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Sep 6, 2017

What is DACA? The Effect of Dreamers on the U.S. Economy

By Team Stash

What is DACA and why are economists worried about it ending?

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The Trump Administration announced on Tuesday it would wind down a program called Deferred Action for Childhood Arrivals (DACA).

What is DACA?

The DACA program was created by an executive order in 2012 by President Obama. It gave the children of undocumented immigrants–people who moved to the U.S. without immigration paperwork–protection against deportation, allowing them to work and attend school. (They are often called DREAMers, short for the Development, Relief, and Education for Alien Minors Act–a bill that has been introduced, but not passed in Congress.)

Immigration is an emotional issue for many in the U.S., who worry about the impact of undocumented workers on domestic jobs.

Emotions aside, there’s general agreement between economists, immigration experts, and politicians of both parties that winding down the program will have a negative impact on the economy, not to mention the lives of the nearly 1 million young people enrolled in the program. Most of the DREAMers were brought to the U.S. when they were still children, and have not returned to their countries of birth since then.

Here’s a quick look at what’s at stake.

Who are DACA recipients?

  • 800,000 teenagers and children of undocumented immigrants are protected by the program.
  • The average age of DREAMers is 25; most arrived at the age of 10 or younger and have little or no connection to the countries from which they’ve immigrated.
  • The majority come from Mexico, El Salvador, Honduras, and Guatemala, according to U.S. Citizenship and Immigration Services. Significant numbers also come from South Korea, and other Asian countries.
  • They live in all 50 states.
  • 45% are in school, and three quarters of those getting an education are pursuing a bachelor’s degrees or higher, according to a study.

What’s being proposed?

DACA gives recipients protection against deportation and the right to work and pursue an education, in two-year increments. Starting September 5, DACA will no longer accept new applicants to the program. Those whose status expires in March, 2018 must apply for a two-year extension by October 5.  

Conservatives argue Congress is the appropriate rule-making body for any such legislation. Congress will have the opportunity to revisit and create legislation around DACA, also in March.

But with no renewals possible after that point, current recipients will exit the program at a rate of 32,000 per month, according to estimates.

What’s the impact on the economy?

Calculations of the economic damage caused by ending DACA vary. But both conservatives and progressives agree that ending DACA is likely to have a negative impact on the economy.

The Cato Institute, a Libertarian think tank, estimates $280 billion would be taken out of the economy over the next ten years.

“The repeal or rollback of the DACA program would have a significant and negative fiscal and economic impact on the country, and disproportionately affect the various states in which DACA recipients are most prevalent,” Ike Brannon, a visiting fellow for Cato, wrote in a blog post in August.

On the other side of the aisle, the progressive Center for American Progress suggests that figure could be closer to $460 billion over the next decade.

Here are some reasons why:

  • 91% of DACA recipients work and pay taxes.
  • 5% have started their own businesses.
  • Their average earnings are $36,232
  • 16% have purchased a first home since receiving DACA, and nearly two thirds have purchased a first car.
  • Nearly three quarters of the largest Fortune 500 companies employ DACA workers.

“The data illustrate that DACA recipients continue to make positive and significant contributions to the economy, including earning higher wages, which translates into higher tax revenue and economic growth that benefits all Americans,” the Center for American Progress wrote in a recent blog post.

Key Takeaways:

Without DACA, nearly 1 million children of undocumented immigrants will lack protection against deportation, and will lose their legal work status. DACA recipients make important contributions to the U.S. economy, worth as much as $460 billion, from taxes, home and car ownership, and starting their own businesses.

Keep reading: Hurricane Harvey: How the Storm Affects the Economy


Written by

Team Stash


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