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Investors Believe Illegal Immigration Is Hurting the U.S. Economic Climate

Investors Believe Illegal Immigration Is Hurting the U.S. Economic Climate

Eight in 10 investors say the government should do more to stop illegal immigration

by Dennis Jacobe


PRINCETON, NJ -- Last week, President Bush renewed his efforts to promote his plan to control illegal immigration while creating a new guest-worker program. This week, expectations are that the Senate will take up proposed legislation to deal with the illegal immigration situation. At the same time, House leaders who passed an immigration enforcement bill late last year intend to hold a series of events promoting border security this week.

Of course, there are plenty of reasons for Congress to act on the issue of illegal immigration, not the least of which is illustrated by the new UBS/Gallup Index of Investor Optimism poll for March showing that 80% of U.S. investors think the federal government should do more to prevent illegal immigration. Only 10% believe the government is doing enough while 7% believe the government should do less to prevent illegal immigration.

What precisely the Congress should do to stem the tide of illegal immigration is a more difficult question. In this regard, investor opinions seem to illustrate some of the economic issues involved as Congress attempts to break the political deadlock over the illegal immigration issue.

Hurting the Investment Climate

Nearly two in three investors (62%) say illegal immigration is hurting the U.S. investment climate a lot (36%) or a little (26%). This about the same as the 65% of investors who felt this way in February a year ago and the 64% who felt this way last July, but down from the 70% of May 2005. Of the 10 issues tested in this poll, illegal immigration ranked sixth in terms of "hurting the investment climate a lot" -- lower than such reasons for concern as energy prices or the federal budget deficit, but higher than the threat of more terrorist attacks or higher interest rates.

Hurting the Taxpayers

Two in three investors (68%) also say that illegal immigrants cost taxpayers too much because they use government services like public education and medical services. Only one in four investors (25%) believes that in the long run, illegal immigrants become productive citizens paying their fair share of taxes.

Hurting Some Local Economies

In sharp contrast to their concerns about the national impact illegal immigration is having on the investment climate, investors appear much less concerned about the impact of illegal immigration on their local economies. One in three investors (32%) say illegal immigration is hurting their local economies a lot (14%) or a little (18%). In fact, 17% say it is helping their local economies a lot (5%) or a little (12%). Nearly half (48%) suggest illegal immigration is having no effect on their local economies.

Taking Jobs Others Don't Want

While most investors feel more needs to be done to prevent illegal immigration and that illegal immigrants already in the U.S. are a net cost to taxpayers, most investors also recognize that illegal immigrants play a significant role in the current U.S. economy. More than 8 in 10 investors (84%) believe that illegal immigrants mostly take low-paying jobs Americans don't want. Only 13% of investors think illegal immigrants mostly take jobs American workers want.

Investor Opposition to Illegal Immigration Is Somewhat Surprising

From an economic perspective, illegal immigrants -- by their very status -- are subject to economic exploitation by being paid lower wages and working under worse conditions than other workers simply because they are "illegal" and fear being deported. The benefits of this exploitation accrue to those employers -- both companies and high-income individuals -- who employ illegal immigrants and the consumers who buy the products and services they produce. Presumably, investors, as owners of many of these companies and as higher-income individuals themselves, benefit disproportionately from today's illegal immigration.

In this context, it is not surprising that investors see illegal immigrants as doing jobs most Americans do not want -- at least at today's wages and working conditions. Nor is it surprising that many investors see illegal immigrants as having no effect or even a positive impact on their local economies. In fact, if the flow of cheap, unskilled labor provided by illegal immigrants dries up, many local communities may be surprised as the cost of some services dependent on this type of labor increase and the wages of unskilled American workers escalate.

However, what is surprising is that so many investors say they support stronger government efforts to prevent illegal immigration. When 8 in 10 of those individuals who probably benefit the most from illegal immigration want the federal government to act to prevent it, then clearly elected officials should take note and act. If they don't, then the already low ratings Congress currently receives from the public might go even lower.

Survey Methods

Results for the Index of Investor Optimism poll are based on telephone interviews with 802 investors, aged 18 and older, conducted Mar. 1-16, 2006. For results based on the total sample of investors, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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