Economic Impact of Immigration by State
Immigration, and how to handle it, continues to be a contentious topic in the United States in 2020. Currently, much of the debate revolves around border security and President Trump’s border wall, which may receive $7.2 billion in diverted Pentagon funds this year. This proposition has divided lawmakers. But political differences aside, there’s no question that immigration as a whole affects the economy.
In light of recent developments in U.S. immigration policy, WalletHub compared the economic impact of foreign-born populations on the 50 states and the District of Columbia. We determined which states benefit the most — and least — from immigration using 23 key indicators. Our data set ranges from median household income of foreign-born population to jobs generated by immigrant-owned businesses as a share of total jobs. Read on for our findings, additional commentary from a panel of experts and a full description of our methodology.
State Economic Impact of Immigrants
‘Immigrant Workforce’ Rank
‘Socioeconomic Contribution’ Rank
‘Brain Gain & Innovation’ Rank
‘International Students’ Rank
|12||District of Columbia||55.16||14||23||12||1|
*1=Largest Economic Impact
With immigration and border security continuing to hold a prominent place in 2020’s political climate, we asked a panel of experts to share their thoughts on the following key questions:
- Do you think the immigration plan proposed by the Trump administration will be effective in reducing undocumented immigration?
- Recent estimates suggest that net migration from Mexico to the U.S. is below zero in recent years — that is, more Mexicans are leaving the U.S. than entering. Do you think this trend will continue?
- What is the best way to enforce the immigration law without breaking families apart?
- Should the U.S. tighten its legal-immigration policies?
- Are immigrants an economic benefit or an economic drain to states?
In order to determine the states in which immigration has the most positive economic impact, WalletHub compared the 50 states and the District of Columbia across four key dimensions: 1) Immigrant Workforce, 2) Socioeconomic Contribution, 3) Brain Gain & Innovators and 4) International Students.
We examined those dimensions using 23 key metrics, which are listed below with their corresponding weights. Each metric was graded on 100-point scale, with a score of 100 representing “most positive economic impact.”
We then determined each state and the District’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.
Immigrant Workforce – Total Points: 30
- Share of Foreign-Born Workforce: Double Weight (~7.50 Points)
- Change in Share of Foreign-Born Workforce (2018 vs 2015): Double Weight (~7.50 Points)
- Work Visas per Capita: Full Weight (~3.75 Points)
Note: “Work Visas” refer to employment permits granted to immigrants and nonimmigrants and include the following categories: Permanent, H-1B, H-2B and H-2A.
- Jobs Generated by Immigrant-Owned Businesses as a Share of Total Jobs: Full Weight (~3.75 Points)
Note: This metric was calculated using the following formula: Number of Employees at Immigrant-Owned Firms / Total Number of Employees.
- Share of Foreign-Born Business Owners: Full Weight (~3.75 Points)
- Share of Active Physicians Who Are International Medical Graduates: Full Weight (~3.75 Points)
Socioeconomic Contribution – Total Points: 30
- Share of Foreign-Born Population: Full Weight (~3.00 Points)
- Change in Share of Foreign-Born Population (2018 vs 2015): Full Weight (~3.00 Points)
- Share of Second-Generation Immigrant Households: Full Weight (~3.00 Points)
- Share of Income Generated by Immigrant Households: Full Weight (~3.00 Points)
- Median Annual Household Income of Foreign-Born Population: Full Weight (~3.00 Points)
- Median Annual Household Income Growth of Foreign-Born Population (2018 vs 2015): Full Weight (~3.00 Points)
- Net Difference Between State and Local Revenues and Expenditures per Immigrant: Full Weight (~3.00 Points)
Note: This metric underlines the net difference between the revenues that the state and local governments get from an immigrant and the expenditures that they have with that person. We took into account all emigrant generations (1st, 2nd and 3rd+).
- Homeownership Rate for Foreign-Born Population: Full Weight (~3.00 Points)
- Immigrant-Owned Businesses Income Generated as a Share of Total Business Revenues: Double Weight (~6.00 Points)
Brain Gain & Innovators – Total Points: 30
- Share of Foreign-Born Population Aged 25 Years & Older with a Bachelor’s Degree or Higher: Full Weight (~6.00 Points)
- Foreign-Born STEM Workers as a Share of Total STEM Workers: Full Weight (~6.00 Points)
Note: This metric was calculated using the following formula: Number of Foreign-Born STEM Workers / Total Number of STEM Workers.
- H-1B Visas per Capita: Full Weight (~6.00 Points)
Note: “H-1B Visas” refer to a visa category that “applies to people who wish to perform services in a specialty occupation, services of exceptional merit and ability relating to a Department of Defense (DOD) cooperative research and development project, or services as a fashion model of distinguished merit or ability.”
- Share of Fortune 500 Companies Founded by Immigrants or Their Children: Full Weight (~6.00 Points)
Note: This metric was calculated using the following formula: Number of Fortune 500 Companies Founded by Immigrants or Their Children in the State / Total Number of Fortune 500 Companies in the State.
- Share of Foreign-Born Fortune 500 CEOs: Full Weight (~6.00 Points)
Note: This metric was calculated using the following formula: Total Number of Foreign-Born CEOs in the State / Total Number of Fortune 500 Companies in the State.
International Students – Total Points: 10
- Share of International Students: Full Weight (~3.33 Points)
Note: This metric was calculated using the following formula: Total Number of International Students / Total Number of Students.
- Economic Contributions of International Students per Capita: Full Weight (~3.33 Points)
Note: “Economic Contributions” refer to the financial contribution of international students through their consumerism, particularly “in the higher education, accommodation, dining, retail, transportation, telecommunications and health insurance sectors,” according to NAFSA: Association of International Educators.
- Direct & Indirect Jobs Created by the Economic Contributions of International Students as a Share of Total Jobs: Full Weight (~3.33 Points)
Note: This metric was calculated using the following formula: Number of Direct & Indirect Jobs Created as a Result of the Economic Benefit of International Students / Total Number of Jobs.
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Sources: Data used to create this ranking were collected from U.S. Census Bureau, Bureau of Labor Statistics, Department of Labor, National Academy of Sciences, Partnership for a New American Economy Research Fund, Association of American Medical Colleges, American Immigration Council, Center for American Entrepreneurship, Boardroom Insiders, Time and NAFSA: Association of International Educators.
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