Latin American immigrants spend earnings in the United States

June 3, 2004

Free Market Foundation

Much has been made of the economic lifeline provided to Latin America by the billions of dollars transferred home by immigrant workers each year. However, according to a new study by the Inter-American Development Bank (IADB), more than 90 percent of the income earned by immigrants stays in their adopted communities, creating a huge boost to local economies:

The 16.7 million U.S. workers born in Latin America had a combined gross income of $450 billion last year, of which 93 percent was spent locally.

Georgia highlights this trend, with an estimated $13 billion generated by labour imported from Latin America, or 3 to 4 percent of the states gross domestic product.

About two-thirds of all migrants born in Latin America are regular remitters, though most dont begin sending money back to their native countries until they are well-established in the United States.

Overall, Latino immigrant workers send more than $30 billion a year home from the United States. Guest workers in the top six states California, New York, Texas, Florida, Illinois and New Jersey remit more than $1 billion home annually from each location.

IADB economist Donald Terry says immigrants, even undocumented ones, are net taxpayers. That is, they use less services (such as schools and hospitals) than the taxes they pay. This is because most dont receive Social Security benefits but pay the withholding taxes as well as sales taxes.

Source: Joel Millman, Immigrants Spend Earnings in U.S., Wall Street Journal, May 17, 2004.

For WSJ text (subscription required) http://online.wsj.com/article/0,,SB108474206287912688-search,00.html

For IADB text http://www.iadb.org/NEWS/DISPLAY/PRView.cfm?PR_Num=98_04&Language=English

For more on the Effects of Immigration http://www.ncpa.org/iss/imm/

FMF Policy Bulletin/25 May 2004