Can Immigrants Give America’s Rust Belt a Tune-Up?

Written by on February 19, 2010 in Business, Demographics, Economics, Employment, Entrepreneurship, Reform with 3 Comments

Immigrants have long been a driving economic force in America’s large thriving metropolitan areas—New York, Los Angeles, Chicago, Miami, Dallas—where immigrants’ economic output produces a large and growing share of the U.S. gross domestic product. But what about the once thriving industrial heartland of the United States known as the Rust Belt? In a roundtable discussion yesterday in Akron, Ohio, authors Richard Herman and Robert Smith discussed their new book which points out how “immigrants and the businesses they create” can “provide rundown neighborhoods with a powerful jolt of new investment and spinoff job opportunities” and how our broken immigration system is taking away at least one tool for economic recovery in the cities that need the most help.

As a Washington Post article points out, the story of immigrant entrepreneurship is nothing new. Immigrants are behind many of the country’s largest corporations—Dow Chemical, DuPont, Pfizer, Proctor & Gamble, Carnegie, Google, Yahoo, Intel, PayPal and YouTube—which provide thousands of jobs for working Americans. And while every small business owner in the Rust Belt may dream of being the next multi-millionaire, the day to day economic contributions of immigrants in these states are equally important.

Immigrants at all ends of the skill spectrum—high skilled, low skilled, entrepreneurs and laborers alike—pay taxes and generate consumer spending which in turn spurs American job growth. According to data from the Immigration Policy Center’s (IPC) state-wide studies:

In Wisconsin, migrant workers’ direct spending generates roughly $14.9 million per year in income to Wisconsin residents and business, and creates 417 jobs for Wisconsinites annually.

Immigrants are a large part of Illinois’ advancing job sectors, representing 27.7% of all net job creation in the “health diagnosing” sector from 2000 to 2005. In the Chicago metro area, consumer expenditures of undocumented immigrants generated more than 31,000 jobs in the local economy and added $5.45 billion annually to the gross regional product.

Immigrants in Indiana paid an estimated $2.3 billion in federal, state, and local taxes in 2007, according to a study by the Sagamore Institute.

Central Ohio is home to more than 45,000 Somali Americans—making it the second largest Somali population in the United States; second only to Minneapolis, MN. Somalis own more than 400 small businesses in Columbus, Ohio, which contribute revenue to the local economy.

Arab American employment accounted for $7.7 billion in total earnings in the four counties of the Detroit metropolitan area in southeast Michigan, generating an estimated $544 million in state tax. Arab American business and consumer spending supported an estimated 141,541 jobs in the four-county region in 2005.

You get the idea. Immigrants’ consumer spending, new businesses and tax revenue make up large portions of ailing state and local economies and are critically important to America’s economic recovery. Herman and Smith’s point is, given America’s long history of immigrant entrepreneurship, why make it harder for skilled immigrants to invest in the American economy on the state and local level? A working immigration system—one that encourages the creation of small businesses—benefits all Americans.

According to Newsweek:

Immigrants are good for our economy. The most skilled create jobs in technology and engineering, says Duke professor Vivek Wadhwa, who estimates that in 2005 immigrant-founded engineering and tech companies employed 450,000 people and generated $52 billion in sales.

Two highly respected Australian economists, Maureen Rimmer and Peter Dixon, studied the issue for the libertarian Cato Institute. “The net impact on U.S. households from tighter border enforcement is unambiguously negative,” they found, because even low-skilled immigrants expand the economic pie and create jobs farther up the ladder. Cato’s Dan Griswold says the study shows a $250 billion difference between the most and least restrictive immigration policies.

Clearly, our broken immigration system is not doing anyone any favors. We can’t build a strong robust economy on a system that doesn’t work. Smarter immigration policies, however, which harness immigrants’ raw economic and entrepreneurial power and integrate them into our society will not only speed the economic recovery process, but create jobs for Americans and help America—in both large and small cities—grow in the long term.

Photo by ex.libris.

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  1. goober says:

    The Mayor of Hazelton, PA literally passed laws to harass immigrants out of his city, and it should be no shock that PA lost an electoral vote. That whole region will continue to fall further behind unless they enter the 21st century.

  2. Ben says:

    You’re leaving out a critical piece of any recovery prospect. You have to have the industry in place. We no longer have that. It’s all off-shore.

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