Do Refugees Help the Urban Economy?
A month before governors from across the nation announced that they would not be allowing refugees into their states, eighteen city leaders wrote to President Obama, asking that the refugee quota be increased. Mayors of New York, Chicago, and Los Angeles, among others, offered to take in a larger proportion of refugees from the conflict in Syria and urged the President to make room for ‘thousands more’ refugees in the United States.
In the letter, the eighteen mayors celebrated the contributions that immigrants and refugees have made to their cities’ development.
“Our cities have been transformed by the skills and the spirit of those who come to us from around the world. The drive and enterprise of immigrants and refugees have helped build our economies, enliven our arts and culture, and enrich our neighborhoods.”
Refugees have different backgrounds and motivations than traditional immigrants. Although they come from war-torn regions to seek safety, refugees are often eager to return their beloved home country as soon as possible. Immigrants, contrastingly, seek social and economic opportunities, working hard to build a new life in their adopted country.
We are hearing opposing stories about what kind of impact refugees will make on American life, so we decided to look at the data. Are refugees as good for our economy as immigrants are? And if so, which U.S. cities would benefit from a global economic boost?
Immigration is Good For the Economy
As we covered earlier this fall, immigration is consistently beneficial to the American economy, in part, since immigrants tend to be more entrepreneurial than native born citizens.
Immigrants are more than twice as likely to start a business as native born Americans. When immigrants and their children do start companies, they are incredibly successful — accounting for 40% of the Fortune 500 list and over 10 million jobs created. And those are just corporate jobs — immigrants start local businesses too. Researcher David Kallick found that immigrant business owners account for 28 percent of all the Main Street businesses in America, employing an additional 4.7 million workers.
Immigrants have to navigate substantial bureaucratic obstacles in order to make a life in America, but they are motivated by hope for a better life, improved social and economic opportunity, and often a chance to improve the lives of their families in their countries of origin.
Does this great hope explain the economic success of traditional migrants?
Refugees are Different
Unlike immigrants, many refugees never had plans to build a new life outside of their homeland. There are many accounts of people who did not leave until it was clear their lives were in imminent danger. Refugees may also have less experience with the language of their host country than immigrants who have made plans to move, since they have little influence on which host country they are able to seek asylum in.
Will refugees share the same drive to succeed economically that has made the American economy so strong?
Who Are the Syrian Refugees?
Half of all Syrians have been displaced. Many are displaced within Syria (6.5 million), many have sought safety abroad (4.4 million), and over 300,000 Syrians have died in the conflict. Still, over ten million Syrians have remained in their homes up to this point.
Of the Syrians who have sought safety in neighboring countries, Europe, and the United States, most refugees are educated, upper-middle class Syrians. Presumably, this is because paying a handler to help you escape Syria is very expensive and simply isn’t an option for the poorest Syrians.
Half of all Syrian refugees are children younger than age seventeen and the refugee population is predominately female. More than forty percent of refugees are younger than eleven years old. There are also reports that a growing number of young men are leaving Syria in order to escape recruitment from rebel and terrorist groups, but the validity of those reports are often called into question.
What kind of impact will these refugees have on Europe and the United States?
Good for Europe
Journalists and economists have asserted that refugees are very good for the European economy. According to Simon Nixon of the Wall Street Journal, the refugee crisis is ‘unambiguously positive’ for the European economy as a whole. Refugees can play a positive role in addressing Europe’s problematic demographic trends and revive a shrinking workforce.
Ironically, the Eastern European countries like Hungary that are notoriously unwelcoming of refugees could benefit most from this population boost. As the Hungarian population ages, their tax base is diminishing. Refugees are exactly what Hungary needs to revive its economy, yet Hungarian politicians are doing everything in their power to discourage new migration, including the abuse of refugees with teargas and water cannons.
Germany is more confident about the benefits of the refugee influx.“Every euro we spend on training migrants is a euro to avoid a shortage of skilled labour,” German state governments declared in early September.
As European countries age, refugees would revive the workforce, increase the tax base, and galvanize Europe’s economic strength.
It is clear that refugees are good for Europe’s economy, but what does a refugee population mean for the average American city?
Good for America, Really Good for Michigan and Ohio
America really is a melting pot whose population growth is dependent upon migration. According to the Pew Research Center, between 1965 and 2015, new immigrants, their children, and their grandchildren accounted for 55% of U.S. population growth. They added 72 million people to the nation’s population as it grew from 193 million in 1965 to 324 million in 2015.
Our economic success has been predicated upon the contributions of migrants to every type of labor, from accepting low paying work that most Americans refuse to creating jobs through starting new businesses, immigration has made our economy stronger.
States like Michigan and Ohio whose governors oppose hosting refugees in their states would benefit immensely from a boost in their labor market. The states shown above in blue have been experiencing a downturn in their population while states like California, Texas, Georgia, and Florida have experienced a boom. That boom is driven by immigration.
We used the mySidewalk tool in order to quickly discern each city’s socio-economic makeup. The following maps explore per capita income and age in Dayton, Detroit, San Francisco, and Austin. The accompanying charts compare educational attainment of first-generation migrants with other residents. Primary language spoken at home is included as well.
Cities with a higher proportion of residents over age 65 and lower per capita incomes would likely benefit from a wave of young refugee families that could participate in the labor force and grow the tax base. As baby boomers retire, the American workforce is expected to grow at a very slow rate. This is bad news for local economies, but an increase in migration to these regions might move the needle in the right direction.
Dayton, Ohio
In Dayton, bringing in refugees could revitalize an aging workforce and boost the economy. Fifteen percent of working-age residents are over 65-years-old and the per capita income is just over $16,000. As of today, the population is very American (we’re talking Fifth-Generation Migrants). Less than five percent of Dayton residents are first-generation migrants and only five percent of Dayton residents have a primary language other than English.
Dayton’s First-Generation migrant population is fairly well educated, twenty percent have completed some college and forty-one percent have a Bachelors or Masters Degree.
Detroit, Michigan
In Detroit, sixteen percent of the working age population are over 65 years old and per capita income is just over $14,000. The median age of workers is 40. Nine percent of Detroit residents speak a primary language other than English and eleven percent of Detroit residents are first-generation migrants. Forty-five percent of those First-Generation residents have obtained a High School Degree or Less, Eighteen percent have completed some College, and Thirty-seven percent have a Bachelors or Masters Degree.
The story is told as clearly in struggling economies as it is told in our nation’s most successful economies. In 2014, the Milken Institute ranked San Francisco as the Nation’s top-preforming city economy. Austin, TX took second place. Both of these cities welcome large immigrant populations.
San Francisco, California
In San Francisco, nineteen percent of the working age population are over 65 years old and per capita income is $49,000. The median age of workers is 37. Thirty-eight percent of working-age San Franciscans are foreign born.
First-generation migrants make substantial contributions to their adopted economy. Forty-three percent of First-Generation residents have obtained a high school degree or less, over twenty percent have completed some college, and a substantial thirty-six percent have a Bachelors or Masters Degree.
Austin, Texas
In Austin, nine percent of the working age population are over 65 years old and per capita income is just over $32,000. The median age of workers is 43. Twenty-two percent of residents are first-generation migrants and thirty-two percent speak a primary language other than English.
Austin is a good example of how low-skilled and uneducated migrants can still help grow a local economy. The educational breakdown of foreign born residents in San Francisco and Austin are fairly close, but Austin has a much larger proportion of migrants who have not completed high school.
First-Generation migrants are less educated than their native Texan peers, but that hasn’t stopped Austin from thriving. Over half of First-Generation residents have obtained a high school degree or have never finished high school, fourteen percent have completed Some College, and thirty percent have a Bachelors or Masters Degree.
Playing the Long Game
To some extent, the impact of the refugee crisis is all about timing.
Short-term: Welcoming a large new population and helping them assimilate into our society will have additional costs. However, these costs don’t need to include state benefits like welfare. As immigrant policy analyst Alex Nowrasteh points out, Jewish refugees who settled in places with less welfare, like Maryland, were more likely to work and learn English. These people are seeking security, not handouts.
Long-term: The United States will absolutely benefit from hosting refugees from countries like Syria. Despite some prevalent cultural myths, migrants of all skill levels benefit the economies without ‘taking jobs’ from ordinary Americans.
Immigration benefits American local government in big ways.
- Increasing the density of underpopulated states will attract businesses
- Increasing the tax base helps local government provide better services
- Areas are balanced out by incoming skill sets higher or lower than what is available in the region
Well-educated migrants also increase the talent pool of an area while boosting productivity and uneducated migrants take on undesirable work, making room for people to move up in our overeducated society.
Which Cities Should Open their Doors?
Post-Industrial cities like Detroit, Cleveland, Buffalo, Pittsburgh, Syracuse, and St. Louis have a lot to gain from welcoming the new wave of migrants. Indeed, it is no coincidence that the mayors cities with struggling economies, like Dayton and Baltimore, are among those calling to increase the refugee quota. Despite facing drastically larger barriers than traditional migrants, refugees have a lot to contribute to our cultures as well as our local economies
Additional Resources: A BBC Analysis of the Conflict in Syria and Vox’s Overview of the Refugee Experience
If you’re ready to let data speak for itself, find out the story that numbers tell about your community.
About the Author: Michelle Stockwell is a student of politics, storytelling, and civic advocacy.
