An addendum to key components of immigration reform

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An addendum to key components of immigration reform

  1. 1. An Addendum to “Key Components of Immigration Reform” An Analysis of the Economic Effects of Creating a Pathway to Legal Status and Expanding High-Skilled Visas on Suffolk County Prepared by Rod Motamedi of Regional Economic Models, Inc. For “Economic  Impacts of Immigrants in Boston”:  An Event Hosted by the Mayor’s  Office  of  New   Bostonians, Boston Redevelopment Authority, and Regional Economic Models, Inc.
  2. 2. Introduction Regional Economic Models, Inc (REMI) is the nation’s leading provider of policy and economic analysis models and also provides guidance and research on studying important issues of the day. In July of 2013, REMI released a study titled Key Components of Immigration Reform1 . That study was funded by the Ford Foundation, Unbound Philanthropy, and the Carnegie Corporation of New York and examined the national and state-by-state economic effects of various immigration reform options. This addendum builds off of the previous study by disaggregating the results for Massachusetts into sub-state areas including the City of Boston as approximated by Suffolk County. Methodology This paper began with the results for Massachusetts from REMI’s national report. It considers two of the options studied in the main paper: creating a pathway to legal status for existing undocumented immigrants and increasing the number of H-1B visas available for foreign, high- skilled workers. Details on simulation methodologies and data sources can be found in the main report. The next key piece in the development of this paper is the PI+ model REMI built for Boston Redevelopment Authority (BRA). PI+ is a dynamic, regional economic model that is used by clients around the world for economic, demographic, and policy studies. BRA has used PI+ for ten years to aid the City of Boston in improving the quality of its quantitative research. We used the baseline employment data in PI+ to allocate the state totals to the individual regions. The model includes three regions: Suffolk County, its surrounding four counties, and the rest of Massachusetts. Each region includes a full forecast of employment for 70 sectors through 2060. The sector-level employment for each region was weighted to reflect its portion of state totals and then used to allocate state-level results to the regions. For example, in 2014, Suffolk County has 19% of the Professional and Technical Services’ jobs in Massachusetts therefore it would receive 19% of those jobs from each of the two scenarios. It is important to note that the types of industries affected between the pathways scenario and the H-1B scenario differ greatly therefore, even though the underlying distribution shares are the same, the policies affect Suffolk County differently. Pathway to Legal Status The analysis of creating a pathway to citizenship for existing undocumented immigrants hinges on the word “existing”.  Unlike  most  immigration  studies,  it  is  not  concerned  with  movements  of   new people rather it is concerned with moving existing workers out of the economic shadows 1 The paper and state-level factsheets can be found here: http://www.remi.com/immigration-report.
  3. 3. into the open economy. Therefore, this scenario does not change national population. However, previously undocumented workers will see their wages increase over time. Part of this increase is due to better protection under the law which comes at a cost to the employer. The other and greater part of this increase is attributed to greater productivity achieved by improved employer- employee matching enabled by new workforce flexibility. H-1B The analysis of increasing the number of H-1B visas issued represents a more traditional immigration scenario. With the expansion in visas, more workers and their dependents will enter the U.S. which will increase both labor force and population. Because H-1B immigrants require a job to enter, these new immigrants represented new employment as well.
  4. 4. Results Pathway to Legal Status Nationally, in 2014, creating a pathway to legal status will produce a total of 123,000 jobs and add approximately $10 billion to gross domestic product (GDP). By 2020, these increases are estimated to be 551,000 jobs and $45 billion. Figure 1: Heat Map of National Employment Effects of a Pathway to Legal Status As the above figure shows, while showing positive employment growth, Massachusetts is not among the top states that benefit in this scenario. This result is due simply to the fact that other states, especially those along the southern border, have a considerable amount of the nation’s undocumented immigrants and thus see a larger relative benefit.
  5. 5. Figure 2: Employment Impacts of Pathway to Legal Status in Massachusetts’ Regions Figure 2 shows the growth in employment in Massachusetts. The initial growth is due to the wage increases over the first five years after legal status. From year six, wage increases follow existing trends. Table 1 shows the industries that gain the most jobs in Suffolk County. The industries are a mix between those that typically employ undocumented workers, those that depend on the consumption of others, and those that support other growing businesses. Table 1: Top Ten Industries by New Employment, Suffolk County, Pathway to Legal Status Suffolk County Top Employment by Industry 2020 Hospitals 318 Securities, commodity contracts, investments 168 Ambulatory health care services 160 Professional, scientific, and technical services 153 Educational services 128 Retail trade 103 Administrative and support services 91 Food services and drinking places 80 Construction 73 Personal and laundry services 51 0 1,000 2,000 3,000 4,000 5,000 6,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Jobs Employment Impact Suffolk County Four County Region Rest of MA
  6. 6. The new jobs support more income and gross product. Because more people are earning paychecks and some are earning larger paychecks, aggregate personal income grows. More income also leads to greater consumption which benefits the economy as a whole. Gross regional product (GRP) is the value of net new economic activity and includes consumption as its largest component. Suffolk County’s GRP grows by $205 million in 2020 and $168 million by 2030. Figure 3: Personal Income Impacts of Pathway to Legal Status in Massachusetts’ Regions $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 MillionsofFixed2014$ Personal Income Impact Suffolk County Four County Region Rest of MA
  7. 7. H-1B Nationally, in 2014, expanding the number of available H-1B visas will produce a total of 227,000 jobs and add approximately $22 billion to gross national product (GDP). By 2020, these increases are estimated to be 408,000 jobs and $41 billion. Figure 4: Heat Map of National Employment Effects of H-1B Expansion As the above figure shows, in contrast to the pathways scenario, Massachusetts is among the top states that benefit in this scenario. This result is due to the fact that Massachusetts generally and Boston in particular receive a significant portion of the high-skilled workers on H-1B visas.
  8. 8. Figure 5: Employment Impacts of H-1B Expansion in Massachusetts’ Regions Figure 5 shows the growth in employment in Massachusetts. The growth is driven by both the increased employment of H-1B workers and also the economic effects of great population from the immigration of the both the workers and their dependents. Table 2 shows the industries that gain the most jobs in Suffolk County. The industries are a mix between those that typically employ H-1B workers, those that depend on the consumption of others, and those that support other growing businesses. Table 2: Top Ten Industries by New Employment, Suffolk County, H-1B Expansion Suffolk County Top Employment by Industry 2020 Professional, scientific, and technical services 556 Educational services 242 Hospitals 224 Food services and drinking places 176 Administrative and support services 123 Securities, commodity contracts, investments 103 Retail trade 90 Real estate 68 Construction 62 Membership associations and organizations 57 0 2,000 4,000 6,000 8,000 10,000 12,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Jobs Employment Impact Suffolk County Four County Region Rest of MA
  9. 9. The new jobs support more income and gross product. More income and a growing population also lead to greater consumption which benefits the economy as a whole. Suffolk County’s  GRP grows by $348 million in 2020 and $556 million by 2030. Figure 6: Personal Income Impacts of H-1B Expansion in Massachusetts’ Regions As mentioned previously, workers immigrating on H-1B visas are allowed to bring their dependents with them. Therefore, the population of the U.S. will grow by more than the number of visas issued. Each new person will represent an increase in demand for goods and services and some will add to the labor force. These secondary effects are embodied in the results presented in this paper. $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 MillionsofFixed2014$ Personal Income Impact Suffolk County Four County Region Rest of MA
  10. 10. Figure 7: Population Impacts of H-1B Expansion in Massachusetts’ Regions Conclusion Each scenario evaluated in the national study and in this addendum promoted economic growth. While each scenario affects states differently, in the end the growth is wide-spread across the nation and within the regions of Massachusetts. Gross product, aggregate and per-capita incomes, and employment all increase in these reform scenarios. In conclusion, we find these immigration reform proposals beneficial for U.S. and its constituent states. 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Individuals Population Impact Suffolk County Four County Region Rest of MA

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