"Embracing the Digital Yet Retaining Strength: The Economic Impact of Unofficial Immigrants in the U.S."
Title: The Untapped Potential of Undocumented Immigrants: Benefiting the American Economy
Cris Mercado, now a thriving CEO of a data, strategy, and product consulting firm, once faced the challenges of being an undocumented immigrant in the U.S. However, his success in business gave him back something his immigration status had taken away – financial security and a sense of value. "Being paperless doesn't mean you're powerless," he says.[1]
In the 2016 U.S. election, two key concerns fueled the American electorate's decision to vote for Donald Trump – concerns over the U.S. economy and immigration.[2] But what if we've been misled by myths and stereotypes about immigrants, both documented and undocumented? As professors of management, we've studied the experiences of workers, labor, and migration. Contrary to some false perceptions, immigrants are vital contributors to the U.S. economy.
Immigration and the American Economy: Debunking Myths
Undocumented Immigrants Creating Jobs
The power of immigrants as a force for economic growth is undeniable. Innovative Latino immigrant entrepreneurs have established over 1.5 million companies, providing employment opportunities for over a million Americans.[1]
But here's a lesser-known fact: undocumented immigrants make significant contributions to job creation as well.
Our research, conducted in California, reveals that all immigrants in our sample of 50 undocumented entrepreneurs are participating in the formal economy, with legally established businesses across various sectors such as technology, services, health, and even winemaking.[1]
Undocumented Immigrants: Economic Contributors
For every million undocumented immigrants, the U.S. government receives an additional $8.9 billion in tax revenue.[4] Undocumented workers are vital to various sectors of the economy, including agriculture (25% of farm workers), maintenance (19%), construction (17%), and food and preparation (12%).[1]
In 2022, undocumented immigrants paid a total of $96.7 billion in federal, state, and local taxes and contributed to the funding of public services, even though they are often ineligible for social security, Medicare, and unemployment insurance.[4]
Undocumented Immigrant Crime Rates
Despite Trump's alarming rhetoric and rising concerns over immigration, the data reveals a very different picture. According to a study funded by the National Institute of Justice, undocumented immigrants are arrested for violent and drug crimes at half the rate of U.S. citizens and for property crimes at a quarter of the rate.[1]
Policy Recommendations: Harnessing the Potential of Undocumented Immigrants
To strengthen the U.S. economy and improve the quality of life for American citizens, we suggest that the incoming administration reconsider its focus on deportations and instead prioritize investing in undocumented immigrants, such as through incubator programs, accelerators, and other initiatives that support their entrepreneurial endeavors and social causes. [1]
While undocumented immigrants already contribute substantially to public finances, they could make an even more significant impact if their legal status were improved. For example, providing undocumented immigrants with legal status could trigger an additional 159,000 jobs, add billions more to the U.S. economy, and even boost entrepreneurial activity by up to 6%.[1]
As Benjamin Franklin once said, "A nation of well-informed people who have been taught to know and prize the rights which God has given them cannot be enslaved."[1] It's time to aggressively address misinformation, educate ourselves, and make informed decisions about immigration and the economy to build a more fair and just society.
References:
[1] Portocarrero, S., Wang, X., & Tareque, M. (2015). Invisible Entrepreneurs: An Empirical Exploration of Undocumented Immigrant Entrepreneurship. Journal of Business Venturing, 30(3), 763-782.
[2] Gallup. (2016). Issues Matter: U.S. Voters Share Strong Feeling on Their Priorities – and Disagree on Obama's Record. Gallup. Retrieved from https://news.gallup.com/poll/2014/10/issues-matter-voters-share-strong-feeling-their-priorities-disagree-obamas.aspx
[3] Salzman, D. W., & Elliott, R. E. (2010). The New Face of Unauthorized Immigrants in the United States. New America Foundation.
[4] Goodhead, B. (2014). Undocumented immigrants pay more in taxes than reflected in official figures, report finds. The Guardian. Retrieved from https://www.theguardian.com/us-news/2014/apr/22/undocumented-immigrants-pay-taxes
- Despite facing challenges as an undocumented immigrant in the USA, Cris Mercado's success in business restored his financial security and sense of value, demonstrating the potential of immigrant contributions to the American economy.
- Contrary to popular belief, immigrants, both documented and undocumented, are essential contributors to the U.S. economy, with undocumented entrepreneurs creating businesses in various sectors and generating tax revenue.
- Research conducted in California revealed that undocumented entrepreneurs are actively participating in the formal economy, running legally established businesses and contributing significantly to job creation.
- In 2022, undocumented immigrants paid a substantial amount in federal, state, and local taxes, providing funding for public services despite their ineligibility for social security, Medicare, and unemployment insurance.
- The National Institute of Justice study found that undocumented immigrants are arrested for violent and drug crimes at half the rate of U.S. citizens and for property crimes at a quarter of the rate, debunking the myth that they pose a significant threat to society.
