Does the American economy really need low-skilled, low-wage Mexican immigrants? We sure do, according to the 2004 film A Day Without a Mexican. The satirical movie imagines what would happen to California if suddenly 14 million of its citizens of Mexican descent up and disappeared. As the film's website puts it:
"As time goes by, the State continues to deteriorate: Garbage has taken over the streets, and tears are permanently painted on the faces of most citizens as the 5th largest economy in the world tumbles. The realization that what has disappeared is the very thing that keeps the "California Dream" runningcooks, gardeners, policemen, nannies, doctors, farm and construction workers, entertainers, athletes, as well as the largest growing market of consumershas turned Latinos and their return into the number one priority in the State."
Of course, the instantaneous disappearance of 14 million people of any ethnicity or race would be pretty disruptive, I would imagine. But the purpose of the film is to remind the rest of America how much immigrants contribute to society. Can you put a dollar figure on that? According to an often-cited 1997 study by the National Academy of Sciences, immigrants of all varieties add as much as $10 billion to the economy each year, primarily because of lower consumer prices caused by a decline in wages for low-skilled nonimmigrant workers.
But what do low-skilled immigrants cost America? Everything has its costs, of course. According to a new analysis by Robert Rector of the conservative Heritage Foundation, the average low-skilled immigrant household received $30,160 in direct benefits, means-tested benefits, education, and other services from all levels of government in 2004.
By contrast, low-skill immigrant households paid only $10,573 in taxes that year, meaning the average low-skill household had a fiscal deficit of $19,588. And what about retirement costs? Rector estimates that if all the current adult illegal immigrants in the United States were granted amnesty, the net retirement costs to government (benefits minus taxes) could be over $2.5 trillion.
A 2003 analysis by the Federal Reserve Bank of Dallas concluded that while high-skilled immigration had "good economic effects"it added to economic growth and helped government financeslow-skilled immigration was more of a mixed picture. "The economic benefits are there as well but have to be balanced against the fiscal impact, which is likely negative," explained economist Pia Orrenius.
But doesn't America need low-skilled immigrants to do the jobs Americans won't? Well, one could certainly argue that at higher wages, American would do those jobs. A 2004 study by Harvard economist George Borjas concluded that from 1980 to 2000, immigration reduced the average annual earnings of native-born men by $1,700, or nearly 4 percent. For the poorest tenth of the workforce, the reduction was 7.4 percent.
And those higher wages wouldn't necessarily send prices out of control. The $10 billion immigrants add to the economy mostly through lower prices is just a drop in the bucket for a $13 trillion economy. And a 1996 study by a pair of Iowa State economists found that the removal of illegal workers from the seasonal agricultural workforce would increase supermarket produce prices by about 6 percent in the short run and 3 percent in the intermediate term.
During the winter-spring seasons, prices would rise more than 3 percent in the short term and less than 2 percent in the intermediate term. Imports would increase about 1 percent. Indeed, a reduction in the supply of low-wage workers would force many industries to turn to automation to maintain or increase productivity.