Deportation vs. Legalization in Colorado

7/31/2019 Deportation vs. Legalization in Colorado

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The Consequences of LegalizationVersus Mass Deportation in ColoradFindings and Methodology

Dr. Ral Hinojosa-Ojeda August 2012

WWW.AMERICANPROGRESS.O


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The Consequences ofLegalization Versus MassDeportation in ColoradoFindings and Methodology

Dr. Ral Hinojosa-Ojeda August 2012


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1 Introduction

3 Economic contribution of immigrants in Colorado

5 The economic consequences of mass deportation

7 The benefits of legalizing undocumented immigrants

in Colorado

9 Appendix: Methodology

13 About the Author

14 Endnotes

Contents


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The effects of mass deportation versus legalization in ColoradoWhat would happen to Colorados economy were it to drive out all of its undocumented immigrants? Conversely, what would

the impact be if all of Colorados undocumented immigrants acquired legal status? Our analysis finds that Colorado would

stand to see significant gains if legalization occurs, and significant losses if mass deportation became a reality.

These results have been calculated using the IMPLAN system. For the complete Colorado ndings and methodology,

visit our website at: http://www.americanprogress.org/issues/immigration/report/2012/08/29/35249//

Total undocumented in 2010

(3.7% of total population)

180,000

4,887,000Total population in 2010

Colorado fast facts Current contributions of undocumented workers

111,000Total undocumented

workers

$7.4 billionGross state product of

undocumented workers

$1.3 billionTax revenue from

undocumented workers

Mass deportation versus legalization in Colorado

$7.4 billionDecrease in gross

state product if 100%

deportation occurs

20,000Jobs created if 100%

legalization occurs

Total wages

$924 millionincrease if 100%

legalization occurs

$3.6 billiondecrease if 100%

deportation occurs

$297 millionincrease if 100%

legalization occurs

$1.3 billiondecrease if 100%

deportation occurs

Tax revenue

What could Colorado do with an extra $297 million in tax revenue?

Give 121 days of free school

lunch to every K-12 student

in the state.

Fund the salaries of close

to 4,300 Registered Nurses.

Fund the yearly salary of

over 6,600 K-12 teachers

in the state.

Fund 118,800 Colorado

GEAR UP Scholarships

at the maximum level.

Fund over 53,500 Pell Grants

at the maximum level.

Increase the school budgets

of all K-12 schools in

Colorado by over $165,000.

3.6%Of total workers are

undocumented

By Ral Hinojosa-Ojeda, Director of the North American Integration and Development Center, UCLA


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1 Center or American Progress |The Cons equences o Le gal izat ion Versus Mass Depor tation in Colorado

Introduction

Debaes abou he economic and scal benes and drawbacks o immigrans ypi-

cally oversimpliy he role ha immigrans play in our economy. When one looks

more closely, hey will nd ha he impac immigrans (or any group or ha ma-

er) have on he economy is muliaceed and complex.

Immigrans are no jus workers; hey are also consumers and axpayers. Te

eecs o heir labor and consumpion on economic growh and scal healh

mus be acored in as we consider how o address he siuaion o having a largeundocumened workorce.1

In his repor we describe he direc impacs o eiher deporing or legalizing

undocumened workers. In realiy, he eecs would be much larger. Mass depor-

aion, or example, would resul in an indirec negaive impac on local businesses

because here would be less money circulaing in he local economy, which would

lead o urher job losses.2 Te esimaes repored here should hus be considered

conservaive raher han exhausive.3

We esimae he economic conribuions o immigrans, boh documened

and undocumened, or seven saes: Arizona, Colorado, Florida, Nevada, New

Mexico, exas, and Virginia. Tese seven saes have some o he larges popula-

ions o unauhorized immigrans, and have played and will coninue o play a piv-

oal role in elecions as swing saes. We hen repor he negaive scal impac o

our dieren deporaion scenariosnamely wha would happen i 15, 30, 50, or

100 percen o undocumened immigrans were removed rom he sae. Finally,

we explore he posiive economic oucomes ha would resul rom legalizing

undocumened immigrans in each o he seven saes. (For a deailed explanaion

o he mehodology used, please see he appendix on page 9.)


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Overall we nd ha each o he seven saes would gain signicanly rom legal-

izing heir unauhorized immigrans, boh in erms o raised wages or all workers

in he sae, new jobs creaed, and addiional ax revenue generaed. Conversely,

deporing even a porion o he unauhorized immigrans would lead o signi-

can losses in gross sae produc, worker wages, and ax revenues. Te benes o

immigraion are clear, and saes sand o prosper hrough posiive immigraionpolicies, or lose ou wih harsh and resricive ones.


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Colorado has a oal populaion o 4.9 million people, o which 321,000, or 6.6

percen, are oreign born. Te sae has 180,000 undocumened immigrans, com-

prising 3.7 percen o he oal populaion.4 (See able 1)

TABLE 1

Foreign-born residents

Thousands

State of Colorado Share of total population

Total population 4,887 100%

Legal foreign-born residents 141 2.9%

Undocumented immigrants 180 3.7%

Total foreign-born residents 321 6.6%

Immigran workers as a whole added over $21.6 billion o Colorados gross sae

produche oal value added by workers o he saein 2010, he laes year

such daa was available. Te undocumened workorce by isel accouned or over

$7.4 billion o his GSP.5 Immigran workers produce even more by way o goods

and services creaed, wih a oal sae oupu o $43.8 billion, including $17.1 bil-

lion rom undocumened immigrans alone. (see able 2)

Economic contribution of

immigrants in Colorado


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TABLE 2

The economic importance of immigrants in the labor force

Employment

(thousands)

Percent of total

employment

Gross state product*

(in millions)

Output**

(in millions)

Employee

compensation***

(in millions)

Total 3,131 100% $269,297 $441,623 $140,075

Legal foreign-born residents 171 5.5% $14,179 $26,749 $7,914

Undocumented immigrants 111 3.6% $7,432 $17,079 $3,551

Total foreign-born residents 282 9.0% $21,611 $43,828 $11,465

*Gross state product or value added includes employee compensation, proprietary income, other property income, and indirect

business tax.

**Output represents the value o the total production o goods and services by industry in the regional economywhether such output isconsumed or not. Output could also be thought as the total value o sales plus or minus inventory.

*** Income received by workers, including benefts and beore taxes.

Immigran workers also pay billions o dollars o axes o he sae reasury. Jus

like he naive born, immigrans pay personal axes, such as income ax and

propery ax , business axes (among hem corporae pros axes, dividends, and

propery axes), and sales axes. Our analysis esimaes ha immigrans on hewhole paid $3.5 billion in axes o Colorado in 2010 wih undocumened immi-

grans conribuing approximaely $1.3 billion. (see able 3)

TABLE 3

The tax revenues immigrants pay

Local and state taxes

Personal taxes

(in millions)*

Business taxes

(in millions)**

Sales taxes

(in millions)

Total taxes

(in millions)

Total $7,035 $17,234 $12,854 $37,122

Legal foreign-born residents $405 $1,049 $786 $2,241

Undocumented immigrants $219 $617 $463 $1,298

Total foreign-born residents $624 $1,666 $1,249 $3,539

*Personal taxes include income tax, motor vehicle license ees, property tax, and other nontax fnes and ees.

**Business taxes include corporate profts tax, dividends, motor vehicle license ees, property tax, severance tax, and other taxes.


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So wha would happen i all he undocumened immigrans were driven rom

he sae?

Removing all o he undocumened immigrans rom Colorado would have subsan-

ial, indeed devasaing, consequences or everyone remaining in he sae. Driving

undocumened immigrans ou o Colorado would lead o subsanially diminished

earnings, decreased gross sae produc, and los ax revenue or he sae govern-

men, which is already reeling rom he recession and high unemploymen6.8percen in 2010 (he base year or calculaions) and 8.2 percen as o June 2012.

Our analysis shows ha he conracion rom rapidly removing undocumened

immigran workers would have severe ramicaions or he sae. I all undocu-

mened workers were expelled, Colorado would lose close o $3.6 billion in

employee compensaion, dened as preax salary and wage earnings. While i is

likely ha some o hese posiions would be lled by oher workers, i even 15 per-

cen o unauhorized immigran jobs go unlled, he sae sands o lose $533 mil-

lion in employee compensaion.6 (see able 4) As ha worker income decreases,

he earnings ha would oherwise be spen in he saes economy, or example, on

groceries, clohes, and housing, are los.

Tere is ample reason o suspec ha a leas a porion o hese jobs would no

be readily aken by oher workers. Immigrans end o live clusered in cerain

communiies, where here may no be a ready supply o oher workers o ll he

openings hey would leave behind. 7 Addiionally, undocumened workers end o

have skill ses ha are specic o he indusries hey work in (or example, con-

srucion, home healh services, ec.) ha ofen do no mach hose o he naive-

born unemployed.8

The economic consequences

of mass deportation


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TABLE 4

Mass deportation, mass income losses

Employee compensation in millions

Total employee

compensation

Direct employee

compensation*

State of Colorado $140,075

15 percent deportation -$533

30 percent deportation -$1,065



* Change in employee compensation as a result o the direct removal o undocumented individuals romthe regional economy.

Tis cycle o diminished earnings, consumpion, and demand would shrink

Colorados economy. Our analysis indicaes ha Colorados gross sae produc

would be reduced by more han $7.4 billion i he enire undocumened populaion

were driven rom he sae. And even i a proporion o hese unauhorized jobs gounlledsay 15 percenha would decrease GSP by $1.1 billion. (see able 5)

TABLE 5

Devastating Colorados economy

The effects of deporting undocumented immigrant workers on state domestic product

Gross state product, or GSP, in millions

Total GSP Direct GSP impact*

State of Colorado $269,297





* Change in employee compensation as a result o the direct removal o undocumented individuals rom

the regional economy.

Finally, mass deporaion would also signicanly decrease he saes ax revenue,

salling he saes economic recovery and orcing painul choices beween cuting

back services or implemening new ax increases. Alogeher, Colorado would lose

close o $1.3 billion were mass deporaion o become a realiy. (see able 3)

Te nex secion deails why doing jus he opposierequiring undocumened

immigrans o regiser and work legallywould have precisely he opposie eec.


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Our analysis shows ha bringing all undocumened workers legally ino he

Colorado workorce would be unquesionably benecial o he sae economy and

all is residens. Ulimaely, only he ederal governmen can resolve he saus o

he undocumened. Bu or he purposes o our analysis we examine in his sec-

ion o he paper wha would happen i Colorados workorce were legalized.

Undocumened immigran workers earn abou 18 percen less in wages han legalworkers.9 A program ha required all undocumened immigrans o earn legal

saus would increase employmen compensaion and employmen in he sae

by closing he wage gap beween documened and undocumened workers. We

esimae ha legalizing he undocumened workers in Colorado would increase

employmen compensaion in he sae by more han $924,000. (see able 6)

TABLE 6

Legalization: Raising Colorado

The effects of legalizing undocumented workers on employment compensation

and employment in ColoradoEmployment compensation

increase (in millions)

Direct employment

gain (in thousands)*

Colorado** $140,075

Legalization $924 20

*Direct employment gain is the increase in employment caused by the legalization o all undocumented immigrants in

the regional economy.

**IMPLAN base data. This case represents the economy without any changes in employment or other values.

Note: Totals may not sum due to rounding error.

As he legalized workers and heir amilies spend he increased earnings on newclohes, a down paymen on a car, or a new aparmen, he eec reverberaes

hroughou he economy. Clohing sores, car dealers, and renal agencies boos

heir sales and hire more sa. In oher words, he increase in economic oupu and

consumer spending would precipiae a spike in demand or goods and services.

The benefits of legalizing

undocumented immigrants

in Colorado


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Insead o he downward spiral produced by exracing hese workers rom he saes

economy, requiring hem o earn legal saus would sar a viruous cycle o growh in

jobs and revenue ino moion. Our modeling shows ha legalizing hese workers

and hus increasing heir spending power, which would lead o greaer economic

demand or goods and serviceswould add 20,000 jobs o Colorados economy (see

able 6) and increase he saes ax revenues by $297 million.10

(see able 7)TABLE 7

Legalization: Boosting tax revenues by the millions

The effects of legalizing undocumented workers on tax state revenue in Colorado,

direct effects

Taxes in millions

Personal taxes* Business taxes** Sales taxes Total taxes Total tax gain Percentage chang

Colorado*** $7,035 $17,234 $37,122 $38,718

Legalization $52 $140 $105 $297 $297 0.8%

*Personal taxes include income tax, motor vehicle license ees, property tax, and other non-tax fnes and ees.

**Business taxes include corporate profts tax, dividends, motor vehicle license ees, property tax, severance tax, and other taxes.

***IMPLAN base data. This case represents the economy without deportation changes.


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Appendix: Methodology

Tis sudy uses he erm undocumened immigrans o describe hose individu-

als who are no U.S. ciizens or legal residens. Overall and oreign-born popula-

ion esimaes are derived rom he American Communiy Surveys ve-year daa

or 2006-2010, as well as he Pew Hispanic Cener on he number o unauhorized

immigrans in a given sae. o calculae he number o undocumened workers in

each sae, we discouned he oal number o undocumened workers in he labor

orce rom Pew daa by he unemploymen rae or oreign-born workers in he

sae a he ime he daa were colleced.11

About IMPLAN

Tis sudy uses he IMPLAN inpu-oupu models o each saes economy, which

allow researchers o calculae he impacs resuling rom changes in policy and

economic aciviy. Te sudy esimaes he impacs on economic oupu and

employmen in each indusry, and he resuling impac on ax conribuions, given

a range o assumed changes o migraion-relaed policies. Te model allows ideni-

caion o direc economic eecs in aeced indusries, indirec eecs in relaed

indusries, and induced eecs ha cascade hrough he economy. Only direc

economic eecs are uilized in his sudy.

Te IMPLAN inpu-modeling approachIMPLAN sands or IMpac analy-

sis or PLANningis mos useul and appropriae in analyzing he shor-erm

shock o a sae economy ha would be immediaely el rom a signican policy

changeeiher a mass deporaion or a mass legalizaion. Te IMPLAN model-

ing approach is hus well suied o analyze he immediae and regionally specic

impacs resuling rom abrup policy shifs.12


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IMPLAN data

Te daase used is a 2010 daa le by sae conaining 509 indusries. For his

sudy, he 2010 IMPLAN daa les were aggregaed down o 36 indusries. A

bridge was creaed beween he 509 indusries in he IMPLAN les and he

13 indusries in he U.S. Census Bureaus indusry ables o creae compaibil-iy beween he U.S. Census daa and he IMPLAN daases. I is imporan o

noe ha in his sudy we are using consan 2010 dollar gures provided by he

IMPLAN daabase.

Undocumented worker estimates

Te number o undocumened workers was esimaed using Pew Cener esimaes

or each sae, adjused o accoun or he unemploymen rae among oreign-born

workers. We hen applied he number o undocumened workers o each indusryusing oreign-born worker percenage esimaes or he economies o each region

(see nex secion), since specic esimaes o unauhorized immigrans by secor are

no available. For insance, i here were an esimaed 100 undocumened workers in

a given region and esimaes or oreign-born workers in he consrucion indusry

in ha region were 23 percen, hen 23 undocumened workers were added o he

consrucion indusry and he res were disribued using he same mehod.

Undocumented workers by industry

In Te Characerisics o Unauhorized Immigrans in Caliornia, Los Angeles

Couny and he Unied Saes, he auhors provide esimaes o he percen-

age o undocumened workers in 13 aggregaed indusries.13 Because no similar

breakdown exiss or Colorado, we used he Caliornia disribuions o esimae

Colorados share o undocumened workers by indusry.


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Undocumented worker value-added contribution by industry

In order o esimae he undocumened worker conribuions o gross sae prod-

uc in each indusry, we applied he ollowing calculaion:

VA*Uj = (VA / E)*Uj

Where:

UUndocumened workers in indusry jJAny given indusry VAoal value added Eoal employmen

Deportation scenarios

In his sudy, we calculae he impacs resuling rom he deporaion o 15 per-

cen, 30 percen, 50 percen, and 100 percen o undocumened workers. Tese

calculaions were perormed by esimaing he number o undocumened work-

ers by indusry and running he IMPLAN model o calculae he exac impac o

hese workers (all else equal).

Te model provides a good esimae o changes in economic aciviy imporan

o his sudy. Te main economic impacs analyzed are: employmen impacs;

oupu impacs; value-added impacs; labor-income impacs; and ax impacs.

Wage differences between legal and undocumented workers

Tis sudy assumes undocumened workers wages are 18 percen lower han

hose o legal workers. o assure ha our gures are he mos conservaive

esimaes possible, we have placed a cap or wages o undocumened workers

in high-wage indusries. Tese indusries are: uiliies, rened energy, ranspor

equipmen, and elecronic equipmen. Te cap consiss o wo imes he medianworker income o unauhorized immigrans ($36,000 x 2 = $72,000), and in

indusries where he median wage was higher han he cap, undocumened

workers wages were reduced by 50 percen insead o 18 percen.14 Based on

his assumpion, we esimaed legal and undocumened workers wages using


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IMPLAN base employee compensaion. Nex, we legalized hose workers,

increasing heir wages o he prevailing marke wage.

When all workers across he sae economy earn he same wages, he labor wage

bill increases, as does oupu based on he increases in wage-based demand. Based

on previous experiences o legalizaion (such as he impac o he ImmigraionReorm and Conrol Ac o 1986), we assume labor produciviy grows in com-

mensurae proporion o wage increases due o legalizaion and a consan wage

elasiciy o labor demand, hus resuling in a sable employmen rae.

Fiscal analysis

ax impacs or his sudy are calculaed in wo pars. Te rs par is calculaed

by exracing oal populaion ax conribuions or he base year (IMPL AN

base year daa). Te second par is calculaed by exracing he dieren per-cenages o undocumened workers rom he economy and hen comparing

he resuls o he original IMPLAN daa. Te dierence in ax revenue is he

undocumened worker conribuion.


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About the Author

Professor Ral Hinojosa-Ojeda is he ounding direcor o he Norh American

Inegraion and Developmen Cener and associae proessor in he Division o

Social Sciences and he Csar E. Chvez Deparmen o Chicana and Chicano

Sudies a he Universiy o Caliornia, Los Angeles. Born in Mexico and raised in

Chicago, he received a B.A. in economics, an M.A. in anhropology, and a Ph.D.

in poliical science a he Universiy o Chicago. Proessor Hinojosa-Ojeda has

held various academic and policy research posiions in a variey o universiies

and public insiuions, including he World Bank, InerAmerican DevelopmenBank, he Whie House Council o Economic Advisers, he Unied Saes rade

Represenaive, Sanord Universiy, and he Universiy o Caliornia, Berkeley.

Proessor Hinojosa-Ojeda ounded he Norh American Inegraion and

Developmen Cener a UCLA in 1995, dedicaed o developing innovaive research

agendas and policy pilo projecs concerning globalizaion and developmen.


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1 In order to have the most accurate data, we use theAmerican Community Survey ve-year estimates ortotal state population (2006-2010), which pools thedata collected over multiple years and is less proneto sampling error. See When to use 1-year, 3-year, or5-year estimates, available at http://www.census.gov/acs/www/guidance_or_data_users/estimates/.

2 For example, with ewer people around to spend theirwages, local businesses will lose customers and prots,and will likely be unable to sustain as many jobs, lead-ing to urther economic troubles.

3 Previous reports released by the Center or AmericanProgress in conjunction with the Immigration PolicyCenter have included direct, indirect, and inducedeects o legalization or deportation o undocu-

mented workers. For more inormation, please see R aulHinojosa-Ojeda and Marshall Fitz, A Rising Tide or aShrinking Pie: The Economic Impact o LegalizationVersus Deportation in Arizona (Washington: Centeror American Progress, 2011) available at http://www.americanprogress.org/issues/2011/03/pd/rising_tide.pd, and Revitalizing the Golden State: What Legaliza-tion Over Deportation Could Mean to Caliornia andLos Angeles County (Washington: Center or AmericanProgress, 2011), available at http://www.american-progress.org/issues/2011/04/pd/ca_immigration.pd.

4 Demographic data rom American Community Survey5 year data, 2006-2010; Passel and Cohn, Unauthor-ized Immigrant Population.

5 The number o employed undocumented workers wascalculated by discounting the Pew Hispanic Centernumbers or the size o the undocumented workorce

(which includes employed and unemployed people,)by the state unemployment rate or oreign-bornnoncitizens, 7.1 percent in 2010, the base year orcalculations. See American Community Survey 5-yearestimates, 2006-2010; Passel and Cohn, UnauthorizedImmigrant Population.

6 A 100 percent deportation scenario, where all jobsdisappear and no native workers replace the undocu-mented is clearly the worst-case scenario. We haveincluded multiple deportation scenarios (15 percent,30 percent, 50 percent, and 100 percent,) to illustratewhat would happen i even a portion o these jobsevaporate. And economic research backs the claimthat, as the Immigration Policy Center puts it, There isno direct correlation between the presence o recentimmigrants and unemployment levels at the regional,state, or county levels. In general native-born workersand recent immigrant workers compliment, rather than

confict with one another, and are not easily substitut-able, generally having dierent work and skill histories,and living in dierent locations. See: Immigration PolicyCenter, The Economic Blame Game; and ImmigrationPolicy Center, Not in Competition. Immigrant workersalso sustain workers in other sectors, with the U.S.Department o Agriculture estimating that each arm

job sustains three other jobs in upstream occupations,such as transportation or manuacturing. See Holt,

Testimony beore the Committee on Agriculture.

7 For example, ater the passage o Georgias immigra-tion law H.B. 87 which drove many undocumentedworkers out o the state, a survey by the GeorgiaRestaurant Association ound that hal (49 percent) orespondents experienced labor shortages, and a whop-ping 88 percent were concerned with experiencinguture labor shortages. See Georgia Restaurant Associa-tion, Georgia Immigration Reorm: Restaurant ImpactStudy.

8 Hagan, Lowe, and Quingla, Skills on the Move; Lowe,Hagan, and Iskander, Revealing talent.

9 Bureau o International Labor Aairs, Eects o theImmigration Reorm and Control Act.

10 Tax eects in IMPLAN are derived rom wage increases

resulting rom the legalization o undocumented work-ers. This tax analysis represents the estimated increasein tax revenue generated by a change in nal demand,refecting only the direct impacts o increasing wagesto undocumented workers.

11 American Community Survey 5 year data, 2006-2010;Passel and Cohn, Unauthorized Immigrant Population.

12 For more inormation on the IMPLAN system, see: MIG,inc.s IMPLAN website, available at http://implan.com/V4/Index.php. For other immigration and economicmodeling uses o IMPLAN, see, or example: RandyCapps, Kristen McCabe, and Michael Fix, Prole oImmigrants in Napa County (Washington: MigrationPolicy Institute, 2012), available at http://www.migra-tionpolicy.org/pubs/Napa-Prole.pd.

13 Karina Fortuny, Randy Capps, and Jerey S. Passel,

The Characteristics o Unauthorized Immigrants inCaliornia, Los Angeles County, and the United States(Washington: The Urban Institute, 2007), available athttp://www.urban.org/uploadedpd/411425_charac-teristics_immigrants.pd.

14 Note: For the Colorado State gures, the wages oundocumented workers in the industry category oRened Energy still crossed the $72,000 thresholdeven ater discounting the wages by 50 percent; or thiscategory alone we discounted the overall wages by 60percent to ensure the most conservative results.

Endnotes


19/19

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for all. We believe that Americans are bound together by a common commitment to

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Documents

Deportation vs. Legalization in Colorado