Study Shows Oklahoma Immigration Bill Will Cost State

OBA releases economic impact report

In October, 2007, the Oklahoma Bankers Association commissioned a study and analysis of the economic impact of HB 1804 on the state’s economy and businesses generally.

“Oklahoma banks are working through a number of influences on the State’s economy as they continue to serve Oklahomans and their communities,” said OBA Chairman Don Abernathy. “The economic impact of HB 1804 is just one of them.” Abernathy is President & CEO of The Bankers Bank in Oklahoma City.

The housing collapse, the sub-prime mortgage meltdown and the resulting credit crunch have collectively had an impact on the nation’s financial system as a whole. In addition, Oklahoma banks are also dealing with economic realities that have come about as a result of the passage of the bill.

"Just last week the Federal Reserve System came to the rescue of Bear Stearns, and that added to the concerns of consumers everywhere,” Abernathy said. “In spite of these challenges, Oklahoma banks remain among the strongest and best-performing banks in the nation.”

Abernathy noted that as a general rule, the OBA does not get involved in non-banking matters. The Association did not take a position on HB 1804 during its consideration by the Legislature in 2007 and does not take a position now.

“Bankers do have concerns about unintended consequences that have come about as a result of (the bill),” he concluded. “That’s the reason we decided to commission this study, to better understand the facts and get a better handle on the costs to the State’s economy and to bank customers.

“Reasonable people disagree about whether the social policy embodied in HB 1804 – to reduce the economic burden on the State and its citizens by encouraging the out-migration of undocumented or ‘illegal’ workers – is a good thing or a bad thing for the State,” he concluded. “But virtually no one disputes that it has had an impact on some Oklahoma businesses.

“And let me be absolutely clear: by asking for such a study the Association did not and does not take a position on (whether HB 1804 is a good thing or a bad thing).”

The study was conducted by the Economic Impact Group LLC of Edmond, which constructed a Computable General Equilibrium (CGE) model to analyze the impact of the bill on Oklahoma production. Key findings and conclusions of the study are:

• Oklahoma’s total foreign-born population is estimated to be between 111,000 and 175,000, an estimated 50,000 – 75,000 of whom are “undocumented”.
• Of the total foreign-born population, it’s estimated that approximately 103,000 are workers and that approximately two-thirds of this group is classified as low-skilled labor.
• The impacts associated with inducing an out-flow of immigrant labor cannot be confined to immigrant communities and industries that primarily employ foreign-born workers.
• The complex structure of the State’s economy allows disturbances in one area of the economy to manifest themselves in other areas. The model employed suggests that impacts are spread to skilled labor and industries that rely heavily on low-skilled labor production, regardless of their original inclination to hire immigrant vs. non-immigrant workers.
• In the short run, an outflow of approximately 50,000 foreign-born workers (about one-half of all immigrant workers in the state), is estimated to cause a 1.3 percent reduction in gross state product. In terms of Oklahoma’s 2006 production level, this represents a nearly $1.8 Billion economic penalty.
• In the long run, some of the impacts of the out-migration are offset by new immigration. Given this adjustment period, the model predicts long run recurring reductions of nearly 1 percent in gross state product, or nearly $1.3 Billion in terms of 2006 production.
• Both the estimated short-run and long-run impacts are consistent with similar analyses performed recently for the State of Texas.

You can download a copy of the entire report by

clicking here

.