EconomicsName: ______

Immigration History & The Economic Impact of Immigration

Immigration Today:

For the past 35 years, the United States has experienced an unprecedented influx of immigrants—both legal and illegal. In 1970, the foreign-born population in the U.S. was 9.6 million. Today it is 40 million (29 million legally here and 11 million illegally here)—higher than at any other point in U.S. history. The top destination states for immigrants include California, New York, New Jersey, Florida, Nevada, and Arizona. California is the number-one destination state with 10 million immigrants, who constitute 28% of the state’s population.

This large scale immigration (both legal & illegal) has had a major impact on the demographics of the United States as well as on the overall economy. The following statistics demonstrate the dramatic effect of immigration over the last 40-years:

  • While the percentage of the U.S. population comprised of immigrants dropped from 14.7% in 1910 to 5% in 1970, it has rebounded to 13%.
  • Immigrants account for 30% of the country’spopulation growth--despite being only 12% of the population.
  • The Hispanic population is projected to increase from 12% to 32% by the year 2100
  • The White population is expected to decline from 72% to 42% by 2100.

The United States admits approximately 900,000 legal immigrants every year, and annual immigration is swelled by another 300,000 people who illegally cross the borders of the United States.

History of Immigration:

Between 1880 and 1920, a time of rapid industrialization and urbanization, America received more than 20 million immigrants. Beginning in the 1890s, the majority of arrivals were from Central, Eastern and Southern Europe. For example, by 1920 more than 4 million Italians and 2 million Jews from Eastern Europe (fleeing religious persecution) had entered the United States. The peak year for admission of new immigrants was 1907, when approximately 1.3 million people entered the country legally. Within a decade, the outbreak of World War I (1914-1918) caused a decline in immigration. The Immigration Act of 1924 created a quota system that dramatically restricted entry, favored immigrants from Western Europe, and prohibited immigrants from Asia.

Immigration remained low in the 1940’s but increased in the 1950’s with the start of the Cold War as the U.S. began admitting people fleeing communist countries. In 1965, new immigration lawsabolished the quota system thereby laying the foundation for a large rise in legal immigration:

  • 1970’s: 4.4 million immigrants 1980’s: 7.3 million 1990’s : 9.1 million 2000-2013: 14 million

Key Immigration Laws in the 1980s and 1990s:

The 1986 Immigration Reform and Control Act (IRCA) reformed United Statesimmigration law by

a) requiring employers to document their employees' immigration status;

b)legalizing illegal immigrants who entered the United States before January 1, 1982 and had resided there continuously with the penalty of a fine, back taxes due, and admission of guilt

In 1990, George H.W. Bush signed the Immigration Act of 1990, increasing legal immigration by 40%.

The 1996 Immigration Actfocused on illegal immigration. It doubled the border control force to 10,000 agents over five years and added fences to the most heavily trafficked areas of the U.S.-Mexico border. It also included aprogram to check the immigration status of job applicants.

The amount of illegal immigration, legal immigration continues to be a source of controversy in the United States. Some observers want Congress to pass legislation imposing restrictions on the number of legal immigrants admitted every year. Proponents of these restrictions question whether the United States needs to admit 900,000+ people annually.

Negative Economic Impacts of Immigration: Key Arguments

The idea that there are jobs that only immigrants do is simply incorrect. A recent analysis of all 472 civilian occupations shows that only six are majority immigrant (legal and illegal). These six occupations account for 1 percent of the total U.S. workforce. Moreover, native-born Americans still comprise 46 percent of workers even in these occupations. There are 67 occupations in which 25 percent or more of workers are immigrants (legal and illegal). In these high-immigrant occupations, there are still 16.5 million natives — accounting for one out of eight natives in the labor force.[1]

The very small economic gain from immigration comes from large redistribution of money from the poor to the wealthy. George Borjas of the John F. Kennedy School of Government, Harvard University, estimates that the net economic gain to natives equals just 0.2% ($35 billion) of the total GDP in the United States—from both legal and illegal immigration. To generate the surplus of $35 billion, immigration reduces the wages of natives in competition with immigrants by an estimated $402 billion a year, while increasing profits or the incomes of users of immigrants by an estimated $437 billion. The native-born workers who lose the most from immigration are those without a high school education, who are a significant share of the working poor.[2] According to Borjas, immigration lowers the wages of low-skilled native workers by about 9 percent. [3]

Immigrants receive huge amounts of public assistance such as food stamps, Temporary Assistance for Needy Families (TANF), subsidized housing, and Medicaid. A substantial portion of the U.S. immigrant population has low educational attainment: About 33 percent of immigrants do not have a high school degree—in fact, on average illegal immigrants have only 10 years of schooling. Although non-citizens are not eligible for income-based welfare programs, their U.S.-born children are. About 24 percent of immigrants use some form of public assistance. Medicaid is the most costly form of federal public assistance--23 percent of immigrant households use Medicaid benefits.[4] At the individual level, excluding any costs for their children, the National Research Council estimated a net lifetime fiscal drain of -$89,000 for an immigrant without a high school diploma, and a net fiscal drain of -$31,000 for an immigrant with only a high school education. However, more educated immigrants create a lifetime net fiscal benefit of +$105,000.[5]

There is no shortage of skilled labor in the United States and skilled immigrants are taking jobs away from qualified Americans. According to Rutgers professor Hal Salzman, Lindsay Lowell of Georgetown, and Daniel Kuehn of American University, currently U.S. colleges graduate far more scientists and engineers than find employment in those fields every year—about 200,000 more—while the IT industry fills about two-thirds of its entry-level positions with guest worker programs. They argue that the fact that wages in IT jobs have been stagnant for over a decade leads to the conclusion that there is in fact no actual shortage of skilled workers in STEM fields and that admitting large numbers of foreign high-skill guest workers stands to hurt all STEM grads, but especially minorities who are underrepresented in high-tech.[6]

Illegal immigrants with little education are a significant fiscal drain, but less-educated immigrants who are legal residents are a much larger fiscal problem because they are eligible for many more programs. For this reason amnesty would substantially increase costs in the long run.[7]

Positive Economic Impacts of Immigration: Key Arguments

Immigrants often take the low-paying jobs (like food service & hotel cleaning) that most Americans don't want to do at such low wages. Few Americans like to wash dishes, bus tables, mop floors, pick up garbage, etc. These types of jobs must be done, but employers consistently have trouble finding regular employees to do the work. A wage of $5-$7 is usually too low to induce Americans to take and stay at such jobs. However, immigrants who may be lucky to earn $5 a day in their native countries are more than willing to work these jobs.[8]

Immigrants actually create jobs as consumers and workers. Immigrant workers spend their wages in U.S. businesses—buying food, clothes, appliances, cars, etc.—which sustains the jobs of the workers employed by those businesses. Moreover, businesses respond to the presence of new workers and consumers by investing in new restaurants, stores, and production facilities. The end result is more jobs for more workers. A 2008 study by economist Giovanni Peri estimated that, from 1990 to 2006, immigration increased the wages of native-born workers by 0.6 percent. College graduates experienced an increase of 0.5 percent, workers with some college 0.9 percent, high-school graduates 0.4 percent, and workers without a high-school diploma 0.3 percent.[9] Undocumented workers also save jobs in some ways.By providing work at low cost, for instance, undocumented workers keep firms from investing heavily in new, expanding technologies that would make their firms significantly less labor-intensive and more automated.[10]

Many members of the science and technology community say that they cannot find enough multilingual and scientifically trained American workers to stay competitive in the global economy. Imposing further regulations and restrictions on companies would, in the words of Microsoft's Bill Gates, "prevent companies like ours from doing business in the United States."

Many immigrants create jobs by starting their own businesses. In fact, according to the 2011 Current Population Survey, 7.5 percent of the foreign-born population is self-employed…According to the 2010 American Community Survey, there were 900,000 small-business owners among current immigrants—close to 18 percent of all incorporated business owners.[11]

Adding an additional group of cheap labor adds to the flexibility of business, leading to cheaper prices, better quality products, and higher profits. Labor is one of a number of costs of doing business. When businesses have trouble filling low skill jobs such as washing dishes or cleaning rooms, they have only two choices: raise the wage rate high enough to fill the jobs or eliminate the positions altogether. While higher wages sounds good, it means businesses must either accept lower profit margins or they must raise prices to make up the difference. A hike in prices means we pay more for restaurants, hotels, factory products, etc. while draining money from other segments of the economy (since we have less to spend). Lower profit margins mean lower stock prices, less valuable retirement funds, and less investment dollar inflow. The second choice of eliminating jobs is obviously undesirable for a couple of reasons, not the least of which is the fact that a willing worker could be denied a job that a business wants to offer. But also, when a business eliminates these jobs, it means lower quality products and services. For example, your favorite restaurant might want to carry three bus people for the Friday night shift, but because of a labor shortage, it may only be able to hire two bus people. The work will still get done, but is the cleaning of tables going to be as thorough? Do you think it will take the same amount of time to get a table on a busy night? These types of problems can be helped by increasing the labor pool through the increase of legal immigration.[12]

Name ______

1. What are the pros and cons of skilled immigration to the United States?

2. What are the pros and cons of unskilled immigration to the United States?

3. What changes, if any, would you make to current U.S. immigration policy?

[1] Steven Camarota and Karen Zeigler, “Are There Really Jobs Americans Won’t Do?: A Detailed Look at Immigrant and Native Employment Across Occupations”, Center for Immigration Studies 2013, Date of Access December 5, 2014,

[2] George Borjas, “Immigration and the American Worker: A Review of the Academic Literature,” Center for Immigration Studies, 2013, Date of Access December 3, 2014,

[3] Gordon Hanson, “Examining the Economic Impacts of Immigration,” Analysis Online, Date of Access December 4, 2014,

[4] Ibid.

[5] Barry Edmonston and James Smith, eds., The New Americans: Economic, Demographic, and Fiscal Effects of Immigration, Washington, DC: National Academy of Sciences Press, 1997, Date of Access December 5, 2014,

[6]Hal Salzman, B. Lindsay Lowell and Daniel Kuehn, “The Bogus High-Tech Worker Shortage: How Guest Workers Lower US Wages”, PBS News Hour, Date of Access December 5, 2014,

[7] Steven Camarota, The Fiscal and Economic Impact of Immigration on the United States, Center for Immigration Studies, Testimony Prepared for the Joint Economic Committee, May 8, 2013 Date of Access December 3, 2014,

[8] “Legal Immigration (Pros & Cons, Arguments For and Against),” BalancedPolitics.org, Date of Access December 4, 2014,

[9]“Value Added: Immigrants Create Jobs and Businesses, Boost Wages of Native-Born Work”, American Immigration Council, Date of Access December 5, 2014,

[10]Andrew Wallace, Matthew Kretman, and Scott Strogatz, “The Immigration Debate: Economic Impact,” Date of Access December 4, 2014,

[11]Adriana Kugler, “Immigration Helps American Workers’ Wages and Job Opportunities,” Center for American Progress, Date of Access December 4, 2014,

[12] “Legal Immigration (Pros & Cons, Arguments For and Against),” BalancedPolitics.org, Date of Access December 4, 2014,