An Essential Resource: An Analysis of the Economic Impact of Undocumented Workers on Business Activity in the US with Estimated Effects by State and by Industry

The issues surrounding immigration are complicated (particularly in the case of the undocumented segment), ranging from security to tax policy to the provision of social services. In a 2008 study of the issue, The Perryman Group estimated the magnitude of business activity directly tied to the undocumented workforce as well as the potential economic effects of various immigration policy options. The analysis has been cited by hundreds of media outlets and used numerous times in Congress and other key political discussions.

The development of immigration policy affects not only national security and other priorities, but also the economy. Overly restrictive policy has the potential to devastate certain industries which would be faced with near crisis conditions in terms of affordable labor. In fact, millions of jobs are at stake, and the spillover effects would ripple through every sector of the economy and every region of the country. While a national reform initiative is imperative, it must be cognizant of the potential economic fallout in order to avoid unnecessary disruptions, dislocations, and unintended consequences.

The Perryman Group studied the effects of the undocumented workforce, taking a balanced view of the economic costs and benefits. Factors considered include the likely numbers of undocumented workers by state, concentration of undocumented workers by industry, dynamic adjustments that would be set in motion by a major change in immigration policy, spillover effects as various supply chains and payrolls are affected, and relative differentials in skill levels and compensation associated with undocumented workers.

The analysis provides an assessment of the magnitude of the impact of the undocumented workforce as well as the economic dependency of various areas and sectors on this source of labor. It also permits an evaluation of both the initial “snapshot” (or static) effects of removing these workers as well as a dynamic view of the emerging patterns over time. Through such a process, information can be gleaned which facilitates a more reasonable discussion of policy options and priorities within a practical economic context. The full report is available below for download.