A project of the Partnership for a New American Economy
Arizona has been at the forefront of the immigration debate. It was the first state to enact a restrictive state immigration law, Senate Bill 1070, and the first to feel economic consequences of such a law. Although many provisions of S.B. 1070 and similar bills passed in Georgia and Alabama have been struck down by the US Supreme Court, the law damaged the state’s economy, especially in some of the state’s most lucrative industries. According to the Center for American Progress, the bill triggered a loss in the state’s tourism industry equivalent to $253 million in economic output, $9.4 million in tax revenues, and 2,761 jobs. Conference cancellations alone cost the state $45 million in forfeited hotel and lodging revenues. Despite these millions of dollars lost, the Supreme Court’s decision seems to have averted an even greater economic contraction. Had the law been allowed to be fully implemented—and successfully forced all undocumented immigrants to leave the state—the Center estimates that Arizona’s economy would have shrunk by $48.8 billion, eliminating 581,000 jobs.
Size of foreign-born population
Percent of state’s population that is immigrant
Growth in foreign-born population 2000-2010
Top countries of origin
Unlike some of the other states that have enacted restrictive laws, immigrants make up a large portion of Arizona’s population. Arizona, which shares a roughly 375-mile border with Mexico, saw a huge growth in its foreign born population between 2000-2010. By 2010 almost 900,000 people in Arizona were foreign born, accounting for more than 13 percent of the state’s total population. Of that group, more than three in five immigrants originated in Mexico.
In the future, the growing number of foreign-born citizens in the United States will cause a demographic shift that has the promise of drastically shifting our electoral map. According to a study by the Partnership for a New American Economy, the foreign-born Hispanic and Asian populations in particular could cause the the electoral makeup of 18 key states to change substantively. In Arizona, there are a total of 582,000 unregistered Asian and Latino voters. Between 2012 and 2016 there will be a total of 184,777 newly eligible Hispanic and Asian voters, by 2020 that number is expected to grow to 386,928. In a high impact scenario, this demographic change could result in 155,026 additional democratic voters in 2016 and 185,817 by 2020
Between 2008 and 2018, science, technology, engineering, and math—or STEM—fields are projected to play a key role in US economic growth, adding jobs 73 percent faster than the rest of the economy. For Arizona, fixing the US immigration system to make it easier for students trained in America to remain in the country after graduation will be critical: in 2009, more than half of the students earning Master’s or PhD degrees in STEM from the state’s research-intensive universities were foreign-born. In recent years, noncitizens have also earned almost two out of every three of the engineering PhDs granted in the state. Despite that, STEM students are often forced to go home after graduation because our immigration system gives them such limited options to stay.
Share of STEM graduates at state's most research-intensive schools who are foreign-born (2009): 50.2%
Share of engineering PhDs who were temporary residents (2006-2010): 63.0%
These foreign born STEM students and graduates are contributing to the Arizona economy by serving as innovators and job creators. A recent study by the Partnership for a New American Economy and the American Enterprise Institute found that for every 100 foreign born graduate of a US Master’s or PhD program who stays in the United States working in a STEM field, 262 jobs are created for Americans. That translates into a significant employment boost for Arizona, a state where, in 2010, more than one in every eight STEM workers with an advanced degree was a foreigner.
In addition to recognizing the positive impact that increasing opportunities for people working in STEM fields would create for Arizona’s economy, Hispanics, both native and foreign-born, already living and working in Arizona account for a large percentage of the state’s spending power and tax revenues overall. A recent study by the Partnership for a New American Economy found that Hispanics account for $18.8 billion in Arizona’s spending power, 16.0 percent of the total for the state. Some $6.7 billion in spending power is in the hands of foreign-born Hispanics living in the state.
Hispanic residents in Arizona also contribute greatly through taxes, and through their payments to the Social Security and Medicare funds. They pay $6.2 billion in combined federal, state, and local taxes overall, with foreign-born Hispanics accounting for $2.0 billion. Their contributions to Social Security and Medicare are also substantial, totaling $3.1 billion to Social Security and $0.7 billion paid into the Medicare trust fund.
Immigration Reform = Economic Growth in Arizona
Reforming our immigration system will generate millions of dollars and thousands of jobs across Arizona. In the Phoenix metropolitan area, 2007 and 2008 H-1B visa denials cost U.S.-born tech workers as many as 1,951 additional jobs and as much as $14,552,000 in missed wages by 2010. According to Regional Economic Models, Inc. (REMI), undocumented immigrants who enroll in a legal path to citizenship will generate more than 14,000 jobs and more than $1.18 billion for the state by 2020. Expanding the number of both high-skilled (H-1B) visas will also have positive economic effects. REMI estimates that expansion of the H-1B program would result in more than 3,200 jobs and add more than $296 million to Gross State Product by 2014. The new H-1B visas awarded to Arizona between 2010 and 2013 will translate into 6,120 new jobs for U.S.-born workers in the state by 2020.
In Arizona, creating a path to citizenship and expanding the high-skilled visa program would add a total of more than $560 million to Gross State Product in 2014.
Immigrants have been integral in helping the Arizona economy grow in recent years, especially as the state has struggled along with the rest of the economy to drive new business and create American jobs. From 2006 to 2010, foreign born residents of Arizona founded almost one in three of the state’s new businesses. Arizona had the tenth highest rate of immigrant business ownership in the country by 2010, with almost one in five of businesses owned by someone born outside the US.
Immigrant entrepreneurs have long been a critical part of Arizona’s economic success story. Two of the state’s Fortune 500 companies, Avnet Inc. and Freeport-McMoRan Copper & Gold Inc., have founders who were immigrants or children of immigrants. Together, these businesses currently employ almost 51,000 people and they brought in more than $47 billion in revenue in 2011.
Due in part to some of the challenges students face remaining in the state after graduation, Arizona is currently short some of the professional workers it needs in critical STEM areas, fields that help the state’s economy remain innovative and competitive. According to the nonpartisan advocacy group Change the Equation, from 2009 to 2011 some 1.7 STEM jobs were posted online in Arizona for every one unemployed STEM worker in the state. A dramatically declining share of immigrants in the state’s STEM workforce from 2000 to 2010 has only exacerbated this shortage.
Ratio of STEM jobs to unemployed STEM workers: 1.7:1
Share of foreign born STEM advanced degree workers (2000): 26.1%
Share of foreign born STEM advanced degree workers (2010): 12.8%
Percent Decrease, 2000-2010: 51.2%
The federal government estimates the state could be short almost 56,781 registered nurses by 2030. Additionally, some experts have expressed concerns about the number of residency slots available in the state, a key way of training and recruiting new physicians. Foreign medical professionals trained abroad can help alleviate these shortages. Graduates of foreign medical schools, most of whom tend to be foreign-born, already make up a significant share of Arizona’s doctors.
Nursing Shortage by 2020: 21,739
Share of nursing positions vacant by 2020: 39.2%
Share of physicians who graduated from foreign medical schools, 2012: 22.9%
S.B. 1070 has also hurt Arizona’s 2.3 billion dollar agriculture sector, which is highly dependent on migrant workers. Using data from the US Current Population Survey, one widely cited study showed that 100,000 Latinos left Arizona in the first months the passage of S.B. 1070. As result, Arizona’s farmers are experiencing problematic labor shortages. Joe Sigg, Director of Government Relations for the Arizona Farm Bureau, says some growers are shifting to less labor intensive crops. Many banks are tightening farmers’ credit because they worry that farms will not be able to find the labor they need to harvest crops. SB 1070 essentially “put a big neon sign on Arizona flashing, ‘You’re not welcome here,’” Sigg says, adding, “where labor once showed up, it doesn’t” today.
Arizona is one of many states that could also benefit if Congress passed the federal DREAM Act, a bill that would legalize the 2.1 million undocumented immigrants who came to the country as children. According to a study by the Center for American Progress and the Partnership for a New American Economy, giving legal status to the 90,000 so-called DREAMers in Arizona would have an estimated $18.4 billion induced economic impact and also create almost 84,000 new jobs in Arizona by 2030.
DREAMers in the state
Economic impact of passing the DREAM act
Number of jobs created by DREAM act by 2030
Seasonal and temporary foreign workers are also helping to create jobs in Arizona. According to the US Department of Labor, Arizona employers were granted certifications to bring in more than 1,782 workers on H-2B visas in fiscal year 2011. One study by the Partnership for a New American Economy and the American Enterprise Institute found that for every 100 H-2B visa workers brought to the US for seasonal work, 464 jobs are created or preserved for American born workers. In Arizona that means the 1,782 visas authorized in FY 2011 alone supported more than 8,000 jobs.
Arizona H-2B Visas (FY 2011): 1,782
When Rosa Macias and her husband, Venancio, moved to the United States in 1990, she spoke “not a word of English” and had only been to the country once, to visit Disneyland. “We didn’t know anything about the American system—education, taxes, the economy, nothing,” Rosa says, “but we knew what we wanted for our kids.” She says they dreamed of giving their two young children a better education and more opportunities than the generation before them had.
Shortly after arriving in El Paso, Texas, she and Venancio began selling furniture at weekend swap meets, sometimes braving weather so cold Rosa remembers her near-freezing hands made it hard to write out invoices. By the early 1990s, the couple had moved to Phoenix, Arizona, and partnered with a brother-in-law to open a 2,700 square foot furniture shop—Make a Deal Furniture—on the East Side of town. Catering largely to Hispanic customers, and distinguishing themselves by offering shoppers in-store credit to buy merchandise, the store was quickly a success. “Our motto in English is ‘furnishing dreams,’” Macias explains, “We don’t only sell furniture, but we also create dreams for people—helping them integrate into a big credit system that might not be familiar to them.” By 1997, Rosa and Venacio had opened their own store, Muebleria Del Sol, and created an independent financing company. And a year later, when they were having trouble finding a new space to expand, Venancio, an engineer by trade, built a shopping center catering to other Hispanic entrepreneurs. Today, the Del Sol Group, which includes four large furniture stores and a commercial real estate business with 13 tenants, brings in $6 million in revenue per year.
Macias says the last few years have been a difficult time to be in business in Arizona. The financial downturn was particularly hard on many of her customers, most of whom are Latino, and the passage of Arizona Senate Bill 1070 in 2010 also caused many more people to pull back on spending or leave the state altogether. “Every time the law is in the courts,” Rosa says, “It causes so much fear in the community, we see it affecting our customers’ credit card defaults.” But after a few lean years, Rosa says her business is focused on rebuilding. Del Sol Group currently employs 70 people, up from a low of 40 employees in 2009. It also recently opened a new, 40,000-foot mall-based store, Red Tag Furniture, designed to appeal to a wider clientele. “We feel like we owe a lot to the State of Arizona—it gave us two grandchildren—so we want our future to be here,” Rosa says.
Immigrants are helping to grow the US economy everywhere, not just in the places—like our biggest cities—that we expect. They are helping to fill labor shortages on America’s farms, starting businesses that employ US workers, and developing the cutting-edge products that make America the world’s preeminent innovation hub.
Click on a state to learn more about the contributions immigrants are making to the local economy.