The court injunction that has halted the implementation of Obama’s executive action on immigration may also be freezing economic growth for the United States. Research from the Center for American Progress (CAP) suggests there are economic gains of granting deferred action to undocumented immigrants through programs like DACA and DAPA. Deferred action raises wages and generates increased tax revenues.
While 26 states battle it out with the Obama administration, another story is unfolding. The United States has already benefited from programs like Deferred Action for Childhood Arrivals (DACA).
CAP’s research suggests there are economic benefits to all Americans by allowing the DACA- and DAPA-eligible population to work lawfully. If Obama’s deferred action programs are expanded, DACA and DAPA recipients will earn an estimated total of $103 billion more over the next decade. What’s more, the U.S. gross domestic product, or GDP, will increase cumulatively by $230 billion over the next 10 years. As the U.S. economy expands, the incomes of all Americans could increase by an estimated $124 billion. That translates to the creation of approximately 28,814 jobs per year over the next 10 years for all Americans.
The White House Council of Economic Advisers (CEA) has already estimated that the executive actions on immigration would, over the next 10 years, increase the U.S. economy (by measure of GDP) by at least 0.4 percent ($90 billion) or as much as 0.9 percent ($210 billion).
Deferred Action Raises Wages
45 percent of DACA recipients have increased their earnings, and almost 60 percent have obtained a new job since receiving deferred action according to the American Immigration Council. There are numerous examples of DACA success.
CAP estimates deferred action recipients stand to earn 8.5% more after receiving the temporary protected status.
The Fiscal Policy Institute’s estimates of a 5 to 10 percent increase in wages over a five-year period reinforces these findings.
Proponents of the expanded deferred action programs believe that employment authorization would likely increase the earnings of undocumented immigrants for two main reasons:
- It enables workers to shed the negative effect their immigration status has on their earnings.
- It allows undocumented workers to have full access to the labor market, enabling them to find jobs that match their skills and maximize their earnings.
Many undocumented immigrants already work. But most are not able to exercise their workplace rights, making them vulnerable to exploitation. Researchers have found that undocumented immigrants are nearly two times more likely to be paid below minimum wage than native-born workers.
With employment authorization, workers are provided with transparency and a greater ability to exercise their rights. Improved wages are the likely result.
Regardless of skill or intellect, many undocumented workers are isolated to low paying jobs. They self-select into jobs that minimize their risk of being discovered as an undocumented immigrant and ultimately deported. Employment authorization gives workers more options. With the legal right to work, undocumented immigrants have a greater ability to seek high-paying jobs that best fit their skill sets.
That’s why the NAID Center concluded that deferred action raises wages. They say that deferred action for 3.8 million undocumented immigrants who are (1) the parents of minors who are U.S. citizens or legal permanent residents, or (2) eligible for the expanded DACA program, would result in an increase in labor income of $7.1 billion over the first two years.
Additional research from CEA suggests that the executive actions would have no impact on employment of U.S.-born workers. Research has demonstrated repeatedly that there is no correlation between immigration and unemployment. Rather, immigration helps to expand the economy.
Generating More Tax Revenue for All Americans
Deferred action programs have the potential to create an additional $2.87 billion in payroll tax revenue in the first year and over $21 billion over five years, according to CAP.
The U.S. immigration system is failing American taxpayers. Although millions on undocumented immigrants are working, none of them can legally contribute payroll taxes. This break down is contributing to the loss of billions of dollars in tax revenue each year.
Advocates of deferred action programs, point out that DACA and DAPA help to fix this shortfall. Deferred action recipients receive an Employment Authorization Card, allowing them to legally work and contribute payroll taxes in the United States.
Payroll taxes pay for benefits such as Social Security. The Social Security system itself is in desperate need of additional tax infusions. Payroll taxes from deferred action recipients could contribute to fixing this problem.
Total Economic Impact of Deferred Action
Research and empirical data is showing that deferred action raises wages for both immigrants and all Americans. What’s more, the growth is the U.S. economy would have fiscal benefits unmatched by other programs.
Deferred action does not even address the entire group of more than 11 million immigrants. Executive action on immigration only addresses approximately 5 million.
The states’ lawsuit could be economically misguided. Last December, 26 states — led by Texas — filed a lawsuit targeting the DACA expansion and the DAPA program. The states in the lawsuit claim that deferred action imposes costs on the states. The CAP study suggests these states, and the court, have failed to see the big picture. There are economic benefits that outweigh the minor costs of issuing driver’s licenses to DACA and DAPA recipients.
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