Facts About Immigration and the U.S. Economy
While immigration is among the most important issues the country faces, misperceptions persist about fundamental aspects of this crucial topic—such as the size and composition of the immigrant population, how immigration affects the economy and the workforce, the budgetary impact of unauthorized immigration, why increasing numbers of unaccompanied migrant children are arriving at the United States’ Southwest border, and the various facets of U.S. labor migration policy. This FAQ provides essential background on these topics.
The immigrant population
1. How many immigrants reside in the United States?
More than 40 million immigrants resided in the United States as of 2012,1 accounting for about 13 percent of the total U.S. population. Of these roughly 40 million immigrants, slightly less than half (46 percent) are naturalized U.S. citizens.2
2. How many unauthorized immigrants are in the United States?
There were an estimated 11.7 million unauthorized immigrants in the United States as of 2012.3 Unauthorized immigrants account for about 3.7 percent of the total U.S. population and about 5.2 percent of the labor force. Note that unauthorized immigrants are a larger share of the labor force than of the total population because the vast majority of unauthorized immigrants are working-age adults.4
3. Are most immigrants Hispanic/Latino?
Contrary to popular perception, less than half (46 percent) of all immigrants in the United States are Hispanic or Latino. Roughly one-fifth of all immigrants are non-Hispanic white (19.2 percent), about 8 percent are black, and just over a quarter (26.3 percent) are Asian or of some other race/ethnicity.5
When it comes to unauthorized immigrants, the overwhelming majority are indeed Latino—primarily from Mexico and Central America. There are, however, also populations of unauthorized immigrants from Asia, South America, Europe and Canada, and the Caribbean.
Immigrants and the economy
4. How much do immigrants contribute to the economy?
One way to quantify immigrants’ contribution to the U.S. economy is to look at the wages and salaries they earn, as well as the income of immigrant-owned businesses, as a share of all wages, salaries, and business income in the United States. For the United States as a whole, immigrants’ share of total output was about 14.7 percent over 2009–2011. Note that this is actually larger than immigrants’ 13 percent share of the population.
Immigrants have an outsized role in U.S. economic output because they are disproportionately likely to be working and are concentrated among prime working ages. Indeed, despite being 13 percent of the population, immigrants constitute 16 percent of the labor force. Moreover, many immigrants are business owners. In fact, the share of immigrant workers who own small businesses is slightly higher than the comparable share among U.S.-born workers. (Immigrants constitute 18 percent of small business owners.)6
5. Are most immigrants employed in low-wage jobs?
In the United States as a whole, there are almost as many immigrants in white-collar jobs (46 percent) as in all other occupations combined. In some states, more than half are in white-collar jobs.7 However, not all white-collar jobs pay well, and the share of U.S.-born workers in white-collar jobs is even higher. Still, the perception that nearly all immigrants work in low-wage jobs is clearly inaccurate.
The same can be seen by looking at immigrants’ levels of educational attainment. While immigrants are less likely than native-born citizens to have gone to college, 46 percent of immigrants have at least some college education.8
Immigrants may be overrepresented in some jobs and underrepresented in others, but the difference between the U.S.- and foreign-born shares is rarely as dramatic as is often assumed. Immigrants are strongly represented in some high-wage jobs, and play a significant role in many middle-wage jobs. For example, 22 percent of dental, nursing, and health aides are immigrants, as are 31 percent of computer software developers—well above immigrants’ 16 percent share of the labor force.9 While immigrants are overrepresented in low-wage occupations, immigrants are a part of the top, middle, and bottom of the economic ladder.
6. Are most immigrants poor?
Nationally, and in many states, the income of immigrant families is not very different from that of non-immigrant families, although individual earnings are lower for immigrants overall. This is because there are typically more workers per immigrant family.
Although most immigrants are not poor, nationally 20 percent live below the poverty line, compared with 16 percent of native-born citizens.10
7. Do immigrants take jobs away from American workers?
There is broad agreement among academic economists that in the long run, immigration has a small but positive impact on the labor market outcomes of native-born workers, on average.11 There is some debate about whether, within the overall small positive effect, certain subgroups are harmed, in particular native-born workers with low levels of education.
The evidence shows that in the long run, immigrants do not reduce native employment rates. But some evidence suggests that in the short run, immigration may slightly reduce native employment, because the economy takes time to adjust to new immigration. Importantly, this effect varies according to the broader economic environment. In particular, when the economy is growing and the labor market is adding jobs, new immigration creates enough jobs even in the short run (and even for the less-educated) to cause no harm to the net employment of native-born workers. But during economic downturns, things do not adjust as quickly. When the economy is weak, new immigration has a small negative impact in the short run on the employment of native-born workers.12
The United States could benefit enormously from an immigration system that is more responsive to broader economic conditions. In our current immigration system, legal immigrant flows are essentially unresponsive to the business cycle. In particular, Congress has set a yearly limit on the number of new permanent and temporary immigrants who may enter the country legally in order to work, and these limits do not fluctuate based on the state of the labor market. For example, in 2010, the unemployment rate in construction was over 20 percent, but the Department of Labor nevertheless certified thousands of temporary foreign worker visas for the construction industry.
An independent federal agency should be established to evaluate the U.S. labor market and make annual recommendations to Congress on the levels of permanent and temporary immigrant labor. This would better allow the U.S. economy to respond to the needs of employers during expansions while avoiding adding too many additional workers to the labor market when the unemployment rate is high.