A project of the Partnership for a New American Economy
In 2011, according to analysis by the Pew Hispanic Center, more than 4.2 million residents of the Lone Star State were foreign-born, placing Texas second in the country in size of its immigrant population. Immigrants have continued to arrive at a rapid clip: from 2000 to 2011, the immigrant population in Texas grew by more than 45 percent. During that same period, New York and California’s immigrant populations grew by only 11 and 15 percent, respectively.
Size of foreign-born population
Percent of state’s population that is immigrant
Growth in foreign-born population 2000-2011
Top countries of origin
Such growth is having a major impact on demographic trends in the state, changing political dynamics and the way the state’s leaders view the economic impact of immigrants and minority communities. In 2010 Texas was one of only five states in the country where the majority of the state’s citizens were ethnic minorities. And in recent years, researchers have indicated that Houston, the state’s largest city, has become the most ethnically diverse large metropolitan area in the country. Some estimates say as much as 44 percent of that city’s population is Hispanic, up from just over 20 percent in 2000. The city’s large Asian population has communities of immigrants from as many as 27 different countries.
Texas is also known to many outsiders as a crucial hub of American scientific advancement, thanks to preeminent research institutions like the University of Texas at Austin, a school that US News and World Report consistently ranks among the top 10 graduate-level engineering programs in the country. Between 2008 and 2018, 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 Texas, 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 almost 58 percent of students earning Master’s or PhD degrees in STEM from the state’s research-intensive universities were foreign-born. Almost two out of three students earning engineering PhDs from Texas schools in recent years were noncitizens.
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 huge employment boost for Texas, a state where, in 2010, almost one out of every four STEM workers with an advanced degree was a foreigner.
Immigrants also add to Texas’s economic growth by earning patents on cutting-edge research and products. In 2011 almost three out of every four patents awarded to the University of Texas System had at least one foreign-born inventor. Those patents do not just represent great ideas. Often, they are licensed to existing companies or used as foundations for new ones, creating American jobs and revenue in the process.
Immigration Reform = Economic Growth in Texas
Reforming our immigration system will generate millions of dollars and thousands of jobs across Texas. According to Regional Economic Models, Inc. (REMI), undocumented immigrants who enroll in a legal path to citizenship will generate more than 64,600 jobs and more than $5 billion for the state by 2020. Expanding the number of both high-skilled (H-1B) visas will also have positive economic effects. The new H-1B visas awarded to Texas between 2010 and 2013 will translate into 80,500 new jobs for U.S.-born workers in the state by 2020. REMI estimates that expansion of the H-1B program would result in more than 20,400 jobs and add more than $2 billion to Gross State Product by 2014.
In Texas, creating a path to citizenship and expanding the high-skilled visa program would add a total of more than $3.2 billion to Gross State Product in 2014.
Hispanics play an important role in all areas in Texas, but a report recently published by the Partnership for a New American Economy shows how significant their economic contribution is. Statewide, Hispanics account for $109.7 billion, or 22 percent, of the spending power. They also pay $35 billion in federal, state, and local taxes; $17.9 billion of that amount goes to Social Security and $4.2 billion goes to the Medicare trust fund.
Immigrants have been integral in helping Texas grow economically in recent years, especially as the state has struggled, along with the rest of the economy, to drive new business and create American jobs. In Texas, as in many places around the country, immigrants have led new business creation: in recent years, foreign-born residents have founded almost one in three of the state’s new businesses. Texas now has the fifth highest rate of immigrant business ownership in the country, clocking in just behind California, Florida, and New York.
Immigrant entrepreneurs have long been a critical part of Texas’s economic success story. Fluor Corporation, a Texas-based Fortune 500 engineering and construction firm, was founded originally by a family of master builders who immigrated to the United States from Switzerland in 1880. And three other Fortune 500 firms based in the state—AT&T, RadioShack, and Marathon Oil—had at least one founder who either immigrated to the United States or was the child of an immigrants. Together, these four companies employ almost 337,000 people today and bring in more than almost $170 billion in annual revenues.
Current immigration policy has been harmful to Texas’s economy. From 2000 to 2010, a period when a flood of tourists from Brazil, China, and India boosted international travel spending globally, Texas saw its market share of the long-haul international tourism market decline. It is estimated this drop cost the state more almost 78,000 potential visitors, as well as $310 million in spending and almost 2,350 jobs. Industry experts have blamed the lengthy delays and expenses involved in obtaining a US tourist visa as a major source of such declines nationwide during that period.
In part because of the challenges students face remaining in the state after graduation, Texas is also currently short 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 more than 2.5 STEM jobs were posted online in Texas for every unemployed STEM worker.
Texas may also need to recruit immigrants to address a coming shortage of medical professionals. The federal government has projected the state could be short almost 109,779 registered nurses by 2030, leaving more than 40 percent of positions in that field vacant. This will place additional strain on the state’s medical services, as Texas already has a low share of physicians per capita. Graduates of foreign medical schools, who tend to be overwhelmingly immigrant, are already helping to fill this shortage.
Physician Density rank relative to other states: 42nd
Share of physicians who graduated from foreign medical schools, 2012: 24.4%
Texas 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 illegal immigrants who came to the country as children. By incentivizing these young people to earn a higher education and allowing them to work legally, the DREAM Act would result in higher earnings and increased spending on products ranging from cars to houses to computers. In Texas, that could have a powerful effect on the state’s economy: legalizing the 325,000 so-called DREAMers in the state would have an estimated $66 billion induced economic impact and also create almost 282,500 new jobs by 2030.
DREAMers in the state
Economic impact of passing the DREAM act
Number of jobs created by DREAM act by 2030
Immigrants in Texas are also helping to create jobs in the state through seasonal and temporary work. According to the US Department of Labor, Texas employers were granted certifications to bring in almost 12,400 H-2B visas in fiscal year 2011, a higher number than any other state in the country. These visas, often used to staff places like amusement parks, hotels, or landscaping services during peak seasons. One study by the Partnership for a New American Economy and the American Enterprise Institute, in fact, found that for every one H-2B visa worker, 464 jobs are created or preserved for American born workers. In Texas that means the visas authorized in FY 2011 alone supported more than 57,000 American jobs.
However, the H-2B visa can be costly and cumbersome to attain. Employers typically spend $2,500 for each H-2B visa they sponsor, and must apply to multiple federal agencies in the process, often waiting eight weeks for an answer. With a more streamlined visa program, job creation in the state could be greater.
Mohammad Al-Abed, an assistant professor of engineering, graduated in the top three students in his department as an undergraduate studying electrical engineering at one of the most prestigious schools in the Middle East. He decided to come to the United States to earn his Master’s and PhD degrees in engineering—a place he considered to have the best academic programs in the world. “I had been to the US a few times, and related to the values that American hold so high,” Al-Abed says, “To be able to be a part of that, while also getting the very best training possible at that time, was really attractive to me.”
And once he arrived, Al-Abed continued to make his mark academically. Al-Abed enrolled at the University of Texas at Arlington in 2004, pursuing a degree in biomedical engineering. Partnering with researchers at the UT-Southwestern Medical Center, he began working on a new device that would make it easier—and more affordable—for doctors to diagnose sleep apnea, an obstructed-breathing disease that affects an estimated 18 million Americans per year. Medicare spent as much as $235 million testing seniors in specialized sleep labs in 2009. Al-Abed’s team imagined their device—an ultrasound-equipped patch someone could wear at home to screen for the disease—could cut down such costs considerably. “We really felt that a device like ours was really needed by physicians,” Al-Abed says. UT applied for two patents for the software involved in his device, and Phillips, the medical-device firm, came out to look at the prototype Al-Abed used in his dissertation.
Al-Abed’s success did not make his immigration situation any easier. During his time in school, he was stuck at home at one point for seven months due to delays processing his visa paperwork—a move that substantially stalled his research. And when Al-Abed graduated, things only got more difficult. The government of Jordan had given him a scholarship to cover some of the costs of his US education—money that came with the stipulation that he would either repay the money in full upon graduation or return home to teach. Although Al-Abed had always imagined he would live in Jordan, he began to feel differently as graduation approached. “Being in the US changed my culture and my mindset,” he says, “I began to realize I’d spent more time in America, than I had in my own country as an adult.” The US immigration system and its limitations, however, made it difficult for him to find a way to stay. Al-Abed considered working at a startup founded by one of his professors, but realized the pay would make it difficult for him to pay off his scholarship debt. And once he discovered that sponsoring himself for an “extraordinary researcher” green card—something he would need to do if he worked at a fledgling startup—would cost him $6,000 to $7,000 in legal fees, he knew the option was out of reach financially.
In 2011, Al-Abed returned home to Jordan to work as a professor at Hashemite University. Although he is still in regular contact with his team in Texas—and they continue trying to commercialize his device—Al-Abed says his busy teaching schedule makes collaborating from afar difficult. It also did not help that he recently applied for a tourism visa to attend an important academic conference in San Diego, but the processing time took so long he missed the event altogether. “When I apply for conference admission, I’m expecting the US government to say no, more than I’m expecting it to say yes,” Al-Abed says, “It’s not a welcoming or easy process.”
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.