The Financial Impact of Immigrants in the United States

Every political season, there is much talk about immigration and immigrants. Migrants have been coming to the United States since 1609. Since then, America has been bolstered, altered, and shaped by the British, German, Irish, Asian, African, Dutch, Indian people, etc.

Yet, with 126 Olympic XXXIII medals in Paris 2024, Americans cheer for one month and return to their social silos forgetting that our diversity is what fuels American exceptionalism. With a large population and a robust sports infrastructure, Team USA has a significant advantage in terms of the number of athletes, resources available for their development, and cultural diversity. Consider this, Team USA was made up of Caucasians, Blacks, Asian Americans, Hispanics, newly naturalized citizens, and second-generation Americans. The Chinese team was made up of Chinese.

Diversity is our trump card.

And yet, some Americans harbor a view that immigrants are taking jobs from American citizens (UPenn Study). However, although immigrants increase the supply of labor, the vast majority aren’t taking so-called opportunities. They also spend their wages on homes, food, TVs, and other goods and services thus expanding domestic economic demand. This increased demand, in turn, generates more jobs to build those homes, make and sell food, and export more products. Even still, a February 2024 poll by Gallup showed that 28 percent of surveyed Americans considered immigration to be the top problem facing the United States.

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The Generational Caravan of Migrants

Immigration to the United States has occurred in waves, with peaks and troughs. These waves include, but are not limited to:

The First wave which began before records were kept in 1820 was mostly made up of English speakers from the British Isles. Over 10 million immigrants arrived during this period, mainly from Northern and Western Europe,
Followed by the Second wave (1840s – 1850s) dominated by Irish and German Catholics. Over 20 million European immigrants came over, an average of 650,000 a year at a time when the United States had 75 million residents,
The Third wave (between 1880 and 1914) brought over 20 million European immigrants. After that, between the 1920s and 1960s, immigration paused due to the World Wars and the Depression, and
The modern Fourth wave began after 1965 and has been marked by rising numbers of immigrants from Latin America and Asia. About half of U.S. immigrants have come from Latin America, with about a quarter from Mexico alone. About another quarter have come from Asia. Between 2000 and 2009 over three-fourths of the 10 million immigrants were admitted.

America is a Country of Immigrants

Under the motto e pluribus unum (out of many, one), America has always been a country of immigrants.

The available evidence suggests that immigration leads to more innovation, a better-educated workforce, greater occupational specialization, better matching of skills with jobs, and higher overall economic productivity.

Immigration also has a net positive effect on combined federal, state, and local budgets. However, not all taxpayers benefit equally. In regions with large populations of less educated, low-income immigrants, native-born residents bear significant net costs due to immigrants’ use of public services, especially education.

In contrast, critics argue that immigration can cause issues of overcrowding, congestion, and extra pressure on public services. However, that’s a problem that already existed. The irony is that these are problems that will always plague a growing society.

Here are some facts so that you know:

Living as an Undocumented Immigrant

Undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022.
Most of that amount, $59.4 billion, was paid to the federal government while the remaining $37.3 billion was paid to state and local governments.
Additionally, undocumented immigrants paid federal, state, and local taxes of $8,889 per person in 2022. In other words, for every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue.

Financial Impact from Taxes and Income

The total immigrant population was 41.6 million in 2022 according to @PewResearch. They make up around 14% of the total US population.
- Most immigrants come from the Mexican Border (10.6 percent) but it doesn’t make them Mexican since it’s a popular border crossing from South America.
- The next group is 2.8% from India. There are 2.5% from China and 2.0% from the Philippines.
Turns out, 77% are LAWFUL immigrants (estimated at 30 million) while 23% are unlawful immigrants (estimated at 12 million).
In 2022, immigrant households had a combined income of $2.1 trillion, which includes their after-tax income, or spending power, of $1.6 trillion.
In a large majority of states (40), undocumented immigrants pay higher state and local tax rates than the top 1 percent of households living within their borders.

Your Financial Problem Aren’t Solved by Excluding Them

FINALLY, no amount of complaining about immigrants will help you pay your bills. The border will never close. People will still come to the US chasing a better life for themselves and their families. You can be xenophobic if you want, but America runs on Dunkin’ and immigrants. Just grab a Birria taco, a margarita, and some guacamole.
“But what about if we get rid of immigrants!!!” Getting rid of immigrants would cost more money from enforcement and long-term border control protocols.
- Additionally, with fewer migrants picking fruits and vegetables, prices at the grocery store/restaurant would soar.
The rise in high-skilled immigration, a pronounced trend since the 1990s, has been linked to innovation, specifically to higher patenting rates among immigrants. Immigrants innovate. They are concentrated in STEM occupations where there is lots of R&D and entrepreneurial activity.
- Over 40 percent of medical scientists, and computer software developers are foreign-born. This specialized immigrant class is overrepresented among college professors, engineers, mathematicians, nurses, doctors, and dentists, to name a few.
So do immigrants and immigration help America? It’s simply a yes. If anything, Americans need to remember that migrants are trying their best to live, be productive, and feed their families.