Study: The Costs of Immigration

By Dave Emanuel

Immigrants were once the bedrock upon which American prosperity was built. Yet in recent years, the face of immigration has changed; immigrants, both legal and illegal are now chipping away at that bedrock, rather than solidifying it.

The study

That’s the conclusion of a recently released study by the National Academies of Sciences, Engineering and Mathematics, (NAS). The study found that in recent years, immigrants have been consuming more in public services than they contribute in taxes. The study also indicates that the immigrant population reduces wages for native born Americans, especially those who are poorest and have the least education.

On the flip side, that reduction in wage levels reduces labor costs and contributes to the bottom line of corporations.

Only one component of the picture

Although current immigration policies and illegal immigration are headline grabbers, the NAS study found that since 2009, the unauthorized immigrant population has remained relatively constant; each year 300,000 to 400,000 new unauthorized immigrants arrive and about the same number leave. In spite of headlines and public opinion that indicate illegal entry is the primary concern, it’s but a single component of the overall economic impact of immigration.

The NAS study found that more than 40 million current residents were born in other countries and that almost one in four Americans are immigrants (first-generation) or children of immigrants (second generation). Since 2001, the influx of legal immigrants has exceeded 1 million per year, and although geographic settlement patterns have changed, most immigrants tend to reside in large metropolitan areas within traditional “gateway” states.

The negative economic effect of the immigrant population is largely influenced by generation.

According to the report,

“In addition to the net fiscal effects on the nation as a whole, the effects on revenues and expenditures for state and local governments are also of concern to policy makers and the public. The panel’s analysis of subnational data indicates that the net burden of immigration to fiscal balance sheets varies tremendously across state governments.

Consistent with findings in the national level analyses (and for the same reasons), first generation adults plus their dependents tend to be more costly to state and local governments on a per capita basis than adults (and their dependents) in second or third-plus generations and in general, second generation adults contribute the most to the bottom line of state balance sheets.

For the 2011-2013 period, the net cost to state and local budgets of first generation adults (including those generated by their dependent children) is, on average, about $1,600 each.”

Taking more than they’re giving… i.e. sucking the system dry

Based on data collected, the NAS presented a number of scenarios, each based on a separate group of metrics, and all showed that immigrants and their dependent children consume more in public services than they contribute in tax payments. All scenarios showed a net reduction in financial resources, with the largest being $299 billion per year.

Immigrants aren’t alone in causing a negative financial impact. Americans born in this country are collecting dollars from the federal money trees, known as “entitlement programs,” at an unprecedented rate. However, on a per capita basis, immigrants cause a significantly larger reduction in financial resources than the one caused by native-born Americans.

With respect to the aforementioned effects on state governments, financial impact is a result of the number of immigrants, and state policy with respect to the availability of public services.

Surprising only to people living under rocks, California leads the nation with the highest negative financial impact, $18.963 billion. Following California are Texas ($7.828 billion), New York ($5.792 billion), Illinois ($4.160 billion) and New Jersey ($3.240 billion). Georgia is 12th on the list at $1.019 billion.

Padding the profits of corporations

In contrast to the drain on public financial resources, the report indicates that the “immigrant effect” has a positive impact on corporate income. The irony here is that liberals castigate corporate America for its profits, yet their immigration policies take money away from the middle class, while padding the coffers of corporations.

As previously noted, in evaluating the fiscal effect, the NAS report does not distinguish between legal and illegal immigration. However, it does note that education, or the lack of it, is a prime predictor of fiscal effect and illegal immigrants tend to be poorly educated. As such, the best means of easing the financial costs of immigration is to simply institute policies that favor educated, legal immigrants.