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Does illegal immigration hurt the US economy?

Immigration law

What impact does illegal immigration have on the US economy?  Does it help or hurt the economy?  Immigration policies came to the forefront in 2015 and 2016.  Donald Trump used immigration as a defining characteristic of his presidential campaign.  The UK Brexit vote to leave the EU was heavily influenced by the massive influx of immigrants into the country that membership in the EU required.

It is generally true that most illegal immigrants come to the US to work.  It is also generally true that they are hard working.  However, when it comes to taxes most are paying little if any taxes.  The ones that work under the table for cash are obviously not paying taxes and the ones that have reportable income are usually only paying Social Security.

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The Heritage Foundation published a report in 2013 that found that each illegal immigrant household received approximately $25,000 in government benefits and paid around $10,000 in taxes.  Children that live in these households also place additional burdens on public schools, roads, police and other local government services.  Education for the children of illegal immigrants is a huge expense and requires schools to hire staff that can speak multiple languages.  So clearly there is a large net government cost associated with illegal immigrant households.

What about the work that illegals do?  Many businesses are in favor of looser immigration policies and some even advocate for open borders.  In general these businesses want access to a large pool of cheap, unskilled labor to keep their costs low.  The more people there are that are applying for a single position, the lower the salary for that job.  Some businesses depend on this dynamic to survive.  Construction and agriculture are two industries that would be hit especially hard if illegal immigration suddenly stopped.

So what’s the net effect from illegal immigration?  Do the economy and the government end up ahead after you factor in how much more profit the businesses are able to generate and how much lower the prices are?   The answer is illegal immigration hurts the US economy but it’s a little more complicated than that.

For example, let’s pretend that the entire US economy has only 2 companies in it and only has a total of 10 jobs.  Let’s assume those companies are growing and they need to hire 2 more people per year.  If we set our immigration policy to allow 1 person per year in and we have a net population change of 1 person per year (from people entering and leaving the workforce) then we will always have exactly the number of people in our country that we have jobs for.  But, if 1 person was getting into the country illegally each year, then every year 1 person would be out of a job (illegal immigrant, legal immigrant, or a native born person).  This example illustrates the impact of illegal immigration on the US economy.

At the end of the day, what’s the difference between legal immigrants and illegal immigrants?  It all comes down to control.  In the case of legal immigration, we control the number of people we allow into our country every year and we control what types of people and where they are from.  This allows us to only let in as many people as our economy and government are able to accommodate and allows us to integrate the people that we do allow in to our culture and our values.  In short, it allows us to make sure the people we let in want to become American.