What It Means for Your Wallet

By Lisa Takeuchi Cullen, Daren Fonda

o IS ALL THIS IMMIGRATION GOOD FOR THE ECONOMY?

By and large, yes. Immigrant labor is a drag on wage growth, thus keeping a lid on inflation and interest rates. As a result, prices for goods and services are lower, and citizens can purchase more. And immigrants are consumers too: some 80% of what undocumented workers earn in the U.S. stays in the country. A recent study by economists at the University of North Carolina found that Hispanic residents, 45% of whom were undocumented, contributed $9.2 billion in spending to North Carolina's economy in 2004. By taking the least desirable jobs, says John Kasarda, a co-author of the study, "they have kept some industries competitive that would have gone to Mexico and China."

o CAN THE U.S. ABSORB MORE IMMIGRANT WORKERS?

The Senate is considering a bill to grant 400,000 work visas annually for low-skilled immigrants in addition to the 140,000 visas currently available to foreign workers (including highly skilled ones). That's like adding a city the size of Atlanta each year. But it's a small fraction of the U.S. workforce of 139 million. "No credible estimate exists that [shows] immigrants cause unemployment," says James Smith, a senior economist at the Rand Corp. On the other hand, immigrants at least cause displacement by taking low-paying jobs from some Americans.

o WHO GETS HURT THE MOST?

Primarily those without high school degrees. Harvard economist George Borjas estimates that the influx of foreign-born laborers has shaved the incomes of U.S. high school dropouts as much as 8%--and taken their jobs in industries like food service and construction. Of the 4.8 million net new workers who entered the labor force from 2000 to 2005, 4.1 million were recent immigrants, says Andrew Sum, director of the Center for Labor Market Studies at Northeastern University. "If you're young and male and a high school dropout, chances are you've been displaced by an illegal immigrant," he says. Forcing supplanted workers to find other employment, however, may encourage them to improve their skills and their earning power, says Smith. "It's not musical chairs."

o IF UNDOCUMENTED WORKERS BECOME LEGAL, WON'T THEY COST BUSINESSES MORE?

Many employers already pay minimum wage to illegal workers. Although some shifty employers may still exploit workers they can keep off the books, "I really don't think most serious corporations want that," says Jagdish Bhagwati, an economist at Columbia University. That's because, says John Gay, a lobbyist for the National Restaurant Association, "a steady supply of dependable labor is more important [than minimum wage] to employers trying to grow their business." Forecasts of labor shortages spook some employers; restaurants expect 15% job growth over 10 years, while the labor force is predicted to grow only 10%.

o WHAT ABOUT THE STRAIN ON SOCIAL SERVICES?

Public schools bear the brunt. Children of undocumented immigrants tend to need English-as-a-second-language classes, and their parents typically don't pay enough in taxes to cover schooling. Hospitals write off the cost of medical services for undocumented immigrants. The bigger picture is more muddled. Economists at Rand have found wide variances in analyses of the costs to taxpayers of providing services to immigrants, from a "surplus" of $1,400 per immigrant to a "deficit" of $1,600. The majority of immigrants, in fact, pay taxes, even the undocumented (via fake Social Security and taxpayer IDs). Through 2002, illegals paid an estimated $463 billion into Social Security. Their takeout: almost nothing.

o WOULD AN INCREASE IN IMMIGRATION AFFECT ME DIRECTLY?

Immigrant workers pluck our grapes, stock our shelves, grill our burgers and clean our offices--for pay that lets us keep our own wallets plumper. Moreover, their domestic labor gives their employers more time to put into higher-paying work and leisure time. A vibrant laborer population could even create white-collar jobs, says Daniel Griswold, an immigration expert for the Cato Institute--say, for hotel managers hired to oversee expanding staffs. "Immigrant workers," he says, "make the economy more flexible, more dynamic."