By banning refugees from the United States, Donald Trump isn’t just denying them an opportunity. He’s harming the American economy.
- By Philippe LegrainPhilippe Legrain is the founder of OPEN, an international think-tank on openness issues, and a senior visiting fellow at the London School of Economics’ European Institute. Previously economic adviser to the President of the European Commission from 2011 to 2014, he is the author of four critically acclaimed books, including Immigrants: Your Country Needs Them and European Spring: Why Our Economies and Politics Are in a Mess — and How to Put Them Right.
President Donald Trump’s executive order halting refugee resettlement from around the world and barring visitors from seven mostly Muslim countries is wrong on many levels. It is cruel, xenophobic, and arguably unconstitutional. And it wouldn’t have prevented 9/11 or saved the lives of the 94 people killed on American soil by Islamist extremists since then, because none of the terrorists responsible for those atrocities were refugees or, indeed, from those seven countries. But in addition to being morally wrong, it’s economically harmful, because refugees make a big contribution to the United States, as do people originating from Iran, Iraq, Syria, Yemen, Libya, Sudan, and Somalia.
Refugees are a tiny proportion of the U.S. population — some 3.3 million have been admitted since 1975 — but they have had an outsized impact. Google co-founder Sergey Brin was a child refugee from the Soviet Union; Google’s parent company, Alphabet, is now America’s second-most valuable firm, with a market capitalization of $553 billion. WhatsApp co-founder Jan Koum and PayPal co-founder Max Levchin were refugees from Ukraine. The late Andy Grove, who helped start and was later CEO of Intel, fled from communist Hungary. So, too, did hedge-fund manager and philanthropist George Soros; Thomas Peterffy, the founder of Interactive Brokers Group; and Steven Udvar-Hazy, the founder of Air Lease Corp.
Yet nobody could have guessed when they arrived in the United States that those refugees would be so successful. Had they been denied entry, nobody would have realized the opportunity that America had missed. So just imagine what some of the brave Syrians fleeing the barbarism of the Islamic State, President Bashar al-Assad’s brutal regime, and the bombing raids ordered by Russian President Vladimir Putin could go on to achieve in the United States. After all, the biological father of the late Steve Jobs, the co-founder and legendary CEO of Apple, America’s most valuable company, was a Syrian who fled his country for political reasons.
People originating from the seven countries on Trump’s blacklist already have contributed a lot to America. eBay was founded by an Iranian-American, Pierre Omidyar. Its market capitalization of $36.1 billion dwarfs the value of Trump’s unlisted business holdings, while Omidyar’s self-made $8.2 billion fortune is more than twice as big as Trump’s partly inherited one. Oracle Corp., a software giant worth $162.2 billion, was co-founded by the late Bob Miner, who was also Iranian-American. While the communities from the other countries are much smaller and generally more recent, one notable Somali-American is author and activist Ayaan Hirsi Ali, an outspoken critic of both Islamic extremism and Trump’s anti-Muslim policies.
Of course, not all refugees and immigrants turn out to be exceptionally successful. But prejudice is a poor predictor of how they will fare. When Vietnamese “boat people” fled their country in the late 1970s and sought refuge elsewhere, they were seen as undesirable and often turned away. Eventually, many were allowed to settle in America. Most arrived speaking little or no English, with few assets or relevant job skills. Yet Vietnamese refugees in the United States are now more likely to be employed than people born in America and have higher average incomes. They have also played a key role in building trade and investment links with Vietnam. One notable entrepreneur is David Tran, who founded Huy Fong Foods. Its main product is Sriracha chili sauce, that big red bottle you see in every Vietnamese restaurant. Most of what he makes is exported to Asia, something that Trump ought to approve of, given his obsession with America’s trade balance.
Refugees contribute to the economy in many ways: as workers, entrepreneurs, innovators, taxpayers, consumers, and investors. Their efforts can help create jobs; raise the productivity and wages of American workers; increase capital returns; stimulate international trade and investment; and boost innovation, enterprise, and growth.
Some do low-skilled jobs that Americans spurn, such as working on farms, cleaning offices, and caring for the elderly. Contrary to fears that they steal jobs, studies show that refugees enable Americans to do better-paying jobs that they prefer.
Higher-skilled refugees — and their highly educated children — provide valuable talent and boost the productivity and wages of Americans with complementary skills. For instance, Syrian nurses can help American doctors provide better care to more patients. Some 28 percent of refugees have a bachelor’s or advanced degree, the same proportion as people born in the United States. Among the immigrants on Trump’s banned list, those from Iran, Libya, Syria, and Sudan are more likely to have a degree than the U.S. average. Many work for leading U.S. businesses, notably in the technology sector, that are now up in arms about the travel ban.
Whatever their skill level, refugees tend to be highly motivated and work hard to rebuild their lives. At Chobani, the company that makes America’s leading brand of Greek yogurt, three in 10 employees are refugees. Chobani founder Hamdi Ulukaya doesn’t just employ them to do good; it also turns out to be good for the bottom line. Starbucks CEO Howard Schultz’s admirable announcement that the company plans to hire 10,000 refugees worldwide in the next five years is likely to be financially rewarding, too.
Enterprising refugees start businesses that create wealth, employ locals, boost growth, and stimulate trade and investment. Like migration itself, starting a business is a risky venture that takes hard work to make it pay off. For those who arrive in America without contacts or a conventional career, it is a natural way to get ahead. A study by the Kauffman Foundation found that in 2012, immigrants to the United States were almost twice as likely to start businesses as people born in America.
Last but not least, newcomers and their children can help spark new ideas and technologies that make all Americans better off. People uprooted from one culture and exposed to another tend to be more creative. Moreover, groups with diverse perspectives and experiences — such as refugees and people born in the United States sparking off each other — tend to outperform like-minded experts at problem solving, which is what most work these days consists of.
Overall, refugees have a higher employment rate than people born in America. While Iraqis and Somalis have lower employment rates, they are mostly recent arrivals, and employment rates tend to rise sharply over time. Refugees who have been in the United States for 20 or more years also have higher median household incomes than people born in America.
A study by Kalena Cortes of Texas A&M University found that among immigrants who arrived in the United States between 1975 and 1980, refugees integrated faster than “economic migrants.” Whereas refugees earned 6 percent less and worked 14 percent fewer hours than economic migrants in 1980, by 1990 they were earning 20 percent more and working 4 percent more hours, notably because in general they improved their English, skills, and education faster over that period.
Of course, welcoming refugees costs money upfront. But it’s a drop in the ocean: Out of the $3.3 trillion federal budget in fiscal year 2015, the budget for the refugee resettlement program was $609 million. That money tends to be spent on local goods and services, benefiting businesses and creating jobs. And like providing public education to American teenagers, it’s an investment that yields further dividends once refugees start working.
In fact, investing one dollar in helping refugees get started can yield nearly two dollars in economic benefits within five years. That’s the key finding of my recent study for OPEN, an international think tank focused on refugee and other openness issues that I founded, and the Tent Foundation, whose mission is to help forcibly displaced people.
A study of greater Cleveland found that while $4.8 million was spent on refugee services in 2012, spending by refugees, refugee-owned businesses, and refugee service organizations boosted the local economy by $48 million, creating 650 jobs and providing $2.7 million in tax revenues to local and state governments.
Refugees’ reliance on public assistance declines sharply over time, although it tends to remain higher than the general population. Even so, refugees tend to be net contributors to public finances over their lifetimes: Two-thirds of new arrivals are of working age (and thus schooled abroad), on average they are in their mid-20s (and thus have a full working life ahead of them), and their taxes help service the huge public debt incurred by the existing U.S. population.
The United States was founded by refugees: The Pilgrims who came over on the Mayflower in 1620 were fleeing persecution in England. Continuing to welcome refugees and immigrants of all faiths — and none — is not just morally right and in keeping with America’s long humanitarian tradition. It is vital for the future economic success of all Americans.
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