Brief/Policy & Reports/Dreamers/Immigration

A DACA fix could add $400 billion to the U.S. economy
in the next 10 years

A young man smiles while standing in front of the U.S. Capitol building
A young man smiles while standing in front of the U.S. Capitol building

New FWD.us estimates show that a DACA fix passed by Congress could allow eligible individuals to contribute at least $390 billion in wages and $117 billion in combined taxes over the next decade. This would be a significant increase above what DACA recipients have already been contributing; in the past decade, DACA recipients have already contributed some $108 billion in wages to the U.S. economy, plus an additional $33 billion in combined federal, payroll, state, and local taxes.

The Deferred Action for Childhood Arrivals (DACA) policy was introduced by the Obama Administration in 2012 as a temporary measure to offer deportation protections and work authorizations for undocumented individuals who come to the U.S. as children. In the decade since, however, Congress has failed to pass a permanent legislative solution for Dreamers, even as the DACA policy faces serious threat from the courts. In fact, FWD.us estimates that, if Congress fails to pass a DACA fix and DACA renewals were halted, 1,000 DACA recipients would lose their jobs each and every business day for two years, leading to an estimated loss of $1 billion monthly to the U.S. economy. Also, unless Congress includes other Dreamers in a DACA fix, the nearly 400,000 individuals on the sidelines of the labor force who are DACA-eligible but who are currently prohibited from accessing the policy due to a court injunction, would be permanently blocked from fully contributing to the U.S. economy for decades.

“DACA recipients have paid some $20 billion in federal and payroll taxes and a further $13 billion in state and local taxes, since 2012.”

For the past 10 years, DACA recipients have made enormous economic contributions to the U.S. economy

When DACA was first implemented in 2012, the average age of DACA recipients was 21 years; they were mostly in high school or college, training for their future careers. Each year since, a larger share of these DACA recipients has entered the workforce, growing from more than half (60%) of DACA recipients at the beginning of the policy to more than three-quarters (77%) a decade later. At the same time, the educational attainment of DACA recipients has also increased, with nearly all having completed high school and nearly half (44%) having some college education by 2022.

As DACA recipients have grown in their careers and gained more experience, they have become even greater contributors to the U.S. workforce and our economy; consequently, their combined economic and tax contributions have continued to increase year after year. For the first decade of the DACA policy, DACA recipients earned wages totaling an estimated $108 billion. They have paid some $20 billion in federal and payroll taxes and a further $13 billion in state and local taxes.

Note: See Methodology for information on estimates. State estimates may not add to the U.S. total due to rounding.
Sources: 2013-2019, 2021 augmented American Community Survey (ACS) data
DACA recipients are likely net contributors to federal and state budgets

DACA recipients’ economic contributions are highest in California ($35.2 billion) and Texas ($16.1 billion), two states which together are home to nearly half of all DACA recipients. DACA recipients have also contributed enormously to state economies in Illinois ($6.5 billion), Arizona ($4.8 billion), Florida ($3.6 billion), Georgia ($3.5 billion), Washington ($3.3 billion), New York ($3.0 billion), and North Carolina ($2.9 billion). Even the economies of states like Indiana ($1.3 billion), South Carolina ($0.8 billion), and Louisiana ($0.3 billion), which have smaller populations of DACA recipients, have together expanded by billions of dollars during the past decade because of DACA recipients’ hard work and continued contributions in their states.

In addition, DACA recipients are likely net contributors to federal and state budgets. Given that DACA recipients cannot access many social welfare programs, the net balance of their contributions is likely even more positive than those born in the U.S. to immigrant parents, who are already recognized as net contributors to federal and most state budget balances.

A congressional DACA fix would unlock hundreds of billions in economic contributions over the next decade

By 2032, the DACA-eligible population will be, on average, 38 years old. At this point in their lives, most DACA-eligible individuals will be nearing the peak of their careers, contributing significantly to the U.S. economy—if they are allowed to remain in the country and continue working.

Over the next decade, FWD.us projects that a DACA fix would empower beneficiaries to contribute at least $390 billion to the U.S. economy, perhaps more, through their wages, and a further $71 billion in federal and payroll taxes as well as $46 billion in state and local taxes. With lawful residency, DACA recipients can more fully advance their careers, new job opportunities will open for them, and hundreds of thousands of DACA-eligible individuals currently without DACA will be able to be lawfully employed.

Note: Assumes a pathway to citizenship passed by Congress in 2022 for DACA-eligible individuals. See Methodology for information on estimates. State estimates may not add to the U.S. total due to rounding.
Sources: 2021 augmented American Community Survey (ACS) data
“The U.S. economy cannot afford to give up the tremendous contributions that DACA recipients can make to our economy and workforce.”

Without the passage of DACA fix for DACA recipients and other Dreamers, total future economic contributions could be even lower than the $108 billion contributed during the previous decade. If Congress does not pass protections, most individuals would have no lawful opportunity to work in careers they’ve spent years preparing for. Many would be forced to seek opportunities elsewhere, perhaps outside of the U.S. And, DACA-eligible individuals currently without DACA would no longer have any pathway to enter positions in education, medicine, business, and STEM that are so desperately needed in the U.S. workforce.

As U.S. working populations age and millions retire across states, DACA-eligible individuals will become even more critical to state workforces. For example, if Congress passes a DACA fix, DACA-eligible individuals will contribute an estimated $99.5 billion in wages to the economy in California during the next decade, as well as an estimated $54.9 billion to the Texas economy. Other states that will see a substantial economic contribution from DACA-eligible individuals in the coming decade include New York ($19.9 billion), Florida ($19.5 billion), Illinois ($18.1 billion), Arizona ($14.4 billion), Georgia ($13.1 billion), Washington ($12.4 billion), New Jersey ($10.8 billion), and North Carolina ($10.2 billion). In providing permanent legislative protections for DACA recipients, these younger workers at their prime working age will be a substantial and essential part of the U.S. workforce as states grapple with a wave of baby boomer retirements over the next decade.

The U.S. economy cannot afford to give up the tremendous contributions that DACA recipients can make to our economy and workforce. As we continue to struggle through continued economic recovery, we need these hardworking, well-educated young people more than ever. But the truth is that the DACA policy will end, and thousands of jobs will be lost each and every day, unless Congress passes legislation to protect Dreamers by the end of this year. The potential benefits are too great, and the costs to our states and our communities too stark, for Congress to fail to act. Congress must pass a bipartisan DACA fix this year.

DACA recipient contributions to the U.S. economy are equivalent to their total annual wages, or spending power, after the payment of all federal, payroll, state, and local taxes. These estimates do not take into account additional economic contributions based on businesses DACA recipients own, their personal investments, home ownership, or the additional wages of their family members. Consequently, these estimates should be considered minimums.

Past wages and tax contributions:
The size of the DACA recipient population has varied from year to year, peaking at around 700,000 individuals in 2018. In 2022, nearly 600,000 people living in the U.S. had DACA. Using American Community Survey (ACS) data for previous years, DACA recipients were identified based on economic, demographic, and social characteristics (see our ACS methodology on how we assign immigration status to respondents in the ACS). Total wages were calculated with these DACA assignments for each year of the ACS.

Because of respondent coverage issues in 2020, ACS data from 2019 was used for 2020 with upward adjustments for changes in overall U.S. wages between 2019 and 2020. Wages for 2022 relied on ACS data from 2021, also with upward adjustments for changes in overall U.S. wages between 2021 and 2022.

The median level of income for the national DACA population was used for DACA respondents who did not provide personal income. Federal taxes are based on federal and payroll tax estimates for market income by household type and household size from the Congressional Budget Office’s 2018 “Distribution of Household Income” report. State and local tax estimates do not take into account differences in local taxation rates, but are based on estimated state averages of taxation by income from the Institute of Taxation and Economic Policy’s 2018 report, “Who Pays? A Distribution Analysis of the Tax Systems in All 50 States.”

Future wages and tax contributions:
Projected wages are based on the total DACA-eligible population for each year using current DACA eligibility criteria. For 2023 to 2027 projections, DACA-eligible individuals’ income and taxes were upwardly adjusted using the mean income of long-term immigrants with lawful permanent residency (LPR) living in the U.S. for 20 years or longer and having similar ages, sex distributions, and educational breakdowns as DACA-eligible individuals as they age through the coming decade. These five years are based on legislation offering LPR for current DACA recipients and conditional LPR for DACA-eligible individuals without DACA.

For 2028 to 2032 projections, current DACA recipient income is upwardly adjusted using the mean annual income of U.S. citizen immigrants living in the U.S. for 20 years or longer and having similar ages, sex distributions, and educational breakdowns as DACA recipients. This assignment is based on eligibility in legislation to obtain U.S. citizenship after five years with LPR. For DACA-eligible individuals currently without DACA, respondent income was upwardly adjusted using the mean income of long-term immigrants with LPR living in the U.S. for 20 years or longer and having similar ages, sex distributions, and educational breakdowns as DACA eligible individuals, allowing for the population to age through the coming decade.

Because more than a quarter of DACA-eligible individuals are under 23, the age at which some DACA recipients had not only completed high school but also had earned a college degree, younger DACA-eligible individuals were aged appropriately into educational attainment and corresponding income categories, with all having completed high school by the end of the projection period (research shows nearly all long-term DACA recipients graduate from high school), and an additional 3,000 characterized as college graduates each year (the average national rate of college attainment for DACA recipients).

These projected total wages allow for changes in educational and career development as DACA-eligible individuals age, as seen in similar individuals with lawful immigration status in the 2021 ACS data. Wage totals were also upwardly adjusted to account for a 2% average annual increase in wages, a conservative estimate given the rising wages currently associated with rising inflation. Finally, the same source data for taxation used in calculating the previous decade tax contributions was used, assuming taxation policies remain similar in the decade ahead.

Phillip Connor

Senior Demographer

phillip@fwd.us
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