US Immigrants - Friends or Fiends

1. U.S.
Immigrants:
Friends
or
Fiends?
www.theevansgroupllc.com
Chip
Evans,
Ph.D.,
Sola
Lamikanra,
Ph.D.,
Robert
Klemyk
and
Dziko
Thunde,
MBA

2. U.S. Immigrants: Friends or Fiends?
The
average
American
is
familiar
with
the
phrase
“we
are
a
nation
of
immigrants.”
There
is
also
common
agreement
that
the
unique
opportunity
for
the
United
States’
rapid
industrialization
and
economic
development,
which
resulted
in
its
rise
to
becoming
the
preeminent
global
superpower,
lies
in
the
collective
advantage
that
immigrants
provided
the
country.
The
value
of
immigrants
to
prosperity
of
the
nation
was
acknowledged
for
the
first
time
during
Abraham
Lincoln’s
administration
in
an
1868
Congressional
report
which
stated
that
“the
rapid
growth
and
prosperity
of
the
country
greatly
depends
upon
foreign
emigration”
and
that
immigrants
would
aid
the
American
dream
of
“making
this
republic
the
freest
and
the
most
powerful
empire
of
the
world)”1.
The
debate
over
the
value
of
immigrants
and
their
impact
on
the
socio-­‐
economic
wellbeing
of
the
U.S.
and
the
number
of
immigrants
that
should
be
allowed
into
the
country
has,
however,
taken
different
turns
over
the
years
by
the
“new
natives”
who
sometimes
see
immigration
as
threatening
to
their
prosperity
and
to
the
American
dream.
For
several
years,
different
formulas
have
been
used
to
determine
the
number
of
immigrants
from
each
region
of
the
world
that
should
be
allowed
to
come
to
the
U.S.
While
most
people
would
agree
that
some
level
of
immigration
should
be
allowed,
there
continues
to
be
disagreement
on
the
number
and
types
of
people
to
allow
into
the
country.
Immigration
phobia
is
often
driven
by
political
concerns
and
posturing
that
play
on
concerns
of
some
Americans
that
immigrants
will
overwhelm
public
assistance
programs,
“steal”
jobs
from
Americans,
cause
major
demographic
shifts
and
increase
the
crime
rate.
It
is
also
common
to
ascribe
some
of
the
blame
of
the
most
recent
worst
recession
since
the
Great
Depression
to
the
influx
of
migrants
that
have
decreased
demand
to
hire
Americans.
Facts
are
often
ignored
and/or
manipulated
in
emotionally
charged
arguments
on
the
topic.
Influx
of
over
11
million
undocumented
immigrants
over
a
number
of
years
has
further
elevated
the
stakes
on
how
Americans
view
the
newer
migrants,
their
value
to
society,
and
what
to
do
with
them
and
with
children
of
illegal
immigrants.
States
with
the
highest
illegal
immigrant
populations
are
believed
to
be
California,
Texas,
Florida,
Illinois
and
New
York2.
The
difficulty
in
passing
a
bill
that
in
effect
acknowledges
the
inevitable
fact
that
these
immigrants
are
already
well
entrenched
within
the
socio-­‐economic
fabric
of
the
U.S.
underscores
the
assertion
that
politics
and
fear
of
losing
power
sometimes
prevails
over
what
is
best
for
the
country.
Estimate
of
taxes
paid
by
undocumented
immigrants
in
2010
was
$11.2
billion.
This
includes
$1.2
billion
in
income
taxes,
$1.6
billion
in
property
taxes,
and
$8.4 billion
in
sales
taxes3.
Although
illegal
immigrants
were
initially
concentrated
in
agriculture,
by
2006
they
appeared
to
represent
24%
of
all
workers
employed
in farming
occupations,
17%
in
cleaning,
14%
in
construction
and
12%
in
food
preparation4.
Most
Americans,
across
all
demographic
and
political
groups
already
support
establishing
a
pathway
for
illegal
immigrants
already
in
the
country
to
stay
and
ultimately
1
2
3
4
http://voices.yahoo.com/the-contributions-immigrants-united-states-88831.html?cat=37
http://cis.org/node/3877#illegal
http://www.immigrationpolicy.org/just-facts/unauthorized-immigrants-pay-taxes-too
http://knowledge.wharton.upenn.edu/article/the-immigration-debate-its-impact-on-workers-wages-and-employers/
Chip
Evans,
Ph.D.
www.theevansgroupllc.com

3. U.S. Immigrants: Friends or Fiends?
acquire
citizenship5.
Redistricting
that
occurred
after
the
2010
elections
resulted
in
House
members
representing
narrower,
more
homogenous
districts
than
the
senators
who
run
statewide.
The
lack
of
consequence
for
not
working
across
party
lines
and
the
need
by
the
legislators
to
win
the
next
election,
particularly
in
very
conservative
districts,
further
complicates
the
immigration
debate.
A
very
interesting
aspect
of
this
debate
is
that
the
far
right
conservatives
often
tend
to
be
the
most
resistant
group
to
immigration
reform.
This,
in
fact,
is
a
shift
from
their
doctrine,
as
there
is
a
preponderance
of
evidence
that
immigration,
in
several
ways,
helps
to
maintain
American
global
superiority
and
its
status
as
a
global
superpower.
This
group
interestingly
sees
their
“brand”
as
being
defined
by
better
ownership
of
the
concept
of
American
exceptionalism.
Of
the
three
planks
that
guide
conservative
philosophy:
preservation
of
traditional
institutions/beliefs,
distrust
of
government
activism,
and
opposition
to
sudden
change,
the
latter
seems
to
be
the
only
one
that
could
be
used
to
explain
their
heightened
resistance
to
immigration
reform.
The
change
in
demography
of
U.S.
residents
has,
however,
not
been
sudden,
as
the
trend
over
several
years
indicates
that
the
country
progressively
gets
larger
with
an
aging
population,
and
more
racially
and
ethnically
diverse6.
Ethnic
minorities
are
the
main
victims
of
anti-­‐immigrant
bias,
which
often
includes
a
perception
by
the
far
right
that
these
are
uneducated
lower
class
individuals
“invading”
the
country.
The
shift
in
status
quo
and
fear
of
the
potential
weakening
of
power
previously
held
by
a
sector
of
the
population
that
would
result
from
the
inevitable
demographic
trend
seems
to
be
of
more
concern
than
benefits
from
immigration
that
far
outweigh
any
possible
downside.
Technology
is
making
the
world
smaller
and
factors
that
impact
strong
leadership
in
the
global
economy
are
rapidly
changing.
Failure
to
embrace
a
comprehensive
immigration
agenda
could
weaken
what
is
arguably
the
country’s
uniqueness
and
strongest
competitive
advantage.
The
critical
importance
of
small
businesses
to
the
American
economy
and
its
stability
is
quite
evident.
They
are
by
far
the
stimulus
for
entrepreneurship
and
creativity,
and
account
for
over
60%
of
all
private
non-­‐farm
jobs.
The
U.S.
has
over
twenty
seven
million
small
businesses
generating
about
50%
of
the
gross
domestic
product
(GDP).
The
millions
of
individuals
that
started
small
businesses
in
the
U.
S.
helped
shape
the
business
world
to
make
it
what
it
is
today7.
Small
businesses
considerably
impact
the
economy
through
job
creation
and
innovation.
The
share
of
U.S.
small
businesses
owned
by
immigrants
grew
by
50%
since
1990,
with
a
fifth
of
the
small
business
owners
born
outside
the
country.
Immigrants
create
businesses
at
higher
rates
than
American
born
workers,
particularly
in
the
high-­‐tech
sector.
They
were
key
founders
in
one-­‐quarter
of
all
U.S.
high-­‐tech
startups
between
1995
and
2005,
including
over
half
of
high-­‐tech
start-­‐ups
in
the
Silicon
Valley
during
that
period.
Small
5
http://www.people-press.org/2013/03/28/most-say-illegal-immigrants-should-be-allowed-to-stay-but-citizenship-ismore-divisive/
6
Shrestha, B.L and Heisler, E.J. The Changing Demographic Profile of the United States. CRS Report for Congress
March 31, 2011
7
http://www.sba.gov/content/small-business-economy-2010
Chip
Evans,
Ph.D.
www.theevansgroupllc.com

4. U.S. Immigrants: Friends or Fiends?
businesses
owned
by
immigrants
employed
an
estimated
4.7
million
people
in
2007,
and
have
generated
more
than
$776
billion
annually8.
Immigrants
started
25
percent
of
public
U.S.
companies
that
were
backed
by
venture
capital
investors.
This
list
includes
Google,
eBay,
Yahoo!
Sun
Microsystems,
and
Intel9.
A
very
recent
and
remarkable
American
story
is
the
$19
billion
purchase
of
WhatsAPP
from
Jan
Koum
and
Brian
Acton
by
Facebook.
Koum,
who
migrated
at
the
age
of
16
from
Kiev,
Ukraine
right
after
the
break
up
of
the
Soviet
Union,
and
later
a
college
dropout,
once
lived
on
food
stamps
for
a
number
of
years
with
his
single
mother.
He
ended
up
co-­‐founding
WhatsAPP
in
2009.
The
level
of
innovation
and
creativity
is
evidenced
by
the
fact
that
with
only
55
employees,
WhatsAPP
generates
an
estimated
$1
billion
in
annual
sales.
In
spite
of
the
widely
held
belief
that
immigrants
and
offshoring
are
reducing
job
opportunities
of
American-­‐born
workers,
studies
indicate
that
sectors
with
a
larger
increase
in
global
exposure
(through
offshoring
and
immigration)
fared
better
than
those
with
less
exposure
in
terms
of
native
employment
growth10.
A
comprehensive
study
by
the
Centre
for
Economic
Research
of
the
London
School
of
Economics
and
Political
Science
for
example,
recently
reported
results
of
tested
predictions
of
a
model
on
U.S.
data
from
58
manufacturing
industries
over
the
years
2000-­‐2007.
Their
results
indicate
a
positive
productivity
effect
and
increased
native
employment
as
a
result
of
immigration.
Their
results
are
consistent
with
the
fact
that
less
educated
immigrants
are
employed
in
the
more
manual-­‐routine
tasks
and
on
average
do
not
compete
within
the
occupations
in
which
the
bulk
of
native
workers
are
employed,
which
tend
to
be
more
non-­‐routine
and
cognitive
intensive.
Immigrants,
they
found,
compete
more
with
offshore
workers.
This
indicates
that
increased
immigration
would
induce
firms
to
move
production
from
offshore
workers
to
immigrants.
At
the
same
time,
immigration
seems
to
be
associated
with
cost-­‐savings
and
a
corresponding
increase
in
productivity
so
that
its
aggregate
effect
on
the
level
of
employment
of
low-­‐skilled
native
American-­‐born
workers
is
positive.
The
research
also
found
increased
offshoring
reduces
the
share
of
American-­‐born
workers’
employment
in
a
sector.
However,
it
also
stimulates
overall
sector
employment
so
that
it
has
no
overall
impact
on
the
level
of
native
American
employment.
The
effect
of
immigration
over
a
period
from
1990
to
2006
was
a
small
positive
effect
on
the
wages
of
American-­‐born
workers
with
no
high
school
degree
(between
0.6%
and
+1.7%),
and
the
average
American
wages
(+0.6%).
Immigration,
however,
had
a
substantial
negative
effect
on
wages
(-­‐6.7%)
of
previous
immigrants11.
Less
educated
foreign-­‐born
workers
specialize
in
occupations
intensive
in
manual-­‐physical
labor
skills,
while
American-­‐born
workers
pursue
jobs
more
intensive
in
communication-­‐language
tasks.
The
complementary
nature
of
skills
can
explain
why
economic
analyses
find
only
modest
wage
consequences
of
immigration
for
less
8
http://www.fiscalpolicy.org/immigrant-small-business-owners-FPI-20120614.pdf
http://www.nvca.org/index.php?option=com_content&view=article&id=254:american-made-the-impact-ofimmigrant-entrepreneurs-and-professionals-on-us-competitiveness&catid=40:research
10
http://cep.lse.ac.uk/pubs/download/dp1147.pdf
9
11
Gianmarco, I. Ottaviano, P. and Giovanni, P. Rethinking the effect of Immigration on Wages. Journal of the
European Economic Association, Volume 10, Issue 1, pages 152–197, February 2012
Chip
Evans,
Ph.D.
www.theevansgroupllc.com

5. U.S. Immigrants: Friends or Fiends?
educated
American-­‐born
workers12.
In
urban
areas,
for
example,
economic
growth
has
a
direct
correlation
with
increases
in
an
immigrant’s
share
of
the
work
force13.
Most
people
are
more
tolerant
of
allowing
highly
skilled
immigrants
into
the
country
because
of
the
belief
that
they
contribute
to
economic
growth,
unlike
low-­‐skilled
workers
that
are
perceived
to
be
a
burden
on
public
services
and
a
drag
to
the
economy.
The
fastest
economic
growth
between
1990
and
2008,
however,
were
not
in
cities
that
primarily
attracted
high-­‐wage
foreigners.
They
occurred
in
places
like
Atlanta,
Denver
and
Phoenix
that
attracted
large
influxes
of
immigrants
with
a
mix
of
occupations,
including
low-­‐wage
and
blue-­‐collar
workers.
In
Denver,
where
the
economy
doubled
between
1990
and
2008,
63%
of
immigrants
worked
in
jobs
on
the
lower
end
of
the
pay
scale.
In
light
of
this,
it
seems
logical
for
Congress
to
examine
the
level
of
priority
given
to
high-­‐skilled,
high-­‐earning
immigrants
and
narrower
channels
for
low-­‐wage
workers.
Research
conducted
at
UCLA
also
shows
that
legalizing
our
nation’s
undocumented
immigrant
population
and
reforming
our
legal
immigration
system
would
add
a
cumulative
$1.5
trillion
to
U.S.
GDP
over
a
decade14.
The
Center
for
American
Progress
report
indicates
that
comprehensive
immigration
reform
would
help
to
create
up
to
900,000
new
jobs
within
three
years
of
reform
from
increased
consumer
spending.
An
interesting
trend
that
is
worth
mentioning
is
the
potential
impact
of
the
rising
wages
in
China.
According
to
Bloomberg
BusinessWeek,
adjusted
wages
for
Mexico’s
superior
worker
productivity
are
likely
to
be
30%
lower
than
in
China
by
201515.
Currently,
the
main
concern
is
that
Mexico
poses
a
high
illegal
migration
problem
to
the
U.S.
because
of
its
close
proximity
and
poverty
in
the
country.
The
lower
wages
in
Mexico
relative
to
China
and
a
number
of
other
considerations,
including
its
proximity
to
the
U.S.,
will
soon
make
the
country
more
attractive
for
outsourcing
than
China.
The
U.S.,
instead
of
fighting
illegal
immigration
from
Mexico,
will
now
be
buying
from
the
country
as
an
outsourcing
nation.
The
shift
in
U.S.
employment
patterns
appears
to
be
more
related
to
deregulation
of
major
sectors
of
the
economy
and
reductions
in
social
spending
started
by
President
Reagan
than
immigration16.
It
is
no
coincidence
that
the
rise
in
the
Chinese
economy
began
during
the
Reagan
presidency.
Implementation
of
these
policies
by
Reagan
and
his
successors
were
accompanied
by
deindustrialization,
plant
closures
and
outsourcing,
as
U.S.
companies
took
advantage
of
opportunities
for
cheaper
products
manufactured
outside
the
USA.
High
paying
manufacturing
jobs
were
lost
and
low-­‐paying
service
sector
jobs
increased.
The
North
American
Free
Trade
Agreement
(NAFTA),
for
example,
was
packaged
as
a
treaty
that
would
help
create
good-­‐paying
American
jobs.
President
Clinton,
who
signed
the
bill
negotiated
by
George
H.W.
Bush,
predicted
that
it
would
increase
the
trade
surplus
with
Mexico.
NAFTA,
in
effect,
12
Peri, Giovanni, and Chad Sparber. 2009. "Task Specialization, Immigration, and Wages." American Economic
Journal: Applied Economics, 1(3): 135-69.
13
http://www.nytimes.com/2010/04/16/us/16skilled.html?pagewanted=1&_r=0
14
http://www.americanprogress.org/wp-content/uploads/2012/09/immigrationeconreport3.pdf
15
http://www.businessweek.com/articles/2013-06-27/four-reasons-mexico-is-becoming-a-global-manufacturingpower
16
http://www.beacon.org/client/PDFs/4156_excerpt.pdf
Chip
Evans,
Ph.D.
www.theevansgroupllc.com

6. U.S. Immigrants: Friends or Fiends?
provided
new
privileges
and
protections
for
foreign
investors
that
encouraged
offshoring
through
elimination
of
risks
previously
encountered
when
locating
manufacturing
in
low-­‐wage
countries.
The
result
of
this
has
been
the
conversion
of
an
otherwise
trade
surplus
of
$181
billion
into
a
U.S.
trade
deficit
with
NAFTA
partners
Mexico
and
Canada,
one
million
net
U.S.
jobs
lost
because
of
NAFTA
and
a
doubling
of
immigration
from
Mexico17.
American
companies
and
consumers,
with
help
from
government
policies,
thus
created
an
unsustainable
high
profit-­‐
cheap
product
model.
It
has,
however,
also
been
suggested
that
automation
might
have
a
greater
impact
on
loss
of
manufacturing
jobs
in
the
U.S.
than
offshoring,
and
that
increasingly
sophisticated
machines
will
ultimately
displace
low-­‐skilled
foreign
labor
as
well18.
The
main
advantage
that
the
United
States
has
over
all
other
countries
in
the
midst
of
the
rapidly
changing
global
economy
is
its
unmatched
ability
to
innovate.
For
this
reason,
the
most
innovative
companies
have
become
activists
in
the
effort
to
encourage
increased
legal
immigration.
Our
most
respected
innovators
and
entrepreneurs,
including
the
late
Steve
Jobs
argue
in
favor
of
attracting
and
retaining
the
brightest
foreign-­‐born
scientists
and
engineers
and
that
the
low
levels
of
H-­‐1B
visas
issued,
particularly
for
highly
talented
individuals
trained
in
the
U.S.,
constitutes
an
immigrant
exodus
that
is
a
reverse
brain
drain.
These
U.S.
trained
talents
when
sent
back
will
end
up
competing
against
the
United
States
from
their
respective
countries
earning
lower
and
more
competitive
wages.
A
recent
study
shows
that
a
percentage
of
U.S.
companies
funded
by
immigrants
declined
from
25.3%
to
24.3%
since
2005,
and
the
proportion
of
immigrant-­‐founded
start-­‐ups
in
the
Silicon
Valley
fell
from
52.4%
to
43.9%
over
the
same
period
of
time19.
This
is
a
trend
that
must
not
be
allowed
to
continue.
Mark
Zuckerberg
correctly
noted
that
the
U.S.
has
a
strange
immigration
policy
for
a
nation
of
immigrants,
and
that
it
is
“unfit
for
today’s
world”20.
The
joint
effort
by
Zuckerberg,
top
executives
and
founders
from
Google,
Yahoo,
LinkedIn,
and
several
top
venture
capitalists
to
influence
the
U.S.
immigration
policy,
is
an
indication
of
the
urgent
need
to
leverage
top
talents
globally
that
would
help
retain
the
American
entrepreneurial
leadership
in
this
rapidly
changing
global
economy.
The
most
important
value
of
many
immigrants
to
the
U.S.
economy
appears
to
be
in
innovation.
Despite
making
up
only
16
percent
of
the
resident
population
holding
a
bachelor’s
degree
or
higher,
immigrants
represent
33
percent
of
engineers,
27
percent
of
mathematicians,
statisticians,
and
computer
scientists,
and
24
percent
of
physical
scientists21.
Additionally,
in
2011,
foreign-­‐born
inventors
were
credited
with
contributing
to
more
than
75
percent
of
patents
issued
to
the
top
10
patent-­‐producing
universities22.
This
in
turn
has
been
shown
to
17
18
19
20
21
22
http://www.citizen.org/documents/NAFTA-at-20.pdf
http://www.cnn.com/2012/07/23/opinion/salam-economy-woe/
http://business.time.com/2012/10/11/vivek-wadhwa-stop-the-u-s-highly-skilled-immigrant-exodus-now/
http://business.time.com/2013/04/12/why-mark-zuckerberg-is-pushing-in-immigration-reform/#ixzz2tnqKLGc2
http://www.census.gov/prod/2013pubs/acs-24.pdf
http://fiscalpolicy.org/immigrant-small-business-owners-a-significant-and-growing-part-of-the-economy
Chip
Evans,
Ph.D.
www.theevansgroupllc.com

7. U.S. Immigrants: Friends or Fiends?
help
increase
the
innovation
rate
among
American
born
workers,
boosting
overall
patent
activity,
attracting
additional
resources
and
increased
areas
of
specialization23.
Rather
than
blame
job
losses
on
immigration
for
which
there
is
no
evidence,
and
real
data
indicates
otherwise,
we
should
focus
on
the
real
causes
of
the
downturn
in
the
economy
and
consequent
loss
of
jobs.
Two
unfunded
wars
in
Iraq
and
Afghanistan
were
significant
contributors
to
the
economic
down
turn.
In
addition
to
the
actual
expenditures
that
would
end
up,
according
to
Harvard
University’s
Kennedy
School
of
Government,
to
be
as
much
as
$6
trillion24,
war
drains
resources
from
productive
use,
which
in
turn
reduces
productive
capacity
of
the
economy.
Increased
military
spending
that
occurred
also
caused
contributed
to
a
large
trade
deficit,
with
potential
trade
deficits
of
almost
$90
billion
after
ten
years,
over
$130
billion
after
twenty
years,
and
more
than
$2
trillion
to
the
U.S.
foreign
indebtedness
over
a
twenty
year
period25.
According
to
the
Institute
for
Economics
and
Peace26,
the
recent
U.S.
wars,
which
were
entirely
financed
by
debt,
unlike
other
wars
they
studied,
are
“having
severe
unsustainable
structural
imbalances
in
its
government
finances."
The
biggest
contributor
to
the
recession
and
massive
shedding
of
jobs,
however,
is
the
collapse
of
the
housing
bubble
that
rapidly
destroyed
almost
$2.6
trillion
in
housing
bubble
wealth
in
the
country.
Prior
to
these
events,
government
policies
such
as
those
focused
on
deregulation
and
NAFTA,
and
consumer
demand
for
cheap
products,
started
the
trend
that
finally
succumbed
to
the
effects
of
the
wars
fought
on
“credit
card”
and
the
collapse
of
the
housing
bubble.
Conclusions
from
the
foregoing
lead
to
the
fact
that
a
common
sense
immigration
strategy
would
be
beneficial
for
the
U.S.
and
Americans.
While
all
countries
should
have
adequate
control
of
their
borders
and
who
they
allow
into
the
country,
a
system
and
process
that
works
best
for
the
country
through
leveraging
local
and
global
talents
and
resources
need
to
be
adopted.
The
world
is
getting
much
smaller,
moving
much
faster
and
talents
are
presenting
themselves
through
various,
sometimes-­‐unexpected,
avenues.
No
one
seeing
Jan
Koum,
a
16
year
old
immigrant
with
a
single
mother
from
Ukraine
on
public
assistance
would
have
imagined
that
he
would
be
founding
a
company
that
would
sell
for
$19
billion
20
years
later.
We
submit
that
the
U.S.,
with
its
current
immigration
policy,
is
not
adequately
positioning
itself
for
sustained
superiority
in
the
global
economy
beyond
the
21st
century.
23
http://www.aei.org/speech/society-and-culture/immigration/immigration-and-its-contribution-to-our-economicstrength/
24
http://www.hks.harvard.edu/news-­‐events/news/articles/bilmes-­‐iraq-­‐afghan-­‐war-­‐cost-­‐wp
25
26
The Recession and the War in Iraq CEPR Fact Sheet, The Cost of War
http://economicsandpeace.org/
Chip
Evans,
Ph.D.
www.theevansgroupllc.com