Building a More Dynamic Economy: The Benefits of Immigration

Chairman Yarmuth, Ranking Member Womack, and members of the committee, thank you for inviting me to testify before you today on this important topic. My name is Tom Jawetz, and I am the vice president for Immigration Policy at the Center for American Progress. American Progress is the nation’s foremost progressive think tank dedicated to improving the lives of all Americans through bold, progressive ideas as well as strong leadership and concerted action.

When I think of the contributions that immigrants—people from all over the world, of all backgrounds, skills, and levels of educational attainment—make to our country, I am reminded of something I often heard from my former boss and your colleague, Rep. Zoe Lofgren (D-CA), who speaks of immigrants as people who have “enough get-up-and-go to get up and go.”1 For hundreds of years, that really has been an important part of the story of America, so it is no surprise that in every state and in communities all across the country, immigrants and their children are helping to build a more dynamic economy and ensure a shared prosperity for all.

One way to look at this is through immigrant entrepreneurship. Although immigrants made up just 13.7 percent of the U.S. population in 2017,2 they made up almost 30 percent of all new entrepreneurs in the United States that year.3 Immigrants continue to be nearly twice as likely as native-born people to start businesses.4

Frequently, we think about immigrant entrepreneurship in connection with tech giants and startups such as Amazon, Apple, Google, and Yahoo—which were founded by immigrants or their children—and Microsoft and Oracle, which are today led by immigrants. According to a recent study by New American Economy, nearly 44 percent of the companies on the 2018 Fortune 500 list were founded by immigrants or the children of immigrants.5 Together, these companies in fiscal year 2017 brought in $5.5 trillion in revenue—a figure that is greater than the gross domestic product (GDP) of every country in the world other than the United States and China.6

But that’s not the whole picture. We know that small businesses make up nearly 70 percent of all employer firms in the country and that they help to create jobs and power local economies. It is therefore significant that immigrants own more than 1 in 5 small businesses and are more than 20 percent more likely to own such a business than a native-born person.7 Beyond the direct economic benefits of these businesses and the jobs they create, it’s important to talk about what it means to a community to have a thriving Main Street. Immigrants own more than 60 percent of all gas stations, 58 percent of all dry cleaners, 53 percent of all grocery stores, 45 percent of all nail salons, and 38 percent of all restaurants.8 These are the businesses that represent the life and vitality of local communities.

Similarly, many times when people think about where immigrants live, they focus on traditional gateway places such as New York, San Francisco, Chicago, and Miami. Certainly, immigrants have long played a critical role in helping cities like these become the creative, diverse, thriving places that we know them to be. But over the past several decades, as immigrants have searched for new opportunities for themselves and their families, they have increasingly moved to new gateway cities such as Atlanta, Charlotte, Nashville, and Phoenix. Even in metropolitan areas, the fastest growth has occurred in the suburbs.9

Immigrants and refugees also are breathing new life into rural communities around the country that have been experiencing population decline for more than two decades. Late last year, CAP found that immigrants helped to ameliorate population decline in nearly 4 out of 5 rural places in the country that experienced such losses.10 And in those rural places that experienced population growth, immigrants were entirely responsible for the growth in more than 1 in 5 places.11We know that sustained population loss contributes to hospitals shutting their doors, schools closing or being consolidated with those in neighboring towns, and businesses drying up. But in these rural places, immigrants are opening small businesses, providing essential health care services, rejuvenating downtown areas, and both filling and creating jobs.12 They are also contributing their food, music, culture, and language and are increasingly becoming involved in local government.

Immigrants are not only helping to build a more dynamic economy right now, but we are counting on them to help ensure our continued shared prosperity in the years ahead. Most immigrants come to the United States during their prime working and reproductive years.13 As more and more Baby Boomers retire, immigrants will not only disproportionately work as their doctors, nurses, and home health aides,14 but immigrants and their children also will do the lion’s share of the work in filling the enormous holes in the workforce that are left behind. According to a recent study by the National Academies of Sciences, Engineering, and Medicine, during the current decade, immigrants and their children will have accounted for virtually all of the country’s growth in the working-age population; in the decade ahead, without immigrants and their children, the working-age population in the United States would decrease by more than 7 million.15The contributions of foreign-born workers through payroll taxes are shoring up the country’s social safety net for years to come and helping to ensure that we honor the commitment we made to older Americans now turning to those programs for support.16

As the current administration has made dramatic cuts to the U.S. Refugee Admissions Program,17 it is worth talking about the important economic contributions of refugees18—particularly to places such as Utica, New York, Clarkston, Georgia, and Fargo, North Dakota—that have increasingly turned to refugees over the years to help revitalize local communities and, again, fight population decline.19 Although the image of a refugee that we’re often presented with—and that is equally true of asylum seekers now requesting protection at our southwest border—is that of a person who comes with little more than the clothes on their backs, this fails to capture the drive and perseverance that it takes to leave your home country and everything you’ve ever known in order to find safety someplace else and start again. Despite the obstacles, that drive helps to explain why refugees thrive in America.20 Refugees have high labor force participation rates and become a net economic positive for the country within only 8 years of arrival.21According to one survey of employers, refugee employees have higher retention rates than other workers across industry sectors and geography.22 The facts are so good that when the U.S. Department of Health and Human Services, at the request of the Trump administration, prepared a study in 2017 concluding that refugees generated a net fiscal impact of $63 billion over the course of a decade, the administration led by Stephen Miller suppressed the findings.23

Up until now, I have been speaking generally about the contributions of immigrants and refugees to our economy, but I want to speak as well to the contributions of the 7 million undocumented workers in this country,24 and specifically to the hundreds of thousands of individuals whose permission to live and work in the country has been thrown into limbo as a result of the Trump administration’s decisions to end Deferred Action for Childhood Arrivals (DACA) and terminate designations of Temporary Protected Status (TPS) and Deferred Enforced Departure (DED).

Undocumented workers are fully integrated into the economic prosperity of this country. In 2016, CAP worked with two leading economists to study the economic impacts of removing all undocumented workers from the workforce.25 The report found that such a policy “would immediately reduce the nation’s GDP by 1.4 percent, and ultimately by 2.6 percent, and reduce cumulative GDP over 10 years by $4.7 trillion.”26Every industry would suffer significant damage, but some would see workforce reductions of up to 18 percent or more, with long-run GDP losses in the tens of billions of dollars annually for every industry. I have included in the Appendix to my written testimony Table 1, which shows the economic damage that removing unauthorized workers from the workforce would have in each of the states from which members of this committee come. The cumulative loss for just your states would amount to more than $350 billion annually,27 and each state would experience substantial losses in key industries, including a 13 percent loss in GDP for North Carolina’s construction industry; a 12 percent loss in GDP for Texas’s leisure and hospitality industry; and a 21 percent loss in GDP for California’s agriculture, forestry, fishing, and hunting industry.28

In 2013, the U.S. Senate passed legislation with strong bipartisan support to reform our immigration system and provide a path to citizenship for undocumented immigrants who had long resided in the country. According to a series of reports prepared by the nonpartisan Congressional Budget Office and Joint Committee on Taxation, including a cost estimate for the bill as passed and a separate report on the broader economic impacts of the bill, the legislation would have decreased federal budget deficits by approximately $1 trillion over 20 years, increased the nation’s GDP by 3.3 percent in 10 years and 5.4 percent in 20 years, and increased average wages for all workers after 10 years.29Incidentally, at a hearing just two weeks ago, Acting U.S. Secretary of Homeland Security Kevin McAleenan also testified that the legislation would have significantly increased border security and helped to address some of the challenges that the administration is now dealing with along the border.30

Tom Jawetz

Earlier this month, the U.S. House of Representatives passed with bipartisan support H.R. 6, the American Dream and Promise Act, which would provide a path to citizenship for Dreamers, young immigrants who came to this country years ago as children, and individuals eligible for TPS or DED. The legislation would offer protection to people such as Donaldo Posadas Caceres, a Honduran TPS holder and member of the International Union of Painters and Allied Trades, who has worked for the past 20 years on some of the tallest bridges in the country, making needed repairs and hanging larger-than-life American flags.31 If the Senate were to take up this legislation and the president were to sign it, the bill would have a positive social and economic impact on states and communities all over the country. Although the legislation would directly affect up to 2.5 million individuals, those potential beneficiaries live with more than 5.6 million family members, more than 1 million of whom are U.S.-citizen children born in the United States.32 These individuals and their households own more than 215,000 homes and pay more than $2.5 billion annually in mortgage payments; they contribute more than $27 billion annually in federal, state, and local taxes and hold more than $75 billion in spending power.33 Working with the Center for the Study of Immigrant Integration at the University of Southern California, we have produced Table 2 in the Appendix to my remarks that shows these data as well as rental payments broken down by congressional district for each member of this committee, where available, and we would be happy to produce a similar table for your colleagues upon request. Looking at the congressional districts represented on this committee, we estimate that the legislation would provide a path to citizenship for nearly 240,000 people who—together with their households—pay nearly $1.7 billion in federal taxes and $950 million in state and local taxes annually. In your congressional districts, these households hold a cumulative $7.4 billion in spending power each year and pay more than $220 million in mortgage payments on nearly 21,000 homes and nearly $750 million in rental payments.34

What gives me hope that we may find our way back to those conversations in the years ahead is that the American public is having a visceral, negative reaction to the relentless, daily attacks on immigrants and refugees that we are now experiencing. According to Gallup polling, a record-high three-quarters of all Americans now say that immigration is a good thing for the country—the highest level of support in decades.35 The share of the American public that believes the level of immigration to the United States should increase or should increase or stay the same are both at the highest levels recorded since Gallup first began asking the question almost 55 years ago in 1965.36 And about two-thirds of the American public continues to support giving undocumented immigrants in the country an opportunity to become citizens.37

Put simply, Americans want real solutions, and they want an immigration system that actually works and that works as designed. If we can do that—if we can establish a well-functioning, modernized, and humane immigration system that both lives up to the best of our nation’s past and works for our nation’s present and future—we will once again be able to honor our traditions as a nation of laws and a nation of immigrants and will have begun to restore respect for the rule of law in our system. Moreover, we will have positioned the country to truly harness the enormous positive economic benefits that immigration holds.

by Tom Jawetz