New Report On The Benefits Of Legalization Comes Up Short

A new report released by the Public Policy Institute of California (PPIC) this week attempts to assess the economic benefits of a legalization program on immigrants and native born workers. The report, Immigrant Legalization: Assessing the Labor Market Effects, however, falls short on research and methodology. While the report accurately concludes that legalization would not have a negative impact on native workers’ wages and employment, the report takes a myopic approach to legalization’s impact on wages and mobility of the newly legalized. A wide range of economic studies—studies which consider legalization’s impact in both the long term and in context to comprehensive immigration reform—conclude that legalization does in fact benefit both native-born and immigrants alike.

With broad and sweeping strokes, the PPIC report inaccurately concludes that immigrants who receive legal status do not experience significant upward mobility in their occupation or wages. The problem with this conclusion is that it’s based on the short term impacts of legalization—in the first 3 to 14 months after legalization only—which is far too short a time to witness the sort of upward socioeconomic mobility that legalization would facilitate. The report also relies on a relatively narrow sample set from the New Immigrant Survey (NIS), which consists of individuals who acquired legal permanent resident (LPR) status between May and November 2003 and are not indicative of the overall undocumented population.

According to Dr. Raúl Hinojosa Ojeda of the School of Public Policy and Social Research at the University of California:
The PPIC sample only looks at wages “soon” after legalization, rather than over a short number of years (3-4), let alone over the long term. All the studies which look at medium to long term see significant differences in earnings potentials. Because of its limited database and scope, the PPIC report is not designed to measure the overall economy-wide, multi sector, or longer term impact of Comprehensive Immigration Reform.

The database they use focuses on a narrow group of new LPRs with the very unusual experience of having received legal status during these months due to unusual circumstances. These LPRS are the lucky ones who could obtain legal status within the current restrictive law. Most of them already had a spouse or other relative as US citizen and were thus in highly privileged position with many bright prospects and support networks. They are obviously not a representative sample. Their sample thus does not capture the bulk of undocumented who have been in their repressed status for years and which thus have a greater way to go to realize their earning and productivity potentials.

A report by Manuel Pastor out of the University of Southern California looks at the economic effects of legal status both on unauthorized immigrants and the state of California. Pastor finds “unauthorized Latino immigrants in California…missed out on approximately $2.2 billion in wages and salary income last year alone due solely to their legal status, and the state lost out on the multiplied impacts of that potential income and spending, suggesting a total potential gain of $3.25 billion annually from authorization.”

A recent report from the Immigration Policy Center and Center for American Progress concludes that, in the first three years after legalization, the higher earning power of newly legalized workers would translate “into an increase in net personal income of $30 to $36 billion, which would generate $4.5 to $5.4 billion in additional net tax revenue.” This is a significant increase that reflects upward mobility among legalized workers which takes years, not months, to achieve.

Although the PPIC report is right that a new legalization program for unauthorized immigrants poses no danger to native-born workers and taxpayers, it vastly underestimates the significant economic benefits that would likely flow from legalization. This stems in part from the report’s questionable assumption that roughly 90 percent of all unauthorized immigrants already pay taxes and that legalization therefore would bring few new taxpayers into the system. Most other authoritative estimates suggest that around half of unauthorized immigrants currently pay taxes. Legalization would bring more people into the tax system that PPIC assumes, and would yield increasing tax revenue over time as the wages of newly legalized workers rise. – Immigration Policy Center