Where do we even begin to discuss immigration?

This fiercely debated subject has pitted Congress against colleagues, the Supreme Court justices against themselves, political parties within themselves and against each other, and even the federal government against state governments.

While some people fear the cultural upset that results from an influx of foreign ideas and customs, most people discuss the economic costs of immigration.

The proponents of immigration point to the fact that foreign-born citizens are more likely to start a business than their US-born counterparts, and especially certain ethnicities, such as Koreans. Advocates also point out how much intellectual property the country owes to immigrants (such as Einstein) and their immediate descendants (such as Steve Jobs). Small business owners also benefit from employing immigrants, many of whom are willing to work for low wages. The US agriculture and construction sectors particularly benefit from lower labor costs.

The dissenters over immigration, on the other hand, point to the costs of illegal immigration. Besides the obvious expenses of border patrol, investigation, and deportation, there are indirect costs of providing healthcare and education for millions of undocumented people in the US who, subsequently, don’t pay income taxes.

Of course, the counterargument is that, despite the US having a higher foreign-born population than ever before, the economy is stronger than ever before. It is experiencing respectable GDP growth, lower unemployment, and higher productivity per worker than ever before. That is, it appears the economy might seem to actually do better with more immigrants.

There are too many non-economic factors at play to consider the issue from a national level (national security, for one). Instead, let’s look at immigration at the state level.

To use the EPI to measure the effects of immigration, we need to group the fifty states into three categories:

1. Those states with a high percentage of immigrants
2. Those states with a low percentage of immigrants
3. The rest of the states to use as a baseline for comparison

When we chart the percentage of foreign-born individuals, we find that the states with the highest immigration rates are California, New York, New Jersey, Florida, and (perhaps surprisingly) Nevada. That makes historical sense: four of these are coastal states with historically large immigrant populations. The outlier, Nevada, can probably be explained by the fact that the state is sparsely populated and that there are a disproportionately high number of immigrants working in two of the state’s largest industries: entertainment (viva Las Vegas) and construction.

Dakota, Montana, Alabama and Mississippi. Again, this makes some intuitive sense. Four of the states are remote, landlocked, and sparsely populated to begin with. While Mississippi is a coastal state, it doesn’t have a major seaport (although, curiously, it does have a large agriculture industry; we wouldn’t have expected it to have as low of an immigrant population as it does).
Next, we chart the EPI scores of these two groups of states—those with the highest percentage of immigrants vs. those with the lowest—against the scores of the other forty US states and calculate the difference.

To get the real story, we performed a regression analysis of all fifty states’ EPI scores against their immigration rates. The result was a negative (albeit weak) correlation, as you can see below.

On the horizontal axis, you see the percentage of the immigrant population in a state. On the vertical axis, you see the difference between a state’s EPI and the average of the other forty-nine states (that is, how much better or worse a state did against the rest of the US).
Clearly, the graph shows that the more immigrants a state has, the worse its economic performance. In fact, for every additional ten percent of a state’s population is foreign-born, its EPI score drops by about 2.4 percent—which, as we’ve discussed before, represents billions of dollars in economic performance.
Is it beneficial to the country to encourage immigration? Perhaps. Do the costs outweigh the benefits on a state level? Not according to our experiment here.