Anti-Immigration Laws Damage US Economy

As many U.S. states are considering and implementing harsh immigration-control laws, research shows that the impact of such laws can harm states’ economies, produce severe worker shortages, result in lost tax revenues, discourage economic growth, make it more difficult and expensive for businesses to operate, and ultimately cost states millions in enforcement, implementation, and legal expenses.

In 2010, unauthorized immigrants comprised roughly 5.2% of the national workforce (or 8 million workers), according to a report by the Pew Hispanic Center. If these workers return to their home countries as a result of tough immigration laws, states will lose laborers, taxpayers, and consumers who earn and spend money in the state. In 2010, unauthorized immigrants in the United States paid $11.2 billion in state and local taxes, including $1.2 billion in state income taxes, $1.6 billion in property taxes, and $8.4 billion in sales taxes, according to data from the Institute for Taxation and Economic Policy.

Alabama’s immigration law (HB-56) could shrink the state’s Gross Domestic Product (GDP) by up to $10.8 billion, according to Professor Samuel Addy at the Center for Business and Economic Research at the University of Alabama. Prof. Addy estimates that a loss of 40,000 to 80,000 unauthorized immigrants who earn between $15,000 and $35,000 annually could result in 70,000 to 140,000 lost jobs with $1.2 to $5.8 billion in earnings; $2.3 to $10.8 billion reduction in Alabama GDP, or 1.3% to 6.2% of the state’s $172.6 billion GDP in 2010; $57 to $264 million loss in state income and sales tax collections; and $20 to $93 million loss in local sales tax collections.

After many of Alabama’s agriculture workers, fearing deportation, failed to show up for work in the fields, Alabama Agriculture Commissioner John McMillan noted: “the economic hardship to farmers and agribusiness will reverberate throughout Alabama’s economy, as one-fifth of all jobs in our state come from farming.”

Foreign companies employ 77,500 workers, or 5% of Alabama’s workforce; the auto industry supports nearly 45,000 people in the state. Immigration Policy Center reports that in November 2011, a German Mercedes-Benz executive, visiting an auto plant in Tuscaloosa, Alabama, was arrested during a routine traffic stop for failing to produce evidence that he was in the United States legally. Soon afterwards, a Japanese Honda employee was issued a ticket when his international driver’s license was deemed insufficient. These examples illustrate the kind of bureaucratic hassle to be faced by authorized and unauthorized workers and executives alike under the new immigration laws.

According to Gerald Dial, Alabama State Senate Republican whip and former HB-56 supporter, an unintended consequence of the legislation is that it has made other states more attractive for investors. “Other states will say, ‘Hey, you don’t want to go to Alabama now,’” said Dial. “We’re probably going to lose those people. We won’t know about it. There won’t be a big red flag: ‘Hey, we didn’t go to Alabama, we’re going to go to Arkansas or we’re going to go to South Carolina.’ That’s probably the most detrimental part of the whole bill.”

In Arizona, deporting all of the unauthorized immigrants would decrease total employment by 17.2%, eliminate 581,000 jobs for immigrants and native-born workers alike, shrink the state economy by $48.8 billion, and reduce state tax revenues by 10.1%, according to a 2011 report by Dr. Raul Hinojosa-Ojeda and Marshall Fitz. In July 2007, a study released by the University of Arizona’s Udall Center for Studies in Public Policy, concluded that economic output would drop annually by at least $29 billion, or 8.2%, if all non-citizens, which include unauthorized workers, were removed from Arizona’s workforce. About 14% of the state’s 2.6 million workers are foreign-born, and about two-thirds to three-fourths of non-citizens are unauthorized.

After Arizona passed its immigration law (SB-1070), major groups and associations cancelled events and conventions in the state, thus causing a significant loss in tourism-related profits. A report by the Center for American Progress estimates that Arizona will lose $45 million in lodging revenue alone. Arizona was eventually forced to spend $250,000 for a marketing campaign to help improve its image after SB-1070 was enacted.

Since many of the immigration laws have been challenged by the Obama Administration, states are likely to incur significant taxpayer costs to defend the laws in the courts. In Arizona, seven lawsuits were filed to stop implementation of SB-1070, and other states are likely to see numerous lawsuits against similar legislation. At the end of February 2011, Arizona had already spent more than $1.5 million defending SB-1070.

In California, studies found that if all of the unauthorized immigrants were removed, the state would lose $301.6 billion in economic activity, decrease total employment by 17.4%, and eliminate 3.6 million jobs.

The state of Georgia experienced severe labor shortages after passing its immigration enforcement bill (HB-87). A survey of farmers conducted by the Georgia Department of Agriculture found 56% of those surveyed were experiencing difficulty finding workers. Early reports from the state estimate economic losses for the 2011 growing season to be between $300 million and $1 billion. Contrary to the popular belief that unemployment among U.S. citizens would decrease if there are fewer undocumented immigrants competing for jobs, legal U.S. workers have not been filling the job openings. Studies show that the uncertainty about how much labor will be available affects growers’ ability to prepare and plant for next year.

A Georgia Restaurant Association survey found that nearly half (49%) of surveyed restaurants reported labor shortages, and 88% were concerned about future shortages. Lack of workers and related business losses have cut some restaurants’ revenue by as much as $80,000 per month.

In Indiana, two of the state’s largest employers, Eli Lilly and Co. (a drug manufacturer) and Cummins Inc. (an engine manufacturer), published a statement arguing that Indiana’s proposed immigration enforcement law (SB-590) would impede their ability to compete globally and grow in Indiana, Immigration Policy Center reports. According to Eli Lilly and Co., Indiana has a sizeable and growing biosciences industry, with almost 90,000 employees and supporting a total of $22.7 billion in economic output – direct, indirect, and induced. Spokesman Ed Sagebiel said the company’s “ability to thrive in Indiana is dependent on an environment that is welcoming.” Similarly, Cummins Inc. highlighted 550 new high-paying jobs they brought to the state as a result of Indiana’s friendliness to new business.

Attorneys at I.S. Law Firm have helped many immigrants to avoid deportation and legalize their status in the United States. To explore your immigration options, please contact us at +1-703-527-1779 or by e-mail:[email protected].