The Cost of Immigration - Weighing The Costs And Benefitsof Immigration
In testimony given before the House Subcommittee on Immigration and Claims at a hearing on "The U.S. Population and Immigration" ("U.S. Immigration at the Beginning of the 21st Century," Washington, DC: The Urban Institute, August 2, 2001), Census Bureau immigration analysts Michael E. Fix and Jeffrey S. Passel pointed out that it was difficult to measure the fiscal impact of immigration because "there is no general agreement and no clear rationale for deciding which costs and impacts to include, nor on how to measure them." Much public concern about immigrants (legal and illegal) focuses on their use of public benefits and their overall cost to the nation's taxpayers. Some people believe that too many immigrants come to the United States to take advantage of taxpayer-funded education, health care, and other social services without ever contributing to the system. Indeed, the fear that immigrants are too heavily reliant on welfare was one factor that influenced the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 (also called the welfare reform law; PL 104-193). Under Title IV of the act, federal welfare benefits for legal immigrants were cut substantially. Those who oppose this provision believe that the revenues produced by immigrants far outweighed the initial cost of their immigration.
A Study of Illegal Immigrants
A report released in August 2004 by the Center for Immigration Studies (CIS) concluded that American households headed by illegal immigrants used $26.3 billion in government services during 2002, but paid only $16 billion in taxes. According to the report this resulted in an annual cost of $10 billion to taxpaying U.S. citizens. CIS described itself as "an independent, nonpartisan, nonprofit research organization … animated by a pro-immigrant, low-immigration vision which seeks fewer immigrants but a warmer welcome for those admitted." The CIS study, Illegals Cost Feds $10 Billion a Year; Amnesty Would Nearly Triple Cost (Washington, DC), was described as one of the first to estimate the impact of illegal immigration on the federal budget.
Table 6.1 compares social characteristics of legal immigrants, illegal aliens, and natives. Illegal aliens had the highest share of uninsured persons, those receiving welfare, and those living in poverty or near poverty. These figures referred only to federal programs; the study noted that costs at the state and local level were also likely to be significant.
TABLE 6.1
Selected social characteristics, 2004
| Rate | Number [thousands] | |
| Poverty all persons | 12.5% | 35,874 |
| All immigrantsa | 17.2% | 5,900 |
| Immigrants and their U.S.-born children (under 18)b | 18.5% | 8,148 |
| Illegal aliens only (estimate) | 22.6% | 2,058 |
| Natives | 11.8% | 29,974 |
| Natives and their childrenc | 11.3% | 27,456 |
| In or near poverty all personsd | 31.1% | 89,361 |
| All immigrantsa | 43.0% | 14,719 |
| Immigrants and their U.S.-born children (under 18)b | 45.0% | 20,447 |
| Illegal aliens only (estimate) | 58.7% | 5,349 |
| Natives | 29.4% | 74,642 |
| Natives and their childrenc | 28.4% | 68,914 |
| Uninsured all persons | 15.6% | 44,961 |
| All immigrantsa | 34.5% | 11,815 |
| Immigrants and their U.S.-born children (under 18)b | 30.0% | 13,647 |
| Illegal aliens only (estimate) | 64.5% | 5,892 |
| Natives | 13.0% | 33,146 |
| Natives and their childrenc | 12.9% | 31,314 |
| Welfare usee all households | 17.1% | 19,162 |
| All immigrant households | 25.7% | 3,638 |
| Illegal alien households (estimate) | 30.0% | 932 |
| Native households | 15.9% | 15,524 |
| Self employmentf all persons | 11.0% | 13,929 |
| Foreign born | 9.7% | 1,790 |
| Natives | 11.2% | 12,139 |
| a Includes all foreign-born individuals, including illegals aliens. | ||
| b Includes all immigrants and all children (under 18) of immigrant mothers, including those born in the United States. | ||
| c Excludes the U.S.-born children of immigrant mothers. | ||
| d In or near poverty defined as under 200 percent of the offical poverty threshold. | ||
| e Based on nativity of household head, at least one person in household uses TANF (Temporary Assistance for Needy Families), food stamps, SSI, public/subsidized housing or Medicaid. | ||
| f Self employment figures are for employed persons 18 years of age and older. | ||
The CIS study projected that, if illegal aliens were given amnesty, the fiscal deficit at the federal level would grow to nearly $29 billion. Some of the findings of the study included:
- Among the largest federal costs incurred were Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs ($1.9 billion); the federal prison and court systems ($1.6 billion); and federal aid to schools ($1.4 billion).
- With nearly two-thirds of illegal aliens lacking a high school diploma, the primary reason they created a fiscal deficit was their low education levels and resulting low incomes and tax payments—not their legal status or any unwillingness to work.
- Amnesty would increase costs because illegal aliens would still be largely unskilled, and thus their tax payments would continue to be very modest—but once legalized they would be able to access many more government services.
- The fact that legal immigrants with little schooling were a fiscal drain on federal coffers did not mean that legal immigrants overall were a drain. Many legal immigrants were highly skilled.
- Because many of the costs were due to their U.S.-born children, who were awarded U.S. citizenship at birth, barring illegal aliens themselves from federal programs would not significantly reduce costs.
- Although they created a net drain on the federal government, the average illegal household paid more than $4,200 a year in federal taxes, for a total of nearly $16 billion.
- However, they imposed annual costs of more than $26.3 billion, or about $6,950 per illegal household.
- About 43%, or $7 billion, of the federal taxes illegal aliens paid went to Social Security and Medicare.
- Employers did not see the costs associated with less-educated immigrant workers because the costs were spread out among all taxpayers.
Educational Attainment
According to the U.S. Census Bureau's The Foreign-Born Population in the United States: 2003 (Luke J. Larsen, Current Population Reports P20-551, Washington, DC, August 2004), in 2003 the share of both the native-born and foreign-born population who had completed a bachelor's degree or more was almost identical (about one-fourth of both groups). However, just 40% of the foreign-born had completed high school compared to 60.3% of the native-born. On the lower end of the educational scale, 21.5% of the foreign-born had less than a ninth-grade education compared to just 4.1% of the native-born population.
Countries of origin make a great difference in the education levels of immigrants. More than 80% of foreign-born residents from both Asia and Europe had at least a high school education compared to 37.7% from Central America. (See Figure 6.1.) According to the Census Bureau's report, fifty percent of the foreign-born from Asia had at least a bachelor's degree while just 11.6% of persons from Latin America had completed the same level of education.
The report's findings indicated that household income levels corresponded to education levels. Among foreign-born families from Asia, more than half (53.6%) had annual incomes of $50,000 or more in 2002, compared to just 29% of families from Latin America. Native-born
FIGURE 6.1
Population with high school education or more, by nativity
and world region of birth, 2003
Labor Force Characteristics of Immigrants
According to data in another U.S. Census Bureau report (Dianne Schmidley, The Foreign-Born Population in the United States: March 2002, Current Population Reports P20-539, Washington, DC, February 2003), as of March 2002 the foreign-born population (which comprised 12.4% of the civilian labor force of 140.5 million people) participated in the labor market at about the same rate as the native population (66.6% compared to 67.3%, respectively), thereby contributing income and payroll taxes. The labor force participation rate among males in their prime working years was higher for the foreign-born population (92.8%) than for native males (91.2%). For females, however, the labor force participation rate was lower at every age among the foreign-born population than among the native population.
Do Immigrants Cause Job Losses for Native Workers?
In A Jobless Recovery? Immigrant Gains and Native Losses (Washington, DC: Center for Immigration Studies, October 2004), Steven A. Camarota compared immigrant and native employment in 2000 and 2004. Table 6.2 shows that the number of working immigrants increased by 2.3 million in the four-year period while the number of working natives decreased by 482,000. Camarota identified a number of factors that may have contributed to the reduced number of employed natives: early retirements, more mothers staying home to raise children, and an increased number of native students out of the job market while attending college. However, he concluded that economic conditions accounted for most of the loss of workforce participation by natives.
Camarota noted that the rapid increase in the number of immigrants made it possible for both the number of immigrants working and the number not working to increase at the same time. Camarota disputed the argument that "immigrants only take jobs Americans don't want," noting that half of the increase in jobs held by immigrants was in positions requiring more than a high school education. He also noted that while both immigrants and natives with less than a high school education experienced unemployment, the influx of immigrants may have made it more difficult for natives with limited education to find jobs.
Immigrant Occupations and Native Unemployment
Camarota also examined the impact of immigration by occupations. Farming, building maintenance, and construction had the highest percentage of immigrants for the total number of people in those occupations. They were also the occupations with the highest unemployment rates for natives. For example, 36% of all employees in farming were immigrants, and the native unemployment rate in farming was 11.9%. The greatest number of immigrants who arrived between 2000 and 2004 worked in construction (462,000) while that industry had the highest native unemployment rate at 12.7%. (See Table 6.3.) Camarota concluded that such data did not show immigrants to be the cause of native unemployment, but it also did not support the argument that there were no American workers available to fill lower-skilled jobs.
In Table 6.4 Camarota analyzed immigrant and native employment in the states that had experienced the greatest increase in immigrant workers. California, with the largest influx of immigrants, had a nearly even balance in employment growth between immigrants and natives. From 2000 to 2004, California saw a 3% growth in immigrant employment and a 2% growth in native employment. By contrast, during the same period, growth in the number of immigrants working in Texas was 25% while the number of natives working increased by just 1%. Camarota noted that in New York the number of both immigrant and native workers declined while in Massachusetts natives gained jobs and the number of immigrants working declined. Camarota concluded that "[i]mmigration is only one of many factors that can have an impact on labor market outcomes for natives."
Unemployment data for 2003 in the U.S. Census Bureau's The Foreign-Born Population in the United
FIGURE 6.2
Total household income, by nativity and world region of birth, 2002
TABLE 6.2
Immigrant and native labor force status in thousands, 2000
and 2004
[In thousands]
| Immigrants | Natives | |
| Number working 2000a | 17,463 | 115,797 |
| Number working 2004a | 19,742 | 115,315 |
| Change in number working 2000–2004 a | 2,279 | − 482 |
| Number unemployed 2000a | 904 | 4,812 |
| Number unemployed 2004 | 1,292 | 7,085 |
| Change in number unemployed 2000–2004a | 388 | 2,273 |
| Number not in labor force 2000b | 5,883 | 30,846 |
| Number not in labor force 2004b | 6,923 | 34,813 |
| Change in number not in labor force 2000–2004b | 1,040 | 3,967 |
| a Figures for those working or unemployed are for persons 18 years of age and older. | ||
| b Figures for those not in workforce are for persons 18 to 64 years of age. Persons not in the labor force are not working or looking for work. | ||
States: 2003 (Larsen, Current Population Reports P20-551, August 2004), showed that 7.5% of the foreign-born in the civilian labor force were unemployed compared to 6.2% of the native-born. Among men, 7.2% of foreign-born and 6.9% of native-born were unemployed. The difference was much greater among women—7.9% of foreign-born women were unemployed compared to 5.5% of native-born women.
Income and Poverty Levels for Immigrants
In 2002 the median annual salary for all U.S. workers was $35,038. Native-born workers had a slightly higher median of $35,956. Foreign-born naturalized citizens were generally in line with the overall workforce at a median annual salary of $35,032. Noncitizens earned considerably less, with a median annual salary of $22, 687, and female noncitizens had the lowest median annual earnings at $20,774. In a comparison by region of birth, foreign-born workers from Latin America earned the least at $21,943, while workers from Asia had the highest median annual income at $38,383. (See Table 6.5.)
In 2002, 16.6% of all foreign-born persons were living at or below the poverty level compared to 11.5% of natives.
TABLE 6.3
Immigrants and natives, by occupation, 2004 (ranked by immigrant share of occupation)
[In thousands]
| Share of all immigrants who work in occupation | Share of occupation comprised of immigrants | Number of employed natives | Number of unemployed natives* | Number of recently arrived immigrants (2000–2004) employed | Native unemployment rate | |
| Farming, fishing, & forestry | 2% | 36% | 540 | 73 | 63 | 11.9% |
| Building cleaning & maintenance | 8% | 35% | 3,054 | 375 | 318 | 10.9% |
| Construction & extraction | 10% | 24% | 5,999 | 874 | 462 | 12.7% |
| Food preparation | 8% | 23% | 5,090 | 525 | 380 | 9.3% |
| Production manufacturing | 11% | 22% | 7,249 | 566 | 272 | 7.2% |
| Computer mathematical | 3% | 19% | 2,451 | 130 | 95 | 5.0% |
| Life, physical, & social science | 1% | 18% | 1,059 | 48 | 39 | 4.3% |
| Healthcare support | 2% | 17% | 2,342 | 166 | 59 | 6.6% |
| Personal care & service | 3% | 16% | 3,549 | 218 | 87 | 5.8% |
| Transportation & moving | 7% | 16% | 6,925 | 608 | 150 | 8.1% |
| Architecture & engineering | 2% | 15% | 2,203 | 77 | 45 | 3.4% |
| Installation and repair | 3% | 13% | 4,296 | 224 | 68 | 5.0% |
| Healthcare practitioner | 4% | 12% | 5,932 | 88 | 66 | 1.5% |
| Sales | 9% | 12% | 13,569 | 879 | 204 | 6.1% |
| Arts, entertainment & media | 1% | 11% | 2,313 | 145 | 37 | 5.9% |
| Management | 7% | 10% | 12,969 | 344 | 133 | 2.6% |
| Office & administrative support | 9% | 10% | 17,278 | 994 | 162 | 5.4% |
| Business and financial | 3% | 10% | 5,098 | 172 | 54 | 3.3% |
| Community & social service | 1% | 9% | 1,944 | 55 | 23 | 2.8% |
| Protective service | 1% | 8% | 2,538 | 134 | 29 | 5.0% |
| Education, training | 3% | 8% | 7,464 | 101 | 102 | 1.3% |
| Legal occupations | 1% | 7% | 1,454 | 40 | 10 | 2.7% |
| Totals | 100% | 15% | 115,316 | 6,836 | 2,857 | 5.6% |
| Figures are for workers 18 years of age and older. | ||||||
| *Not all unemployed persons report an occupation. | ||||||
TABLE 6.4
States with the largest number of immigrant workers, in thousands, 2000 and 2004
[In thousands]
| 2000 | 2004 | ||||||
| Number of immigrants working | Number of natives working | Number of immigrants working | Number of natives working | Change in the number of immigrants working 2000–2004 | Change in the number of natives working 2000–2004 | Share of employment growth going to immigrants 2000–2004 | |
| Texas | 1,534 | 8,049 | 1,921 | 8,114 | 387 | 65 | 86% |
| North Carolina | 217 | 3,686 | 410 | 3,496 | 193 | −190 | 100% |
| Maryland | 302 | 2,303 | 490 | 2,236 | 188 | −67 | 100% |
| Georgia | 223 | 3,787 | 410 | 3,644 | 187 | −143 | 100% |
| California | 5,177 | 10,385 | 5,339 | 10,552 | 162 | 167 | 49% |
| Arizona | 383 | 1,912 | 527 | 1,947 | 144 | 35 | 80% |
| New Jersey | 782 | 3,326 | 924 | 3,199 | 142 | −127 | 100% |
| Virginia | 337 | 3,116 | 455 | 3,085 | 118 | −31 | 100% |
| Florida | 1,607 | 5,691 | 1,670 | 6,048 | 63 | 357 | 15% |
| Illinois | 800 | 5,276 | 818 | 5,159 | 18 | −117 | No emp. increase |
| New York | 2,162 | 6,489 | 2,121 | 6,329 | −41 | −160 | No emp. increase |
| Massachusetts | 524 | 2,617 | 478 | 2,652 | −46 | 35 | 0% |
| Note: Figures are for workers 18 years of age and older. | |||||||
Among the foreign-born population, noncitizens had double the share (20.7%) of persons living at or below the poverty level compared to naturalized citizens (10.0%). A lower percentage of naturalized citizens (10%) were living in poverty than native-born citizens (11.5%). (See Table 6.6.) Among the foreign-born population, those from Latin America had the highest poverty rate (21.6%) while those from Europe had the lowest rate (8.7%). (See Figure 6.3.)
TABLE 6.5
Median annual earnings of native and foreign-born workers,
by region of origin, 2002
| Total median earnings | Median earnings of men | Median earnings of women | |
| All workers | 35,038 | 39,429 | 30,203 |
| Native workers | 35,956 | 41,015 | 30,635 |
| Foreign-born workers | 27,047 | 28,994 | 25,195 |
| Naturalized U.S. citizens | 35,032 | 39,341 | 30,388 |
| Not U.S. citizens | 22,687 | 24,576 | 20,774 |
| Region of origin of foreign-born workers | |||
| Europe | 36,738 | 45,474 | 31,399 |
| Asia | 38,383 | 43,296 | 31,833 |
| Latin America | 21,943 | 22,941 | 20,374 |
| Other | 32,348 | 35,802 | 30,484 |
| Note: The data cover earnings by year-round, full-time workers. | |||
TABLE 6.6
Percentage of native and foreign-born populations at or below poverty level, by age, 2002
| Foreign-born population | |||||
| Total population | Native population | Foreign-born population | Naturalized U.S. citizens | Not U.S. citizens | |
| Total population | |||||
| All ages | 12.1 | 11.5 | 16.6 | 10.0 | 20.7 |
| Under 18 | 16.7 | 16.2 | 28.5 | 16.4 | 31.0 |
| 18 to 64 | 10.6 | 9.7 | 15.6 | 9.2 | 19.2 |
| 65 and older | 10.4 | 9.9 | 14.7 | 11.9 | 21.0 |
| Men | |||||
| All ages | 10.9 | 10.2 | 15.4 | 9.3 | 18.8 |
| Under 18 | 16.8 | 16.3 | 29.0 | 19.1 | 30.8 |
| 18 to 64 | 8.9 | 7.9 | 14.1 | 8.7 | 16.8 |
| 65 and older | 7.7 | 7.1 | 13.4 | 9.6 | 21.8 |
| Women | |||||
| All ages | 13.3 | 12.7 | 17.9 | 10.6 | 22.9 |
| Under 18 | 16.6 | 16.1 | 28.1 | 14.0 | 31.2 |
| 18 to 64 | 12.2 | 11.4 | 17.1 | 9.6 | 21.9 |
| 65 and older | 12.4 | 12.0 | 15.8 | 13.6 | 20.4 |
Table 6.7 details the types of benefits received by U.S. households from different welfare programs in 2001. More than one-fifth (22.7%) of all immigrants received welfare benefits compared to 14.6% of natives. Refugees were the most likely to receive welfare benefits and received the greatest amount of benefits. Of all refugee households (based on the immigration status of the head of household), 28.5% received some type of welfare benefits at an average monthly payment of $3,402.00.
FIGURE 6.3
People living below the poverty level, by nativity and world region of birth, 2002
[In percent]*
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