Immigration Reform Boosts Maryland Economy
The country and state will reap economic benefits from President Obama’s action on immig
ration reform. Making more than 3 million people workers in the United States will increase gross domestic product (GDP), productivity, and tax revenue.
Maryland would see an increase in tax revenue of around $163 million if all undocumented immigrants became legal residents, according to a 2010 Institute for Taxation and Economic Policy report. Given that Obama’s action would only affect 35% of undocumented individuals and families, the revenue increase in Maryland is likely to approach $57 million[1]. Allowing undocumented immigrants already in the country to get legal worker status will add about $90 billion in national GDP over the next 10 years (in 2014 dollars), according to even cautious estimates. One reason is increased productivity. Productivity will rise “because of increased labor market flexibility and reduced uncertainty for workers currently in the United States and because of increased innovation from high‐skilled workers,” the White House report says.
GDP will also increase due to immigrants working jobs that better match their skills. Highly-skilled undocumented immigrants normally work in jobs that offer the least risk of detection. They are often short-term, low-wage jobs that offer no opportunity for advancement. Through immigration reform, these worker will be able to more fully participate in the workforce, in jobs that match their skills.
Moreover, no harm will come to U.S-born workers. Increases in high-skilled immigration have no effect on the likelihood of unemployment for either college-educated or non-college-educated natives, research shows.
The immigration reform will also increase tax revenue. The executive action makes it harder for employers to cheat undocumented workers out of lawful wages and dodge payroll taxes. Undocumented employees are often victims of wage theft, either from not being paid a fair wage or by having their wages withheld, with little to no recourse. This, in turn, limited the amount the government could collect in taxes, the amount these workers had to support their families, and how much they could spend in the local economy. Immigration reform also benefits reputable business owners by protecting them from unsavory competitors who knowingly under-pay employees and under-report taxes.
While local economies will get a boost from increased tax revenue, schools and other public services will not see additional strain. Due to a Supreme Court ruling (Plyler v. Doe), all children (except children in detention centers) have the right to an education, regardless of their immigration status. Students affected by President Obama’s executive order already attend public schools.
Likewise, the presidential action does not make public support programs, like food stamps, available. While undocumented immigrants affected by the executive action will be expected to pay taxes, the fact that they are not eligible for the same safety net programs as most other taxpayers is troubling. It would be better for Maryland if all people and families had access to aid during financial and economic crises.
The President stated his action will stand only until Congress moves forward with immigration reform. The increase in tax revenue, personal earnings, GDP, and productivity should be an incentive to speed up the process.
[1] Based on analysis by Maryland Center on Economic Policy
