Economics of illegal immigration: workers add perhaps $3.5 billion to our state's economy each year.

• Author: Hicks, Michael
• Position: INDIANA INDICATORS

FEW ISSUES GARNER AS much vitriol as the debate over illegal immigration. The dimensions of the debate are wide ranging, but as with most aspects of public policy, they are heavily influenced by economic issues. Indiana has embarked on an immigration debate, and so a bit of economics might be helpful.

First, according to the most reliable recent data, Indiana has fewer illegal immigrants than neighboring states. I have seen estimates of between 4-5,000 to over 100,000, a number that varies seasonally with the agricultural industry This is as much as 1.5 percent of our state's population. These workers add perhaps $3.5 billion to our state's economy each year.

Wages for illegal immigrants are undoubtedly lower than for either native workers of the same age cohort or legal immigrants (who, because of their tendency for high educational achievement actually earn, on average, more than native workers).

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The very best evidence concludes that illegal immigration has not affected domestic wages, even at the low end of the scale. And, with a statewide unemployment rate of 4.6 percent illegal immigrants are certainly not costing U.S. citizens jobs. An American competing with an illegal immigrant has far bigger worries than job competition from illegal immigrants.

Illegal immigrants also use public services: schools, health care and sadly, the legal system. Illegal immigrants also pay taxes. In Indiana, immigrants pay income tax, sales tax and fees. At the federal level, illegal immigrants who employ falsified documents also pay income taxes and payroll taxes (FICA), which combine to somewhere between 15 and 20 percent of their incomes. Illegal immigrants pay taxes exactly like citizens.

Illegal immigrants cannot claim Social Security benefits or income tax refunds, so their marginal tax rate will be much higher...