Why lack of immigration affects stocks

Let’s get the numbers everyone dwells on out of the way.

There are about 14.3 million ‘unauthorized’ immigrants in the United States… a number that has done that has done nothing but go up since 2019.

According to the Federation for American Immigration Reform (FAIR) – The illegal immigrants who have entered since January of 2021 have added an extra $20.4 billion to the taxpayer tab.

That’s in addition to the $140 billion taxpayers already shoulder for existing illegal immigrants already in the country.

In fiscal year 2022, there have been over 2 million border encounters, up from 1.7 million in 2021.

It’s not just the exorbitant expense that’s hitting the American taxpayer – the unintended consequences can be reaching:
–  Wages and working conditions for legal Americans are being driven down.
–  Classrooms and limited affordable housing resources and natural resources are strained – if not entirely exhausted.
–  Very real national security threats surface, with the potential for increased crime.

Despite all of this, the impact of immigration on the economy over time is actually positive.

In short, immigration fuels the economy. When they enter the workforce, the production capacity for the country is increased – and the GDP goes up.

While there is an upfront expense that is shouldered by taxpayers, immigrants are statistically unlikely to replace native born workers. Instead, they end up taking lower paying jobs, pushing native born citizens to higher paying occupations. (Reference this study and the conclusions).

Additionally, it’s good for business. Why?

1. Housing. You have to live somewhere and affordable housing giants like Dominum, LDG and The NRP Group have never been doing better. The three combined for over 7,500 unit starts last year alone. This in turn spurs new housing starts, also up by 15.6% last year. NewAmericanEconomy.com estimated that immigrants have added $3.7 Trillion to US Housing wealth.
2. Higher Education. More and more immigrants are getting their bachelor’s degree or higher according to the Pew Research Center. This means that for-profit education providers – not just universities and colleges benefit.

Looking for a stock that will help your portfolio while the boarders continue to be blitzed?

Grand Canyon Education: This is the company behind Grand Canyon University in Prescott, Arizona. It serves 90,000 students both onsite and online – and LOPE has held up despite the recent downturn / correction with the broader indexes. In fact, we’ve liked this stock for year – especially when it went on sale during COVID and was trading in the mid-fifties.

Still not fully up to speed on why people aren’t crazy about illegal immigration?

Here’s the basic argument against….

Lack of immigration control refers to a situation in which there are few or no restrictions on the movement of people across national borders. While immigration can bring many benefits to an economy, lack of immigration control can also have negative consequences. Here are a few ways in which lack of immigration control can hurt the economy:

Overcrowding and resource depletion: When there is a large influx of immigrants into a country, it can lead to overcrowding and resource depletion. This can put a strain on housing, healthcare, education, and other public services, which can be costly for the government and taxpayers. In addition, overcrowding can lead to environmental degradation, as more people consume natural resources such as water, land, and energy.

Unemployment and wage stagnation: Lack of immigration control can also lead to unemployment and wage stagnation for native-born workers. When there is a large supply of labor, employers may be able to choose from a pool of workers that includes both immigrants and native-born workers. This can lead to increased competition for jobs and can put downward pressure on wages. In addition, immigrants may be willing to work for lower wages than native-born workers, which can further decrease wages for native-born workers.

Social unrest and cultural conflict: Lack of immigration control can also lead to social unrest and cultural conflict. When a large number of immigrants arrive in a country, it can lead to a rapid change in the demographics and cultural makeup of the population. This can create tension and conflict between different groups, as people may feel threatened by the changes taking place in their communities. In addition, lack of immigration control can lead to the exploitation of immigrants, as they may be vulnerable to abuse due to their lack of legal status.

National security risks: Lack of immigration control can also pose national security risks. When there are few restrictions on who can enter a country, it can be difficult to track the movement of people and to identify potential threats. This can make it easier for terrorists, criminals, and other undesirable individuals to enter the country and carry out nefarious activities.

Legal and administrative costs: Lack of immigration control can also lead to legal and administrative costs. When a large number of immigrants enter a country without legal permission, it can be expensive and time-consuming for the government to process and deport these individuals. In addition, lack of immigration control can lead to a higher incidence of illegal activity, such as smuggling, trafficking, and document fraud, which can be costly to investigate and prosecute.

In conclusion, lack of immigration control can have negative consequences for the economy. It can lead to overcrowding and resource depletion, unemployment and wage stagnation, social unrest and cultural conflict, national security risks, and legal and administrative costs. While immigration can bring many benefits to an economy, it is important for governments to have control over their borders and to manage the flow of immigrants in a way that is sustainable and beneficial for all stakeholders.

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