KY Policy Blog

Refugees, Immigrants Important to Kentucky and the Economy: An Overview of the Research

By Anna Baumann
February 1, 2017

From the promise to build a wall paid for by tariffs on Mexican imports and uncertainty about what will happen to DACA (which allows undocumented immigrants whose parents brought them to the U.S. as children to apply for a renewable reprieve from deportation), to a 120-day ban on refugee admissions and an indefinite ban for Syrians, President Trump’s actions and intimations around immigration have sparked outrage and a national debate.

The conversation should take into account immigrants’ integral role in our economy and communities where they work, do business, pay taxes, buy homes and much more. Here’s a summary of past KCEP analysis of these issues.

Refugees, Including Targeted Groups, Make Important Contributions to Kentucky

Kentucky has resettled the 16th largest group of Syrian refugees in recent years, Louisville has the 14th largest Somali refugee population among metro areas and the state has resettled 4,000 refugees from Iraq, Iran, Somalia, Sudan and Syria since 2011 – countries which, in addition to Libya and Yemen, are on President Trump’s travel ban. Counting refugees from all countries (as all refugees are under the 120-day ban), Kentucky resettles more than twice the national annual average.

These large refugee communities tend to do very well once resettled. The Center for American Progress (CAP) utilizes census data on Syrian immigrants and four groups of refugees (including targeted Somalians) to describe their level of integration and economic participation:

  • 11 percent of Syrian immigrants in the U.S. labor force own businesses, compared to 3 percent of native-born residents and their average business earnings are 41 percent higher.
  • For men, refugee employment rates are similar to those of native-born residents.
  • Refugees who have been in the U.S. 10 years or more earn median wages on par with U.S.-born earners.
  • 9 out of 10 Syrian immigrants and the vast majority of refugees become naturalized.
  • The majority of refugees own homes and become English proficient.

Refugees, distinct from other immigrants, flee their countries of origin and are granted entry in the U.S. due to persecution related to race, religion, nationality, social and political identity.

Undocumented Immigrants in Kentucky Pay $37 million in State and Local Taxes, Would Increase with Legal Status

Refugees and immigrants with legal status pay taxes just like everyone else in Kentucky, chipping in for the investments that benefit us all. However, a misguided notion about immigrants who lack legal status is that they do not pay into these same systems.

Research from the Institute on Taxation and Economic Policy (ITEP) shows otherwise. Undocumented immigrants living in Kentucky pay $37 million in state and local taxes every year, at an effective tax rate that’s higher than what the wealthiest 1 percent of Kentuckians pay: 7.1 percent compared to 6 percent of family income. They make these contributions through property taxes, sales taxes and income and payroll taxes.

Improving the legal standing of Kentucky’s estimated 49,000 undocumented immigrants, instead of worsening it, would also improve their ability to comply with tax laws, resulting in additional revenue for our state and local investments. The table below shows how taxes would increase under a pathway to citizenship, as well as what would have happened under President Obama’s expansion of deferred action for young people (DACA) to their parents (DAPA) which has been blocked by a federal district court in Texas.

Source: ITEP

Protecting, Improving Legal Status of Undocumented Immigrants Would Benefit Kentucky

What’s good for our foreign-born neighbors is good for native-born Kentuckians. For instance, creating a driving certificate for undocumented immigrants would make them eligible for car insurance, improve road safety, disentangle immigration and traffic enforcement and improve families’ ability to get to work, take their kids to school and contribute in their local economies.

By supporting higher wages, increased economic demand, more tax revenue and a level playing field for businesses that do and do not employ undocumented immigrants, a pathway to citizenship would provide the most complete opportunities for deeper integration into and stimulus of the economy. But in the absence of such comprehensive reform, preserving President Obama’s deferred action status for childhood arrivals to the U.S. is critical:

  • The work permits made available to childhood arrivals open a wider range of economic opportunities to them and increase the return on investments in their own education and training (leading to a more productive workforce). In some states like Kentucky, DACA students are eligible for in-state tuition.
  • Work permits put immigrants in a stronger position to contest wage theft, leading to more bargaining power for all low-wage workers.
  • DACA also helps ensure that more immigrants who drive are licensed and insured.

New Americans in Kentucky Are Diverse and Contribute to Our Economy

Public dialogue tends to cast immigrants as a separate, homogenous group but in fact the data show  foreign-born people who have made Kentucky their home are diverse and well-integrated.

  • More than one in three are naturalized, and the rest are legal residents – such as refugees and those with work visas – and undocumented immigrants.
  • Immigrants are well-represented across our workforce, with almost half in white collar occupations.
  • Immigrants are more likely than native-born Kentuckians to be small business owners: 1 in 33 Kentuckians are immigrants, but immigrants make up 1 in 20 small business owners here. Their share in the labor force and economic output also slightly exceed their share of the population.
  • Immigrants are overrepresented among those with less than a high school diploma and also those with a bachelor’s degree or higher.
  • About a 1/3 are Hispanic, a 1/4 white, a 1/4 Asian, and less than 10 percent black. Common countries of origin include Mexico, Germany, Cuba and Japan.
  • Of the 116 languages spoken by Kentucky school-children qualifying for “limited English proficiency” programming, Spanish, Arabic, Chinese, Bosnian and Japanese are the most common.

Refugees, other legal residents and undocumented, new Americans in Kentucky are part of our communities, working and supporting local businesses and raising families. Policy decisions should reflect this reality.

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