Estimating the Costs of Restrictive Immigration Laws

Much has been written about the rise of restrictive immigration laws in states such as Arizona, Alabama, and Georgia, both by those for and against these measures. What is now emerging are initial assessments of the economic costs and benefits of these policies.

One area affected is employment. Supporters of these laws argue that by discouraging undocumented migrants these policies free up jobs for native workers. So far the preliminary evidence suggests otherwise. In Georgia, 56 percent of farmers report having difficulty finding workers, and nearly half of restaurant owners claim to be experiencing a labor shortage (while overall employment numbers in Georgia increased since the law was passed–coinciding with the U.S. economic recovery–they have not increased in sectors traditionally employing unauthorized workers, a better measure of the effects of the law). Other reports on Alabama and California also show or predict widespread drops in total employment, and the elimination of thousands of jobs due to less intended consequences of the new laws.

A broader more technical study done by the Americas Society/Council of the Americas estimates that cities with restrictive immigration laws lower local employment numbers by nearly 20 percent, compared to similar cities without such ordinances. One reason the report suggests is that immigrants largely complement rather than substitute native workers, expanding jobs for all.

Looking at the overall state level economic effects, the picture does not get better. A cost-benefit analysis by University of Alabama researcher Samuel Addy predicts that the effects of law HB56 on Alabama’s GDP will range from two billion to nearly eleven billion dollars (roughly 1 to 6 percent of Alabama’s GDP), depending on how many of the state’s unauthorized workers actually “self-deport”– i.e., leave the state. A separate report, written in October 2011, by Tom Baxter at the Center for American Progress states that Georgia could lose between $300 million and $1 billion a year due to its new immigration legislation.

These costs come in part from the many roles illegal immigrants play in local economies. They are not only workers, but also consumers. They and their families pay rent, shop at the local supermarket, clean their clothes at the laundromat, go out to dinner, and buy clothes at the mall. Their departure from a state means less business for local stores (and less tax revenue for local and state governments).

There are areas where the state could end up saving money: K-12 education and healthcare being the most talked about. However, these areas may also not be as straightforward for cutting costs as many may have thought, with some commentators pointing to lost revenue from federal funding and the associated costs of checking student’s migrant statuses as mandated in Alabama’s laws. An article by Arizona Central, a Phoenix local newspaper, speculated that if every undocumented immigrant disappeared from Arizona, the estimated savings for healthcare and education combined would be in the millions, much less than the projected billions in economic losses. While the motivations behind many of these laws may be to improve the economic prospects for U.S. citizens, the early results show instead the opposite–increased costs for natives and non-natives alike.