The Economic Benefits of Passing the DREAM Act

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Until now, much of the debate surrounding the Development, Relief, and Education for Alien Minors Act, or DREAM Act—a bill to provide a pathway to legal status for eligible young people who were brought here as children and who complete high school and some college or military service1—focused on legal, ethical, and logistical concerns.2 But there are other important benefits of enacting the DREAM Act, most importantly the boost to the economy.

This report takes a close look at this economic perspective. We present an analysis to understand what would happen if the United States were to grant a pathway to legal status to an estimated 2.1 million eligible youth in our country by passing the DREAM Act. Overall, we find that the passage of the DREAM Act would add $329 billion to the U.S. economy and create 1.4 million new jobs by 2030,3demonstrating the potential of the proposed law to boost economic growth and improve our nation’s fiscal health. In making these projections we used American Community Survey data from 2006 to 2010 to calculate the number of eligible unauthorized youth that would qualify for the DREAM Act—creating the largest dataset of unauthorized immigrants to date—and then put the data into a robust model of the likely educational and job attainment potential of eligible DREAMers to estimate their likely future earnings.4 This model takes into account factors such as educational level, age, sex, race and ethnicity, and constitutes our estimate of the direct economic consequences of the DREAM Act. This is similar to the methodology used by education economist Luis Crouch and many of his colleagues in the field.5We then used the IMPLAN system of input-output matrices to detail the so-called induced effects of passage of the DREAM Act on the U.S. economy.

This approach enables us to gauge how the buying power from the increased future earnings of DREAMers ripples through the economy to support additional economic growth, job creation, and increased revenues.6 The IMPLAN model is used by the U.S. government—including the Bureau of Economic Analysis and the Department? of Defense—as well as a variety of departments in 39 different states and private industry to estimate the induced effects of legislative and other changes that impact the inputs in an economy.Because the data sets used for both direct and induced impact were taken from 2006 to 2010 and include the height of the recession in generating expected performance, the findings presented here likely understate the actual economic impact of the DREAM Act. Our forward-looking analysis begins in the year 2010, the last year in which detailed economic and demographic baselines are available, and runs through 2030, at which point a significant portion of eligible DREAMers would have completed their schooling and entered the workforce.8We find in this report that enabling these 2.1 million eager-to-be-Americans to contribute to building the American Dream would deliver a double boost to our economy.

First, enacting the law would provide an incentive for their further education because for most of those who would be eligible the legalization provisions can only be attained through completion of high school and some college.9Receiving more education opens access to higher-paying jobs, enabling these undocumented youth to become much more productive members of our society. Second, gaining legal status itself translates into higher earnings for these youth since legal status allows DREAMers to apply to a broader range of high-paying jobs rather than having to resort to low-wage jobs from employers who are willing to pay them under the table.Thus our projections track both the gap in current earnings between unauthorized individuals at various levels of education and their U.S.-born counterparts, as well as the gains in earnings from attaining more education. Overall, our research finds that by 2030 the eligible DREAMer population will earn 19 percent more in earnings than without passage of the DREAM Act, in turn increasing their consumption and contributing more in the way of tax revenue to the federal government.In detailing the ways in which passage of the DREAM Act will add significant value, jobs, and tax revenue to the American economy, it is important to note that the benefits would not simply be a one-time addition but instead unfold over time, with the economic benefits growing larger as time goes on.

This upward trajectory comes because eligible DREAMers will have a staggered entrance into the workforce, with many eligible youth still in elementary or secondary school at the time of passage

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