Immigrants and Workforce Development

As noted in a previous post, I had the honor of participating in a state legislative committee hearing on the topic of immigrants and workforce development. Here is my written testimony.

Good morning. My name is Lee Huang, I am a director at Econsult Corporation here in Philadelphia. I received an undergraduate degree from Wharton with a dual concentration in Accounting and Management, and a Master’s in Government Administration from the Fels Institute of Government at the University of Pennsylvania, with dual certificates in Public Finance and Economic Development. Econsult Corporation is an economic consulting firm founded in 1979. Our work includes high-level economic and statistical analyses for government agencies, non-profit organizations, and private companies. We cover topics from economic development to real estate to transportation. Most recently, we conducted an unprecedented study of Philadelphia’s commercial corridors, reviewing city tax data and shopper survey data that had never been available before.

So in exploring the economic impact of integrating immigrant workers into the state economy, we bring a rigorous, statistical approach, and are careful to deal with facts, not guesswork. Let me start by noting that 74 percent of immigrants in the Commonwealth are of working age, versus only 56 percent of native-born Pennsylvanians. So from the standpoint of our workforce, Pennsylvania needs immigrants. The Commonwealth is old and getting older. Although young people flock to our wonderful colleges and universities, most of them leave the Commonwealth four years later. If our economy is going to thrive, we need workers who will stay.

We also need effective ways of making sure those workers are producing at their highest ability. If we’re not firing on all cylinders, that’s wasted capacity. In this case, that means making sure that qualified workers get connected to the jobs that Pennsylvania employers need to fill.

The Welcoming Center is a key part of making that connection. If I may borrow from a turn of phrase by President Obama, who recently wondered aloud that so much work needed to be done and yet so many people were looking for work; today’s hearing is about wondering aloud that so many skilled immigrants are under-utilizing the very skills and experiences that are most needed within the Commonwealth.

But the Welcoming Center is helping bridge that gap with a variety of outreach, training, orientation, and placement services. To help measure the value of these services, Econsult reviewed an entire year’s worth of data from the Center. We calculated the impact of all of the workers placed in jobs, and we found numerous positive results.

• First, individual workers were able to earn more. When a person earns more money, she can spend more – in other words, they now have greater purchasing power. That spending power ripples through the local economy, creating additional employment and earnings opportunities for other Pennsylvanians. Using standard economic multipliers, we calculated this “ripple effect,” and estimated that from one year’s worth of participants in Welcoming Center programming, the Commonwealth gained over 200 jobs and $4 million in earnings, of which 145 jobs and $2.7 million in earnings was enjoyed within the City of Philadelphia.

• Second, the City of Philadelphia and the Commonwealth of Pennsylvania both received higher tax revenues and will continue to receive higher tax revenues, as a result of individual workers’ actualizing their higher earning potential. Having been trained and supported by the Welcoming Center, participants helped contribute to the City of Philadelphia receiving an additional $103,000 in annual wage tax revenues, while the Commonwealth separately gained an additional $123,000 in annual income tax revenues.

• And that is just the initial year of results; those gains in tax revenues generated will continue into the future, and likely as those workers advance in their respective professions. If I may use a financial analogy: having made an investment, through supporting the Welcoming Center in training and guiding immigrants towards their highest and best use in our state economy, the Commonwealth receives both the “capital gains” (in this case, human capital gains) of the talents and efforts of these immigrant participants, as well as an ongoing “dividend” (in this case, a financial dividend) in the form of their annual contribution to state and local income tax revenues.

You can find more results, statistics, and methodologies in the Shared Prosperity report in the packets you received today. We will also make it available on the Econsult and the Welcoming Center websites.

I want to conclude by stressing the importance of integration to native-born Americans. Clearly, immigrant workers gain directly from their participation with the Welcoming Center, and as I just demonstrated, that gain also benefits the local and state economy as well as local and state governments. It is important to stress that these new Americans are joining communities that already exist. Integration is a two-way street. We called our report Shared Prosperity because it’s clear to us that when the integration process is smooth, our whole region benefits. Specifically:

• Businesses have a bigger and more talented pool of workers

• Entrepreneurs are able to start and grow their businesses, allowing them to create new jobs right here in Pennsylvania

• Commercial corridors benefit from increased energy and investment as merchants open up shop in storefronts that used to be vacant

• And the talented young people who come here to attend college are able to stay here and buy homes, raise families, and participate in our civic life

In short, making sure that legal, work-authorized immigrants are integrated into our workforce is wise policy, not just for immigrants, but for everyone. Again, thank you for the invitation to speak today. I would be pleased to answer any questions you have.

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