The powerful economic case for immigrants

Chris Farrell
Chris Farrell: A greater appreciation for the economic contribution of newcomers should allow for a more reasoned approach toward immigration reform.
Submitted photo

Chris Farrell is economics editor of American Public Media's Marketplace Money and author of "The New Frugality: How to Consume Less, Save More and Live Better."

Mass expulsion. Electrified fences. An alien invasion. These are only a few of the incendiary comments that have been targeted at illegal immigrants during the Republican presidential primary contest.

It's hardly surprising that immigrants — specifically illegal immigrants — came up during the latest Republican debate, held in Arizona Wednesday night. The rhetoric was less incendiary than in previous debates. But it's all part of a backlash against immigrants, both legal and illegal, that was set in motion long before the current primary season. The anger cuts across traditional party lines.

A signal moment came when the comprehensive immigration reform package pushed by President George W. Bush collapsed in a vituperative frenzy in 2007. The worst labor market since the 1930s, with the Great Recession and subsequent anemic recovery, has only deepened antipathy toward immigrants, especially the estimated 11 million immigrants who entered the United States without documents.

The United States is going through its greatest wave of immigration since the late 19th century and early 20th century. Since 1990, about 1 million immigrants a year have come to America legally, while an average of 500,000 each year have entered illegally or overstayed their visas.

Some 13 percent of the population is foreign born, up from 8 percent in 1990. The comparable figures for Minnesota are 7 percent and 3 percent, respectively.

However, Minnesota's immigrant population from Africa, Southeast Asia, the former Soviet states and elsewhere has expanded rapidly. For example, from 2000 to 2008, Minnesota's immigrant population grew by 48 percent, compared with a 22 percent increase nationwide, according to a recent report, "The Economic Impact of Immigrants in Minnesota, 2010," by Katherine Fennelly and Anne Huart, scholars at the Hubert H. Humphrey Institute of Public Affairs at the University of Minnesota.

A lot has gone wrong with the U.S. economy, and over the past two decades more of the blame has been placed on immigrants, legal and illegal. Immigrants, we're told, are taking jobs away from native-born Americans and they're driving down wages, especially among less skilled native-born Americans. Unlike previous waves of immigrants, the newcomers show little interest in assimilating into American culture. Immigrants are a fiscal burden on local budgets, from overcrowded emergency rooms to overcrowded classrooms to overcrowded jails.

Yet the economic case for immigration is powerful. The net national result and the net Minnesota result have been positive. On balance, the economic and social benefits of an open-door society have far outweighed the economic and social costs. Yes, economics is only one way to judge the impact of foreign-born residents. But economics lies at the heart of the debate over immigration.

Let's start with the familiar. America's frontier industries, from semiconductors to biotechnology, have benefitted enormously from immigrant scientists, engineers and entrepreneurs. The numbers may be well known, but they're still striking. Highly educated foreigners account for about a third of U.S. innovation, measured by international patents issued to U.S. residents. A quarter of U.S-based Nobel laureates over the past half-century were foreign-born. Half of the Ph.D.s working in science and technology in the United States were born elsewhere.

Perhaps the most striking statistic comes from Silicon Valley, the epicenter of high-tech innovation. There, the percentage of start-ups that were founded by immigrants reached 52 percent between 1995 and 2005, according to scholars Vivek Wadhwa, Annalee Saxenian, Ben Rissing and Gary Gereffi.

The economic return from immigration isn't limited to educated newcomers. Throughout the Twin Cities and elsewhere in the state and country, immigrant entrepreneurs open restaurants, corner grocery stores, travel agencies and other businesses that revitalize neighborhoods. Middle-class families can pay for landscaping services, child care, home health care and other services that once only the very wealthy could afford, freeing them to focus more on career and family. A cottage industry of economic studies suggests the impact on immigrants on the wages of native-born Americans is scant. By every measure, second-generation immigrants are doing better in school than the first generation by a considerable margin. Looking at immigrants from Mexico, the second generation closes about half the gap between its parents and non-immigrants.

Despite the popular association of foreign-born newcomers and crime (think the Godfather and Scarface), immigrants are a force against crime. For instance, the U.S. government's Industrial Commission report of 1901 found that "foreign-born whites were less criminal than native whites." More recent research by Robert J. Sampson of Harvard University powerfully suggests that it's no coincidence rising immigration tracks the reduction in crime in the United States. For example, among Hispanics in Chicago (primarily Mexican-Americans), he calculated that first generation immigrants were 45 percent less likely to commit violence than third-generation Americans, after adjusting for individual, family and neighborhood backgrounds. Second-generation immigrants were 22 percent less likely to commit violence than third-generation Americans. "Cities of concentrated immigration are some of the safest places around," writes Sampson.

You can see many of these scholarly insights come alive on Lake Street in Minneapolis. Some two decades ago, the urban artery ran through some of the city's most poverty-stricken and violent neighborhoods. When we spent time on Lake Street for an American Radioworks documentary several years ago, old-timers talked about boarded-up storefronts and frequent drug deals. The first Latino-owned business opened up on Lake Street in 1994. Largely thanks to an influx of Latino immigrants, business along Lake Street has thrived (although that's a relative term, considering the current economy). The surrounding neighborhoods are full of working-class families, a good number of them undocumented Latinos. They're here to work.

The worry that the current generation of immigrants is not assimilating like earlier generations is also exaggerated. For example, a recent Pew Center Research study reports that a record 14.6 percent of all new marriages in the United States in 2008 were between spouses of a different race or ethnicity from one another. Read what was written about the Italians, the Finns, the Irish, the Germans and other immigrant groups in the 1880s through 1930s. The same charge was commonplace and, as we know from our grandparents, wrong.

None of this is to say immigration — legal and illegal — doesn't come with costs. Many illegal immigrants live on society's fringes. Far too few immigrants are doing well enough at school in an economy that increasingly values educational achievement. Schools are often burdened with additional costs of educating students from around the world.

Still, economics of immigration isn't a zero-sum game where immigrants gain and natives lose, or vice versa. No, even during these troubled times, the better metaphor is an expanding economics pie. A greater appreciation and optimistic read on the economic contribution of newcomers should allow for a more reasoned legislative approach toward immigration reform. As the famed 18th century British conservative Edmund Burke wrote, "All government, indeed every human benefit and enjoyment, every virtue, and every prudent act, is founded on compromise and barter."

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