• Danai Strother & Tao Lu

Concepts of Economic Analysis

Introduction

Immigration into the United States of America also known as the “New World” has taken place ever since the discovery of this magnificent land by various explorers. The United States isalso referred to as the “melting pot” because of the diversity of ethnic backgrounds that migrated to its land over the years.

In the early studies of colonization and immigration to the U.S., it is quite common to learn of the settlements of Native Americans, Europeans, and the British along with other ethnicities. All of which had their reasons as to why they migrated to the U.S. One could make the assumption that these reasons for migration to the U.S. were positive and for the better, but in 2014 many whose ancestors migrated long, long ago are rethinking the intentions of these current immigrants.

Immigration in 2014 plays a vital part in economic concerns. Those who are against immigration for the sake of economic growth want to eliminate immigration all together or reduce it to where they feel they have control over it. According to these people, taxes, safety, jobs etc. are at stake.

On the other hand, there are citizens of the U.S. that believe the foundation of the country was built upon the gathering of various ethnicities and that immigrants as a whole contribute to the growth and well-being of the economy.

In this paper, one will discover the highlighted reasons for immigration and how immigration can in actuality build, repair and add to the well-being of the U.S. economy.

According to the article, “Americans name Immigration over economy as biggest concern” published by CBSNEWS.com in July 2014, the Americans who oppose immigration believe that immigration is a bigger concern than the country’s “stagnant economy” (Boerma, 2014). The article illustrates to the reader that the immigration controversy had temporarily died down until President Obama pushed for an immigration reform bill to go in affect at the beginning of the year 2014. Ultimately, that bill played the role of an initiator as it heightened the controversy over immigration. One of the main concerns was “the mounting worry abouthumanitarian as well as national security fouls.”These people were seeking safety and they truly believed that if these immigrants were to continue to slip through border control it would result to danger. It is to the point where even Marine Corps Gen. John Kelly, the head of the U.S. Southern Command, has voiced that he does not have enough resources and force to patrol the border.

In “Immigration Benefits the U.S., So Let’s Legalize AllWork,” an article published by Forbes in September 2013, the author illustrates a more positive side to immigrants migrating and working in America. One of the main solutions that this article highlights is the separation of citizenship and employment. The author reiterates that if citizenship is such a big deal than the government should separate citizenship and employment by distributing more work visas to potential workers of America. Through the article one learns that the economy can significantly gain a boost with the help of these immigrants who are “natural entrepreneurs, establishing companies, creating jobs, and driving innovation” (Bandow, 2013).

In the article “Immigration Reform: Legalized Workers Earn More and SpendMore,” published by NYTimes.com in April 2013, the author informs the reader that if the US legalized workers it would be a “powerful economic and fiscal boost to this country” (Fitz, 2013).The article elaborated on the fact that if these immigrant workers were legalized they would have opportunities to invest in “training and education” to better themselves. This investment goes back in to the economy and in return these legalized immigrants will be able to obtain higher wages for their learned skills. The main point they are aiming to make is when one makes more money they are likely to spend more, so if these immigrants become legal and educated they will have more money to spend in the US. This leaves room for more investment in to the economy.

As time goes by, more and more immigrants in the United States obtain higher education. According to article “How Highly Educated Immigrants Raise Native Wages,” published by Economist’s View in May 2014, there were only 5 percent of immigrants with a high school degree and an approximately 7 percent with a graduate degree, in 1970. Now, more than 20 percent of them have a high school degree and 18 percent with a graduate degree. Also, comparing with native-born students, immigrants are more likely to pursue a bachelor’s degree in Science, Technology, Engineering or Mathematics (STEM). In research, 45.5 percent of immigrant students have a degree in STEM comparing with only 28 percent of native-born students have (Economist’s View, 2014). One of the most common concerns is whether immigrations will take away jobs from native-born Americans. In the research, this negative impact of immigration only affects to the low skill or less educated native-born Americans, because many immigrants are low-skilled, lacked of education and many don’t speak English. These immigrants are more likely from developing countries that are willing to work at the minimum wages. They will take the jobs that most native-born Americans won’t (e.g. farming or construction). The research states that the immigrants with a degree in STEM will increase the native wages because the country’s stock of knowledge is increased. The research states economists have recognized the significance of innovation in generating economic growth, and the role of scientists and engineers in fostering such knowledge production (Economist’s View, 2014). The immigrants with a STEM degree help increasing the overall productivity of the economy and make it grow. As a result, the overall wages will go up (it may affect the aggregate supply. see Graph No.1).

Many Immigrants come from the lower class of developing countries like Mexico, El Salvador, Honduras, India or China. These people with lowed-skill and lack of education come to the U.S. for a better opportunity and for pursuit of their American Dream. According to the article, “Immigration Is Good for the U.S. Economy” published by A. Hinkle in July 2014, the immigrants are willing to work. Approximately 93 percent of male immigrants are participating in the labor force, comparing to only 81 percent of native-born American males are (Hinkle, 2014). Many of immigrants have been paying at the minimum wages and have been doing manual, physical jobs that most native-born Americans don’t want (mostly in the food and agriculture industry). The low-paid workers help the industries to reduce manufacturing/producing costs. As a result, the retail price (e.g. oranges) will go down that most people will be able to afford (see Graph No.2). The research also states that, comparing to native-born Americans; immigrants are more likely to start a business. The research estimates immigrant-owned business in the U.S. generate more than $775 billion in sales and pay more than $126 billion in payroll each year (Hinkle, 2014). When there are more businesses, more jobs will be created. These immigrants are helping the U.S. economy to grow.

One could assume that the main reason for immigration is for opportunity. Opportunity in itself is a wide spectrum of reasons to migrate to the “Land of the Free.” The motivation behind the move is often times the “American Dream” which is portrayed in movies, television, and other avenues to these immigrants. This “American Dream” is also compared to the reality of life in country they are from and depending on the comparison the potential immigrant will know if they will be headed for the states.

Within this comparison, the immigrants compare many things, but economy is one of the most compared factors. Some may have the dreams and aspirations to grow a business, but they look at the economy andthe control of their country’s government and are not impressed. Therefore, you will have those that take that chance to migrate seeking to do something different and provide more for themselves and/or family. Furthermore, education is a factor that motivates these immigrants to move to the states. They look at their country’s educational facilities and some come to the conclusion that what is offered in their homeland is not what they desire to do or they lack the resources needed for the field of study desired.

In addition, a portion of these immigrants are seeking to flee from communistic, corrupt, dictatorship type of governments. Many of them learn of the freedom and liberty that America has to offer and make their way down here as soon as they can. Admirable freedom factors that the U.S. holds are freedom of speech, freedom of religion, and freedom of petition. Some of the people that desire to come to the states are not allowed to voice their opinion or speak against any law or regulation. Some may leave because they are not allowed to practice any faith in their homelands due to their particular government.

The economy, educational opportunities, and freedom along with many other factors are reasons why citizens of various countries migrate to the U.S. This matter can be a tremendously positive effect on the economy in America.

When these people migrate over and become students they are likely to invest a significant amount of money into “training and education” (Fitz, 2013). This can not necessarily hurt our economy. The more students we have the more money the economy is accumulating. Also, once these students gain the education they were seeking they invest their skills and time back into the economy through careers. This allows for an increase in production, innovation, and even research. According to Forbes, immigration would stimulate the job market as many of them are “establishing companies” and are “creating jobs” for Americans (Bandow, 2013). This will only add more force behind business cycles throughout the country.Without the capstone on these people they may feel more liberated and encouraged to come to the U.S and live life differently. Immigration nowadays “offers a mix of cultural benefits and challenges, complicated but manageable” (Bandow, 2013). We will have diverse groups of people to provide bilingual education to our students of America. When businesses and markets become more versatile as far as language through their services it opens up other money avenues.

According to Marine Corps Gen. John Kelly, the head of the U.S. Southern Command, “the resources allocated to him have been unrealistically inadequate to curb the flow of migrants out of countries like Honduras, Guatemala and El Salvador”(Boerma, 2014). The man- power to drastically reduce immigration is becoming nearly impractical to achieve. That is why it may be in the best interest of the economy to withdraw some of the force we have on immigrants and be receptive of the significant benefits they bring forth to the country when they migrate.

The increasing immigrants can be a factor to affect the quality of the U.S. education system. Under the supply-demand principle, when more immigrant students going to the public schools, the schools would have to offer more classes or expand the size of it, meaning hiring more teachers or having more students in each class (e.g. from 20 to 30 students normally to 40 students or more). When immigrant students with limited English are in the same classes with native-born students, teachers may have to slow the pace of teaching and lower their expectations so the immigrant students won’t be left behind (Hunt, 2012). The schools may have to offer after school tutoring for the immigrant students. Since the demand of services keeps increasing, now the education system is having difficulty to provide enough resources to all the students; it needs more funding. This pressure could mean to cut spending (e.g. some school activities or supplies) or increase taxes.

The world is in a technology age. New technologies help to reduce producing cost, make everyone’s life easier and have great impact to make economy grow. The education system is in a critical role and has responsibility to inspire more students to enter technology fields and later contribute the world (Gioia, 2009). However, the limited resources have effect the chances and opportunities of students (for both immigrants and native-born) can get. All of the above are the negative impacts of immigration. They are reducing the quality of the current education system in U.S.

Immigrants make the country’s net population increased. The increased population will lead to a higher demand on rents and housing. It creates a positive impact on housing markets. A study by the National Association of Homebuilders used Census Bureau population projections to estimate that after 10 years, new immigrants would occupy more than 2 million multifamily units and 1.2 million single-family houses (Siniavskaia, 2012).

The immigrants can create possible impacts on the housing market in U.S.First, the increasing immigrants represent a big demand of housing. When immigrants move to a neighborhood, they increase more opportunities. The growth of population means more buying power. Also,many immigrants tend to open business which creates jobs at the area and help the neighborhood grows. Second, immigrants tend to move to the less demanded neighborhood (because it’s cheaper). They can make those areas became viable alternatives (more opportunities) for working-class Americans to seek for jobs (Partnership for a New American Economy, 2013). On the other hand, not all immigrants are poor or less educated. The wealthy immigrants have contributed the housing market as well (buying multiple houses). As a result, immigration raises population which will increase the demand on housing market. When housing market goes up, it helps the U.S. GDP to grow.

Conclusion

In conclusion, the benefits of immigrants migrating to the U.S. are far greater than the negative perceptions. Without these incoming immigrants we are at a loss. To open doors for innovation and research the U.S. must open their minds to allowing more immigrants to become legalized, so they can participate in innovation and research. With the whopping number of sales by immigrant business owners we can tremendously increase our GDP. Furthermore, there are plenty of jobs Americans are not wanting to do that many immigrants would do just to support their families.

Along with that, all the people migrating over many will need a place to rest their head, which allows for the housing and rent market to increase. In addition, the immigrants seeking to further themselves through education and training will only fuel back into the educational market. With these factors and the others previously stated, the business cycle will have powerful force behind it. Before America harps down further on immigration they should really investigate the risk of preventing these immigrants entry into America. America’s foundation and backbone was built upon various ethnicities to keep it running. Now is not the time to stop.

Graphs No.1

When workers’ wages increased, companies may hire fewer workers. As a result, the aggregate supply will decline.

Graphs No.2

When immigrants work at the minimum wages, the cost of producing oranges will decrease. As a result, the retail price of oranges will decrease and the supply of oranges will increase and the supply curve will shift to right.

References

Bandow, D. (2013, September 16). Immigration Benefits The U.S., So Let’s Legalize All Work. Forbes. Retrieved August 4, 2014, from http://www.forbes.com/sites/dougbandow/2013/09/16/immigration-benefits-the-u-s-so-lets-legalize-all-work/

Boerma, L. (2014, July 16). Americans name immigration over economy as biggest concern. CBSNews. Retrieved August 4, 2014, from http://www.cbsnews.com/news/americans-name-immigration-over-economy-as-biggest-concern/

Economist’s View (2014, May 29). How Highly Educated Immigrants Raise Native Wages. Retrieved August 4, 2014, from http://economistsview.typepad.com/economistsview/immigration/

Fitz, M. (2013, April 16). Immigration Reform: Legalized Workers Earn More and Spend More. . Retrieved August 4, 2014, from http://www.nytimes.com/roomfordebate/2013/04/16/the-economics-of-immigration/immigration-reform-legalized-workers-earn-more-and-spend-more

Gioia, V. (2009, March 13). Has Illegal Immigration’s Effect on Education Become the ‘Third Rail’ of Politics? Retrieved August 4, 2014, from http://www.familysecuritymatters.org/publications/detail/exclusive-has-illegal-immigrations-effect-on-education-become-the-third-rail-of-politics

Hinkle, A. (2014, July 21). Immigration Is Good for the U.S. Economy. Reason.com. Retrieved August 4, 2014, from http://reason.com/archives/2014/07/21/immigration-is-good-for-the-us-economy

Hunt, J. (2012, November 17). The Impact of Immigration on the Educational Attainment of Natives. Retrieved August 4, 2014, from http://www.voxeu.org/article/impact-immigration-educational-attainment-natives

Partnership for a New American Economy (2013).Immigrants Boost U.S. Economic Vitality through the Housing Market. Retrieved August 4, 2014, from http://www.renewoureconomy.org/research/immigrants-boost-u-s-economic-vitality-through-the-housing-market/

Siniavskaia, N. (2012, August 3). Immigrants and Housing Demand. Retrieved August 4, 2014 from http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=186289&channelID=311#.UWLwK-gZBvI.twitter

Winkler, A. (2013, May).Economic Benefits of Immigration on Housing Markets. Retrieved August 4, 2014 from http://americanactionforum.org/uploads/files/research/Immigration_and_Housing_Markets.pdf