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Fabiola Santiago, an undocumented UCLA student with a masters degree in Public Heath,
Squandered education?
BRAIN WASTE

The US pays a price for keeping immigrants underemployed

By Oliver Staley & Ana Campoy

US president-elect Donald Trump pledged to get America’s economy growing by 4% a year. Legalizing unauthorized immigrants would take him a long way toward that goal.

Undocumented workers generate 3% of US GDP, or $5 trillion over 10 years, according to a new analysis from two economists at Queens College in New York. If the US government granted them permission to legally work in the country, they would be able to land better jobs and boost the economy by another .6%.

The US could extract another bump in growth from the untapped earning potential of highly educated immigrants, both undocumented and otherwise. One out of four immigrants with a college degree is in a low-skill job, or has no job at all, according to another study by the Migration Policy Institute (MPI). That’s $39 billion a year in squandered wages, and more than $10 billion in missed tax revenues.

Together, the two studies underscore the often-overlooked complexity of the US immigration picture. Dealing with that picture will require far more nuanced policy than mass deportations or building a 55-foot wall border wall.

Not a monolith

Queens College economists Ryan Edwards and Francesc Ortega analyzed data from the Center of Migration Studies, which calculated the legal status of millions of immigrants using Census data on country of origin, year of arrival, education, and occupation. The figures show that unauthorized immigrants come from dozens of nations and work in hundreds of professions.

“They are not monolithic, they are not all uneducated folks from Mexico,” Edwards says. “They are from all over the world, they are from all education backgrounds, and they are in every state.”

As a group, unauthorized immigrants are more likely to accept lower paid work, and are less likely to seek other, higher paying opportunities, because of the risk their status will be discovered, Edwards says. Despite those concerns, 60% of unauthorized immigrants are in middle- to high-skill jobs, according to MPI.

The deportation of 11 million unauthorized immigrants—a proposal Trump laid out early in his campaign but has since backed away from—would cost the US about $435 billion annually, and ultimately about 2.6% of GDP.

Granting them permission to stay, on the other hand, would benefit the economy. Documented immigrants are almost 30% more productive than undocumented counterparts, because they’re able to take jobs at the maximum of their ability, according to Edwards and Ortega. One study found that wages increased 20% for formerly undocumented workers a year after legalization.

That doesn’t mean workers in the US legally—about 75% of the total immigrant population—are earning their full potential, even if they are highly skilled. Nearly a quarter of immigrants with a college degree who have become US citizens, and about a third of those who are legal permanent residents, are under or unemployed, per the MPI analysis. (The rate for unauthorized college graduates is 40%.)

Wasted brains

The loss of immigrant contributions is only growing as their educational level rises, a phenomenon MPI has dubbed “brain waste.” Over the past couple of decades, the share of immigrants with a college degree, both with and without papers, has been steadily expanding.

While the proportion of college graduates is about the same for all immigrants and the US-born population, more recent arrivals—those who came within the past five years—are considerably more educated, per MPI.

PopulationShare of college educated
US born31%
All immigrants30%
Arrived in the past 5 years48%

The shift in immigrants’ education profile has to do with a variety of factors, none of them US visa policy, says MPI president Michael Fix. Fewer Mexicans are entering the US due to improved economic opportunities and a falling birth rate in Mexico, as well as stepped up patrolling along the border. Those Mexicans who are coming tend to be better-educated than in the past. More women are also entering the US with college degrees, and Indian and Chinese immigrants have surpassed their Mexican counterparts in numbers.

All of this should be great news for the US, which faces labor shortages as baby boomers retire.  ”If you have an immigrant flow that’s highly educated, they’re going to be more productive,” Fix says.

Yet nearly 2 million college-educated immigrants, a quarter of all of those who hold a degree, suffer from “brain waste.” MPI’s analysis found many causes for this, ranging from lack of English proficiency to the difficulty of getting foreign degrees validated, to racism. Hispanic and black immigrants were more likely to be in low-skill jobs than their equally educated white counterparts, the study showed.

Getting rid of employer bias might be hard, but officials in the US could adopt relatively simple policies, such as offering language courses or making professional licensing easier, to better profit from the country’s immigrant population, MPI suggests.

Immigrant costs

While undocumented immigrants unquestionably contribute to the US economy, analysts who favor tougher restrictions say their gains don’t outweigh the larger costs to the economy. By accepting lower wages, they drive down the pay for the lowest-skilled US workers, and cost more in social benefits than they contribute in taxes, says Steven Camarota, director of research for the Center for Immigration Studies.

Households headed by immigrants—documented or undocumented—cost $6,234 on average in federal cash, food, housing, or medical benefits, 41% more than the $4,431 used by native-born households, according to a CIS analysis. While legalization may boost incomes, and therefore yield more tax revenue, it also makes it more likely that the newly-documented immigrant population will access those benefits, as they no longer risk deportation, Camarota said.

“Theres no possibility that people, who on average have a 10th- and 11th-grade education, come close enough to contributing enough in tax to make up for what they consume,” Camarota says.

But this simple equation—taxes vs. benefits—glosses over other important elements in the balance of immigrants’ impact on the US. While low-skill foreign workers depress wages for certain groups, such as prior immigrants and high-school dropouts, skilled immigrants can increase both pay and employment for natives by sharing their knowledge, and through innovation, according to a comprehensive analysis  (pdf) published by the National Academies of Sciences, Engineering, and Medicine earlier this year.

The study, dubbed “The Economic and Fiscal Consequences of Immigration,” also found that immigrants help the economy in other ways—by lowering the costs of products and services through cheaper labor, for example, and by buying those products and services as consumers. And while immigrants tend to be a fiscal drag for local and state governments, they have a positive effect on federal finances.

As is often the case with immigration, reality is more complicated than it seems.