Loss of immigrants could shrink the economy

There are more reports out that efforts to chase immigrants out of the United States will cost everyone in the pocketbook.

    According to the Progressive States Network,  Oklahoma's state Treasurer, Scott Meacham reported that a recent drop in sales tax revenue (4.6% below expected totals) could be explained by the apparent exodus of thousands of Hispanics due to fear of HB 1804, the controversial immigration law known as one of the strictest in the country. Advocates (and opponents) should note the Treasurer's acknowledgment that the thousands fleeing the state results in less sales tax collected on essentials like food, clothing and supplies. In preparing HB 1804, an Oklahoma House study found that undocumented immigrants contributed about $21 million a year in tax collections -- about $11 million in income tax and about $10 million in sales tax. 

Meacham also reported hearing that there are "labor supply issues" in the agricultural, energy and construction sectors in parts of the state, stating that landscape contractors were having difficulty hiring employees, even when offering jobs at $15 an hour (about twice the minimum wage). Oklahoma contractor, Jack Gray, head of Standard Roofing Co. Inc. said "We will be in the worst depression Oklahoma's ever seen if this bill stays in effect." He reports that his company is offering good paying jobs, but cannot bid for future business due to the lack of workers caused by HB 1804.

Other negative economic effects of HB 1804 include lowering apartment values and sales by raising the cost of doing business. Brokers and managers say that with the loss of many Hispanic workers, documented or undocumented, due to fear of HB 1804, there have been higher labor costs or labor shortages when it comes to roofing or maintaining buildings. They warn that with the investment property market usually setting prices based on income streams, any rise in operation costs are taken seriously.

Shrinking Arizona's Economy: In Arizona, HB 2779 won't go into effect until January 1st, but that hasn't stopped it from already having a negative impact on Arizona's economy. HB 2779 is shaping up to be one of the strictest anti-immigrant laws in the country, encouraging people to contact a county sheriff's or county attorney's office to report businesses they suspect of employing an illegal immigrant. As the Wall Street Journal reported last week, Arizona businesses have been outspoken opponents of the law since before it was signed by the Governor Napolitano in July of this year. Says the president of the Arizona Chamber of Commerce and Industry, Glenn Hamer: "It's crystal-clear that the employer sanctions law will harm the state economy. It's simply a question of degree."

Hamer's statement is backed up by a recent study by the University of Arizona's Udall Center that concluded that economic output would drop 8.2% annually if non-citizen foreign-born workers were removed from the labor force. Two-thirds of Arizona's foreign-born workforce is estimated to be working in the state without legal authorization.

Judith Gans, the author of the University of Arizona study, told the Wall Street Journal that, "Getting rid of these workers means we are deciding as a matter of policy to shrink our economy. They're filling vital gaps in our labor force."

Ironically, the shortage of workers in Arizona has helped drive at least one company to outsource work to Mexico. Sheridan Bailey, the president of steel-beam manufacturer Ironco, has he's signed a deal to outsource some of his business' production to a Mexican company in order to cope with Arizona's now tight labor market. Bailey told the Wall Street Journal that, "This law has the potential of sinking a business." HB 2779 may also stall business growth. Arizona's biggest franchisee and grandson of the founder of Carl's Jr. fast-food restaurants, Jason Levecke, has put on hold plans to open 20 more outlets statewide, stating that, "That's $30 million that could blow up in my face. The risk is too great."

The Udall Center study cited in the Wall Street Journal, Immigrants in Arizona: Fiscal and Economic Impacts, found that the fiscal cost of immigrants to Arizona in 2004 was an estimated $1.4 billion. However, tax revenues attributable to immigrants as workers were approximately $2.4 billion. The net fiscal gain for Arizona from immigration then is approximately $940 million. These numbers don't distinguish between documented and undocumented workers, but then there are reports that immigrants authorized to work are leaving Arizona due to fear and discrimination arising from HB 2779.

Comments

[Mack]

This is perhaps the most frustrating part of this debate. In order for people to grasp the economics, they first have to admit two things:

1. America's workforce is aging. Also, there are not enough of us in our prime working years.

2. A wealthy society does not train itself or it's offspring to take the low skilled jobs. Instead, it relies upon immigrants.

(As a sidenote, you have mispelled Newscoma, (one M) and where the heck is Chris Wage, John H, Sean Braisted, or Aunt B? Are you looking for a Progressive blogroll? They should be on it.