Commentary: Why are we so afraid of immigration?

March 10, 2008

Indiana Senate Bill 335 is a poorly crafted public policy that fails to reflect the totality of immigration and the societal and economic issues associated with it.

Hispanics are the nation's largest minority group, numbering 47 million. About a quarter of Hispanic adults, roughly 11 million, are unauthorized immigrants. The Pew Hispanic Center estimated Indiana's unauthorized immigrant population at 65,000, roughly 1 percent of the population.

In 2004, 93 percent of unauthorized men age 18-64 were in the labor force, versus 85 percent of legal immigrant men and 82 percent of U.S.-born men. Unauthorized men have higher labor-force participation rates than other men because they are younger and are less likely to be disabled, retired or enrolled in higher education. Virtually all unauthorized men come to America to work.

For many years, studies of the U.S. labor market have shown little or no negative effects of immigration on the wages or employment of native-born workers. Without question, immigration reduces the prices paid by consumers on many goods and services.

However, the magnitude of those effects and exactly who benefits is unclear. Higher-income Americans may benefit from child care and household services, gardening and food-preparation services in restaurants. All Americans are likely to benefit from lower prices on food and housing.

While unauthorized immigrants pay a variety of taxes, the extent of their contribution to Social Security is perhaps most striking.

In 2002, 9 million W-2s with incorrect Social Security numbers were recorded, accounting for $56 billion in earnings, or about 1.5 percent of total reported wages. These wages paid $7 billion in Social Security tax revenue and $1.5 billion in Medicare taxes, padding the account surplus for 2002 with the difference between what was received by Social Security and what was paid out as benefits. The economic impact of unauthorized immigrants is well understood by the actuaries at the Social Security Administration. In fact, the money paid by unauthorized workers and their employers is factored into all Social Security Administration projections.

Instead of passing Senate Bill 335, the General Assembly should enact legislation that would avoid the piecemeal system of charity care for immigrants in our state's emergency rooms by providing a uniform system of health care for, at the very least, children of illegal immigrants. California, the epicenter of unauthorized immigration, witnessed a significant decline in uninsured children when multiple regions enacted the California Children's Health Initiative.

When more than 60 percent of the children of unauthorized immigrants are U.S. citizens, their good health is in our best interest. Further, instead of offering bills and amendments that take education away, Indiana should ensure that all immigrant children are educated. Without an education, Indiana and the nation risk the creation of an uneducated, undocumented and disenfranchised population. The U.S. Supreme Court recognized this in 1982 when it struck down a Texas law that denied public funding for the education of children of unauthorized immigrants.

Low educational attainment and poor health are Indiana's twin scourges. Rather than devoting precious time to legislation that does not and cannot solve the immigration problem, Indiana would be better served if members of the General Assembly dedicated their energy to rectifying the broad challenges of education and public health for the benefit of all.

Williams is regional venture partner of Hopewell Ventures, a Midwest-focused private-equity firm. His column appears monthly. He can be reached at bwilliams@ibj.com.
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