In “America’s (illegal) saviours”, Hermes chief executive officer and head of investment Saker Nusseibeh writes that illegal immigrants account for as much as 6-7% of the US workforce.
Academic research suggests that by offering amnesty and work-rights to this section of the population, the US government could boost its tax-take by some $4.5bn (€3.5bn) in the first three years, as well as reduce the estimated $5bn annual cost of detaining and deporting illegals.
But tax is only part of the story, Nusseibeh argues. He highlights an amnesty scheme implemented by President Ronald Reagan in 1986 which affected some three million illegal immigrants – a much smaller pool than would benefit under recent proposals put forward by President Barack Obama.
Reagan’s scheme led to significant wage increases for those affected, Nusseibeh notes, as the average hourly pay of previously-undocumented workers rose by more than 15% in five years.
Even a moderate boost in wage growth “would equate [to] billions of additional consumer dollars”, Nusseibeh estimates. While the illegal immigrant population of the US pales in comparison with, say, the number of people joining China’s “middle class”, the multiplier effect of rising wages would be larger.
“This is because the threshold to middle class in emerging nations is much lower as is their per capita incomes, while in the US, the spending power of even the poor is higher,” he writes.
“For example, if the average wages of 11 million US illegal immigrants were to double they would still be below the US native average yet their spending would increase much more significantly.” An average increase in wages of $10,000 would bolster GDP by 0.7%, Nusseibeh adds.
A PDF of “America’s (illegal) saviours” can be downloaded from the Hermes website, here.