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The Potential Economic Impact of Obama’s Immigration Policy Reform

economygraph.jpgLast week President Barack Obama announced his plan to allow amnesty to certain undocumented immigrants currently living in the United States. His policy reform was met with a significant amount of criticism from the GOP as well as from the American public but many feel there is one aspect of the changes that may be a bright spot for the United States regardless of how popular or unpopular the President’s plan may be. That bright spot is the boost to the US economy that allowing amnesty to nearly 5 million undocumented immigrants will provide. Considering the concerns that many Americans still have about the slow pace of the country economy, this potential impact could help sway those who were not in favor of Obama’s immigration policy reform.

It Could Help, But How Much?

On the surface it sounds like a true upside and it may very well be. Of course only time will tell. But if the new immigration policy changes do in fact end up helping the US economy, the next logical question becomes just how much of a benefit could be provided. The President’s proposal that would give upwards of 5 million undocumented immigrants a possible path to legal status could also revamp the visa process that gives opportunities to highly skilled workers – particularly those in the tech fields.

According to a study conducted by economists at the University of California at Los Angeles, these policy changes would have significant short term effects on the economy to the tune of 160,000 new jobs, nearly $7 billion in labor income, and upwards of $2.5 billion in tax revenue. The long term effects, according to a study conducted by officials at the White House, estimates that the President’s plan would provide a much needed shot in the arm to the gross domestic product by between 0.4% and 0.9%. That translates to between about $90 billion and $210 billion over the next decade.

Two Modes of Impact

Most economists in the US who have contributed their opinion and analysis to the various media outlets have stated that there are essentially two modes of impact that the new immigration changes could have when it comes to the economy in the United States. The first would be by the wages paid to low-skilled workers and the second would be through the increase in productivity that would result from higher numbers of highly skilled workers in the country’s labor force. Back in the mid-1980s when then-President Ronald Reagan made a similar amnesty allowance for undocumented immigrants, the impact on those immigrants affects was that their wages went up between 5% and 10%, according to some studies.

The reason for the boost in wages was believed to be two-fold. For one thing, undocumented workers knew they would be in the country for a long time so they became more invested in their training and abilities. Also, with the fear of deportation lifted, they were able to switch jobs and find work more suited to their higher skill sets.

The problem is not knowing how many eligible immigrants will actually participate since Obama’s order does not grant full legal status. If only about half of those eligible participate – which is about the same as who participated in Reagan’s plan 30 years ago – then it may not provide quite the beneficial impact after all. Once again, only time will tell.

If you or someone you know is in need of legal counsel regarding an immigration issue, please contact the immigration attorneys at the Lyttle Law Firm in Austin, Texas or call their offices at 512-215-5225.