By Ernesto Castañeda, American University; The Conversation
Several studies indicate that remittances constitute 17.5% of immigrants’ income. (Pexels Photo)
Donald Trump has vowed to deport millions of immigrants if he is elected to a second term, claiming that, among other things, foreign-born workers take jobs from others. His running mate JD Vance has echoed those anti-immigrant views.
Researchers, however, generally agree that massive deportations would hurt the U.S. economy, perhaps even triggering a recession.
Social scientists and analysts tend to concur that immigration — both documented and undocumented — spurs economic growth. But it is almost impossible to calculate directly how much immigrants contribute to the economy. That’s because we don’t know the earnings of every immigrant worker in the United States.
We do, however, have a good idea of how much they send back to their home countries – more than US$81 billion in 2022, according to the World Bank. And we can use this figure to indirectly calculate the total economic value of immigrant labor in the U.S.
Economic contributions are likely underestimated
I conducted a study with researchers at the Center for Latin American and Latino Studies and the Immigration Lab at American University to quantify how much immigrants contribute to the U.S. economy based on their remittances, or money sent back home.
Several studies indicate that remittances constitute 17.5% of immigrants’ income.
Given that, we estimate that the immigrants who remitted in 2022 had take-home wages of over $466 billion. Assuming their take-home wages are around 21% of the economic value of what they produce for the businesses they work for – like workers in similar entry-level jobs in restaurants and construction – then immigrants added a total of $2.2 trillion to the U.S. economy yearly.
That is about 8% of the gross domestic product of the United States and close to the entire GDP of Canada in 2022 – the world’s ninth-largest economy.
Immigration strengthens the US
Beyond its sheer value, this figure tells us something important about immigrant labor: The main beneficiaries of immigrant labor are the U.S. economy and society.
The $81 billion that immigrants sent home in 2022 is a tiny fraction of their total economic value of $2.2 trillion. The vast majority of immigrant wages and productivity – 96% – stayed in the United States.
Remittances from the U.S. represent a substantial income source for the people who receive them. But they do not represent a siphoning of U.S. dollars, as Trump has implied when he called remittances “welfare” for people in other countries and suggested taxing them to pay for the construction of a border wall.
The economic contributions of U.S. immigrants are likely to be even more substantial than what we calculate.
For one thing, the World Bank’s estimate of immigrant remittances is probably an undercount, since many immigrants send money abroad with people traveling to their home countries.
In prior research, my colleagues and I have also found that some groups of immigrants are less likely to remit than others.
One is white-collar professionals – immigrants with careers in banking, science, technology and education, for example. Unlike many undocumented immigrants, white-collar professionals typically have visas that allow them to bring their families with them, so they do not need to send money abroad to cover their household expenses back home.
Immigrants who have been working in the country for decades and have more family in the country also tend to send remittances less often.
Both of these groups have higher earnings, and their specialized contributions are not included in our $2.2 trillion estimate.
Additionally, our estimates do not account for the economic growth stimulated by immigrants when they spend money in the U.S., creating demand, generating jobs and starting businesses that hire immigrants and locals.
For example, we calculate the contributions of Salvadoran immigrants and their children alone added roughly $223 billion to the U.S. economy in 2023. That’s about 1% of the country’s entire GDP.
Considering that the U.S. economy grew by about 2% in 2022 and 2023, that’s a substantial sum.
These figures are a reminder that the financial success of the U.S. relies on immigrants and their labor.
Ernesto Castañeda, Professor, American University
This article is republished from The Conversation under a Creative Commons license. Read the original article.
