Cause and Effect From Someone Who KNOWS By Chuck McGlawn

Sunday, December 4, 2011

We have read and abbreviated (below) The New Alabama Immigration Law: A Preliminary Macroeconomic Assessment written October 2011 by Samuel Addy, Ph.D. Director of the Center for Business and Economic Research Culverhouse College of Commerce and Business Administration

The University of Alabama

Dr. Sam Addy joined the Center for Business and Economic Research (CBER) in 1998 and assumed the position of Director in 2007. He holds an M.S. in Mineral Engineering from the University of Minnesota, and a Ph.D. in Mineral Economics from The Pennsylvania State University.

In this role as Director, he regularly speaks to groups and organizations on topics including the Alabama economy, economic policy, economic development, and workforce development. Dr. Addy works with CBER’s economic research program and has directed and conducted economic impact studies for numerous public and private clients across the state. Other areas of emphasis include assessment and analysis of Alabama’s workforce; fiscal policy; socioeconomic analysis for transportation and other development projects; and environmental and climate change issues. Sam has published in academic journals and is often quoted in local, regional, national, and international media.

In his recent article, he points out that, “Economies are demand-driven so any policy, regulation, law, or action that reduces demand is misguided and will not contribute to economic development…” He goes on to say, “Instead of boosting state economic growth, the law HB56  is certain to be a drag on economic development…”

Dr. Abby doesn’t blame the well-intentioned lawmakers, or the citizen supporters of HB56, however misguided, “those that tend to favor the law focus on its intent but often not on its actual effects.” Dr. Abby says, “[T]he law is likely to drive a portion of … illegal immigrants out of state or underground. [D]emand in the Alabama economy is reduced since the income generated by these people and their spending will decline. That results in a shrinking of the state economy and will be seen in lower economic output, personal income, and fewer jobs  (Emphasis added) than would otherwise have been.

Dealing with some of the misconceptions, he says. “What about the argument that illegal immigrants are a drain on resources because they don’t pay taxes? Yes, illegal immigrants use some public services but they do pay taxes and the economy enjoys some benefits as a result of the demand created by their presence.” He goes on to say, “[T]he levels of income they receive many illegal workers will not have to pay federal income tax because of the standard deduction and personal exemption allowed. Indeed, they could receive earned income tax credit, which many do not file for because they wish to remain below the radar and because their status makes it practically impossible. In addition, they make payroll taxes with little chance of ever benefiting from those social safety net programs unless somehow they become legal.” [Where have we heard that before?]  However, [illegals do] “pay sales and property taxes directly and indirectly through their income spending and consumption activities.”

Near the end of his paper, Dr. Abby joined the throng by adding, "Although there’s an ongoing debate about the costs and benefits of illegal immigrants, it is generally accepted that immigration, as a whole, has a net positive effect on the national economy."

Dr. Abby concludes with, “Bottom-line, the law will be costly to the state economy even without consideration of [increased] enforcement costs. Is it possible to amend the new immigration law so that it keeps the admirable intent but also increases demand in the economy, brings more of the informal economy into the light, boosts economic development, and facilitates the continuation of the economic strides that the state has been making? In short, what we need are laws and policies that will keep Alabama on a ROLL.

My own conclusion is that anyone that favors keeping HB 56 and enforcing it, has some other agenda than economic benefits to the National economy, benefits to the Alabama economy and a better life for not only those immigrants that will be affected but the people of Alabama.