positive effects they have on the economy.
In reality, it’s difficult to place an exact number on the cost.
But the country’s leading researchers at the National Academies have found this.
First-generation immigrants do cost governments more than the U.S.’ native-born population.
One of the major costs is education, which is paid for primarily by both local and state governments.
But that does seem to change when it comes to their children.
As adults, second-generation immigrants are some of
the strongest economic and fiscal contributors in the U.S.
They contribute more in taxes than their parents and the rest of the native-born population.
So while immigration’s impact on the economy is nuanced in the short term,
most economists agree it’s positive news for the country in the long run.
Hey guys, it's Uptin. Thanks for watching.
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