Page last updated at 22:07 GMT, Thursday, 4 May 2006 23:07 UK

US immigrants spark growth debate

By Robert Plummer
BBC News business reporter

While US politicians feud over proposed reforms to immigration laws, a parallel debate is raging on the impact of foreign-born workers on the country's economy.

May Day marchers in Orlando, Florida
One economist's dream is another's nightmare

The immigrants themselves, whether legal or illegal, were clearly keen to show what a difference they make to the US when more than a million of them boycotted work and turned out at May Day protest rallies.

But ask economists the simple question "Is immigration good or bad for the US?" and you will soon find that their view is far from unanimous.

In terms of sheer numbers, legal immigration is currently high by historical standards, although lower than its all-time peak in the early 1990s.

Figures from the Department of Homeland Security show that 1.1 million people became legal permanent residents of the US in 2005. Mexico was the biggest contributor, with 14% of the total.

But each year, up to a million illegal immigrants also enter the country, mostly from Mexico and other Latin American nations. The Pew Hispanic Center, a research group, reckons more than 11.5 million of them now live in the US.

Illegal influx

According to the research group's figures, the states with the highest number of illegal immigrants are California, with more than 2.5 million, and Texas, with more than 1.4 million.

More than 40% of all illegal immigrants in the US, amounting to about 4.4 million people, have arrived in the past five years, the group says.

California: 2.5m-2.75m
Texas: 1.4m-1.6m
Florida: 800,000-950,000
New York: 550,000-650,000
Arizona: 400,000-450,000
Illinois: 375,000-425,000
Georgia: 350,000-450,000
New Jersey: 350,000-425,000
N. Carolina: 300,000-400,000
Virginia: 250,000-300,000
Source: Pew Hispanic Center estimates based on US government's Current Population Survey, March 2005

Most experts seem to agree that the US economy is bigger and faster-growing because of the influx of illegal workers.

But the debate really gets heated when they try to work out who wins and who loses as a result - and by how much.

Certain sectors of the economy clearly attract more immigrant workers than others.

Chief among these is the construction industry, which employs an estimated 2.4 million foreign-born labourers.

That means 22% of all construction jobs are held by immigrant workers, nearly two-thirds of whom are thought to be in the US illegally.

Farming, cleaning, building maintenance and food preparation are other jobs likely to go to immigrants.

Wage levels

Foreign-born workers, then, are most likely to end up in low-wage, low-skilled jobs.

But they are by no means evenly spread across the US and account for less than 5% of the country's workforce. So why the fuss?

Well, conventional wisdom would say that unskilled immigrants, legal and illegal, must surely harm the job prospects and wages of the 10 million similarly unskilled and uneducated American-born workers.

May Day immigration rally in Washington
Immigration is an increasingly hot US political issue

Some pundits go even further, arguing that the knock-on effect of immigration also allows big firms to drive down wage levels for middle-class employees, adding to their growing sense of economic insecurity.

One economist, George Borjas of Harvard University, says men who had dropped out of high school saw their earning power decrease by 7.4% between 1980 and 2000 as a result of immigration.

But this view is challenged by David Card, an economist at the University of California, who says the wage gap between dropouts and high school graduates has remained constant since 1980.

He concludes there is "scant" evidence that immigrants harm the opportunities of US-born workers.

'Net gain'

Those who take a more benign view of immigration maintain that foreign-born workers tend to contribute more to the economy than they take out, even after accounting for the remittances that many of them send back to their countries of origin.

US-Mexico border sign on a bridge in El Paso, Texas
There are plenty of US jobs for Mexicans who make it across

They say the money such workers pay in taxes far outweighs the amount they receive in benefits, especially since many of them return home before retirement and make no claims on the social security system.

They also point out that some US jobs only exist because of the availability of cheap illegal immigrant workers, who are prepared to work for wages that are below what Americans would accept.

Others retort that the low salaries indicate the work involved is of little value to the US economy, which could easily get by without the jobs concerned or the workers who do them.

Whatever the truth of the matter, the fact remains that Mexicans who enter the US illegally in search of a better life are simply obeying market forces - and little can be done unilaterally by Washington to stem the tide without the Mexican government's co-operation.

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