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Immigration and Economics: By the Numbers

11 Jul

By Andrew Soergel | Economy Reporter July 10, 2017, at 12:01 a.m.

Mohamad Ali remembers stepping off an airplane at New York City’s John F. Kennedy International Airport in 1981 – his first moments in the U.S.

Ali traveled with his mother, a teacher in their native country of Guyana who decided to leave in search of a better life. Ali was 11 years old. His father had already been in the U.S. for a year, and his younger brother and sister wouldn’t arrive in America for another three years.

Although his path wasn’t always easy, Ali went on to attend Stanford University and eventually become a vice president at IBM and the chief strategy officer at HP before becoming president and CEO of Boston-based software company Carbonite. Under his leadership, he says Carbonite has doubled its employee base and tripled its stock value.

“Having to deal with everything from poverty to being discriminated against … at the end of the day, America is still an incredible place,” says Ali, a staunch believer that immigrants contribute to economic growth. “We have the systems and structures and laws that give people opportunities.”

The question of whether immigration helps or hurts the U.S. economy is a touchy one, and one that has different answers depending upon one’s position along the political spectrum. But a preponderance of research suggests the overall benefits largely outweigh the costs, as immigrants like Ali drive innovation, enhance productivity and create jobs for Americans and visa-holders alike.

Ali’s Carbonite helped launch an immigration report commissioned by the Massachusetts Technology Leadership Council, or MassTLC, in early June. The document expanded upon data-heavy legal documents the MassTLC submitted to the U.S. District Court of Hawaii and the U.S. Courts of Appeal for the 4th and 9th Circuits earlier this year in response to President Donald Trump’s proposed temporary travel ban.

Among other findings, the 164-page document highlighted that 40 percent of Fortune 500 companies were founded by immigrants or the children of immigrants. And more than half of U.S. startups valued at $1 billion or more – known colloquially as “unicorns” – were started by immigrants.

“These unicorns are the next two decades or three or four decades of American innovation,” Ali says. “And if you don’t have them or have a smaller group of them, it really damages the American economy.”

The report in some ways isn’t a unique document – there’s a surfeit of data and studies suggesting immigrants disproportionately start up their own businesses and create jobs in the U.S. A 2016 study from the National Foundation for American Policy profiled 87 U.S. startups valued at $1 billion or more. Forty-four were founded or co-founded by immigrants. That group was collectively valued at $168 billion and employed an average of 760 people per company.

A 2013 study from the National Venture Capital Association found that a third of venture-backed companies that went public between 2006 and 2012 were founded or co-founded by an immigrant to the U.S. And a massive report published in September by the National Academies of Sciences, Engineering and Medicine found that immigration is “integral to the nation’s economic growth.” The document suggested immigrants “reduce the prices of some goods and services, which benefits consumers,” that “new arrivals and their descendants are a source of demand in key sectors such as housing, which benefits residential real estate markets” and that “they help equalize wage growth geographically, making labor markets more efficient and reducing slack.”

The Other Side of the Coin

But the findings weren’t entirely rosy – nor are other reports that suggest the benefits of immigration also come with some costs. The NASEM study also found that immigrants’ presence is a net drain on government resources, noting that they eat up between $43 billion and nearly $300 billion more in benefits and support than they pay in taxes, based on 2012 calculations.

The document also found that, while overall employment hasn’t been meaningfully restricted by the levels of immigration seen in the U.S. in recent years, teenagers working low-skill jobs appear to have had their working hours reduced, and those without a high school diploma have seen wage reductions.

A separate 2013 report from George Borjas, an economics and social policy professor at the Harvard Kennedy School, found that the overall immigration population in the U.S. reduces the wages of “natives in competition with immigrants by an estimated $402 billion a year.”

Still, that finding stands in contrast to the results of a 2015 study published in the National Bureau of Economic Research. That undertaking determined “immigrants can raise native workers’ real wages” and that “local workers benefit from the arrival of more immigrants.”

With research for and against immigrants’ economic contributions, policy discussions on the subject are often politically driven. But Ali says his company and many others like it depend on skilled labor, both from domestic workers and from international talent. And he says the U.S. could do a better job of making the immigration process more fair and attractive to keep global companies and workers from going somewhere else.

“Look at health care positions,” he says. “A huge portion of all physicians in the United States are foreign born. Not only is our economy dependent on [immigration], but our health and our lives are dependent on it. We need to communicate that we want [these skilled workers]. I think today, over the last six months or so here with this new administration, we’ve communicated exactly the opposite.”

Countries That Accept the Most Migrants

The European Commission pledged $40 million on July 4 to help Italy manage the surge of migrants arriving from Africa. Since the beginning of 2017, more than 100,000 migrants have made the perilous journey across the Mediterranean Sea to seek refuge in Europe, with Italy initially receiving about 85 percent of migrants, according to the United Nations.

As thousands fleeing unrest in the Middle East and North Africa travel to the European Union, member nations have hesitated to create a quota system that would require each country to resettle a specified amount of people. Italy, struggling with the costs and logistics of housing thousands of refugees, has criticized other EU nations for refusing to shoulder their share of migrants and relieve some of its burden.

According to data from the Organization for Economic Cooperation and Development, the number of new asylum-seekers reached a record of about 1.6 million in 2015, with approximately 22 percent of refugees coming from Syria, by far the leading country of origin. Here is a look at the 10 countries in the 35-member organization that took in the most permanent residents – which includes foreign nationals moving to the country as well as those already there on a permanent basis. The most recent data, coming from 2015 and during the height of the refugee crisis, offers a portrait of global conditions as countries scrambled to handle the flood of migrants.