Study Shows Legalizing Undocumented Immigrants Would Produce $1.5 Trillion Benefit

moneyA new study by University of California at Los Angeles professor Raúl Hinojosa-Ojeda suggests that comprehensive immigration reform, which includes an earned path to legalization for undocumented immigrants, could generate at least $1.5 trillion in added U.S. gross domestic product over 10 years.

Hinojosa bases his findings in a simulation model that uses the effects of legalization under the 1986 Immigration Reform and Control Act (IRCA) — which granted legal status to 1.7 million undocumented immigrants — as a starting point. IRCA increased the hourly wages of legalized immigrants an average of 15.1 percent by 1992. It also significantly increased incentives for these immigrants to “invest in themselves and their communities” and removed “artificial barriers to upward socioeconomic mobility.” Hinojosa predicts that if comprehensive immigration reform passes in 2010, legalized unauthorized workers would be granted full labor rights, which would in turn boost worker productivity, produce $4.5 to $5.4 billion in new net tax revenue, and generate enough consumer spending to support 750,000 to 900,000 jobs. Taken together, these benefits would add up to a 0.84 percent yearly increase in GDP, or $1.5 trillion over 10 years.

Hinojosa also predicted the effects of an enforcement-only strategy that several right-wing politicians and anti-immigrant activists are advocating for in the place of immigration reform. Hinojosa found that while native-born workers would experience a wage increase, any mass deportation strategy would reduce U.S. GDP by $2.6 trillion over ten years. This number doesn’t take into account the additional $206 to $230 billion it would cost just to physically deport undocumented immigrants over a five-year period.

Some moderate Republicans are more focused on promoting an expansion of temporary immigrant worker programs and have already indicated they won’t support an immigration reform bill that doesn’t include such provisions. Hinojosa warns that if immigration reform were to consist of only a temporary worker program, GDP would only increase by $729 billion over 10 years and result in a wage decline for both native-born and temporary immigrant workers.

Though Hinojosa uses IRCA’s legalization program as the basis of his economic model, he is careful to warn that the bill failed to “create flexible legal limits on immigration that were capable of responding to ups and downs in future U.S. labor demand.” As a result, it was unable to stem the flow of future undocumented immigrants. In response to IRCA’s deficiencies, the nation’s two largest labor federations have already suggested the creation of an independent commission to assess and manage levels of future immigration based on real economic demand.