Texas’ strong economic growth is a cause — and effect — of immigration

Photo by Todd Wiseman

To say that immigration is a contentious subject these days would be a massive understatement. The presumptive Republican nominee has gotten great traction out of his promises to deport every single illegal alien currently in the country as well as build a gigantic wall between the United States and Mexico, and the popularity of this position led his other primary competitors to largely embrace his outlook before dropping out.

The anger people have toward immigration doesn't really comport with reality. In a study I did with my colleague Logan Albright recently published by the Texas Public Policy Institute, we tried to look at the costs of immigration — both legal and illegal — to Texas. By dint of its border with Mexico and its booming economy, the state has been a magnet for immigrants, and not just from Latin America.

No other region of the country is growing as smartly as Texas these days, and that growth is both the draw and the outcome of the large presence of immigrants in the state.

Some people's reflexive reactions to immigration are easy to understand: It's over seven years since the last recession began, and there remain millions of people who lost their jobs and have yet to find new employment. Many of them will never work again. To them — and many more with what they perceive to be a tenuous grip on employment — the threat of more competition for their jobs must seem like a cruel trick.

Many people also object to the cost that immigrants impose on government, especially their health care and retirement costs. Given that our entitlement programs are already woefully underfunded, they would argue that supporting more immigrants is something we simply cannot afford.

But by looking at current data and a wealth of previous studies, we found that immigration's costs to the government are often overstated. For instance, illegal immigrants cannot easily obtain government benefits like Medicaid or Social Security, but if they do manage to obtain work (and many do, via the assumption of another's identity and Social Security number) they end up paying for benefits that they will never be able to collect. Even those who do obtain legal work permits often don't end up working long enough to qualify for any retirement benefits in this country. The Congressional Budget Office estimates that if we did manage to kick out every illegal immigrant, the finances of Social Security would appreciably worsen.

Of course, it could be tough for blue-collar workers to readily accept that immigration is good for the economy: What they see from immigration is increased competition for the types of jobs they are seeking, and possibly lower wages as a result. The fact that immigration boosts economic activity and ultimately creates more jobs is an abstraction that seems completely irrelevant to the day-to-day worries. That this cohort loudly opposes immigration is understandable.

I won't even pretend to offer a solution to the pitched battles over immigration these days, but I will suggest we begin to think about how we could get more job creation from the legal immigration we do get. Each year, we educate millions of the finest students across the globe and send them on their way. Newly minted MBAs, engineers, scientists, and thousands of other skilled professionals come to the United States to add to their skill set and then have the door closed on them as soon as they graduate.

Making it easier for these people — who are more inclined to start a business and create jobs than any other cohort we can conceive of — to spend a modicum of time in the United States after graduation would help taxpayers, job-seekers and the U.S. Treasury.

While even contemplating any immigration change in this political environment seems foolhardy, I'll nonetheless submit that this might be as close to a free lunch in the economy as it gets — and something worth considering after election season winds down.

Ike Brannon

Senior fellow, the Cato Institute