Bloomberg: Covid-19 Relief for Undocumented Would Boost the Economy for All

September 30, 2020

Depriving workers of $1,200 checks caused a $10 billion loss in economic activity.

By: Lorena Gonzalez and Raul Hinojosa-Ojeda

Among the many policy failures of our national Covid-19 response, the exclusion of 18.1 million people, including 4.9 million U.S. citizens, from federal stimulus packages will go down as one of the most economically devastating self-inflicted wounds.

These are neighbors who shop at local stores, pay rent and fuel the economy through their workforce participation to the tune of a $1.6 trillion contribution to the nation’s gross domestic product. According to research conducted by the University of California, Los Angeles, leaving undocumented immigrants out of the $1,200 tax rebate approved by Congress in March resulted in a $10 billion loss in economic activity — which is almost $3.4 billion more than what it would have cost to include them. (One of us, Raul Hinojosa-Ojeda, is a co-author of the study.)

The important role that documented and undocumented immigrants play in the national economy has been shown repeatedly in studies by the National Immigration Forum, the Center on Budget and Policy Priorities, the Brookings Institution and others.

With Congress negotiating a new coronavirus stimulus package, relief for undocumented workers must be a priority.

In California, undocumented immigrants make up more than 9% of the workforce and fuel the world’s fifth-largest economy. It is both a moral and an economic imperative to be sure they survive the pandemic. In April, Governor Gavin Newsom announced an emergency $125 million financial assistance program that would extend benefits to undocumented Californians. Cities including Los Angeles and San Francisco also have public and private programs to provide a safety net for immigrants who otherwise have nowhere to turn. But without an infusion of federal support, many undocumented families will fall off a financial cliff and take their local economies with them.

There are many communities outside of California that have not stepped in to fill the federal void even when undocumented immigrants and their families are hurting. The national unemployment rate for undocumented workers reached 29% in May, much higher than the rate for any other demographic group. The overconcentration of undocumented residents in construction and service jobs that have seen drastic cuts amid Covid-19 has resulted in a 25% reduction in wages for those workers.

The UCLA report found that undocumented workers and families are key contributors to the U.S. economy: About 78% of undocumented workers are employed in essential sectors. Undocumented workers and their families earn lower wages compared with their U.S.-born counterparts. Even before Covid-19, immigrant families struggled to make ends meet, yet their contributions keep local economies running. The failure to address their needs will only deepen the pandemic’s economic recession.

The shortsightedness of the federal policy also hurts U.S. citizens of all races and backgrounds. The UCLA report found undocumented immigrants contribute more than $190 billion in taxes. The American-born children of undocumented immigrants are facing hunger, potential homelessness and financial stress. The Donald Trump administration even made a decision to deny the $1,200 stimulus check to families in which one parent was undocumented, even if the other was a U.S. citizen.

The pandemic has exposed not only health and social inequalities, but also how our local and federal responses can lead to greater economic decline and deeper racial inequality. This vicious cycle of systemic discriminatory policies can be reversed with new policy ideas in a future federal stimulus package. Despite facing high unemployment rates, undocumented workers and their families are critical to meeting consumer demand for the national, state and local economic recovery.