Undocumented Immigration: The Hidden Pillar of the United States Economy

In the United States, as inflation-adjusted working-class wages stagnate and upward mobility appears inaccessible, the public’s scapegoat has been voiceless undocumented immigrants. In the recent federal election, curbing undocumented immigration to promote economic prosperity became a historically rare bipartisan priority; the American democratic process chose Donald Trump to implement this crackdown via mass deportation. Both parties framed undocumented immigration as economically harmful, leaving voters ignorant of the potentially immense costs of reducing undocumented migration. This gap in political discussion begs the question: to what extent do undocumented immigration and potential mass deportation impact the economic prosperity of the United States? A review of the available literature shows that undocumented immigrants’ contributions to the American economy outweigh their costs, and even if the United States government should curb undocumented migration, mass deportation would be fiscally inefficient compared to potential alternative solutions.

Undocumented Immigrants’ Contributions to the United States Economy

Undocumented immigrants benefit the United States economy because of their contributions to natives’ wages and employment, and the labor they provide to key industries. Christoph Albert, an assistant economics professor at the Collegio Carlo Alberto, found that immigrants accept lower wages than natives, meaning firms that hire immigrants can cut costs, expand, and create jobs, reducing native unemployment (Albert 75). Albert’s claim rests upon immigrants accepting lower wages, likely because the labor market perceives them as less employable. Ali Farashah, senior lecturer at Mälardalen University’s School of Business, Society, and Engineering, corroborates this notion, finding that immigrants face unique struggles finding employment because of language barriers, discrimination, or lack of recognition for foreign credentials (Farashah et al. 486-490). Farashah and Albert’s logic also applies to undocumented immigrants, who face those challenges alongside legal barriers to working in the formal economy. While immigrants help create jobs for natives, immigration skeptics, such as economics professor at the Harvard Kennedy School George Borjas, believe that immigration reduces the wages of low-skill native workers. In Politico Magazine, Borjas wrote that influxes of immigrants without high school diplomas increase the low-skill labour supply, compete for jobs, and decrease the earnings of low-skill natives (Borjas). Since senior demographer at Pew Research Center Jeffrey Passel and senior writer D’Vera Cohn found that undocumented immigrants disproportionately work low-skill jobs (Passel and Cohn), undocumented immigrants, in particular, would be competition to high school dropouts by Borjas’ logic (Borjas). Borjas’ claim assumes that the low-skill labor supply is monolithic, but given that immigrants face unique barriers to employment (Farashah et al. 486-490), immigrants and natives are not perfect substitutes in the labor market. Bocconi University economics professor Gianmarco I. P. Ottaviano, University of California at Davis economics professor Giovanni Peri, and University of California at Merced professor Greg C. Wright found that hiring immigrants alongside natives can improve a firm’s efficiency because the two demographics have comparative advantages in different tasks (Ottaviano et al. 1954-1955). For example, natives’ English fluency gives them an advantage in communication-heavy tasks, while undocumented workers often specialize in manual labour (Ottaviano et al. 1926). Thus, firms that hire immigrants and natives frequently become more efficient, enabling expansion and job creation for natives and immigrants, documented and undocumented.  As additional research by Giovanni Peri and University of California at Davis PhD candidate Alessandro Caiumi suggests, native wages benefit from native-immigrant complementarity because natives, many of whom start as low-skill manual labor workers, often move into more specialized, higher-paying administrative roles when immigrants are hired (Caiumi and Peri). Therefore, Borjas’ logic is invalid; immigrants and natives are not substitutes but complements in the labour market that fill different niches in a firm, and hiring immigrants allows natives to earn more. Additionally, key industries depend on unauthorized immigrants, who comprise 17% of agriculture and 13% of construction workers (Passel and Cohn). Further, according to an article by several senior Pew Research Center writers and researchers, undocumented immigrants work in jobs generally undesirable to non-immigrants (Krogstad et al.), likely because the aforementioned barriers immigrants face in finding employment reduce their alternatives. Thus, mass deportation would cause labor shortages in these industries, driving up food and housing costs. Such price increases could provoke economic stagnation or instability by reducing disposable incomes or forcing people into debt. Overall, undocumented immigration is crucial to an affordable cost of living and beneficial to the wages and employment of natives.

The Costs of Mass Deportation Compared to Alternatives

If undocumented immigration should be reduced, mass deportation is an inefficient solution that will harm the United States economy by causing massive budgetary strain compared to alternative solutions, such as addressing immigration’s root causes. According to the nonprofit advocacy group American Immigration Council, deporting 10 million immigrants would cost $967.9 billion in tax dollars (“Mass Deportation”). Since there are 11.3 million undocumented immigrants in the country, as estimated by Bryan Baker and Robert Warren at the Office of Homeland Security Statistics (Baker and Warren), $967.9 billion underapproximates the cost of deporting the entire undocumented immigrant population. Conversely, Steven Camarota, at the anti-immigration think tank Center for Immigration Studies, estimates that undocumented immigrants produce an average lifetime net fiscal drain of $68,000 (Camarota) or $971.8 billion for all 11.3 million undocumented immigrants in the United States. Since the undocumented population’s lifetime net fiscal drain is similar to the cost of deporting them, whether they are deported or remain in the United States and continue using government services will not meaningfully impact government spending in the short term. However, deportation will become far more burdensome to taxpayers long-term because it will fail to deter future undocumented migration. According to Newsweek senior correspondent Chantal Da Silva, anti-immigrant policies, such as those implemented during Donald Trump’s first presidency, do little to reduce undocumented migration to the United States (Da Silva) because the violence and poverty in immigrants’ origin countries are such significant push factors that punitive policies do not deter migration (Da Silva). Thus, even if the United States deported its current undocumented population, unauthorized migration would likely continue because of those push factors, making mass deportation a massive, recurring cost. Countries like El Salvador, which have reduced poverty and violence, have seen lower emigration rates to the United States (Da Silva), demonstrating that minimizing push factors appears to curb immigration. A 2022 White House press release detailing U.S. government efforts to address immigration’s root causes thus presents a model for reducing undocumented migration (“Report on the U.S.”). This government aid and investment effort, the costs of which mentioned in the press release are under $2 billion, has given hundreds of thousands of people jobs, food security, education, internet, and healthcare, providing hundreds of millions of dollars in funding and assistance to local NGOs that support labour rights and press freedoms, and supplying legal assistance to local prosecutors and citizens to help reduce corruption and human trafficking (“Report on the U.S.”). If, as Da Silva’s article suggests, undocumented immigration will persist as long as significant poverty and violence exist below the U.S.-Mexico border, addressing these root causes is the only way to reduce undocumented immigration. Although available literature evaluating the effectiveness of this strategy is limited since it is so novel, the substantial impact provided by only $2 billion suggests that addressing immigration’s root causes is more cost-effective and sustainable than mass deportation.

Conclusion

The literature reveals that mainstream U.S. political parties are misguided regarding the economics of undocumented immigration. Undocumented immigrants are a pillar of the U.S. economy because of native-immigrant complementarity and their contributions to key industries. If the government seeks to curb undocumented migration, mass deportation will be ineffective, unsustainable, and strain public finances more than the alternative of addressing immigration’s root causes. Political discussion is too often limited to analyzing mainstream politicians’ platforms, restricting the scope of debate, economic research, and future policymaking. This literature review demonstrates that both parties’ immigration policies are flawed and directly counterproductive to their stated goal of promoting economic prosperity.

Works Cited

Albert, Christoph. "The Labor Market Impact of Immigration." American Economic Journal: Macroeconomics, vol. 13, no. 1, 2021, pp. 35-78. JSTOR, www.jstor.org/stable/27113833. Accessed 29 Jan. 2025.

Baker, Bryan, and Robert Warren. "Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2018–January 2022." Office of Homeland Security Statistics, U.S. Department of Homeland Security, Apr. 2024, ohss.dhs.gov/sites/default/files/2024-06/2024_0418_ohss_estimates-of-the-unauthorized-immigrant-population-residing-in-the-united-states-january-2018%25E2%2580%2593january-2022.pdf. Accessed 28 Jan. 2025.

Borjas, George J. "Yes, Immigration Hurts American Workers." Politico Magazine, Politico, Oct. 2016, www.politico.com/magazine/story/2016/09/trump-clinton-immigration-economy-unemployment-jobs-214216/. Accessed 28 Jan. 2025.

Caiumi, Alessandro, and Giovanni Peri. "Immigration's Effect on US Wages and Employment Redux." National Bureau of Economic Research, Apr. 2024, www.nber.org/papers/w32389. Accessed 28 Jan. 2025.

Camarota, Steven A. "The Cost of Illegal Immigration to Taxpayers." Congress.gov, 11 Jan. 2024, www.congress.gov/118/meeting/house/116727/witnesses/HHRG-118-JU01-Wstate-CamarotaS-20240111.pdf. Accessed 28 Jan. 2025.

Da Silva, Chantal. "Why Do Migrants Keep Coming to the U.S. Border, Despite Donald Trump's Hardline Policies?" Newsweek, Newsweek Digital, 12 July 2019, www.newsweek.com/why-migrants-us-border-trump-push-pull-factors-1447784. Accessed 28 Jan. 2025.

Farashah, Ali, et al. "Perceived Employability of Skilled Migrants: A Systematic Review and Future Research Agenda." The International Journal of Human Resource Management, vol. 34, no. 3, 2023, pp. 478-528, https://doi.org/10.1080/09585192.2022.2099226. Accessed 7 Feb. 2025.

Krogstad, Jens Manuel, et al. "A Majority of Americans Say Immigrants Mostly Fill Jobs U.S. Citizens Do Not Want." Pew Research Center, 10 June 2020, www.pewresearch.org/short-reads/2020/06/10/a-majority-of-americans-say-immigrants-mostly-fill-jobs-u-s-citizens-do-not-want/. Accessed 28 Jan. 2025.

"Mass Deportation: Devastating Costs to America, Its Budget and Economy." American Immigration Council, 2 Oct. 2024, www.americanimmigrationcouncil.org/research/mass-deportation. Accessed 28 Jan. 2025.

Ottaviano, Gianmarco I. P, et al. "Immigration, Offshoring, and American Jobs." The American Economic Review, vol. 103, no. 5, 2013, pp. 1925-59. JSTOR, www.jstor.org/stable/42920634. Accessed 29 Jan. 2025.

Passel, Jeffrey S., and D'Vera Cohn. "Industries of Unauthorized Immigrant Workers." Pew Research Center, 3 Nov. 2016, www.pewresearch.org/race-and-ethnicity/2016/11/03/industries-of-unauthorized-immigrant-workers/. Accessed 28 Jan. 2025.

"Report on the U.S. Strategy for Addressing the Root Causes of Migration in Central America." The White House, 19 Apr. 2022, bidenwhitehouse.archives.gov/briefing-room/statements-releases/2022/04/19/report-on-the-u-s-strategy-for-addressing-the-root-causes-of-migration-in-central-america/. Accessed 28 Jan. 2025.