After many false starts, a convergence of public sentiment and political will has sped the country to the brink of comprehensive immigration reform. In purely economic terms, it's a no-brainer — one of those rare instances where a moral imperative neatly aligns with our national self-interest.
Enemies of reform often tar it as an amnesty program, but tossing around the A-bomb just confuses the issue. The draft legislation currently before Congress wouldn't simply rubber-stamp unauthorized immigrants. They'd be required to pay hefty fines and application fees, learn English and civics, pass background checks, and pay back taxes. That alone would deliver a welcome fiscal shot in the arm.
And that's just the tip of the iceberg. The biggest boon to the economy would stem from the ripple effects of bringing the 11 million undocumented immigrants living on the margins of society into the mainstream — translating directly into higher wages and better living standards for all Americans.
Our current dysfunctional immigration system exerts downward pressure on wages for the undocumented. As a 2008 Federal Reserve Bank of Atlanta study found, "when a firm cuts costs by hiring unauthorized workers for lower wages, its competitors become more likely to hire unauthorized workers for lower wages as well in order to benefit from the same cost savings." The result is a race to the bottom in already low-wage labor markets.
As we learned when the 1986 Immigration Reform and Control Act conferred green cards on 2.7 million undocumented immigrants, legalization reverses that pressure by establishing a "wage floor." No longer cowed by the threat of deportation, immigrants with the legal protections to fight abusive working conditions and contest wrongful termination make much more productive laborers. They also seek work that better matches their skills, and tend to invest more in education and training. As a consequence, they earn around 15 percent more than their undocumented counterparts (add another 10 percent for naturalized citizens). That rising tide of wages for those at the bottom lifts all boats, translating to an increase in earnings of $470 billion for Americans on the whole. (That and the figures in the following paragraph are computed over 10 years.)
But immigrants are more than just workers — they participate in the economy as consumers and taxpayers too; with higher earnings come higher taxes (legalization would bring in $109 billion in added tax revenue). They also buy more stuff and launch more entrepreneurial ventures. That spending and enhanced economic activity, in turn, stimulates further demand and expands the economy at large, both of which end up creating more jobs. In fact, legalizing undocumented foreigners in the US would generate more than a million jobs, according to the Center for American Progress. Think tanks of all political persuasions estimate that this one-two of job creation and consumption would raise GDP by anywhere between $832 billion and $1.5 trillion.
Oh, and feel free to ignore some conservative groups' scaremongering that a flood of legalized immigrants will overburden the welfare state. A 2007 cost estimate by the nonpartisan Congressional Budget Office shot that dead-letter down when it found that immigrants granted legal status pay twice as much in taxes over their lifetimes as they use in services.