The Fiscal Impact of Immigration:Heritage Got It Right

The Fiscal Impact of Immigration 
Heritage's finding that less-educated immigrants
are a large fiscal drain is incontrovertible
 

WASHINGTON, DC (May 14, 2013) — The Heritage Foundation's recent study authored by Robert Rector, a leading expert on immigration and welfare, clarifies the Schumer-Rubio bill's fiscal cost to the American public. The Center for Immigration Studies' analysis of the study finds that its basic conclusion that less-educated immigrants are a large fiscal drain is incontrovertible.

Heritage determined that the current fiscal drain (services used minus taxes paid) from illegal-immigrant households was $55 billion a year, and if the immigrants receive permanent legal status it would rise to $106 billion a year. Over the lifetime of illegal immigrants, who are only 34 years old on average, the total price tag would be $6.5 trillion.

This imbalance results not from an unwillingness to work on the part of illegal immigrants. Rather, it stems from the fact that adult illegal immigrants only have about 10 years of schooling on average. In the modern American economy, those with relatively little education (whether immigrant or native-born) earn modest wages on average and make modest tax contributions. At the same time, they tend to use a good deal in welfare and other means-tested programs. As a group, the less-educated use more in services than they pay in taxes. Anyone who argues otherwise has simply not looked at the data the government collects on this subject.

"Our analysis of Census Bureau data shows that even less-educated immigrants who have been in the country for 20 years have high rates of welfare use and low income tax liability," said Dr. Steven Camarota, the Center's Director of Research. "If the size and cost of government were cut in half, then the fiscal outcome might be different. But until that happens, illegal immigrants as a group will be a significant net fiscal drain."

For a more detailed analysis see:http://www.nationalreview.com/node/348192

Proponents of amnesty, led by the Cato Institute, have offered very weak arguments to attack Heritage. Some argue that Rector's methodology is non-standard because it looks at taxes paid and services used by households rather than individuals. In fact, this is the standard way to look at the issue. Critics also argue U.S.-born children should not be counted. But the impact must include both the immigrant and the family he brings or acquires, as the children are here only because their parents have been allowed into the country. It is worth noting that the National Research Council (NRC) study in 1997 did a fiscal analysis that excluded U.S.-born children, and it still found that less educated immigrants were a large fiscal drain by themselves.

The Schumer-Rubio bill may limit welfare access for the first 10 years after legalization, but the Heritage study shows that illegal-immigrant households already receive about $4,500 a year on average from means-tested programs. The U.S.-born children of illegal immigrants have access to all programs, the ban does not apply to every program, and the administration of these programs is far from airtight. Further, when the 10-year window expires, the costs explode.

Dr. Camarota emphasizes that there is no evidence that the economic benefits gained from having access to low-skilled immigrant labor offset the fiscal costs. "The NRC study, which was authored by many of the leading economists in the field, is the only study of which I am aware that tried to measure both the economic impact and the fiscal impact of all immigrants," notes Dr. Camarota. "That study found that the economic gain to the native-born from all immigrants was smaller than the fiscal drain created by all immigrant households. And that finding was for all immigrants, not just illegal immigrants, who are much less educated and poorer on average than immigrants generally."

The nation's top immigration economist, Harvard's George Borjas, observes, "Immigration is primarily a redistributive policy." To assume that immigration creates large gains to natives, one must invent benefits that are not demonstrated in the academic literature. Immigration makes the economy larger but, as Borjas' work shows, of that economic growth, "97.8 percent goes to the immigrants themselves in the form of wages and benefits."

View the Senate bill, CIS Senate testimony and commentary at: http://www.nationalreview.com/node/348192