Experts Say Anti-Immigration Laws Carry Unintended Economic Costs

Anti-immigration policies like an Oklahoma bill cracking down on illegal aliens are costly, two economists said in an interview aired recently on a Baptist radio program.

Passed in 2007, the “Oklahoma Taxpayer and Citizen Protection Act,” HB 1804, is the nation’s toughest immigration law. It requires employers to verify the legal resident status of all new employees and makes it illegal to fire a legal resident and allow an illegal to stay on the job.

The Federation for American Immigration Reform said Oklahoma spends about $207 million a year on illegal immigrants, mostly for education, emergency healthcare and incarceration. The bill’s intent was to reduce that drain by driving undocumented workers to other states.

“Oklahoma is no longer ‘OK’ for illegal aliens,” the bill’s sponsor, State Rep. Randy Terrill, said when the bill passed. “The bottom line is illegal aliens will not come here if there are no jobs waiting for them, they will not stay here if there is no government subsidy, and they certainly won’t stay here if they know that if they ever encounter our state and local law enforcement officers, they will be physically detained until they’re deported.”

But two economists hired by bankers to study the impact of the measure said unintended consequences could carry far greater economic costs than the amount saved in social services. Russell Evans and Kyle Dean of the Economic Impact Group of Edmond, Okla., said if 50,000 immigrants leave Oklahoma on account of the law, the state stands to lose about $1.8 billion a year in productivity and wages.

“The way the economy works is that if I do a job I require certain things to do that job,” Dean said in an interview recorded earlier and broadcast May 25 on a special edition of “Religious Talk” with Will Prescott. “Let’s say I’m in the IT industry. I might require accountants to do my accounting work for me, and I might require cabling techs to do the cabling for me, and so on.”

“So let’s say you just pull me out of the economy,” Dean explained. “Now all of a sudden I don’t need the accountant to do the work that I needed accountants to do the work before I left. So one of the unintended consequences I believe of this particular issue is that if you pull a significant portion of the workforce out, there’s going to be some of the workforce that is complementary in nature to whatever it was that that particular piece of the workforce was doing that is also going to be adversely impacted.”

“As you remove foreign-born workers, as you remove these workers from the economy, what happens in the low-skill labor market is that the businesses and the firms have to compete for the remaining low-skill workers,” Evans added. “It drives up the wages of this particular group. As these wages go up, it essentially makes Oklahoma production less competitive relative to our neighbors and suppresses Oklahoma production. So as Oklahoma firms produce less, as they slow the rate of expansion, not only do they require fewer workers, they require fewer high-skill workers.”

Evans and Dean said previous studies indicate that laws targeted at illegal immigrants adversely affect all foreign-born workers, because they create a “chilling” climate that applies to all immigrants regardless of their residency status. Further complicating the picture are families of mixed residency status, meaning that decisions about whether to stay or go often are not by individuals but rather whole families.

Evans said low-skill jobs aren’t the only ones affected.

“If I’m in the construction business, and I have to compete against other firms for my roofing crew and my framing crew and I therefore have to drive up these wages, I then take fewer jobs,” he explained. “I slow my rate of construction. I need fewer architects, fewer design engineers, fewer accountants, fewer loan facilitators. I need fewer high-skill workers that complement my roofers and my framers in producing the ultimate product, which is a house. So those effects get transmitted to both labor groups.”

Since high-skill jobs tend to be more mobile than unskilled labor, professionals who find themselves unemployed or underpaid may also decide to leave the state.

Oklahoma’s unemployment rate has dropped in the months since HB 1804 went into effect, but so has the state’s overall Business Conditions Index. Arrests of illegal immigrants have increased dramatically in recent months, but so have crimes targeting victims who are presumed to be undocumented, because those residents are reluctant to call police for fear of being deported.

Critics say bills like HB 1804 make Oklahoma look narrow-minded. “There’s a perception in the Hispanic community that Oklahoma is anti-Hispanic,” Allan McCobb, executive director of United Way of Enid and Northwest Oklahoma, said last month in an immigration forum.

Supporters failed in efforts to pass a “Son of HB 1804,” while Senate Democrats were able to gut a bill that would have sent a constitutional amendment to a public vote to make English the official language in Oklahoma.

Evans and Dean said they had not taken sides on the moral or ethical implications of the law.

“We take no position on 1804 as a bill itself,” Dean said. “We were simply tasked to look at the economics of it, find out what the cost of driving illegals out of Oklahoma, what that cost to our production and what that cost to our income is going to be. Our take from the beginning has been that all of this information needs to come to the forefront so we can have a good debate.”

“We certainly have a position that policies like this in Oklahoma that have a significant impact on the overall economy merit consideration,” Evans added. “They merit research and they demand an open and frank discussion of consequences.”

Bob Allen is managing editor of EthicsDaily.com.