What's missing in the immigration debate

0:01NPR

0:11This is The Indicator from Planet Money. I'm Darian Woods. And I'm Adrian Ma. Pop quiz, Darian. According to a recent survey by Pew Research, 61 % of voters say what issue is very important to them. Can you guess what I'm thinking? Well, I know number one is the economy, but we're here today to talk about immigration. So is that what it is? Yes. I guess pop quizzes are hard to do when you work on the same show together. Today's topic is immigration. One person who's really noticed how much of an issue this is in the news is Zeke Hernandez. He's a professor at the University of Pennsylvania's Wharton Business School.

0:48And he says amid all of the coverage and the political speeches, he's really noticed two narratives about immigrants taking hold. Immigrants are villains who are here to steal your job and undermine your safety and destroy American culture and our heritage. The other narrative is immigrants are the poor huddled masses who need our compassion, and we must help them even if it costs us. It's either kind of fear or pity. I'm definitely one of the villain immigrants. I was not going to say anything, but since you said it, it's out there in the open now. But you know, Zeke says this dichotomy between fear and pity, it distracts us from the larger truth about immigrants.

1:31Today on the show, we break out of that binary. Yeah, we hear about the less talked about ways all immigrants, documented and undocumented, shape our economy.

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2:45Learn more about the technology, insights, and support available at amazonbusiness.com. Zeke Hernandez has moved around a lot during his lifetime. He was born in Uruguay, and his family moved from there to various parts of Central America and eventually to Argentina. And there, he says he noticed just how different economically countries could be. I was in the poorest slums of the city of Buenos Aires. And so, you know, when you see old men crying because they can't find work or women that are, you know, totally anxious because they can't feed their kids, that really moves you. When Zeke came to the US for college, he became fascinated with the question of why some countries prosper economically and others falter again and again.

3:32The answer seemed to come down to people. I realized that if you want to explain the movement of investment, ideas, innovation, customers, and just the evolution of economies and markets, you can't separate that from the movement of people. And since then, Zeke has been researching how immigrants shape economies around the world. He recently wrote a book laying out what he's learned called The Truth About Immigration, Why Successful Societies Welcome Newcomers. So the argument I'm making is based on 20 years of research, is that immigrants don't need your fear, they don't need your pity, they are good for you, good for you and your children.

4:13And that's both economically and socially. Zeke says the reasons for this can be broken down into five things. Five things any group of people contributes to economic growth. And because immigrants are people, they also contribute these things. They are talent, consumption, taxes, investment, and innovation. Let's unpack those. So we'll start with talent. Immigrants bring skills and the ability to work. They often fill jobs where there aren't enough native-born workers willing or able to do them, which could be anything from picking fruit to practicing medicine. But Zeke says it would be a mistake to think that an immigrant's labor is the only thing they contribute to an economy.

4:56Yeah, I mean, after they work, they have paychecks to spend, right? So the second thing they bring is consumption. In economic terms, when immigrants enter an economy, they increase aggregate demand for goods and services. But that's really just the beginning of it. The more interesting part is what happens next. One is what I call a novelty effect, which is immigrants just because they have different tastes and preferences, right? They grew up liking, I don't know, different foods or different kinds of music, or they use technology a little bit differently or something like that. They are introducing new categories of products and services or brands that they liked where they came from.

5:33Yeah. So, for example, in D.C., where I live, there's a large Ethiopian community. And you're more likely to see in this area a demand for Ethiopian food and restaurants. Or in a place with lots of Korean immigrants, retailers may be more likely to import Korean beauty products. So this is the novelty effect of immigrant consumer demand. Right. Like I come from New Zealand and there is a fruit I cannot find in New York. It's called a feijor. And I order the mail order from California. What does it taste like? It's a really tangy, sweet, ball of perfume and delight. It's hard to explain. Please send them to me.

6:11I'm not sure they'll still be good by then. Now, the third thing immigrants contribute is taxes. They pay sales taxes, payroll taxes that fund social security. And that's even true for many undocumented immigrants. Now, in the short run, there is a cost to integrating newer immigrants, which is disproportionately borne by local governments. You know, the cost of public education and social services like food assistance. But in the long term, Zeke says that these costs are outweighed by the taxes immigrants pay. Zeke says that the average immigrant makes a net positive contribution of just over a quarter million dollars.

6:48The fourth thing that immigrants contribute to the economy, which Zeke says is often overlooked, is investment. And this can happen a couple of ways. For one thing, you can have foreign companies investing in the U.S. The research I've done in the U.S., for example, shows that when immigrants increase by 1 % as a share of a state's population, that state becomes 50 % more likely to get investment from the immigrants' home country than it otherwise would have been. If you want to see like a contemporary story on this, look no further than Pollo Campero, which is one of the fastest growing restaurant chains in the United States.

7:26And of all places, it's from Guatemala. So you had this Guatemalan company over the past couple decades opening U.S. locations. At this point, they have over 100 of them. And they open them in places where there tend to be a lot of immigrants from Central America. That's what I call the immigration investment jobs triangle. That is, immigrants settle, investment follows, those investments create jobs, and not jobs just for immigrants. And then another way investment can happen is an immigrant to the U.S. starts a business. Immigrants are also 80 % more likely than native-born people to start a business.

8:01And that means that they're putting their own capital, their own investment in a new business. Okay. Now that 80 % is at the average for every business from a mom and pop restaurant to Google or Zoom or Duolingo, which are immigrant founded firms. The fifth and final thing immigrants contribute to economic growth, according to Zeke, is innovation. They bring ideas. Just check out some of these stats. One study estimates that in In recent decades, immigrant inventors were responsible for one in three U.S. patents. In addition, nearly half of Fortune 500 firms were founded by an immigrant or a child of immigrants.

8:39So that rounds out the five things immigrants contribute to the economy. Which, again, any group of people has these five qualities. It's just that immigrants bring a different set of skills and different tastes and ideas which help grow the economy in a way that it couldn't otherwise. Zeke says this is just as true for people who immigrate to the U.S. illegally as those who come here legally. I think the difference is that illegal or undocumented immigrants often have a ceiling on how much of those five things they can contribute because of their legal status. I'll tell you a short story on this.

9:16My barber is really good and we've become good friends over time. he confessed to me after years of getting to know each other that he's an undocumented immigrant. He's not in the country legally. And he also told me that his lifelong dream has been to start his own barbershop. And he has$200 ,000 saved in cash ready to start this business, which almost knocked me off my chair. I was like, you have how much money? And I was like, wow, okay. And I said, well, why don't you do this? And he said, I can't because of my legal status. So the real tragedy of illegal immigration when it comes to the economy is that we don't get as many of the five things that immigrants bring as we could if they were here legally.

10:00Now, Zeke wants to be clear. He's not advocating for illegal immigration, but he is in favor of more legal pathways. To put it another way, there hasn't been a major update to U.S. immigration policy in over three decades. And because of that, Zeke argues that the U.S. economy is missing out. This episode was produced by Julia Ritchie with engineering by Maggie Luthor. It was fact-checked by Sierra Juarez. Cake & Cannon edits the show and the indicators are production of NPR.

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