Proof that immigrants fuel the US economy can be seen in the billions they send back home

Social scientists and analysts tend to agree that immigration — both documented and undocumented — stimulate economic growth. But it is almost impossible to directly calculate how much immigrants contribute to the economy. That’s because we don’t know the earnings of every immigrant worker in the United States.

However, we have a good idea of ​​how much they send back to their home countries — over 81 billion dollars in 2022, according to the World Bank. And we can use this figure to indirectly calculate the total economic value of immigrant labor in the United States.

Economic contributions are probably underestimated

i drove a study with researchers from Center for Latin American and Latin American Studies and Immigration Laboratory at American University to quantify how much immigrants contribute to the U.S. economy based on their remittances, or money sent back home.

More studies indicate that remittances constitute 17.5% of immigrants’ incomes.

With this in mind, we estimate that immigrants who remitted in 2022 had take-home wages of more than $466 billion. Assuming their wages are about 21 percent of the economic value of what they produce for the businesses they work for — such as workers with similar entry-level jobs in restaurants and construction — then immigrants added a total of 2 .2 trillion dollars to the US economy annually.

That’s about 8% of the gross domestic product of the United States and almost the entire GDP of Canada in 2022 — the ninth economy in the world.

Immigration strengthens the United States

Beyond its value, this figure tells us something important about immigrant labor: the main beneficiaries of immigrant labor are the US economy and society.

The $81 billion that immigrants sent home in 2022 represents a small fraction of their total economic value of $2.2 trillion. The vast majority of immigrants’ wages and productivity — 96 percent — stayed in the United States.

Remittances from the United States are a substantial source of income for the people who receive them. But they are not a drain on US dollars, as Trump once suggested he called remittances “welfare” for people from other countries and suggested taxing them to pay for building a border wall.

It is possible that the economic contributions of US immigrants are even more substantial than we estimate.

First, the World Bank’s estimate of remittances by immigrants is likely an undercount because many immigrants send money abroad with people traveling to their home countries.

In previous researchmy colleagues and I have also found that some immigrant groups are less likely to send than others.

One is white-collar professionals — immigrants with careers in banking, science, technology and education, for example. Unlike many undocumented immigrantswhite-collar professionals usually have visas that allow them to bring their families with them, so they don’t have to send money abroad to cover their household expenses back home.

Immigrants who have been working in the country for decades and have more families in the country also tend to send remittances less often.

Both groups have higher incomes, and their specialized contributions are not included in our $2.2 trillion estimate.

Furthermore, our estimates do not account for economic growth spurred by immigrants when they spend money in the United States, creating demand, generating jobs, and starting businesses which employs immigrants and locals.

For example, we calculate contributions of Salvadoran immigrants and their children alone added about $223 billion to the US economy in 2023. That’s about 1% of the country’s entire GDP.

Given that the US economy increased by about 2% in 2022 and 2023, this is a substantial amount.

These numbers remind us that the financial success of the United States is based on immigrants and their work.

Ernesto Castañeda is a teacher at American University.

This article is republished from conversation under a Creative Commons license. Read on original article. The views and opinions expressed in this commentary are solely those of the author.