Study Tallies Huge Economic Cost of Excluding Undocumented Taxpayers from CARES Act Relief

A recent report out of UCLA looks at the economic contributions of undocumented workers, and at the economic cost to the nation of Congress’s failure to include undocumented workers who pay taxes with Individual Taxpayer Identification Numbers (ITINs) from the economic relief provisions of the CARES Act.   This CARES Act omission resulted in an estimated 15.4 million individuals being denied economic relief, including 9.9 million undocumented immigrants and 5.5 million of their U.S. citizen or permanent resident spouses and children.

Some of the key findings in the report include:

  • Undocumented workers contribute  $1 trillion annually to the nation’s GDP.
  • They contribute $190 billion annually in tax revenue .
  • They generate economic activity supporting 20 million jobs nationally.
  • Had CARES Act economic relief provisions gone to undocumented taxpayers and their U.S. citizen spouses and children (who were disqualified from economic stimulus payments if their spouse or parent were undocumented), $10 billion would have been added to the economy, supporting 82,000 jobs nationally.
  • The HEROES Act (passed by the House of Representatives in May, 2020) would include taxpaying undocumented immigrants in its pandemic economic relief provisions.   This would cost $9.5 billion, but would be more than made up for by generating  $14 billion in economic output, supporting over 112,000 jobs.
  • Over 78% of undocumented workers are employed in jobs deemed “essential” by the Department of Homeland Security during the COVID-19 crisis, including in health care and the food supply chain.
  • Undocumented workers have been the worst hit of all demographic groups by COVID-19’s effects, with their wages falling by 25% and their unemployment rate rising to 29% due to the collapse of other sectors where they are highly concentrated, such as hospitality.  By June 2020 both of those rates had improved somewhat but were still trailed other demographic groups.

The reports recommends that future federal COVID-19 relief legislation should:

  • Include undocumented workers and their U.S. citizen children and spouses in all federal, state, and local economic relief and stimulus programs.
  • Pass the provisions of the HEROES Act in the Senate that include taxpaying undocumented workers in COVID-19 relief and would include rebates for the economic stimulus payments,they should have received under the CARES Act.
  • Include all undocumented workers in tax rebates, cash transfers, business development loans, rent allowances and other emergency measures passed to overcome the effects of COVID-19.

The report notes that should Congress fail to include these workers in future pandemic relief, states should do so.   The economic benefit to states of extending state funded economic impact payments and unemployment benefits to undocumented immigrants substantially compensates for the costs of those benefits as the funds are plowed back into their local economies, generating jobs and tax revenues.

As the report concludes,

excluding undocumented workers from relief programs is bad for the workers, bad for economic recovery, and bad for government budgets. Including undocumented workers in government relief measures would support economic recovery, generate much-needed jobs, and increase government revenue.

You can find the report here.