Illegal Immigration Impact on the American Economy


Illegal immigrants are an important sector of the US economy. It has both positive and negative results on the economy. Us economy is greatly benefited from the illegal immigrants in many ways. Pros and cons of the illegal immigration on the US economy are discussed below:

Positive effects of Illegal immigration on the US economy

US economy attained rapid growth and development with the greater contribution from the illegal immigrants in the country. The immigrants are a major portion of the labor force in USA. With the availability of low cost labor force, important sectors in the economy such as construction, manufacturing, and farming are highly benefited and it stimulates the growth of these sectors in a strong manner. The economists have the view that without the support of illegal immigrants the growth of the US economy will be lower than the present growth rate. It helped the economy to grow faster without much inflationary pressures. US consumers are much benefited from the low prices of commodities which resulted from the low wage requirements of the immigrant workers. The availability of low wages stimulated the work opportunities available in the economy and it helped the higher skilled native labors greatly. House construction is an important sector of the US economy. Hiring of low paid immigrants helped the housing sector greatly to reduce the labor cost and it helped to heat up the home market. “The Bureau of Labor Statistics estimates that 22 percent of construction workers are foreign born, with 2.4 million immigrants working in the sector, the largest source of jobs for immigrant labor. Jerry Howard, CEO of the National Association of Home Builders, estimates that 25 to 30 percent of those working in resident construction are immigrants -though no one knows how many are here legally.” (Isidore,2006).

The restrictive approach of US government on illegal immigration adopted in the year 2004 caused a shortage of unskilled labor force and it badly affected the harvesting activities in the farming sector. It caused $ 1 billion economic loss for the farming industry through the un-harvested crops. The immigrants bring ethic of hard work in the county and thus the employers in the country are greatly supported by the immigrants.

Negative effects of illegal immigration

The major negative impact of illegal immigration is related to competitive challenges faced by the native lower skilled labors. The labor market studies on the phenomenon shows that large supply of immigrants has displaced low skilled US born workers; especially the young and poor natives. “About 85.5 of every 100 new workers are new immigrants in this decade.” “They’re really displacing young workers at a very high rate.” (Isidore,2006).

It affected the social development among the weaker sector of the society and thus economy also affected. “By increasing the labor supply between 1980 and 2000, immigration reduced the average annual earnings of US-born men by an estimated $1,700, or roughly 4 percent.” (Illegal immigration’s impact on wage rates, 2007).

The US born workers with poorest social background are highly affected by the illegal immigrants as they lack jobs and reducing wages by 7.4%. US born black and Hispanic workers are impacted by the direct competition with immigrants. It is estimated that in USA there are nearly 12 million illegal immigrants and a major portion of them are engaged in unskilled and low paid jobs. Thus low skilled native workers are in direct competition with the immigrants and it caused reduction in wage rate to the unskilled native labors. Thus the disparity of income distribution among the economy is increased and it caused social issues.

The illegal immigrants in the county do not pay income tax or other legal obligations for using the public services arranged by the government such as schools and public health centers. Thus government expenditure on public services is illegally used by the undocumented immigrants and it caused drainage of the government spending. The violations of laws by the employers who hire the illegal workers cause great loss of public finance without paying taxes. The illegal workers may be against the society for their exploitation and social confliction with the native citizens.

Recommendations for solving the problems

Prevention of illegal immigration to the country will lead to labor shortage and thus the native employers will be forced to raise wages for the workers. It will increase the cost of products and thus inflationary pressure may be aroused in the economy. When considering the small net profit effect on the economic growth (less than 1%), , the restrictive approach towards the immigrants are not favorable to the stable economic growth of USA. Thus government can adopt protective measures for the low skilled native labors through specification of sectors. It can be seen that even though there is no direct tax payment by the undocumented workers, the sales tax and pay roll taxes are paid by them indirectly and it will be more than the cost of public services utilized by them. Government has to adopt legal mechanism for migration. The legal immigrants would require higher wages than the illegal ones and thus employers are badly affected. “Impeding illegal immigration without creating other opportunities for legal entry would conflict with market forces that push labor from low-wage countries to the high-wage U.S. labor market.” (Vang, 2009).

The US government has to take steps to provide adequate workforce to the economy by providing legal position to the undocumented workers as it is essential for maintaining the economic prosperity on a continuous basis. They should provide adequate protection to the illegal workers with adequate compensation as available to the legal, documented workers.


Isidore, Chris. (2006). Illegal Workers: Good for US. Immigrants help heat up home market. CNN 2009. Web.

Isidore, Chris. (2006). Illegal Workers: Good for US: The U.S has benefited from illegal Immigrants, most economists say, though some low-skilled workers have been hurt. CNN 2009. Web.

Illegal immigration’s impact on wage rates: By the numbers. (2007). Workingclass Conservative. Web.

Vang, Bruce. (2009). Illegal immigration- its impact on the US economy: How do illegal immigrants detriment the U.S economy. Ezine Article. Web.

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