Does Immigration Help or Hinder Economic Growht

EC301 INTERMEDIATE MACROECONOMICS

(IMMIGRATION AND ECONOMIC GROWTH)

"DOES IMMIGRATION HELP OR HINDER ECONOMIC GROWHT"

Kenneth W. Lingenfelter

Johannes Snyman

Park University Internet Campus

A course paper presented to the School for Arts and Sciences and Distance Learning

in partial fulfillment of the requirements for the degree of

Baccalaureate

Intermediate Macroeconomics

Park University

December, 2012

Immigration can be defined as one who has entered a country to take up permanent residence. Economic growth is defined as increase in a country's productive capacity, as measured by comparing gross national product (GNP) in a year with the GNP in the previous year. The combination of both leaves the population and economist with this question. Does immigration help or hinder economic growth in the United States? I have personally worked for and have firsthand knowledge of legal immigrants making an impact on our economic growth. Most of which are self-starters who own and operate their small businesses while hiring others to stimulate the local and national economy. Many of these legal immigrants are extremely knowledgeable on the operations of businesses, but may lack the reputation for landing the same career with businesses operating in the same field. I have also witnessed illegal immigration and how the negative and positive activities have affected the economic growth of our nation. I believe that immigration can and will affect the overall gross national product. Immigrants and Americans native to the United States will help and hinder the economic growth. "The failure of national economic policy is costing us more than jobs; it has begun to weaken that uniquely American spirit of risk-taking, large ambition, and optimism about the future. We must rally them now to bold departures that rebuild our national morale as well as our material prosperity" (Mitch Daniels, Newsweek, 2009). As the nation moves forward with immigration reform, the population will see the negative impacts of illegal immigration, and the positive impacts of legal immigration in our country.

According to the population and polls conducted in reference to the status of economics, the majority believe that illegal immigration is detrimental to the economics status. Many of the illegal immigrants are accepting and fulfilling the needs for less paying jobs because the lack of Americans wanting to work for lower wages. The outcome for accepting the lower paying jobs is said to drive the labor down and keep the economy running. Many companies would ultimately fail and would be destined to fold under the pressure for not filling these positions. These reaction will cause an increase in productivity, in which, will cause in increase in the price level. The negative impact on the influx of illegal immigration does not so much impact the adult population in the hiring process, but will affect those without a high school education. These individuals are more likely to work hospitality or seasonal jobs. The bigger pictures shows that the illegal immigrants fail to pay into taxes, social security, or into unemployment insurance. The unwillingness to pay into the tax pool will put the burden onto the taxpayers of the American citizen. Many of these illegal immigrants are using up social services and other forms of public assistance, for which they fail to pay the upfront taxes on, causing more of a drain on the economy for which can't be made up through the numbers of employment. While attempting to fix the ongoing issues for illegal immigrants crossing our borders, economists believe that altering the issues concerning the crossing of skilled immigrants with hurt the economy. The influx in immigration has increased the gross national product by an estimated $39 billion per year, which begs to differ that immigration does more to help the economic growth than to hinder it.

Over the past two decades, small businesses being operated by immigrants have risen by six percent. These businesses include grocery stores, physician offices, real estate firms, and restaurants. The increase in these businesses will increase the employment rate, household income, and stimulate the economic growth. An estimated 4.7 million workers have been employed by immigrant business owners, earning revenue of $770 billion. Over the long-run there has been an increase in income by three percent with immigrant employment of one percent. These increases result in the total household income increase by $5000, in which is circulated back into the economy for the purchases of products, creating new opportunities and jobs.

Consumption is affected by illegal immigrants through the following ways: The most significant benefits come from lower labor costs and this translates into reduced prices for every commodity they handle. Consumers save on hundreds of purchases from produce and food products to new homes (Gordon, 2012).

Investments are affected in the following manner: Companies and shareholders enjoy cost reductions from lower wages, pass some to unaware consumers whom, in turn, pocket their share of the profits gained from the sweat of resident foreign laborers (Gordon, 2012).

Government Purchases: On the local and state level immigrants contribute through property and sales taxes but, contrary to the federal windfall, they tend to absorb far more in services, benefits, and assistance. In the final accounting, the U.S. Treasury and Social Security both enjoy a huge surplus and leave state and local governments on their own to fund the overwhelmed regional services (Gordon, 2012).

Net Exports: International trade transactions are a significant item in the national income accounting. Immigrants contribute to the goods and services that are made within the borders of the U.S. (Gordon, 2012).

On the basis of the commentary, I believe that on balance, illegal immigrants contribute more to the U.S. economy than they take away from it. Most analysts, after considering all aspects, agree both legal and illegal immigrants produce a slight, yet