Could legalizing immigrants improve U.S. economy?

By Tim Gaynor - Analysis

PHOENIX (Reuters) - If the United States under President Barack Obama grants legal status to its 12 million illegal immigrants, most of them Hispanics, would it prove a net gain or a drain for the beleaguered U.S. economy?

Immigration, particularly what to do about illegal immigrants, is a hot-button issue in the United States. Immigration advocates say illegal immigrants do jobs Americans won't. Critics say they depress wages and drain resources.

There is disagreement over whether giving legal immigration status to people now in the United States illegally would sap hard-pressed federal, state and local coffers, as people who oppose legalization say, or boost tax revenues and unleash a pent-up spending spree by the immigrants, as advocates argue.

Hispanics are the largest and fastest growing minority in the United States, accounting for around 15 percent of a U.S. population of some 300 million people. An estimated fifth of them are in the country illegally.

Compared to multibillion-dollar financial bailouts and a nearly trillion-dollar economic stimulus package signed by Obama in February amid the ongoing recession, analysts say the economic costs or gains from legalization are relatively small.

"A lot of this conversation about economics has to do with the political optics," said Marc Rosenblum, a senior analyst with the Migration Policy Institute think tank in Washington that examines international immigration issues.

"Immigrants are still a small proportion of the U.S. economy, and it's not going to make or break the U.S. economic recovery or the recession, whether or not we do legalization," Rosenblum added.

The most recent attempt to get immigration legislation through the U.S. Congress failed in 2007 amid an acrimonious public debate about what critics called "amnesty" for millions of illegal immigrants and opposition from many Republican lawmakers in the U.S. Congress.