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2004 August 25 Wednesday
Illegal Immigrants At Least $10 Billion Net Cost At Federal Level

The Center for Immigration Studies has a new study on the costs to the federal government of illegal aliens written by Steven A. Camarota. The net cost of illegal immigrants to the US government is conservatively at least $10 billion per year.

This study is one of the first to estimate the total impact of illegal immigration on the federal budget. Most previous studies have focused on the state and local level and have examined only costs or tax payments, but not both. Based on Census Bureau data, this study finds that, when all taxes paid (direct and indirect) and all costs are considered, illegal households created a net fiscal deficit at the federal level of more than $10 billion in 2002. We also estimate that, if there was an amnesty for illegal aliens, the net fiscal deficit would grow to nearly $29 billion.

Among the findings:

• Households headed by illegal aliens imposed more than $26.3 billion in costs on the federal government in 2002 and paid only $16 billion in taxes, creating a net fiscal deficit of almost $10.4 billion, or $2,700 per illegal household.

• Among the largest costs are Medicaid ($2.5 billion); treatment for the uninsured ($2.2 billion); food assistance programs such as food stamps, WIC, and free school lunches ($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 degree, the primary reason they create a fiscal deficit is their low education levels and resulting low incomes and tax payments, not their legal status or heavy use of most social services.

• On average, the costs that illegal households impose on federal coffers are less than half that of other households, but their tax payments are only one-fourth that of other households.

• Many of the costs associated with illegals are due to their American-born children, who are awarded U.S. citizenship at birth. Thus, greater efforts at barring illegals from federal programs will not reduce costs because their citizen children can continue to access them.

• If illegal aliens were given amnesty and began to pay taxes and use services like households headed by legal immigrants with the same education levels, the estimated annual net fiscal deficit would increase from $2,700 per household to nearly $7,700, for a total net cost of $29 billion.

• Costs increase dramatically because unskilled immigrants with legal status — what most illegal aliens would become — can access government programs, but still tend to make very modest tax payments.

• Although legalization would increase average tax payments by 77 percent, average costs would rise by 118 percent.

A few points to note about this study:

  • They do not appear to have factored in costs and revenues at the state and local levels of government. So, for example, most of the costs of educating the children of illegal aliens are not included. Higher law enforcement costs for the local commuities due to higher crime rates among illegals are similarly not included.
  • The costs that victims pay (emotional, financial and from loss of loved ones) from crime is not factored in.
  • The need to build more public infrastructure such as roads and schools due to immigrant population growth does not appear to be included. Los Angeles is currently in the middle of a $10 billion school building project due to illegal immigrant-caused population growth.
  • The cost of racial preferences is not factored in. The bigger the Hispanic population gets the higher the costs that Caucasians and East Asians and South Asians will have to pay for racial preferences. Businesses and governments will run less efficiency as larger portions of their work forces are hired to satisfy quotas and so-called "diversity" goals.
  • Environmental costs are not considered. The higher the population density gets the higher the costs must be per person to keep total pollution down.

The problem caused by illegal immigration does not last only until descendant generations get educated to American levels. As Steve Sailer points out the Hispanic-white achievement gap is going to prevent Hsipanics as a group from ever rising to white levels of education, income, and tax paying.

Recently, while browsing Tom Wood's new "Right on Race" blog, I had a chance to ask Stefan Thernstrom what the NAEP data actually showed. He graciously provided the following raw data, to which I've added some straightforward calculations. (Number fans click here for table).

Conclusion: overall, the white-immigrant Hispanic achievement gap is actually 14% worse than the notorious white-black disparity.

But for American-born Hispanic children (not just second generation, as many might assume, but the second up through the seventh generation), the gap is 67% as large as the white-black variance.

Exactly as I predicted!

(It’s interesting that the gaps between whites and blacks and native-born and foreign Hispanics are widest among 8th graders and narrowest among 12th graders. Presumably this narrowing is partly caused by differing high school dropout rates, which remove more of the lowest-scoring minorities from the ranks of the test-takers.)

The good news: if we cut off all immigration from Latin America tomorrow, the total white-Hispanic achievement chasm would narrow over the next, say, 30 years, from more than 90% of the white-black difference down to 67%.

Steve's numbers above are consistent with Hispanic high school graduates across generations from first generation immigrants all the way through 4th generation descendants. We pay for the first generation and we keep paying for the later generations.

We should stop the influx of illegal aliens and deport the illegals that are already here. We should also change legal immgration qualifications to make college level education as the minimum required for prospective immgrants.

Share |      By Randall Parker at 2004 August 25 02:29 PM  Immigration Economics


Comments
John S Bolton said at August 25, 2004 8:47 PM:

It is true that low-income groups consist almost entirely of those who are not net taxpayers. The people are being fooled on this point of whether what we're seeing is assisted immigration on a truly massive scale. It is one of the most taboo subjects in the anti-merit society, to mention that immigrants are almost invariably on net public subsidy. To mention it is to alert people to the magnitude of the foreign aggression and the traitorous officials who promote the increase of this, upon the citizenry. The idea of an educational qualification for immigration, while surely an improvement over the running-down of population quality which is occurring today, has some drawbacks. College degrees are highly variable in quality; forged credentials are easily obtained, and would be easy to use for immigration, since there is no further requirement of performance. A standardized test of conceptual ability in English, taking a number in the low hundreds of thousands, from the top down, is more proctorable. They could be tested before and at the point of arrival, so as to avoid fraud. Machine testing of English language speech and understanding of verbal communications would yield a population more assimilable to society in general, but specifically to economic integration on the net taxpayers' level. This system would work for tourism, also, since the big-spending tourist and business travelers are the ones we should want, not the low-budget ones who make our immigration control more difficult, even to the point of major damage to national security, and the future of the nation and of the republic.

T. J. Madison said at August 27, 2004 9:20 AM:

Wow, 10 billion dollars. That's as much as FIVE B-2 bombers! That's nearly 0.02% of the overall Fiscal Imbalance, or maybe 5% of the annual deficit.

Randall Parker said at August 27, 2004 11:13 AM:

T.J., For reasons I mentioned, I think this is an underestimate. There are costs this estimate does not include such as state-level costs. Also, if you read the body of the report you will find places where they made very conservative assumptions that produced lower figures than likely exist in reality.

One thing anyone has to keep in mind when talking about costs is that the US government has a $50 to $70 trillion dollar unfunded liability for old folks retirement. That means that the average American gets more in benefits from the government than they pay in taxes. The low income American citizen children of those illegals are making the unfunded retirement liability far larger than the $10 billion estimate assigned to them in this study. They have got to be adding trillions of dollars to the unfunded liability.

John S Bolton said at August 28, 2004 1:05 PM:

Other costs of mass anti-merit immigration which are seldom mentioned, are those involving the ways in which our country becomes more like the world average. Isn't it traitorous and clearly malicious to want to push us towards the world average for unemployment, child-labor utilization, TB prevalence, or that of hepatitis A or B? Is it good to become more like the world average in terms of leprosy prevalence, or the incidence of malaria or typhoid fever? The seasonalization and casualization of employment is another destructive consquence of using large-scale standardless immigration to move a high-standards country towards the dead-level average of the world. The malicious hostility of professoriate and officialdom against civilization and high standards of productiveness in particular, is especially clear in the case of their enthusiasm for the mass immigration of their needy friends.

John S Bolton said at September 4, 2004 2:53 AM:

The medical expenses of immigrants are astronomical. Take the total health care percentage of the economy, which is upwards of 1,400 billion, and subtract the half which goes to the elderly, leaving more than $700 billion. Divide this by ten for the 10+% foreign born percentage in the country, which equals ~$70 billion. Now add the cost of their minor children, 20+% of minors are children of the foreign-born, or at least 15 million. These are born to their parents, not to the net taxpayer. Therefore, add a premium of say $2,000 per child, for their medical share, which is $30 billion, on to the $70 billion for the adult foreign-born themselves, and the total is $100 billion. This assumes that the foreign-born and their minor children here get much less than their pro rata share of the medical expenses' totality. If they got close to a pro rata share, their total would go over $200 billion a year. Per capita income of the foreign-born is low, so they can't pay in taxes even the cost of their medical expenses.

Brian L. Agnew said at October 5, 2004 2:47 PM:

Working in the healthcare industry, I see first hand the cost of illegal immigration. The cost of the care provided to these people is bankrupting the industry, let alone the legal taxpaying residents of this country. In California, emergency rooms and hospitals are falling like dominos. Most of the people being serviced are either on the dole, soon to be on the dole or "self pay" patients. This "self pay" population have little or no resources to pay the price of the services provided, costing the system millions of dollars per year. Millions of dollars we as taxpayers can no longer afford to subsidize. As a group, these people are extremely ill, having increased cases of diabetes and all the related complications thereof, renal failure, requiring dialysis, hypertension due to obesity and poor diet rich in cholesterol. Never having had preventative medical care places these people ripe for the ravages of diseases we have long silenced in our regular population. Tuberulosis and hooping cough are on the rise. I see case after case of these ailments every year in ny hospital, not to mention the disease that comes from poor hygiene and crowded living conditions. We are in serious trouble with the ever increasing numbers that are crossing our borders every day. It is quickly turning this state into a third world conditon.

Hector P. Maldonado said at November 20, 2004 10:37 AM:

While I found this study (and the comments it generated) to be very interesting and informative, I also noticed that it focuses entirely on the costs that illegal immigrants create for our government's administration. It is true that illegal aliens cost our government billions in the way of education, health care, law enforcement and other social services; yet, the this per-capita cost is no more than any other group of the same economic or migratory status, including whites, blacks or asians. While I am by no means a proponent of illegal immigration, I do believe that judging illegal aliens simply of their face value is unjust. This study never considers the benefits that illegal aliens provide this country. I challenge Mr. Camarota to consider a day without illegal aliens. A day in which California's oranges or Washington's apples would remain on trees. A day in which hotels accross the nation would not be cleaned. A day in which your favorite restaurant would have to close its doors because of a lack of employees. Government costs aside, consider the economic losses that would be incurred by millions of small business throughout our country that would be forced to stop operations on a day without illegal aliens. Consider the hipocracy of the government: it spends billions to manage illegal immigration, but not to eliminate it, since they are aware of the economic implications this would cause. It is a matter of simple supply and demand. Illegal aliens continue to risk their lives and their life savings to come to this country because WE want them here. If we did not give illegal aliens jobs-which, by the way, are jobs we DON'T want-they would never come to this country. The demand is high; therefore why do we get angry when it is being met? Let's remember that illegal aliens are still human, albeit underappreciated. So, I agree, let's eliminate illegal immigration. Let's have a day, a week or perhaps a month without this "parasites" of society. Perhaps then we would realize that the benefits that these people provide our country far outweigh the costs. Perhaps then we might begin to understand that the only alien in them is in their status, and as humans we should treat them with a little more respect and dignity.

Thank you for allowing me to post my comments.

Randall Parker said at November 20, 2004 11:32 AM:

Hector,

First generation Asian immigrants who come here legally make tens of thousands of dollars more a year and pay way more in taxes. They commit crime at lower rates. They make much larger contributions as engineers and scientists.

A day without illegals: America functioned quite well for decades after immigration was shut down in the 1920s. The food crops got picked. The trash was collected. In many parts of the country where few illegals have gotten to the natives still do all those things.

It is a fantasy that the illegals are needed. The fact that they get paid so little is a sign that the economic value of what they do is low.

The demand is high? Why are wages for unskilled jobs declining and why have they been declining since the 1970s? Because the demand is becoming less than the supply.

Hector Maldonado said at November 20, 2004 1:56 PM:

Randall,

What is exactly is the definition of "contribution". Most working people in our society contribute in some way or another; whether it is a good or service. Unfortunately, society has taught us that the only contributions worthy of recognition, to mention a few, are those in the fields of academics, politics, economics, and most importantly (I am being a bit facetious with this final one) entertainment. The implication of this though, is that we live life overlooking the smaller contributions that help maintain order and provide the groundwork for larger contributions to occur. How many offices/departments do you know of that would fall apart if the office manager (a.k.a secretary) were to quit work? Yes, the employer/ supervisor is providing a greater contribution, but very much with the support of his/her office manager.

Doctors, lawyers, engineers, scientists or any other skilled worker do not need to 'pick up trash' or 'pick fruits' because they can provide a more efficient (not necessarily more important)contribution in other occupations. Yet, the fruit-picking and trash collection still needs to occur. How many people do you know that are willing to pick fruit in 90 or 100 degree weather for 12, 13 or even 14 hours at a time? I am pretty certain that you wouldn't do it and neither would I, since we are fortunate enough to have other options. Unfortunately, we live in a society of spoils in which we are demand higher quality and better paying jobs, but do not want to exert a proportionate amount of work to obtain this.

I do not attempt to argue that illegal immigrants contribute more to the economy than "first generation Asian immigrants". Although, they do contribute many very important, but often-times overlooked "petty" services-services that no one else is willing to perform. Try to tell our nations "important" contributors (Wal-Mart, Best Western, Dole, and other huge corporations) that a day without illegal immigrants will go unnoticed and they will laugh.

If an illegal alien comes to this country and is a law abiding (apart from his migratory status) citizen, then I say "let him be". Let's allow them the basic services (education, health care, freedom, and hope) that we many times take for granted (but which they have may not have had the luxury of), if they don't break the law and are contributing to our economy. We need to come up with a plan that works for the parties involved, because we are obviously not being successful in stopping illegal immigration.

Hector

Randall Parker said at November 20, 2004 8:17 PM:

Hector,

No, there are no petty services that no one else is willing to perform. Hispanic immigrants drive down wages at the bottom and take jobs by willing to work at lower wages than those jobs previously paid.

Those lousy high-labor jobs would be more automated if the illegals were not here to work them. In Australia they also have a wine industry but they use automated grape picking equipment because the government does not allow in large numbers of cheap laborers. The result is higher salaries for field workers and a faster rate of technological advance. Cheap labor is a crutch. Take it away and necessity will be the mother of invention.

Speaking of necessity being the mother of invention, This brings to mind the very substantial contributions that Benjamin Franklin made to America and the world:

Franklin founded what is considered the first public library. During the next several years, Franklin was instrumental in establishing the first fire department, a police force, and the Academy of Philadelphia, which became the University of Pennsylvania. Around 1744, Franklin invented a stove which reduced excessive chimney smoke. The Franklin stove is still in use today.

...

In the 1740's, Franklin began experimenting with electricity, which led to the invention of the lightning rod.

...

In 1775, with war seemingly inevitable, Franklin returned to America. Shortly thereafter, he was made a member of the Second Continental Congress and helped draft the Declaration of Independence.

What is missing from the Hispanic immigrant story in America are the big contributions. Instead you expect me to take seriously the willingness to work at WalMart or in a vegetable field. This is called diminished expectations. Note that we do not have these diminishe expectations for the far smaller numbers of East Asian and South Asian immigrants found high tech companies, make scientific discoveries, and make many other contributions at levels far above the levels that Hispanics do. Nor do we expect whites as a group to achieve at such low levels.

A plan that works for me is to build a barrier on the border with Mexico and keep out people who we have such low expectations for. We should round up and deport all the illegals who are here too. It is a matter of finding the will and it can be done.

Hector Maldonado said at November 21, 2004 9:25 AM:

Randall,

I truly hope your "plan" is implemented. In the 1940's the Bracero program was implemented because there was a need for highly skilled (yes, highly skilled) farm workers due to the shortage caused by WW2. Back then though, the agriculture industry was booming and therefore the need was more evident than it is now. Since then, technology has greatly reduced the number of farmworkers needed and therefore people the need isn't as apparent. So, I truly hope that you plan is implemented. It is not until you we lose something that we take for granted that we truly realize its just how "big" the "contribution" they were making.

Let me know when you want to start building the "barrier". I'll be the first to start pouring the concrete.

HM

Grey Allen said at April 13, 2005 5:49 PM:

I agree with the author of this site: we ought to give illegals nation-wide 20 days to set their affairs inorder and leave with some dignity. All those who choose to remain, thinking we won't do anything about them, that we're bluffing will be deported, ready or not. I do apoligize, as I have ignored all previous comments.

Sonali said at August 5, 2005 5:41 PM:

I guess this site was created nearly a year ago, but hopefully the author still reads and responds to posts. In any event, I am trying to learn more about illegal immigration, both its positive and negative points, and upon reading your essay, I came up with a few questions.

First off, is the amount of money that would be poured into building a wall to prevent illegal immigration really going to save us money in the long run? Remember, not only must the wall be put up, but it must be maintained, guarded, etc...Are you saying that the cost of illegal immigrants on our nation is substantially more than what we would end up spending on this proposed wall?

Second, I read above that according to the author of the site, things worked just fine in the 1920's when immigration was shut down. How can you compare the 1920's to the year 2005? Things have changed drastically since then, specifically, the average education level of the population. Now a days, the general population is much more educated than back then. In the 1920's there were plenty of blue collar Americans willing to do "low-skill" jobs, but in the 21st century, the amount of Americans willing to do those jobs has decreased significantly. I have trouble believeing that all the jobs needed to be filled would be filled by willing Americans, if there were no illegal immigrants.

Finally, what is this proposal you have about making sure that all legal immigrants have a minimum of a college level education? Not all Americans have a college education, in fact, many don't even have a high school degree. So how can one propose that immigrants of all people, must have a college education? There is plenty of need in this country for "low-skill" labor. We don't need to be restricting immigration to those people who can "provide this country with something substantial". The United States is the land of opportunity, and if a legal immigrant wants to come here and perform a job that does not require a diploma, then good for them. We need laborers in all sectors of this society.

Randall Parker said at August 5, 2005 6:10 PM:

Sonali,

Yes, the total cost of illegal immigration is many times what we'd spend on maintaining and guarding the wall.

Look, I can't prove that assertion in a single response. I've written many posts on immigration and economics that you ought to read in my Immigration Economics category archive. You'll find the evidence that you seek there.

As for educaton and unskilled work: The salaries for the bottom 10% have been falling in inflation adjusted terms since the early 1970s. This means supply has been growing faster than demand for the least skilled workers. No, there is no shortage of low skilled workers. Also, lots of work that gets done by unskilled workers would be done in more automated ways if there were fewer and therefore more highly paid unskilled workers.

For example, the Australian wine industry is more automated than the California wine industry because the Australian industry does not have access to large amounts of cheap illegal immigrant labor. See my post "Cheap Immigrant Labor, California Wine, And Australian Vintner Automation" for the details.

Michael said at April 15, 2006 10:04 PM:

I'm not smart enough to follow all that crazy math that's been done up there. I'll simply present what FOUR illegal immigrants do to tax payers. My father was a dialysis technician that had to take care of illegal immigrants that come to the Emergency Room. As we all know going to the E.R. increases costs of services. So, here we go:
1. Simple use of dialysis machine for 1 illegal immigrant coming into the E.R. = $1,600
2. A minimum amount for needed drugs during dialysis treatment = $2,400.
3. Standard cost for 1 illegal immigrant's single dialysis treatment = $4,000.
Now, I mentioned 4 immigrants. So, here we go again:
1. Simple use of dialysis machine for 4 illegal immigrants coming to the E.R. (1 time each) = $6,400 (1,600 x 4)
2. Minimum amount for needed drugs during treatment = $9,600 (2,400 x 4)
3. Standard cost for 4 illegal immigrant's SINGLE dialysis treatment = $16,000
Now, each immigrant gets the dialysis treatment 3 times a week = $48,000 per week.
Multiply this amount for 52 weeks and you get a nice little lump sum of $2,496,000 per year that FOUR illegal immigrants cost American taxpayers. Obviously this amount is lower than 70 billion but look at how many people it takes to incur almost 2.5 million dollars costs. Another point I should make: The minimum amount for drugs needed is if the dialysis patient is in "good" health. Most patients need a plethora of additional drugs that only skyrockets the cost that these FOUR illegal immigrants cost American taxpayers.

Laurie said at October 9, 2006 2:53 PM:

My husband is on dialysis and his treatments certainly don't cost as much as you are saying. I imagine the figures you are using are the inflated figures a hospital/clinic charges when a person doesn't have health insurance. If you have insurance the amount the insurance company pays for a single treatment is much less. And, the meds my husband gets, paying out of pocket, is about $400/month. Where you came up with $2,400 I have no idea.


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