How much did illegal immigrants contribute to Texas’ economic boom?

at 02:43 PM ET, 08/19/2011

A fast-growing population was key to Texas’ record job growth, fueling a demand for construction and services while the rest of the country languished. How much did illegal immigration contribute to the state's growth?

Relying significantly on lower-wage jobs to fuel growth, Texas has drawn from a large, relatively cheap labor pool that’s included large numbers of legal and illegal immigrants. Illegal immigrants have taken jobs in many of the industries central to Texas’ economic boom, such as home construction, agriculture and the service industry. Illegal and legal immigrants make up about 20 percent of the state’s total workforce, according to the U.S. Census Bureau. And the Pew Hispanic Center estimates that 8 percent of Texas’ total workforce was made up of illegal immigrants as of 2008.

“It’s a big part of our economy across the board, overwhelmingly in low-skilled, hard work,” says Charles Foster, a Houston-based immigration attorney and board member of the Greater Houston Partnership, a business development group. “It impacts Texas more than almost any other state.” The state’s heavy reliance on immigrant labor may not have dragged wages down to rock bottom either: As Matthias Shapiro notes, the state’s median hourly wage is $15.14, ranking 28th of 51 in the nation, and it’s been increasing at the sixth-highest rate since the recession.

While the illegal immigrant population has dropped off nationwide during the recession, the number of illegal immigrants in Texas stayed steady. It may have even gone up between 2007 and 2009: according to Pew Hispanic Center, the population rose by 200,000 during those two years, though the group notes this figure isn’t statistically significant. As part of the bigger Hispanic community, illegal immigrants also increased the state’s population by bearing more children, as fertility rates are higher among Hispanics than whites and African-Americans. Altogether, foreign-born Hispanics — including legal and illegal immigrants — make up nearly a third of the state’s Hispanic population, which itself has fueled 65 percent of population growth in Texas since 2000.

At the same time, the growing immigrant community — along with the rest of the state’s booming population — has put greater demands on the public sector, racking up costs in education, health care and other resources. While illegal immigrants are ineligible for most public benefits, they still receive emergency care that the state covers when hospitals pass on the costs. And the growing number of new residents overall is also expected to strain public resources in Texas  down the road, especially if the state continues to make draconian budget cuts. By 2013, for example, Texas is expected to add 160,000 schoolchildren, and a higher demand for water amid a dwindling supply may force taxpayers to build reservoirs and fix
aging infrastructure
.

But there’s some evidence that there’s a net economic benefit to illegal immigration, even with such costs factored in. In 2006, the
Texas state comptroller, a Republican, released a study showing that illegal immigrants produced more in state revenues than they received in state services in the previous year: “Undocumented immigrants produced $1.58 billion in state revenues, which exceeded the $1.16 billion in state services they received.” (The study also notes that “local governments bore the burden of $1.44 billion in uncompensated health care costs and local law enforcement costs not paid for by the state,” without providing figures about local revenues that these immigrants generated.) The comptroller estimated, moreover, that the Texas workforce would decline by 6.3 percent without the illegal immigrant population, even accounting for new arrivals that would most likely come to replace them.

To be sure, the state comptroller’s report came out before the recession changed the entire economic outlook of the country, Texas included. But more recent research has confirmed some of its findings. In a study last year, University of California, Davis economist Giovanni Peri found that immigration — both legal and illegal — had a short-term negative impact on employment and average income rates of native-born workers. But in the longer term, Peri concludes, “immigration unambiguously improves employment, productivity, and income” for native workers as well and shows no evidence of depressing wages.

Such trends were clearly on display during the recent downturn: In June 2009, the unemployment rate for immigrant workers fell by 0.6 percent during the recession while rising for native workers by 0.5 percent, as Rakesh Kochhar, a researcher at Pew Hispanic Center, testified before Congress in March. But employment rates for both groups rose as the economy began to improve in late 2010, Kochhar added: “Thus, the economic recovery now appears to be benefiting all workers, although the gains to native-born workers have been a bit later in coming.”  In other words, according to such research, immigration tends to make things slightly worse for native workers amid a recession, while raising income and employment for everyone during times of economic expansion — and in the long run.

So Texas, with its booming economy, may have more to benefit from with its large immigrant population, both illegal and illegal. But that doesn’t necessarily mean that all states would immediately benefit from a big influx of immigrant workers.

 
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