by Daniel Costello

The net number of illegal immigrants entering the United States has slowed significantly in recent years, and has fallen below the number of those entering the country legally, according to a report released Thursday by the Pew Hispanic Center, a Washington think tank.

The findings are sure to bring comment from many different points along the political spectrum. A key point that is likely to get less attention is what the findings mean for the economy and long-term issues like state and federal budgets and even taxes.

Here's an explanation.

 

The Pew report estimates there were 11.9 million illegal immigrants in the U.S. as of March. That would be a decline of 500,000 from the center's estimate a year ago.

Again, putting politics aside, the economic ramifications could be huge. For one, many new immigrants are paid a lower wage than U.S. citizens. That pushes down costs in lower wage industries, from farming to fast-food. With less immigrants working in those jobs, wages could go up. Of course, that's a good thing for workers but it could further add to inflation.

Secondly, immigration is one of the few bright spots when it comes to financially burdened U.S. entitlement programs like Medicare and Social Security.

In 2006, the U.S. birthrate hit a 35-year high and passed what's known as the "replacement rate." A replacement-level fertility rate is considered vital for keeping retirement programs such as Social Security solvent by supplying new workers to pay into the system to support retirees.

Europe, Japan and other industrialized countries have long had fertility rates far below the replacement level, creating the prospect of labor shortages and increasing concerns they won't be able to afford the costs of supporting their aging populations.

That's why countries from Italy to Russia now offer women up to $10,000 to have a child.

While analysts say the higher U.S. birth rate is the result of many factors, a large one appears to be that new immigrants have significantly more children than those born in the U.S. In this country, Hispanics have the highest fertility rate — about 2.9 — followed by African Americans (2.1), Asians (1.9) and whites (1.86).

All of that means high immigration rates in recent years have raised hope among some economists that the U.S. may be able to better afford all those retiree benefits that politicians have been promising with blank checks for decades. Even the cost of schooling children of immigrants and other public programs isn't likely outweighed by this benefit.

With the growing credit crunch and the economy worsening, and fewer jobs for immigrants to take, it's likely even fewer will come to the U.S. for the foreseeable future. Some say that's a good thing, while others say it's a shame.

Either way, the trend is likely to have a much more far reaching financial impact than it may appear on first look.