The Next Trillion-Dollar Stimulus? It's Immigration Reform

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Thanks to the electoral drubbing Republicans took from Latino voters on Tuesday, it's looking increasingly likely Congress might actually tackle comprehensive immigration reform some time this year. House Speaker John Boehner suddenly likes the idea. Even Fox News' Sean Hannity is a convert

That's delightful news for any number of reasons. If it happens, millions of hard working people will be able to step out of America's legal shadows. But almost as importantly, it might just give the U.S. economy a trillion-dollar shot in the arm, as explained in a report published by the left-leaning Center for American Progress in 2010.  

To get that boost, we have to be smart about reform. CAP argues that a truly comprehensive program would create a path to citizenship for people who are already here and set flexible limits for future immigration, so that annual totals rise and fall with our demand for labor. They estimate that those policies would add $1.5 trillion to the economy over ten years, or about 0.84 percent to our annual GDP. Compare that to mass deportations which, by sending millions of individuals packing, would sap trillions from consumer spending and growth. 

CAP_Immigration_GDP_1.PNG

These calculations are based partly on the impact of the Reagan administration's 1986 immigration reforms, which gave legal status to about 3 million undocumented individuals. That, in turn, gave those workers leverage to bargain with their employers for higher paychecks, while giving them an incentive to learn English so they could advance in the workplace. Estimates vary as to exactly how much newly legal immigrants were able to earn, but they all point to an improvement in their earning power.

Extrapolating from that history, CAP believes that giving today's 11.3 million undocumented immigrants a route to citizenship could increase their collective earning power by as much $36 billion a year. That money would funnel back into the economy and support more jobs. It might also help raise wages for American born, low-skill workers, since businesses wouldn't be able to take advantage of cheap undocumented immigrants who lack lack legal rights or better job options. 

Here's a year by year breakdown of what immigrant stimulus might look like over a decade. The reason that a temporary worker program doesn't give us the same kind of bang for our buck is that immigrants wouldn't have the same sort of negotiating power on pay, and wouldn't have much incentive to invest in their education or skills. 

CAP_Immigration_GDP_2.PNG

So that's the deal. If we can take advantage of this moment, and give the millions of people who are already working here a chance to earn their citizenship, we get a trillion dollar prize. In this case, doing the humane thing also pays. 

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Jordan Weissmann is a senior associate editor at The Atlantic.

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