2006 August 16 Wednesday
Steven Camarota On Costs Of Immigrants

Testifying before the US Congress House Ways and Means Committee Steven A. Camarota of the Center for Immigration Studies summarized many immigration economics findings.

  • The National Research Council (NRC)1 estimated that immigrant households create a net fiscal burden (taxes paid minus services used) on all levels of government of $20.2 billion annually.
  • The NRC estimated that an immigrant without a high school diploma will create a net lifetime burden of $89,000, an immigrant with only a high school education it is negative $31,000. However, an immigrant with education beyond high school is a fiscal benefit of $105,000.
  • Estimating the impact of immigrants and their descendants, the NRC found that if today’s newcomers do as well as past generations, the average immigrant will be a fiscal drain for his first 22 years after arrival. It takes his children another 18 years to pay back this burden.
  • The NRC also estimated that the average immigrant plus all his descendants over 300 years would create a fiscal benefit, expressed in today’s dollars of $80,000. Some immigration advocates have pointed to this 300-year figure, but the NRC states it would be “absurd” to do so.

Note that the net fiscal burden on government is not the only source of economic costs of immigrants. Immigrant groups that commit crime at higher rates (e.g. Hispanics commit crime at over 3 times the rate of whites) impose economic losses on businesses and private individuals. Also, their higher rate of medical uninsurance imposes costs on hospitals and other health care provides and those costs get passed on those who pay medical insurance in the form of higher medical insurance rates.

Illegal immigrants area net burden on government coffers. If they were legalized the burden they impose would increase substantially.

  • The Center for Immigration Studies (CIS) estimates that in 2002 illegal alien households imposed costs of $26 billion on the federal government and paid $16 billion in federal taxes, creating an annual net fiscal deficit of $10.4 billion at the federal level, or $2,700 per household.2
  • Among the largest costs, were 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/court systems ($1.6 billion); and federal aid to schools ($1.4 billion).
  • If illegal aliens were legalized and began to pay taxes and use services like households headed by legal immigrants with the same education levels, CIS estimates the annual net fiscal deficit would increase to $29 billion, or $7,700, per household.
  • The primary reason illegal aliens create a fiscal deficit is that an estimated 60 percent lack a high school degree and another 20 percent have no education beyond high school. The fiscal drain is not due to their legal status or unwillingness to work.
  • Illegal aliens with little education are a significant fiscal drain, but less-educated immigrants who are legal residents are a much larger fiscal problem because they are eligible for many more programs.
  • Many of the costs associated with illegal aliens are due to their US-born children who have American citizenship. Thus, barring illegal aliens themselves from federal programs will have little impact on costs.
  • Focusing just on Social Security and Medicare, CIS estimates that illegal households create a combined net benefit for these two programs in excess of $7 billion a year. However, they create a net deficit of $17 billion in the rest of the budget, for a total net federal cost of $10 billion.

I've just excerpted from a much longer article. Camarota also explains how immigrants do not help with the unfunded old age pension liabilities. The average age of immigrants is close to the average age of the existing population. Plus, the lower skilled immigrants earn less and therefore pay much less in taxes. They are not going to bail out Social Security and Medicare.

Lots of costs caused by immigrants do not show up in the form of taxes. Higher medical insurance rates are a major way that immigrant costs get shifted onto the middle and upper classes. To get a sense of the size of the costs getting transferred onto natives see my posts Medical Cost Shifting Onto Privately Insured Rises, Illegal Immigration Drives Up Number Of Medically Uninsured, and Immigration And Heavy Burden Of Medically Uninsured.

Share |      By Randall Parker at 2006 August 16 09:44 PM  Immigration Economics

John S Bolton said at August 17, 2006 12:07 AM:

Did they include the cost of public schooling for foreigners or illegal aliens children here?
After all, children are born to their parents, not to the net taxpayers' responsibility.
The low number for the total net public subsidy indicates that they may have included only those children in school who are themselves foreign-born.
Public school enrollment of children of foreign-born is already over ten million, which means over $100 billion dollars.
If Iran were invading and grabbing over $100 billion in plunder a year, they would have been nuked back to nomadism.

David Lajaunie said at August 17, 2006 8:35 AM:

I think the problem is a lot worse than that. If you take the entire local, state and federal tax burden of $3.5 trillion dollars and divide it by the estimated amount of workers in the U.S. (149M) you get an apportioned tax rate of about $23,500 per capita. That includes all taxes and fees. It should be obvious that very few illegal immigrants, indeed, substantially less than half of all Americans pay even the averaged amount of taxes directly or indirectly through purchase of goods and services. This does not include the enormous government debt or pending infrastructure replacement costs either.

Rich said at August 17, 2006 8:44 AM:

With regards to the schooling costs of illegal aliens, during Arnold's gubernatorial race I was shocked to find that *half* the California budget goes to schools. CA has the highest State tax of any State.

There are other hidden costs however. It turns out that immigrants (legal and illegal) tend to send money home (to their real homes) and families in Mexico or wherever. They send lots of money. The last figures I saw for California was $160 Billion per year. All this money flows out of the local economy. The only way to keep enough cash in the system to keep the economy alive is to print more money. And the federal government prints lots, and has recently decided to stop publishing how much, which is a bad sign all by itself. This is very inflationary and costs everyone, even in those states which don't have a major immigration problem.

Robert Hume said at August 17, 2006 10:02 AM:

And the subject of conservation has disappeared from the discussion. The beaches near DC are very crowded compared to 30 years ago (mostly with upper-class white folks, more of whom can affaord to go to the beach because their income has crossed some threshold, I suppose) but in the long run all the beautiful places in the US will be more crowded than they would have to be and there will be less wilderness.

D Flinchum said at August 18, 2006 6:03 AM:

And about those CA schools, Rich: The public schools in CA used to be in the top 2 or 3 in the nation. Now they at the bottom with Mississippi and Alabama. So what are those Californians getting for their money?

Fairfax County Virginia just outside of Washington, DC used to have some of the best schools in the nation. They, too, are starting to slip - lots of budget-busting ESL and special ed - and for the same reasons. Below is data from FAIR.

Summary of Fairfax County Data (and Source)
Population (2003 CB est.): 1,000,405
Population (2000 Census): 969,749
Foreign-born Population (2000 Census): 237,677
Share Foreign Born (2000): 24.5%
Immigrant Settlement 1991-98 (INS): 55,320
Population Projection 2025 (FAIR): 1,482,000

True, some of the foreign born are highly educated professionals - I've worked with some of them and they are great - but many are the unskilled and poorly educated illegal workers who have been drawn to construction, hotel/restaurant work, cleaning, etc. and who populate the day laborer sites. Middle and working class people are being forced out of the area by high housing costs and many who can't afford to live in the better school districts move farther out into what was once rural areas, just as the same type of people are fleeing CA.

California has been losing more US population than it gains for some time. From 1990 on, virtually all of its growth has been as a result of immigration. According to William H. Frey, a Brookings Institution demographer, from 1990-1999, 2.2 million more California residents moved to other states than people from other states moved to California. California lost nearly 350,000 residents from July 2001 to July 2004 alone.

Fairfax County still has a way to go to catch up with CA but it's definitely moving in that direction.

Rasfarengi said at August 18, 2006 11:50 AM:

Fellas...this is real simple.

Go the Ali G. route. Bring in the hot chicks.

Does not matter where they come from. Hotter the better. I believe strongly in evolution and natural selection. Smarter and/or wealthier men tend to marry hotter women, who produce over time better than average looking childern as well as some smarts. Anyone don't believe it...if any of you live in the DC area, come meet me at Foggy Bottom station one afternoon, which is in the middle of George Washington U. and I can show you a hot chick of all nationality. :-) Ugly chicks can stay home, so can men. :-) Problem solved. Amen.

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