As recent days have made clear, many Americans see plenty of reasons to provide legal status to those eligible for the Deferred Action for Childhood Arrivals, or DACA, program. The initiative, created in 2012, gave undocumented immigrants brought to the country as children a reprieve from deportation, allowing many to legally work, attend school, or join the military for the first time. In the days since the Trump administration announced its plan to phase out the program, more than 400 CEOs have come out in favor of protecting Dreamers, many of whom work at their firms. Prominent university presidents have extolled the character of their DACA students and their role in innovation-rich fields. And 15 states, as well as Washington, D.C., have sued to try to prevent the ending of the program.
Last week, NAE highlighted one of many reasons why Dreamers are an important community to accept and protect: The very real and meaningful economic contributions they make to the U.S. economy. Our analysis of the 1.3 million DACA-eligible individuals, age 16 and above, found that more than 90 percent were actively employed in 2015. That group earned $19.9 billion in income and contributed roughly $3.0 billion in taxes that year. They also formed businesses at higher rates than similarly aged U.S.-born workers, with almost 38,000 working as self-employed entrepreneurs in 2015 alone.
But DACA, of course, gains more resonance when we look beyond the national picture. Every state in the country is currently home to hundreds—or in many cases, thousands—of DACA recipients. Clawing back the protections afforded to this group upsets community networks and schools, and can hurt local employers and businesses dependent upon Dreamers to serve as workers and customers. To better understand how the DACA-eligible population contributes to individual states, this brief provides estimates on the economic activity of the Dreamer population in 26 states across the country—the areas where we estimate the DACA-eligible population exceeded 10,000 people in 2015. Our estimates are derived from the 2013–2015 American Community Survey, and rely on the same calculation techniques used in previous NAE studies on the subset of undocumented immigrants eligible for the DACA program. (A detailed methodology is available at the end of this report.)
Before diving into economic contributions, it helps to first consider how the DACA-eligible population is distributed geographically. Almost one of out every four DACA-eligible individuals was living in California in 2015, while another one out of every six was Texas-based. Other less expected states, however, had sizeable concentrations of undocumented immigrants eligible for the DACA program. This group includes Arizona and Georgia, two states that had roughly 40,000 or more DACA eligible residents. Another four states—including Maryland, Washington, Virginia, and North Carolina—had 25,000 or more. Colorado and Nevada hovered right below that in the low 20,000s.
Figure 1: States with the Largest Number of DACA-Eligible Residents, 2015
|Number of DACA Eligible Residents|
Much like the national picture, our work finds that the DACA-eligible population in each state is largely employed and working. Looking just at those aged 16 and older who are in the labor force and not in school or the military, we find that at least 86 percent of DACA-eligible individuals is employed in every state in our analysis. In some places, a particularly large share of DACA-eligible individuals is working. In Colorado, for instance, more than 95 percent of the state’s sizeable DACA-eligible population was employed in 2015. Similarly, the employment rate of Massachusetts’ DACA-eligible residents topped 95 percent that year. Meanwhile, in two smaller states—Oklahoma and Oregon—more than 93 percent of DACA-eligible individuals held jobs in 2015.
Figure 2: Employment Rate of the DACA-Eligible Population in Top States, 2015
|Share of DACA Eligible Population in Labor Force that is Employed|
With their high rates of employment, it is little surprise that the DACA-eligible population is also contributing meaningfully to their states and localities as both earners and taxpayers. In 2015, the DACA-eligible population in the 26 states featured here earned a collective $18.6 billion. In each of the four states with the largest number of undocumented immigrants qualifying for the program—Florida, California, Texas, and New York—the DACA-eligible earned more than $1 billion in income that year. While the total in these four states amounts to over $11 billion, their earnings in California were particularly high, reaching almost $5 billion.
As would be the case with any other workers in our economy, some of the income earned by DACA-eligible groups went back to state and local governments in the form of tax revenue. State and local tax payments are essential to fund some of the basic functions of government such as staffing public schools, collecting trash, and maintaining police forces. At the federal level, the payments of DACA-eligible individuals go partially towards sustaining our fragile entitlement programs. In Figure 3 below, we show the amount of state and local taxes and taxes overall paid by DACA-eligible immigrants in each state. Looking beyond the largest states, we can see that even a relatively small DACA-eligible population contributes a significant amount to government tax coffers. In Florida, the subset of Dreamers eligible for the DACA program paid more than $214 million in taxes in 2015. In Illinois and New Jersey, they paid more than $130 million in overall taxes that year.
Figure 3: Aggregate Earnings and Tax Payments of DACA-Eligible Individuals in Key States, 2015
|Aggregate Income (in millions $)||State and Local Taxes Paid (in millions $)||Taxes Paid Overall (in millions $)|
One important measure of how a given group contributes to the country’s economy is the amount they spend each year as consumers. More than three out of every five U.S. jobs were in the broader services sector in 2014, according to the U.S. Bureau of Labor Statistics. Without a steady supply of paying customers, these positions—in fields like retail, hospitality, and medicine—would struggle or cease to exist. Looking at the spending power of the DACA-eligible population, we can see that in many states their power as consumers is notable. In nine states, their spending power was greater than $400 million in 2015. In two of them, it exceeded $2.5 billion. We show the spending power held by immigrants in each of our 26 states in Figure 4.
Figure 4: Spending Power of DACA-Eligible Individuals in Key States, 2015
|Spending Power (in millions $)|
DACA-eligible immigrants are not just contributing to our economy through their tax payments and spending, but by starting businesses and creating jobs for American workers as well. Because of limitations in the sample size available for analysis, we are only able to confidently estimate the size of the population of entrepreneurs eligible for DACA in the five largest states. Similar to the national pattern, we find that in four out of the five states the DACA-eligible population has higher rates of entrepreneurship than similarly aged U.S.-born workers, or those ages 16 to 34. In New York, for instance, 5.7 percent of the DACA-eligible population in the workforce is made up of self-employed entrepreneurs, compared to just 4.0 percent of the relevant group of U.S.-born workers. In Florida, the gap between the two entrepreneurship rates is 1.2 percent. Although the entrepreneurship rates of young people can sound small on their face, they do translate into large numbers on the ground. In 2015, California was home to roughly 8,900 DACA-eligible entrepreneurs, while Texas had 7,320.
Figure 5: Share of DACA-Eligible Workers and U.S.-Born Workers Who Are Entrepreneurs in Selected States, 2015
|Share DACA-Eligible, Self-Employed||Share of U.S.-Born, ages 16-34, Self-Employed||Number of DACA-Eligible Entrepreneurs|
The next few months will likely be decisive for the more than 1.3 million DACA-eligible individuals currently living in the United States. With the administration already winding down the DACA program, Congress has been given six months to find a legislative solution. But while a decent share of the press coverage in recent days has focused on the intense machinations on the issue in Washington, this brief shows just how important the DACA-eligible population is to the economies of a whole host of states—from longtime immigrant destinations like New York and California to states that have only in recent years been popular settlement destinations such as Georgia, North Carolina, and Nevada. Although there are many reasons to enshrine into law protections of the Dreamers, this brief demonstrates that economic contributions should be part of any discussion by policymakers on this issue going forward.
We use data from the 2013–2015 American Community Survey (ACS) to identify potential DACA-eligible persons. Due to the small sample size of DACA-eligible population in the one-year ACS sample, we pool the 2013, 2014, and 2015 data and use the average weight of three years to arrive at our final estimates.
To start, we use the same approach our previous work has employed to identify undocumented immigrants from the U.S. Census microdata. This method is similar to the method used by Harvard economist George Borjas to impute undocumented status using several variables in the U.S. Census. As DACA recipients are legally allowed to work in certain occupations that undocumented immigrants cannot work in, we adjust our methodology here to reflect such differences between undocumented immigrants and the DACA-eligible population.
To determine whether a person in the microdata has legal status in the United States, foreign-born individuals who reported naturalization are reclassified as non-citizens if the individual has resided in the United States for less than six years or, if married to a U.S. citizen, for less than three. In both of these cases, it would be virtually impossible to naturalize, making it likely such individuals misreported their status to Census officials. After reclassifying those individuals, we then consider the entire pool of non-naturalized immigrants as potentially undocumented. Using the following criteria, we then remove individuals from the pool who are highly likely to have legal status:
- Arrived in the United States before 1980;
- Citizens and children less than 18 years old reporting at least one U.S.-born parent;
- Spouses of natural born citizens, or naturalized citizens who have resided in the United States for six years or more;
- Recipients of Social Security benefits, Supplemental Security Income, Medicaid, Medicare, or public assistance;
- Households with at least one citizen that received SNAP benefits;
- Refugees; or
- Federal government employees or law enforcement officers.
The remainder of the foreign-born population that does not meet these criteria are reclassified as undocumented. Since DACA-eligible population is a subset of the total undocumented population, we then apply the guidelines for DACA from United States Citizenship and Immigration Services (USCIS) to ACS microdata to restrict our data further. We determine an undocumented person DACA-eligible if the individual:
- Was born after the second quarter of 1981;
- Came to the United States before reaching his or her 16th birthday; and
- Has moved to the United States by 2007.
While USCIS guidelines for DACA application also include restrictions on those who have criminal records, it is not possible to determine such information from the U.S. Census. Our final numbers of the DACA-eligible population are the most reliable estimates that one can extrapolate from the Census microdata.
Unlike past NAE papers on income and tax contributions, this brief treats each DACA-eligible individual as a single taxpaying unit. This follows the lead of other groups, such as the nonpartisan Institute on Taxation and Economic Policy (ITEP), that have also sought to quantify the economic and tax contributions of this population.
As in past NAE briefs, we use the term “spending power.”5 Here and elsewhere we define spending power as the disposable income leftover after subtracting federal, state, and local taxes from total household income.
Using the 2013–2015 ACS microdata sample, we then estimate the aggregate household income, tax contributions, and spending power of DACA-eligible households. We estimate state and local taxes using the tax incidence estimates produced by ITEP.6 For federal tax rate estimates, we use data released by the Congressional Budget Office in 2014 and calculate the federal tax based on their estimates for household federal tax incidence rates by income quintile.7
Entrepreneurs in this brief are defined as any worker who reported being self-employed in the 2013–2015 ACS sample.
 U.S. Bureau of Labor Statistics, Bureau of Labor Statistics, “Employment by Major Industry Sector,” accessed September 21, 2016, http://www.bls.gov/emp/ep_table_201.htm.