Q&A of the Day – The Impact of Illegal Immigrants on US GDP Growth
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.
Today’s Entry: Submitted via talkback inquiring about the impact of illegal immigration on GDP.
Bottom Line: It’s a good question and frankly it’s one that’s crossed my mind as well as we’ve had an unexpectedly resilient US economy this year, despite the pressures of inflation, high interest rates and a banking crisis. Today’s note comes on the back of the news last week that 2nd quarter GDP came in at a solid 2.4% - well ahead of expectations which had already been improving in recent weeks. In a year in which most economists, and for that matter myself following the March banking crisis, thought we’d enter a recession, what we experienced through the first half of the year is that much more impressive from the perspective of resiliency. While it’s still possible a second half recession occurs this year, that seems highly unlikely with the Atlanta Federal Reserve’s GDP Now estimate for 3rd quarter economic growth accelerating to a strong 3.5%. So here we are in an era with record illegal immigration into this country at the same time these surprising economic outcomes have been occurring. Is it a coincidence? Is it connected?
First and foremost, it’s a given that illegal immigration has an economic impact and the listener who submitted today’s question is correct in stating that government assistance weighs in heavily. I most recently covered the government assistance impact, and direct costs to us as taxpayers, last September based on research from the Center for Immigration Studies. Here’s a quick recap.
- 63 percent of households headed by a non-citizen use at least one welfare program
- Compared to native households, non-citizen households are more than twice as likely to end up on government assistance
- The longer an illegal immigrant is in the US, the more likely they are to end up on assistance (of households headed by non-citizens in the United States for fewer than 10 years, 50 percent use one or more welfare programs; for those here more than 10 years, the rate is 70 percent)
And most specifically to Floridians...
- The low-end cost to Floridians due to illegal immigration is about $3.7 billion annually. There are 7.9 million households in Florida which means each Florida household is paying a minimum of $468 annually just to support illegal immigration in this country.
Now, obviously there’s going to be an economic impact of all of this additional taxpayer money floating around. So how big is it? As you might imagine measuring the economic impact of illegal immigrants isn’t the easiest thing to do. The most comprehensive and credible study I’ve seen estimating the impact was performed by Harvard economist George Borjas. Last decade he estimated that the US economy increased in size by 11% more than it would have otherwise due to the impact of immigration (legal and illegal). Notably, he also found that 97.8% of the benefit of increased economic growth went to the immigrants (both legal and illegal). It’s well known that many illegal immigrants will funnel money out of the US to families in other countries. That’s heavily evidenced in the study’s data.
The key in attempting to gauge in real-time how much of an impact illegal immigration is having on economic growth, is to use the data from the study and to adjust it for the estimated numbers of legal and illegal immigrants currently as a percentage of the US population. Don’t worry, I won’t bore you with the details. But here’s the breakout. At the time of the study’s impact – 3.7% of the total US population was comprised of illegal immigrants (11.7 million). Today that number stands at 5% (16.8 million). With illegal immigrants steadily making up a larger part of the US population, now accounting for 5% of all people in this country, the economic influence would grow from the previously measured 11% increase in economic growth over the previous decade.
Without getting too wonky and in the weeds, the regular impact on GDP growth by illegal immigrants was 0.2% in the previous decade. Adjusting for the illegal immigrant population gains as a percentage of the population, that would now be 0.27%. So, to put a fine point on the conversation, here’s what we see. The GDP growth rate was most recently 2.4%. Without the impact of illegal immigrants, the growth rate would have been rounded off to 2.1%. Due to the nominal increases in GDP growth because of illegal immigrants you have many open border advocates willing to use data such as this to buttress their position. Data shows conclusively however, that the average illegal immigrant has a net negative long-term impact on the US economy as the cost to taxpayers during the duration of their time in this country exceeds the benefit of the contributions of economic growth. There is no less efficient way to stimulate the US economy than through illegal immigration. This is due to the high taxpayer costs associated with their presence here, the lowering of wages for legal citizens who compete for employment, and regular sending of proceeds out of the United States.