In the United States, policymakers and Americans have long argued over the issue of illegal immigration. One side calls for a wall and stronger border security; another side calls for amnesty and open borders. In a four-part series, I will assess the economic, social, and moral arguments for and against illegal immigration. This discussion comes from an essay originally written in October of 2017.

For the social and moral arguments, see this post and this post. For my conclusion, see this post.

Photo from The Federalist


Since its founding, America has stood as a refuge, a nation for immigrants seeking life, liberty, and the pursuit of happiness. For as long as America has admitted immigrants, however, it has just as well restricted immigration. Today, one of the most divisive issues regarding American immigration policy concerns illegal entry. With, according to the Pew Research Center, an estimated 29% of America’s 40 million immigrants not holding legal status, the subject has particular relevance for Americans today (Costa).

Economics Benefits of Illegal Immigration

As of 2012, undocumented immigrants constituted 3.7% of the U.S. population and, despite the Immigration and Reform Control Act that made illegal the employment of undocumented workers, 5.2% of the workforce (Costa; G. Hanson 9). 

Photo from The Olive Branch Report

From the perspective of the supporters, illegal immigrants enhance the economy. For the most part, they fill positions for which the labor market does not provide enough willing American laborers. As such, supporters consider illegal immigrants complementary to American workersincreasing the supply of labor and contributing goods and services in work previously unfilled (“The Effects”). 

Furthermore, illegal laborers working unskilled jobs free Americans to pursue greater job opportunities, creating “the infrastructure for future job positions” by taking those whose wages and conditions the average American will not accept (“The Unseen”). Not to mention that, based on study by labor economist George J. Borjas of Harvard Kennedy School, illegal labor increases the GDP by 11%

In addition, workers who migrate illegally respond more quickly to market needs than workers who migrate legally. Their informality translates to flexibility when it comes to response to economic conditions. For example, when wages in Mexico fall and the need for unskilled labor in America rises, illegal immigration to America increases (G. Hanson 12). Workers move from a region of low-productivity to one of high-productivity without need to wait in long queues for visas, which would delay productive response to the business cycle. 

illegal immigrants labor
Cartoon from Phil Hands

With regards to the wages concern on the debate, wherein opponents claim that illegal immigration depresses wages, supporters respond with the findings by such organizations as the Migration Policy Institute, a think tank in Washington, D.C., that analyzes and develops migration and refugee policies, that overall illegal immigration has a small fiscal impact on the U.S. economy. According to economics professor Gordon Hanson of MPI, it produces “a tiny net gain…after subtracting U.S.-born workers’ losses from U.S. employers’ gains.” 

Furthermore, the wages that illegal immigrants accept allow the continued productivity of businesses despite increases in the minimum wageHoward Baetjer, Jr., a member of the Foundation for Economic Education and lecturer in economics, explains that minimum wage harms the lesser-skilled workers of businesses because an employer, perceiving that maintaining current staff or store hours at the new rate would ruin him, would either cut the lesser-skilled workers or cut store hours, or both. In Baetjer’s example, illegal immigrants accepting worker at pay below the minimum wage allows the conflicted employer to maintain previous productivity, satisfying both his employees and his consumers

Photo from Cornell University

From the supporters’ perspectives, then, illegal immigration spurs the economy by filling necessary work, creating opportunities for job growth, and promoting business productivity 

Economic Detriments of Illegal Immigration

On the other hand, opponents regard illegal immigration as a burden on the economy. 

One of the main economic arguments in favor of illegal immigration surrounds the idea that illegal immigrants take the jobs that Americans do not want. However, this statement has only partial truth, according to Politics and Reality radio host Joshua Holland, who observes that many undocumented laborers work jobs “side-by-side with millions of natives and legal residents.” Employers accept this illegal labor and Americans, by extension through use of the goods and services provide, do as well.

The reduced cost of illegal labor means that employers will usually favor it over that offered by citizens or legal immigrants who could work the same jobs taken by illegal immigrants. Thus, contrary to supporters’ claims that illegal immigrants do not threaten American workers, they do jeopardize the work prospects of low-skilled natives, the poor, and minorities not only by taking the jobs the latter would fill, but also by encouraging employer exploitation in those industries in their compliance to sub-par treatment (Holland; G. Hanson 20; “Illegal Immigration is a Crime”). 

Cartoon from Bilicki

With regards to the fiscal impact, while illegal labor may in fact raise the U.S. GDP 11%, equal to about $1.6 trillion, much of this GDP increase returns to the immigrants through wages and benefits. Annually, $25 billion returns to Mexico as a sort of remittance from its expatriates (V. Hanson). That is to say, much of the net gain distributes to the immigrants, rather than the natives. It does not circulate within the American economy. 

Beyond this loss of revenue, illegal immigrants also cost Americans incomeAccording to reports from the Urban Institute and the Center for Immigration Studies, illegal aliens cost the seven states with the largest concentrations of illegal immigrants $3.1 billion for education services in 1993, and the federal government $10 billion in 2002 for government services (“Economic”). 

anti-immigration rally
Photo from Orange County Register

While supporters view illegal immigration as a positive for the economy, opponents recognize that employment and financial loss result from the policy. 


What do you think about the economic impact of illegal immigration?

See the bibliography for this series here.