How Immigration Effects the Economy and You

Learn Immigration's Pros and Cons, and Overall Impact


 Photo by Joe Raedle/Getty Images

U.S. immigration policy is highly controversial. Most of the debate centers around the economic impacts, security risks, and humanitarian concerns. As a result, U.S. immigration policy is a hodge-podge of laws, court decisions, and executive orders. That allows each president to change policies without Congress.

In 2018, there were 44.8 million immigrants in the United States. That's more than any other country in the world.

Despite their large number, immigrants only make up 13.7% of the U.S. population. That's less than Canada (22%), Australia (28%), or the United Arab Emirates (88%.)

In 2018, one-fourth of immigrants living in the U.S. were from Mexico. Another 6% were from China, 6% from India, 4% from the Phillippines, and 3% from El Salvador. Those sources are changing. Of the permanent immigrants who arrived in 2018, India supplied 5%. Another 15% were from Mexico, 6% from China, and 7% from Cuba.

Most immigrants are citizens, but many are here without documents. The United States also accepts refugees and those who show up at the border to apply for asylum. Here are the facts around America’s immigrants, and how they affect the U.S. economy and you.

Types of Immigrants

It is estimated that more than 75% of immigrants are documented. They are joined by 1.1 million immigrants a year who receive green cards allowing permanent legal resident status. There is a backlog of 3.6 million applicants.

There is a lot of controversy over three other types of immigrants: those who are living in the United States without documents, those who are applying for asylum, and refugees.

Undocumented Immigrants

In 2017, there were an estimated 10.5 million undocumented immigrants in the United States. That's 3.2% of the U.S. population of 320 million and less than 25% of the immigrant population. Half of them have been in the United States for at least 15 years.

The number of undocumented immigrants has tripled since 1990, when there were 3.5 million in the United States. But it's down from a peak of 12.2 million in 2007. That was before the Great Recession, which didn't hit Mexico as hard as it did the United States. As a result, fewer Mexicans migrated north.

The goal of Trump's immigration policies is to reduce the number of undocumented immigrants in the country.

In the workforce, there were 7.6 million undocumented immigrants in 2017. That's 4.6% of the labor force. It's down from 8.2 million in 2007. 

About 3 million of undocumented immigrants pay taxes using an Individual Taxpayer Identification Number. According to the Internal Revenue Service, they and their employers paid $9 billion in payroll taxes in 2010. They do so even though they are not eligible for Social Security benefits upon retirement. Many of them hope that paying taxes will one day help them become a citizen. It also allows them to receive the Child Tax Credit, although they are ineligible for the Earned Income Tax Credit.

Undocumented immigrants are not eligible to enroll in Medicare, Medicaid, CHIP, or Obamacare. They can take advantage of school breakfast and lunch programs, child and adult protective services, and other emergency services.

They can also go to community health centers for primary care. This doesn't cover specialties. As a result, complicated conditions don’t get treated until they become an emergency. Around $2 billion a year in emergency Medicaid funds go to hospitals who must care for anyone who shows up at the emergency room. Hospitals report that most of them are undocumented immigrants.

Twenty percent of undocumented immigrants came from Mexico in 2017. In 2007, it was 52%. At the same time, the number from Asia and Central America has increased. One reason for the shift is an improvement in Mexico's economy. More Mexicans are leaving the United States than are arriving.

As the number of undocumented immigrants from Mexico decreased, it increased from El Salvador, Guatemala, and Honduras. Crime in Honduras soared after Salvadoran drug gangs took over. The illegal drug trade to the United States moved there from the Caribbean.

Unauthorized immigration also increased from Asia. As a result, the apprehensions of non-Mexicans has outnumbered those of Mexicans for the past three years.


In 2018, the U.S. Immigration and Customs Enforcement (ICE) deported 337,287 immigrants. The official term is removal, the court-ordered departure of undocumented immigrants back to their country of origin.

The record was set in 2013 when 432,281 were removed. In total, the President Barack Obama administration removed more than 3 million. Of those, nearly half had a criminal record. It sent home more in its first five years than the President George W. Bush administration did in eight years. That's despite deportation relief for 580,946 young immigrants under Obama's Deferred Action for Childhood Arrivals. One reason is that the Bush administration funded new anti-immigration laws after the 9/11 attacks. But it took until 2009 before that funding created a strong immigration agency.

Some experts also consider returns as deportations. That's the number of people turned away at the border. ICE returned 109,083 potential immigrants in 2018. The record was 1.7 million in 2000. The decline is due to a renewed focus on removals instead of returns. Some even say that removals reduce the number of returns. Those who have been removed know they will face serious consequences at the border. Those who have been returned simply try again.

Asylum Seekers

In 2018, there were 105,472 affirmative asylum applications. They came with 55,089 dependents. U.S. law allows anyone who shows up at the border to apply for asylum. They are referred to an asylum officer who determines if they have a “credible fear” of persecution or torture in their home country. Immigrants already in the United States can also apply for asylum to prevent deportation. In 2018, the government granted asylum to 38,687 applicants.

Once immigrants get approved for asylum, they can stay in the United States. They receive authorization to work and apply for a Social Security card. They can apply for Medicaid or Refugee Medical Assistance. They can also petition to bring family members to America.

If the asylum officer doesn't find a credible fear, they order deportation. The refugee can appear before a judge to challenge the finding. 


In 2018, the United States granted 22,405 immigrants refugee status. A refugee applies for protection from persecution while outside their country of origin. If granted protection, the Office of Refugee Resettlement arranges benefits. Various non-profits help them resettle. For 30 to 90 days, the non-profits provide housing, furnishing, food, clothing, orientation, and employment services.

The U.S. Citizenship and Immigration Services screens and interviews all applicants prior to arrival in the United States. They determine if the refugee has “suffered past persecution or has a well-founded fear of future persecution on the basis of race, religion, nationality, membership in a particular social group, or political opinion in his or her home country.”

History of U.S. Immigration

U.S. immigration policy has reflected its economic needs. When the nation needed workers, immigration laws were relaxed. When jobs were harder to find, Congress curtailed immigration.

In 1790, Congress stated that only free white people could become U.S. citizens. This was reversed in 1870, after the Civil War. In 1864, the Immigration Act encouraged immigration to address labor shortages caused by the Civil War. In 1882, the Chinese Exclusion Act prohibited the immigration of Chinese laborers. This was later expanded to most Asian countries.

The statue of "Liberty Enlightening the World" was built in 1886 to honor America's centennial and its recent abolition of slavery. Between 1886 and 1924, almost 14 million immigrants entered the United States through New York. In 1892, an immigrant processing station was established on Ellis Island in the statue's shadow. As World War I loomed in Europe, it became a symbol of America as a beacon of hope for those being persecuted.

The plaque at the Statue of Liberty says "...Give me your tired, your poor, your huddled masses yearning to breathe free..."

Congress established national-origin quotas with the Immigration Act of 1924. It awarded immigration visas to just 2% of the total number of people of each nationality in the United States as of the 1890 national census. People were anxious because of World War I, so they heartily supported limits on immigration. The law prohibited the United States from accepting many of the Jews when they tried to emigrate from Nazi Germany. By 1970, the law had forced immigration down to a low of 4.7% of the population. That was reduced from a high of 14.7% in 1910. 

In 1942, the United States and Mexico created the Bracero program. It allowed Mexicans to assist farmers during the World War II labor shortages. It ended in 1964. The 1943 Chinese Exclusion Repeal Act allowed 105 Chinese immigrants per year.

In 1965, President Lyndon Johnson pushed Congress to change immigration policy with the Immigration and Naturalization Act. It eliminated quotas based on nationality. Instead, it favored those with needed skills or who were joining families in the United States.

In 1980, Congress encouraged refugees from war-torn areas after the Vietnam War. In 1986, the Immigration Reform and Control Act legalized undocumented immigrants who met certain conditions. In 2012, President Barack Obama created the Deferred Action for Childhood Arrivals program. It allowed young adults who had been brought to the country illegally to apply for deportation relief and a work permit.

Today's percentage of immigrants is similar to the late 19th century when almost 15% of U.S. residents were immigrants. Below you can see a breakdown of historic immigration to the United States from 1850 to 2018.

How Immigration Affects You

Immigrants contributed 15% of U.S. economic growth between 1990 and 2014. There are three reasons for this:

  1. Most immigrants are of working age. They immigrate to find jobs, thus adding to the labor force.
  2. An increasing number of migrants have higher-level degrees.
  3. They increase innovation since immigrants are more likely to file for patents.

More than three-quarters of newly-arrived immigrants are between ages 18 and 64. That's higher than the slightly more than 50% of Americans who are of working age. This lowers the dependency ratio, providing taxes to support social programs for U.S. children and seniors.

Newly-arrived immigrants are better-educated. In 2017, almost half of those who had recently arrived in the U.S. had a college degree or higher. As a result, the immigrant population has about the same education as the U.S.-born citizens. In 2016, around 30% of immigrants had a college degree or higher. That's now almost at the level (32%) of native-born counterparts.

That number of educated immigrants has almost doubled since 1980. One reason is that global literacy rates are improving. Another is that Asia has surpassed Latin America as the largest source of newly-arrived immigrants. More than half of Asian immigrants have a college degree or more.

Immigrants are three times more likely than natives to file patents. Around 40% of the world's patent applications are filed by U.S. immigrants. Immigrants founded 30% of U.S. firms that have gone public. They founded more than 50% of startups valued at over $1 billion that have yet to go public. These firms all have the potential for high job growth.

Newly-arrived immigrants have one thing in common that reduces their ability to compete with native-born workers. They generally don't speak English as well. That means they are less likely to take jobs that require strong communication skills. For example, natives in management and media don't face a lot of competition from newly arrived immigrants. Immigrants with advanced degrees gravitate toward scientific and technical jobs that don't require high communication.

In 2014, immigrants held 33% of agricultural jobs and almost half of those were documented, according to the Pew Research Center. In construction, 24% of the jobs went to immigrants, and almost half of them were documented. The biggest share was domestic workers. There, 45% were immigrants and less than half of them were documented.

What hurts some workers helps consumers. Immigrants lower the price of goods and services for everyone. That’s because they provide low-cost labor that allows companies to reduce the prices of consumer goods.

Immigrants in the workforce pay taxes into Social Security and Medicare. It improves the age dependency ratio. That's the number of working people who support the nation's senior population. The ratio is worsening because the U.S.-born population is aging. There aren't as many in the working-age population to support them. As more immigrants enter the workforce, the age dependency ratio improves.

Contrary to other claims, an increase in undocumented immigrants in an area does not lead to a similar increase in violent crime. Furthermore, only 8% of the federal prison population in 2015 was there for infractions regarding immigration.

Future of Immigration

Immigration dropped during the Great Recession and has not returned to pre-recession levels. Instead, immigration from Latin America may continue to weaken. There were two reasons, according to researchers from the University of California, San Diego. First, the economies of Latin American countries continued to improve. As a result, there isn't as much of an income gap between those countries and the United States.

Second, the baby boom continued through the 1970s. There weren't enough jobs to employ all those young workers entering the labor force in the 1990s, but the economies have had enough time to absorb these workers in the last 20 years. As a result, there isn't the same demographic push sending immigrants to the United States.