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  • Precarious Prosperity

    Part: 1, 2, 3, 4

    More than 18,000 people are sworn in as U.S. citizens during naturalization ceremonies at the Los Angeles Convention Center on August 28, 2008 in Los Angeles, Calif.
    Photo by David McNew/Getty Images

    Is there a new American Revolution in the making? Thirty-five million foreigners have come to live here. It won't be long before the nation's foreign-born population will surpass the historic 14.7 percent share reached in 1910, when Ellis Island and the Statue of Liberty famously beckoned to Europe's "huddled masses yearning to breathe free."

    With numbers like these, it's hardly surprising that a revolt against immigrants has broken out. Long-simmering fears that the border is far too porous heated up after 9/11. CNN anchor Lou Dobbs routinely excoriates immigrants for everything from committing crimes to destroying the livelihood of America's middle class. Volunteer militias patrol the border with Mexico. High-tech workers lobby against companies' bringing in skilled immigrants. States are cracking down on employers that hire illegal immigrants, and the federal government is spending billions building a wall between Mexico and the United States. The current economic downturn is adding to the tension, with wages stagnant, jobs hard to get, unemployment rising, and social services strained.

    The backlash is focused on illegal immigrants, especially Hispanics who arrived with a coyote rather than a visa. It's estimated that there are between 11.5 and 12.5 million unauthorized, undocumented, illegal - pick your favorite term - immigrants living in the United States. Because Hispanics comprise 75 percent of illegals, the desire to take away the welcome mat and Latinos have become synonymous.

    It's widely believed that low-skill low-wage immigrants are a drain on the American economy. That may be true short-term, especially in some parts of the country. But over the long haul, the evidence strongly suggests that immigrants--legal or not-benefit the nation's economy far more than they cost it.

    To be sure, economics is only one lens for measuring the impact of illegal and legal immigration. National security is another. So is citizenship, and culture. Nevertheless, in much of the incendiary debate surrounding immigration in recent years, the economic contribution of legal and illegal immigrants has been under-appreciated.

    Take America's high tech economy. It has prospered, largely thanks to highly educated foreigners. The nation's cutting-edge industries, from semiconductors to biotechnology, depend on immigrant scientists, engineers, and entrepreneurs to remain competitive. For instance, more than a quarter of America's Nobel laureates in the natural sciences - physics, chemistry, medicine - are foreign-born. About a fifth of master's degree holders and Ph.D.s working as managers, scientists and engineers are immigrants. In Silicon Valley, immigrant-founded startups made up 52 percent of total new companies in the high-tech region between 1995 and in 2005, according to scholars Vivek Wadhwa, Annalee Saxenian, Ben Rissing, and Gary Gereffi. The Indian, Asian, Latin American, and other immigrant diasporas are a boon to U.S. exports.

    Of course, skilled, educated immigrants are usually legal. But illegal immigrants make major contributions to the economy as well, as do less-educated legal immigrants. They are workers, consumers, business owners, and even taxpayers. Immigrant entrepreneurs, from the corner grocer to the local builder, are creating jobs and revitalizing neighborhoods. Immigrant workers are critical to construction, food preparation, and cleaning services. Cities with lots of immigrants have seen their per capita tax base go up, contrary to popular impression, according to David Card, economist at the University of California, Berkeley.

    You can see the impact of immigrants if you walk down Lake Street in Minneapolis. Two decades ago, the urban artery ran through some of the city's most poverty-stricken, violent neighborhoods. Many of its store fronts were boarded up. Drug dealing, prostitution and other crimes were commonplace. When he started working on Lake Street back in 1991, "it was in very bad shape," recalls Ramon Leon, executive director of the Latino Economic Development Center on Lake Street. "Everyone was leaving, and no one wanted to live here."

    In 1994, Leon says, the first Latino-owned business opened up on Lake Street. Cheap rents and homes attracted Hispanic entrepreneurs and families. By 2008, largely thanks to an influx of Latino immigrants, business along Lake Street is booming and neighborhoods are full of working-class families. Many of those families are undocumented Latinos, or extended Latino families that include a mix of legal and illegal residents. It's estimated that up to 40 percent of Latino families on Lake Street are undocumented. But whether they have papers or not they're contributing to the economy. "The buying power of Latinos is huge," says Leon, who first came here illegally but is now legal following the Reagan Administration's 1986 Immigration and Control Reform Act.

    He's right. The Hispanic population is 15 percent of the U.S. population. Economists at the investment banking firm Goldman Sachs project that Hispanic households will hike their spending to some $691 billion in 2010 compared to $500 billion in 2005.

    Continue to part 2

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