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The Economic Case for Commonsense Immigration Reform

Director of the National Economic Council Gene Sperling outlines the economic case for a fair, effective and common-sense immigration system that strengthens our economy and the middle class.

America’s immigration system is broken. Too many employers game the system by hiring undocumented workers and there are 11 million people living in the shadows. Neither is good for the economy or the country. We must come together on a plan that requires responsibility from everyone —both from the workers who came here illegally and those who hire them—and guarantees that everyone is playing by the same rules.

Together we can build a fair, effective and common-sense immigration system that strengthens our economy and the middle class. As the President has made clear, any effort must include continuing to strengthen border security, creating an earned path to citizenship, holding employers accountable, and streamlining legal immigration.

Folks on both side of the aisle agree that we need to work together to bring millions of undocumented individuals out of the shadow economy and provide U.S. businesses with a stronger, legal workforce so we can better compete in the 21st century global economy.

It’s clear commonsense immigration reform is good for the economy as a whole. Don’t take our word for it – study after study has shown that commonsense immigration reform will strengthen the economy, spur innovation and increase US trade and exports.

Here are just a few studies that make the economic case for commonsense immigration reform:

  • Fixing our broken immigration system would increase America’s GDP. In 2006, the nonpartisan Congressional Budget Office found that immigration reform would increase GDP by between 0.8 percent and 1.3 percent from 2012 to 2016. 

More small businesses means more jobs, and we’ll also see a boost in demand for local goods:

  • Immigrants start small businesses. According to the Partnership for a New American Economy, immigrants are more than twice as likely to start a business in the United States as non-immigrants, and in 2011, immigrants started 28 percent of all new business while only accounting for 13 percent of the U.S. population. 
  • Immigrant-owned businesses create jobs for American workers. According to the Fiscal Policy Institute, small businesses owned by immigrants employed an estimated 4.7 million people in 2007, and these small businesses generated more than $776 billion in revenue annually. 
  • Immigrants boost demand for local consumer goods. According to the 2010 American Community Survey, immigrants earned a total of $1.1 trillion, and the Immigration Policy Center estimates that the purchasing power of Latinos and Asians, many of whom are immigrants, alone will reach $1.5 trillion and $775 billion, respectively, by 2015. 

It’s also worth noting that more than 40 percent of Fortune 500 companies were founded by immigrants or a child of immigrants.  According to the Partnership for a New American Economy these companies employ more than 10 million people worldwide and generate annual revenue of $4.2 trillion.

We also need to make sure we attract and retain the best and brightest students from around the world to help ensure the next great breakthroughs in technology and medicine are developed right here in the United States. 

  • Immigrants innovate as scientists and engineers. According to the National Survey of College Graduates, immigrants represent slightly under 14 percent of the resident working population holding a bachelor’s degree or higher, but among this group they represent 29 percent of scientists. They also represent 50 percent of PhDs working in math and computer science occupations and 57 percent of PhDs working in engineering occupations. 
  • Immigrants develop cutting-edge technologies and companies.  According to a paper from the National Bureau of Economic Research, immigration was responsible for one third of the explosive growth in patenting per capita in the 1990s, and these innovations contributed to increasing U.S GDP by 2.4 percent. According to the National Venture Capital Association, immigrants have started 25 percent of public U.S. companies that were backed by venture capital investors. This list includes Google, eBay, Yahoo!, Sun Microsystems, and Intel. 
  • Immigrant scientist and engineers positively impact wages. According to a study at the University of California – Davis, a 1 percent increase in the share of foreign scientist and engineers in the U.S. workforce would increase the wages of native college-educated workers by 4 to 6 percent, and have no significant effect on the wages and employment of native non-college-educated workers.

We can also boosts our exports to help ensure America continues to build things the rest of the world buys by improving infrastructure and staffing at ports of entry in order to facilitate more efficient and secure trade.

  • Fixing our broken immigration system is critical to bilateral trade and U.S. exports.  Investments to strengthen the border and facilitate more efficient trade with both Mexico and Canada will strengthen the U.S. economy. Canada and Mexico are our first and third trading partners in the world, respectively, together accounting for nearly one-third of U.S. exports in 2012 and more than $3 billion two-way trade per day in 2012. An increase in exports means more jobs right here in the US.

We can also reform the tourist visa process by strengthening international law enforcement cooperation and facilitating more efficient travel. That means more tourists are renting cars, staying in hotels, eating at restaurants, and spending money in the US.

  • Fixing our broken immigration system will help increase international travel and tourism to America. Travel and tourism represent the largest service-export industry in the U.S., setting a record $168.1 billion in exports in 2012 and supporting 7.7 million jobs in the third quarter 2012. The economic impact and importance of travel and tourism will continue to grow in the coming years as emerging economies around the world experience an increase in their vacationing middle classes. China, Brazil, and India alone represent approximately 40 percent of the world’s population and by 2017 the number of travelers from those countries is expected to increase by 259 percent, 83 percent, and 47 percent respectively.               

As you can see there’s a strong economic case for commonsense immigration reform. We’re pleased with the progress being made on Capitol Hill -- it’s time to finish the job.

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