Thinking outside the Box: Perspectives on the Economic Myths of Immigration

By Charles Vernon



Undocumented immigration presents a complex and nuanced political issue in the United States. One of the most contentious aspects of the debate related to this issue is how undocumented immigrants affect the U.S. economy. Some of the prevailing myths used to fuel anti-immigrant sentiments in the United States are myths about the economic harm the undocumented do to the U.S. economy.

This article addresses some of these economic myths. Reflecting on widely propagated beliefs, this article is not meant to be an indisputable rebuttal to these myths. Rather, it is designed to be a point of departure for readers to go more deeply into the myths—to spend more time examining these claims made against the undocumented and to critically assess them. It is important that we think outside the box about these issues rather than accepting them as true and damning evidence against the strangers among us, those who so desperately need people of conscience to consider their situation with eyes of compassion and lenses of justice.

After all, there are hundreds of studies that seek to answer the question of whether undocumented immigrants “benefit” or “harm” the U.S. economy. Most attempt to answer that question by crunching hard numbers and fail miserably in giving a critical analysis of the issues inherent in or behind the statistics.

Moreover, so many of the statistics are simply contradictory, depending on the source you consult. For example, the Federation for American Immigration Reform (FAIR) estimates that undocumented immigration imposes a net cost of 45 billion on the United States each year[i]. But, according to a National Academy of Sciences study, immigrants contribute about 10 billion to our economy each year[ii].

So, who to believe? It becomes overwhelming to investigate the methodology of even a few of these studies, let alone synthesize meaningful and accurate conclusions.

My own research and assessment suggests that there are many benefits associated with the presence of the undocumented in the United States which are impossible to quantify and which fail to register in the mainstream debate. (After all, even the conservative Wall Street Journal conducted a survey of leading U.S. economists and concluded that 44 out of 46 believe that undocumented immigration is beneficial to the economy[iii].) And yet, there indeed are also economic costs to their presence—which exist primarily as a result of the exploitative manner by which the undocumented workforce arrives and lives in the Unites States. I believe, however, that when all is said and done, our country sustains its way of life largely due to the undocumented among us.

I’ll consider only a few of the “economic myths of migration”:


Myth: Undocumented Immigrants Do Not Pay Taxes

Most Americans don’t realize that the majority of undocumented workers actually do pay taxes. The majority of undocumented workers pay income tax via the use of falsified or borrowed social security numbers; yet the federal government also allows the undocumented to legally pay taxes—state and federal—using an assigned identification number. In Texas alone, for example, undocumented immigrants contributed 1.6 billion in tax revenues in 2006[iv] .

Also important to consider is the fact that undocumented workers pay sales tax on goods and services purchased in the United States. This fact, however, cannot be easily quantified and is conveniently overlooked by many groups such as the Federation for American Immigration Reform (FAIR).


Myth: Undocumented Immigrants Don’t Contribute to Public Systems like Social Security.


As taxpayers, undocumented workers also pay billions of dollars into the social security fund—which, barring a politically unpalatable change in policy, they will never see. Since W-2 earnings reports with falsified social security numbers cannot be matched to the corresponding undocumented workers, they are also unable to claim tax refunds from the IRS. The New York Times cited a study in April 5, 2005 that stated that undocumented immigrants contribute an annual $7 billion in Social Security subsidies that they will never claim.

Indeed, as America steadily ages and Social Security creeps down the path of bankruptcy, these workers increasingly are helping to keep the system afloat. By one estimate, through the year 2002, undocumented workers had contributed an incredible $463 billion dollars to the social security fund[v].


Myth: Immigrants are a Drain on Our Educational System.

This reality—of immigrants’ contribution to our tax base and social security system—leads to one of the most concrete examples of a vital benefit of immigration: the constant influx of young people into a country which otherwise is aging. In the case of undocumented persons 16 years or older, we frequently receive the additional benefit of workers who have been educated at another country’s expense.

Opponents of immigration often decry the fact that children of the undocumented receive K-12 education at taxpayer expense. It is convenient for immigration opponents that education dollars spent on immigrant children can be roughly estimated, while it is conversely impossible to quantify the future economic benefit of their contributions to American society as educated individuals.

Additionally, proponents of this argument fail to consider the money that the undocumented invest in the educational system. In Texas, for example, undocumented immigrants generated $582.1 million in property tax revenues for schools in 2006[vi].

Adding insult to injury, xenophobes often argue that undocumented children should not to have access to K-12 education; simultaneously, however, they charge that immigrants lack the desire to assimilate into American society and are unwilling to learn English, the “official language” of the United States. Such inherently contradictory arguments leave undocu
mented immigrants in a lose-lose situation.

Myth: Undocumented Immigrants Disproportionately Use Public Services and Programs.

On a first count, it is important to clarify that undocumented immigrants are ineligible for most public services and programs, such as Medicaid, food stamps, and welfare[vii]. Access to such services at state and federal levels require proof of U.S. citizenship, and states and municipalities across the country have been working to enact increasingly stringent measures to prohibit and limit access by the undocumented. It is accurate that all U.S. citizen children—regardless of their parents’ immigration status—are eligible to apply for such benefits based on their families’ economic situations. However, many programs are now even penalizing families (i.e. deducting benefits and/or charging fees in the case of public housing) for each non-citizen member of the family.

Several studies still suggest, however, that immigrants’ contribution to the tax base far outweighs their use of public services. Smith and Edmonston[viii] documented, for example, that over their lifetime, immigrants will put in $80,000 more in taxes than they will take out in public services.

Beyond the numbers associated with this myth, it is also important to consider some of the hypocrisies inherent in our policies and programs with respect to undocumented immigrants. Our own laws, in a large sense, create those costs. For example, it is undeniable that undocumented immigrants place a financial burden on hospital emergency rooms, particularly in the border states of California, Arizona, and Texas. At the same time, the reality is that the vast majority of the undocumented has no reasonable access to preventative medical care. They—like most of the uninsured and under-insured in our country—wait until their conditions worsen to the point of emergency, rendering the treatment vastly more expensive than it would have been at a preventative level. If we could provide the undocumented—living and working as full members of our society—with access to preventative care, as part of both a legalization process and the implementation of a universal coverage health care program, we would dramatically reduce the burden on our emergency rooms.

In that same vein, we also have to consider the implications of needlessly forcing a large population of people to engage in very dangerous activities, such as crossing scorching deserts for days with insufficient water, swimming across rivers with dangerous currents, jumping aboard fast moving trains, and, after running those gauntlets, working at hazardous job sites run by unscrupulous, exploitative employers. It seems in poor taste for Americans to make it as difficult and dangerous as possible for willing workers to come and fulfill vital roles in major industries, and then to turn around and complain about the medical costs associated with that senseless difficultly and danger.

During my time at Annunciation House, we hosted a woman whose leg was cut off by a train while she attempted to hide from the Border Patrol. As a single mother from Mexico City, she had crossed the border to offer herself as grist for our economic mill. It seems that the least we could do as a country is offer such a person a secure way to cross our border. However, perhaps there is an iota of justice, albeit a very small one, in the fact that we as taxpayers are now responsible for her tens of thousands of dollars in medical bills.

Myth: Undocumented Immigrants Don’t Bolster Our Economy but Send All Their Money to Their Country of Origin.

One frequently hears the complaint that the undocumented “send all their money back to Mexico” rather than putting it back into the U.S. economy. This seems hardly to be the case. Countless studies point to the significant contributions of immigrants’ consumption in the communities where they work and reside. In Chicago, for example, consumption revenues generated by undocumented immigrants create over 31,000 local jobs and increase the gross regional product by $5.45 billion each year[ix].

At the same time, it is certainly true that Mexicans and Central Americans living in the United States provide vital economic support for their countries of origin. In fact, remittances from the undocumented back to their families in Mexico are estimated to be around 20 billion dollars a year[x]. The situation is similar in the four Central American nations of Honduras, El Salvador, Guatemala, and Nicaragua, which according to one study, combined to receive 7 billion in remittances in the year 2004[xi].

While it is beyond the scope of this article, I often have contemplated the parallels between remittances and the drug trade. In both cases, our vast American appetites—whether for cheap consumer goods or illegal drugs—have created a massive cash flow back into Mexico. The cash flow helps to keep the Mexican economy afloat, while simultaneously having a destabilizing effect on Mexican society (endemic separation of families), and on Mexican politics (endemic corruption), respectively.


Myth: Undocumented Immigrants Are a Drain on the Economy and Take the Jobs of U.S. Natives.

A terse and somewhat crass response to this myth is that “cheap labor saves us money”—and the undocumented do indeed provide U.S. employers with cheap labor. Studies involving hard numbers take advantage of the lack of quantification inherent in any analysis of the true value of undocumented labor, however. In other words, it is impossible to quantify the assured billions upon billions of dollars that Americans have saved on all manner of goods and services rendered more affordable as a result of the cheap, at times bordering on slave, labor pool of undocumented immigrants. Employers certainly profit from the low wages they can get away with paying to the undocumented, but just as surely, they pass savings on to consumers.

Our guests at Annunciation House frequently are forced to accept temporary jobs in the greater El Paso area; these jobs are usually pay appallingly low wages. Guests report that for a full day’s work in construction, they earn as little as $25 and seldom more than $40. We hear numerous stories from guests whose employers simply don’t pay them. Being undocumented and living in an area saturated with the Border Patrol, our guests have virtually no recourse in such situations. More stable employment is usually available further into the interior of the United States, but seldom to the point where the undocumented are paid anything approaching the true value of their labor.

Studies clearly show that undocumented workers serve to shore up the work force for important industries in the United States. By one estimate, undocumented workers hold 24% of all farming jobs, 17% of cleaning jobs, 36% of insulation installation, 29% of roofing and drywall installation, and 27% of
food processing jobs[xii]. The net effect is that such industries are able to flourish, instead of struggling to stay afloat, which has a ripple effect on the expansion of our economy as a whole. In the words of Justin Akers Chacon, “These workers comprise the vast connective tissue that allows the American economy to function.”[xiii] Indeed, our experience corroborates research findings that state, on average, that immigration is beneficial to U.S. natives, as immigrants tend to complement rather than substitute natives, thereby increasing native productivity and income[xiv].




In sum, the above described myths that are so widely propagated—and narrowly analyzed—only serve to deny the tremendous contributions immigrants make to our economy and to the social fabric of the United States. We have to continue to think outside the box about these myths and falsehoods and share the complexity of information related to their realities.

We cannot in good conscience continue to exploit the undocumented for our economic benefit, then turn around and use them as political scapegoats and treat them as second class citizens, or worse. It’s far past time that we recognize their enormous contributions to our morally and economically complicated nation, and accordingly welcome them into the fabric of our society.






[iii] Wall Street Journal, “Illegal Immigrants and the Economy,” April 13, 2006


[iv] Strayhorn, C.K. “Undocumented Immigrants in Texas,” Office of the Comptroller, Texas: Special Report, 2006


[v] “What It Means For Your Wallet,” Time, April 10, 2006


[vi] Strayhorn, 2006


[vii] “Undocumented Immigrants: Myth and Reality,” Urban Institute, 2005


[viii] Smith, J.P. and B. Edmonston, The New Americans: Economic, Demographic, and Fiscal Effects of Immigration. Washington, D.C.: National Academy Press, 1997.


[ix] Mehta, C., et al, “Chicago’s Undocumented Immigrants: An Analysis of Wages, Working Conditions, and Economic Contributions,” University of Illinois Chicago Center for Urban Economic Development, 2002.


[x] “Legislators Go After Remittance Monies,” Frontera NorteSur News, Februrary 19, 2006


[xi] “Remittances driving Central American Economies,” Frontera NorteSur News, April 17, 2006




[xiii] No One Is Illegal, Justin Akers Chacon and Mike Davis, Chicago, Haymarket Books, 2006


[xiv] Executive Office of the President, Council of Economic Advisers, “Immigration’s Economic Impact,” 2007



Charles Vernon is a school bus driver from Boulder, Colorado. He volunteered last summer with Tucson-based No More Deaths, and has been working at Annunciation House since April 2007.


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