February 9, 2016
The Arizona Experience
Wall Street Journal -- February 8, 2016
The Thorny Economics of Illegal Immigration
Arizona's economy took a hit when many illegal immigrants left, but benefits also materialized
Maricopa -- After Arizona passed a series of tough anti-immigration laws, Rob Knorr couldn't find enough Mexican field hands to pick his jalapeño peppers. He sharply reduced his acreage and invested $2 million developing a machine to remove pepper stems. His goal was to cut the number of laborers he needed by 90% and to hire higher-paid U.S. machinists instead.
“We used to have many migrant families. They aren't coming back,” says Mr. Knorr, who owns RK Farms LLC, an hour's drive from Phoenix.
Few issues in the presidential campaign are more explosive than whether and how much to crack down on illegal immigration, which some Republican candidates in particular blame for America's economic woes. Arizona is a test case of what happens to an economy when such migrants leave, and it illustrates the economic tensions fueling the immigration debate.
Economists of opposing political views agree the state's economy took a hit when large numbers of illegal immigrants left for Mexico and other border states, following a broad crackdown. But they also say the reduced competition for low-skilled jobs was a boon for some native-born construction and agricultural workers who got jobs or raises, and that the departures also saved the state money on education and health care. Whether those gains are worth the economic pain is the crux of the debate. [...]
Proponents of doing more to curb illegal immigration say the mass departures helped the state economically in several ways. Government spending on health care and education for illegal immigrants and their U.S.-born children dropped. Wages for plasterers, landscapers, farmworkers and other low-skilled laborers jumped because of scarcity, according to employers and federal data.
“Even if the size of the state's GDP decreased, the decrease in immigration redistributed income from employers to employees, particularly at the bottom end of the labor market,” says Steven Camarota, research director of the Center for Immigration Studies, in Washington, which favors reduced illegal immigration. “That's a good deal.”