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5 Things to Know About Immigration and the U.S. Economy

A pending decision by President Barack Obama on whether to use his executive powers to make interim immigration reforms because Congress failed to could make the already heated immigration issue even more volatile. The Economic Policy Institute, a liberal leaning, non-profit think tank, released a report Thursday aiming to dispel many myths and provide some fundamentals before politics sends things into a frenzy. Here are the five biggest takeaways from the institute's report on immigrants:

1. Less than half of all immigrants are Hispanic or Latino.

As of 2012, more than 40 million immigrants lived in the United States – but just 46 percent, or roughly 18 million, of these immigrants were Hispanic. While there were more Hispanic or Latino immigrants than any other racial or ethnic group, altogether non-Hispanic white, black and Asian immigrants made up more of the non-native population of the U.S.

That being said, it is true that the overwhelming majority of undocumented immigrants coming to the U.S. were of Latino or Hispanic descent. Most of these non-naturalized immigrants came from Mexico as of 2008. And while a large number of these undocumented immigrants are from Central America, nearly the same number came from South and East Asia. And the number of undocumented immigrants from Europe and Canada in 2008 exceeded those that came from the Caribbean.

2. Immigrants don’t just take low-paying jobs, and they’re not all poor.

Indeed, immigrants are overrepresented in some areas of employment, but the EPI report added that 46 percent of immigrants work in traditionally white-collar positions. And while immigrants only make up 16 percent of the workforce, they make up over 20 percent of dental, nursing and health aides and over 30 percent of all software developers. These figures, the report said, show that “immigrants are a part of the top, middle and bottom of the economic ladder.”

In that same vein, not all immigrants live below the poverty line. It is true that immigrants on average make less than their native-born peers. But because there are typically more family members able to work and because they’re not all in low-paying jobs, some live quite comfortably. Nevertheless, 20 percent of immigrants do live below the poverty line – slightly higher than the national average of 16 percent.

3. Unauthorized immigrants are good for state and federal budgets.

State and federal governments don’t have to worry about undocumented immigrants, the EPI report said, “because they contribute more to the system than they take out.” While the costs associated with an influx of undocumented immigrants are largely borne by state and local governments, the federal government only sees positives. Undocumented immigrants, due to their legal status, are typically unable to tap into government programs beyond public schooling, meaning that they don’t take much money from the government. They also typically do not receive income tax credits, since few sign up for the needed identification numbers due to fears of deportation.

At the same time, many work under fraudulent Social Security numbers and consequently pay into social safety net programs they cannot use. Additionally, these immigrants all pay taxes, whether they are income- or sales-based, adding revenue that can then be used within state and federal budgets.

4. Deporting undocumented immigrants would be costly for multiple reasons.

First off, deportation itself is costly, since it often involves transporting undocumented immigrants. Additionally, it is logistically difficult given the fact that many immigrants remain under the radar, and more will continue to come to the U.S. As such, the actual process of deportation is expensive. But sending immigrants back to where they originated from would have other economic consequences. Indeed, undocumented immigrants receive jobs and some benefits from government programs. As the report finds though, “they also consume goods and services, thereby generating economic activity and creating jobs.” So there is some rationale that deporting these immigrants could inflict damage to the economy.

5. Immigrants do affect employment and wages – but not always in the ways that you’d think.

According to the EPI’s report, immigration’s effect on employment depends on the economy. If the economy is weak and does not respond well to change, in the short run an increase in immigration could have the effect of reducing the number of jobs available to native-born workers, particularly those with lower education levels. At the same time, in a healthy economy, the economic productivity generated by new immigrants could represent a boon to job figures, meaning that these newcomers to the U.S. would improve the employment situation. As it stands now, the U.S. government limits the number of work visas available to foreign workers, and that limit does not change based on the health of the economy. As such, the report found that the economy is not equipped to benefit from the increased employment opportunities presented when immigration goes up.

Similarly, immigrant workers do impact wages. Generally, those in the U.S. on work visas and undocumented immigrants have very little say in how much they are paid due to the difficulty or inability associated with changing jobs. As such, wages can be deflated – but most often it is earlier immigrants themselves that are affected by this and not native-born workers. For those born in the U.S., the report said that new immigrants will have little effect on wages – and what effect it did have would be slightly positive.