I was recently surprised to read personal commentary by Paula Biewer on immigration in a recent edition of Small Business Times. The commentary was provided by a certified identity theft risk management specialist with no expertise on the subject of immigration.
As immigration is an important issue that affects every business, I felt it necessary to provide a brief accounting of immigration as it relates to business.
Immigration and immigration reform are good for business.
U.S. immigration policy affects every business, regardless of size and industry. It impacts government spending and in turn the U.S. tax structure, as well as businesses access to labor and capital. It also affects the sense of security of consumers and investors, imposing hidden costs on the U.S. economy.
Government Spending & Taxes
While there has been wide speculation on the impact undocumented immigrants have on the U.S. economy, the CATO Institute and the President’s Council of Economic Advisors report that the average immigrant pays a net $80,000 more in taxes than they collect in government services. The net benefit is estimated at nearly $10 billion annually. Separately, the Social Security Administration reports that 75 percent of all unauthorized workers in the United States pay federal income taxes, as well as pay into Social Security, Medicare and unemployment insurance programs, even though they are ineligible for benefits.
Ironically, the debate surrounding the economics of unauthorized immigration tends to focus on federal programs and not at the local or state level where the actual integration and health care services are provided and the costs incurred.
Everyone in the United States, regardless of immigration status, is entitled to emergency health care services (Emergency Treatment and Labor Act of 1986) and a primary education (U.S. Supreme Court Case PLYLER v. DOE, 1982). These are services that are provided at a state and local level with limited reimbursement from the federal government.
While it is estimated the same percentage of undocumented immigrants pay state income taxes as do federal taxes, they also pay sales, fuel and other consumption taxes in addition to property taxes either directly on homes owned or indirectly through rent. However these local taxes and fees are not enough to offset local and state integration and health care costs.
The result is, while undocumented immigrants pay more taxes into the system than the cost of services consumed, the majority of the taxes are paid to the federal government, providing it with a substantial surplus while local municipalities, states and health care providers are left to absorb the costs.
Labor & Capital
As global competition will increase as countries around the globe continue to develop, the United States will be entering a severe labor shortage, as the largest segment of the U.S. workforce, the baby boomers, will begin to retire. Both the U.S. Department of Commerce and U.S. Department of Labor predict a labor shortfall as over 77 million baby boomers will begin to retire in 2010. For this reason, U.S. Department of Commerce Secretary Carlos Gutierrez has called for reform in U.S. immigration policy that will provide for increased immigrant labor flow as well as a path to legalization for trained and productive immigrants already integrated into the U.S. economy. Without such measures, the ability of U.S. companies to compete will become increasingly more difficult, as labor will be scarce, and in turn, capital for new plants and equipment are diverted to countries where labor is accessible.
Almost everyone, including the president, legislators and immigration advocates, agrees that the Canadian and Mexican borders and other ports of entry must be secured. However, there is disagreement on how to achieve this goal. Despite loud calls from a few to build a wall along the borders and to deport all undocumented immigrants, the Secretary of the Department of Homeland Security has stated this simply is not possible, and the United States must focus its resources on a realistic approach.
Many non-partisan experts agree that any plan to secure the border must include a combination of physical and technological barriers along the border, passage of immigration legislation that will allow for the immigrant worker flow required by the U.S. economy and finally provide a pathway to legalization for those already living and working within the United States.
President George W. Bush has repeatedly stated that this approach will result in a physically and economically secure America.
As in business, it is only with quality information that a successful strategic plan can be developed and implemented. An immigration policy that provides for our nation’s security and economy while upholding our country’s commitment to human rights will always be good for business.