Immigration vs. Florida's Economy

Immigration vs. Florida's Economy

ECONOMY by Stephen O. Morrell | Florida TaxWatch

Immigrants are a cornerstone of the American Dream, often starting on the bottom of the economic ladder and by hard work, determination and perseverance, prospering and becoming fully assimilated into the society within a few generations. The adage that we are "a nation of immigrants" is neither trite nor a cliche but a historic and unique characteristic of our country - a feature that without doubt has contributed to America's prominence in the world.

While the importance of immigration to America is not controversial, immigration policy is another matter. Reforms to immigration policy have potentially significant consequences for the national and Florida economy. As elected officials debate this issue, it is a good time to review what we know and don't know about the economic aspects of immigration.

Here are a few of the salient facts and issues:

More immigrants, same areas

The first table indicates that over the past 15 years, on average, at least 1.06 million immigrants have been entering the country each year. Foreign-born now represent about 12% of the total U.S. population, an increase of 50% since 1990. Estimates for the undocumented portion of the foreign-born population vary widely but are thought to be in the 10-million to 13-million ranges.

In contrast, Florida's foreign born account for about 18% of the state's population - much higher than for the nation. However, Florida's foreign born have been a sizable component of our state's population for a considerably longer time than is the case nationally.

The sheer increase in the number of immigrants in a relatively short time span nationally is likely the most notable change from prior episodes and the change provoking the most debate. The growth in Florida's foreign-born population has taken place over the last 45 years rather than the last 15 years. Florida's more gradual increase in foreign born has allowed for smoother adjustments.

The second table illustrates the five states with the largest absolute population gains from 2000 to 2005, and the components of these gains. Nationally, 42% of our population increase is because of immigration. This percent ranges from a whopping 63% in California to 22% in both Arizona and Georgia. Florida is in the middle, with a five-year growth of 528,085, or 28% of its new residents coming from other countries outside the United States.

Fiscal impacts vary

The consensus of economic research is that immigration provides considerable economic benefits. The key economic issue is a technical one, revolving around whether employers make additional investments in productivity, boosting technologies and equipment in response to an expanding supply of workers associated with immigration.

If so, then economic growth, jobs, incomes and wages will expand. If not, then jobs may increase but wages may even fall.

Overall, the research indicates the former has occurred, especially as it pertains to newly arrived workers with high levels of education, skills and work experiences.

Highly educated and skilled immigrants appear not only to provide substantial benefits to the economy but also make large positive contributions to the public finances. And, while the economic impact of low-skilled immigrants is positive, the fiscal impact may on balance be negative.

Government provided services at the federal, state and local levels have expanded sharply since the last wave of immigration, including health care, education, transportation, public safety, and social services. Lower-income households, whether native or immigrant, documented or undocumented, may use such services more intensely than others but contribute relatively less to their provision. Indeed, the fiscal burdens may fall more heavily on state and local governments than the federal in this regard.

Wider availability, better quality and lower-cost public services may be a strong inducement for immigration, especially when combined with more attractive wages. However, the important issue is whether the public sector is the most effective vehicle for providing such services, rather than who should and should not receive them.

Stephen O. Morrell, Ph.D., is a professor of economics at the Andreas School of Business at Barry University and a senior research fellow with the Florida TaxWatch Center, a Tallahassee-based non-profit research group.

By the Numbers

Foreign born populations

in the U.S. and Florida

1990 2000 2005

U.S total 249 million 281 million 300 million

Foreign born 20 million 31 million 36 million

Percent of total 8% 11% 12%

Florida total 12.94 million 15.98 million 17.40 million

Foreign born 1.66 million 2.72 million 3.13 million

Percent of total 13% 17% 18%

Sources: U.S. Census Bureau, U.S. Dept. of Homeland Security, 2004 Yearbook of Immigration Statistics, Florida TaxWatch

five states with the largest

absolute population gains, 2000-05

Net migration %

Natural to/from Internat. Internat.

Total gain Increase* rest of U.S. Migration Total

U.S. 14,995,802 8,651,861 - 6,333,941 42%

Calif. 2,260,494 1,557,112 -664,460 1,415,879 63

Texas 2,008,176 1,115,182 268,722 663,161 33

Fla. 1,807,040 246,058 1,057,619 528,085 28

Ga. 885,760 376,105 233,667 192,844 22

Ariz. 808,660 241,732 408,160 168,078 22

* Births and deaths. Sources: U.S. Census Bureau, Florida TaxWatch