Immigration or recession?

By Susan Strother Clarke
Via The Orlando Sentinel

As the great immigration debate continues, I’ve wondered about a couple of things.

What would happen to the U.S. economy if immigration — legal and illegal — stopped tomorrow?

Taking it a step further, what would happen if the 11 million to 12 million illegal immigrants here now simply went away?

For answers, I turned to number-cruncher Mark Zandi, chief economist at
Moody’s Economy.com. He based his data not on emotion, but on the
things that economists look at, such as employment, income and buying
power.

Granted, my scenarios are extreme. When Congress
continues its discussion next week about illegal workers, it’s highly
unlikely that enough lawmakers would support either case.

Still, given the anti-immigrant rhetoric in some quarters, it’s interesting to play out the extremes.

Zandi tells me that if the United States could seal its borders and
stop all immigration, the country would be looking at a half-point
decline in growth of the gross domestic product.

Given that GDP
is projected to expand by 3.5 percent this year, a half-point slip
isn’t earth-shattering. But it’s not great, either.

For a
little perspective, Hurricane Katrina, with the unemployment and high
fuel costs it caused, shaved as much from the GDP as would an end to
all immigration.

But the real economic woes would start if the illegal immigrants already in the country flat-out went away.

Instead of expanding, the economy would shrink by 2.5 percent. What
does that feel like? Well, a decline even approaching that level hasn’t
happened since 1982, when the economy shrunk by 2 percent.

As
for an idea of what 1982 felt like, unemployment then averaged almost
10 percent and inflation was about double what it is now.

“If
the illegals left, relatively quickly, it would mean a fairly
measurable recession. We would have a year of negative numbers,” Zandi
said.

One year, maybe more. That’s because there wouldn’t be
enough people to fill certain jobs. About 6.5 million of the illegal
immigrants in this country are employed. That’s 4 percent of the work
force — and that’s a chunk of people who can’t be replaced overnight.

In Florida, the workers play big roles in citrus, tourism and
construction. Eventually, employers would be forced to pay more money,
and new people would move into some of the jobs.

But that would
take time. And prices would go up. The economy is like that old song
about the knee bone being connected to the leg bone. Everything is
entwined.

If I pay more for my food and house, I can’t afford
to buy a car. That means that someone loses a sale at the local
dealership, his family has less money to spend and so forth.

It’s also true that illegal immigrants suppress wages. That’s something that hurts the poorer native-born people.

But the low wages that are paid to illegal immigrants help the rest of the economy.

Said Zandi: “Adding up the winners and losers, with immigration, the economy overall benefits.”

That’s something all members of Congress should keep in mind.