The United States has long been a beacon of hope for global migrants, attracting people from around the world with the promise of economic opportunity. However, beneath the surface of this migration phenomenon lies a complex interplay of economics and policy, particularly concerning undocumented migrants. These individuals, often unseen and under-discussed in the mainstream narrative, play a significant role in the American economy.
The US economy is characterised by high employment and significant gender parity in the workforce. Most American households have multiple earners, contributing to higher overall household income. Despite a long-term unemployment rate slightly above 5.5%, the US maintained a low unemployment rate of 3.7% in 2023. Concurrently, the long-term economic growth rate has been stable, approximately at 3.12%. This robust economic performance, however, comes with its challenges, such as labour shortages in various sectors.
Migration policies and the workforce
The US has a complex yet effective set of migration policies and is a major destination for international students, many of whom join the American workforce, fulfilling the demand for educated and skilled labour. Additionally, the US economy relies significantly on outsourcing technologically enabled tasks, particularly to China, India, and other developing economies. According to PEW Research, in 2017 out of 45 million (13.7% of population) immigrants in the US, 10.5 million were undocumented, making up about 3.2% of the US population.
It is necessary to understand the glut in absolute numbers of illegal and undocumented immigrants in the US in association with the puzzle of US minimum wage rates. The minimum wage policy in the US is a contentious issue, with significant variations across states. The federal minimum wage stood at a modest $7.25 per hour in 2023. However, 30 states have set higher minimum wages, with the highest being $42, and the lowest at $17 per hour. The national average hovers just under $26 per hour. This disparity in wages is a key factor driving undocumented immigration, particularly across the southern US-Mexico border. It should also be noted that many illegal migrants and F1 visa holders who work on the sly will get as low as $5 per hour of work, making it the most exploitative labour force regime in the US.
Also read: Since 2019, 1.49 Lakh Indians Detained While Trying to Illegally Enter US Border: Data
Undocumented immigration is an economic necessity in the US and the two major contesting political parties use this not only to politicise voting behaviour but also entice private investors and businesses which can do with an illiterate labour force. Thus, the influx of undocumented migrants is often a result of economic necessity, driven by the disparity in wage rates and the demand for labour in certain sectors. These immigrants find employment in infrastructure, hospitality, small businesses, and agriculture. Notably, they often receive formal documentation within months of arrival and can become naturalised within a couple of years – a process significantly faster than for those on H1B and F1 visas.
The impact on household economics
With the US national residential rental average consuming 30% of median household income (and over 50% for the lowest income quintile), individuals earning federal minimum wage or working unofficially face significant financial strain. Many immigrants, including the undocumented, take substantial risks to enter the US, motivated by the possibility of sending remittances back to their home countries. For example, the average daily wage in India is low, making even modest savings in the US significant enough to justify the risks of migration. Even the take-home, for example, of an Uber operator which can be as high as $4,000 per month in the US is hovering around $300 (Rs 25,000) per month in India.
Also read: Four ‘US Donkey Flights’ Had Left for Nicaragua When French Immigration Intercepted Legend Airlines
Undocumented workers in the US typically earn a low of $1000 per month (some also receive accommodation as part of their employment). The money sent back home – even if it’s as little as $300 per month – translates into a substantial amount in Indian currency, providing considerable support to families in India. This economic incentive is a major factor driving migration, often through risky and illegal channels. Obvious that they reside in extremely rundown residential areas and even share a bed on a rotational basis. In this context, it is important to note that the immigrants (also undocumented) take risks to enter the US in the hope of savings and remittances to their dependents back in their country of origin. Thus, in the US, a saving of $10 to $20 a day is enough to take extremely high-risk migrating routes even by paying high costs as evidenced by the recent example of a chartered plane from India to Nicaragua, which was stranded in France. It could also mean taking a life-threatening one-way trip in a shop container.
As we speak over 100,000 Indians have entered the US through the ‘Dunki’ routes which are well depicted in last week’s movie release of the same name produced by Rajkumar Hirani and acted by highly acclaimed acters – Shah Rukh Khan, Taapsee Pannu, and Vicky Kaushal. Illegal migration from India, however, is not happening from households that are poor, but rather from those which can afford to pay high fees for human traffickers, smugglers, and those dealing with hawala transactions.
Abusaleh Shariff is with the US-India Policy Institute, Washington DC, and Centre for Research and Debates in Development Policy, New Delhi and Bengaluru.