High Unemployment Rates Frame the Immigration Debate

In the wake of President Obama's "jobs summit," the debate about how illegal immigration impacts unemployment has risen in volume. For Rep. Lamar Smith, R-Texas, the summit was fatally flawed because it did not directly address illegal immigration.

"Notably absent from the president’s jobs summit is any discussion of how to take back the 8 million jobs currently occupied by illegal immigrants and make them available to out-of-work U.S. citizens and legal immigrants," he wrote on Politico.com.

Rep. Smith, a fifth-generation Texan and a known Capitol Hill immigration hardliner, asked: “How can the administration justify giving millions of jobs to illegal immigrants when the economy is struggling with a 10 percent unemployment rate?”

He's right about the numbers. An estimated 5 percent of the U.S. labor force is made up of undocumented immigrants, meaning they hold 8 million jobs (that number's generally not disputed). But what's not so clear is how many of those positions are truly jobs Americans would compete for, at the wages offered, even with high unemployment.

Several studies suggest that among Americans and legal residents, it's mainly those lacking a high school diploma who are competing directly with undocumented immigrants for jobs (and by most estimates, that's less than one out of every 10 U.S. workers).

A 2006 study by Giovanni Peri, a professor of economics at the University of California, Davis, concluded that immigration actually benefits more educated U.S. workers by boosting overall productivity, resulting in wage increases for degree-holders.

A widely cited 2008 study by the Perryman Group for Americans for Immigration Reform, a business-led coalition, went even further. Deporting undocumented workers en masse -- the study calls the workers an "essential resource" -- would have the net result of erasing thousands of jobs permanently in many states, not to mention being a prohibitively expensive exercise.

Of course, that's cold comfort to millions of U.S. workers who lack a high school diploma and feel they are being undercut by undocumented foreign workers.

A study released this month by Gordon H. Hanson, of the University of California, San Diego and the National Bureau of Economic Research, cites an estimate that American high school dropouts lost 9 percent of their income over one recent 20-year period, due to illegal immigration.

But Hanson, who prepared his study for the nonpartisan Migration Policy Institute, also states that despite the controversy it generates, illegal immigration has no significant impact on the overall U.S. economy.

Hanson’s study doesn't gauge the effect of innovation (for example, new techniques undocumented immigrants may have introduced in construction). But it does account for most other relevant factors such as undocumented immigrants' contribution to GDP and tax revenue (a majority have payroll taxes deducted), as well as public monies they drain, mainly via public schooling and emergency room visits.

In the end, writes Hanson, "it's a wash."

In this Hanson coincides with Marcelo Suárez-Orozco, co-director of the immigration studies program at New York University, who said late last year, as the economy crumbled, that despite the evidence that proponents and critics of immigration pile on either side of the issue, the impact on the economy isn't as dramatic as either side would like to think.

For Hanson, the key question is how to create an immigration system that creates incentives against illegal immigration, channels foreign workers onto legal entry paths, and provides the U.S. labor market with all the unskilled labor it needs (particularly during an upswing), but with enough flexibility to decrease influxes when the labor market contracts, as it has in the last couple of years.